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'Shadow Elite': Outsourcing Government, Losing Democracy

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James Madison famously wrote in the Federalist Papers (#51), "If men were angels, no government would be necessary."

We've learned the hard way, most starkly in the Great Depression and now in the Great Recession, that men and women are anything but angels, and that government first and foremost must protect the American people from the unmitigated avarice of the private sector.

The problem is, what has happened to that lofty, Founding Fathers notion of government as our protector? To me, the most important contribution, and the most disturbing part of Janine Wedel's brilliant new book, "Shadow Elite: How the World's New Power Brokers Undermine Democracy, Government and the Free Market", is that she has laid bare the lie that we have functional separation today between the public and private sector. Over time, capitalism and democracy have become gradually melded into corporatism in the corridors of power in Washington (and in many other national capitals around the world). Public and private are now substantially blurred, as the "transnational" political elites and the financial elites have become literally the same people. It is a condition which leaves the people feeling unrepresented, unprotected and utterly disregarded, a prop in their own play, a hollow feeling the great Peruvian journalist Gustavo Gorriti once eloquently described as "cosmetic democracy."

According to Janine, whose unflinching social anthropological work I have respected for years, three out of four people doing the work of the federal government today are actually private contractors. Think about that a minute...That means private company employees -- with less stringent conflict of interest requirements and also not generally obligated to adhere to the Freedom of Information Act -- increasingly have become the government and now substantially rule the roost.

When I directed the Center for Public Integrity earlier in this decade, we discovered a mercenary culture far more extensive than I had ever imagined. For example, in 2002, in a report entitled "Making a Killing: The Business of War", we identified 90 private military companies operating in the world, hired by governments or corporations. In early 2003, we reported that nine out of 30 members of the Defense Policy Board, then chaired by Richard Perle, had ties to defense companies with $76 billion in Pentagon contracts in just the preceding two years. In late 2003, the Center issued "Windfalls of War", first revealing that Kellogg, Brown & Root, then a subsidiary of Vice President Dick Cheney's former company, Halliburton, was the top recipient of U.S. war contracts in Afghanistan and Iraq. That report, which won the first George Polk award for online reporting and was produced by 20 researchers, writers and editors, also revealed that the most of the major contractors had close employee or Board ties to the executive branch for Republican and Democrat administrations and cumulatively they had contributed many millions of dollars to the political process.

Fascinated and alarmed by the Tammany Hall feeling of political favoritism or cronyism I was getting, we launched into another epic investigation and published "Outsourcing the Pentagon: Who's Winning the Big Contracts" in the fall of 2004. We examined 2.2 million contract actions over six fiscal years, totaling $900 billion in authorized expenditures, and discovered that no-bid contracts had accounted for more than 40 percent of Pentagon contracting, $362 billion in taxpayer money to companies without competitive bidding. In other words, the multi-billion dollar no-bid contracts Halliburton had received actually weren't such an aberration, unfortunately. Indeed, we found contractors had written the Department of Defense budget, were guarding our soldiers in the Green Zone in Iraq, had participated in the Abu Ghraib interrogations and when the Secretary of Army wanted to find out just how many contractors were being employed, he naturally hired a company to find it out.

Were there howls of protest in Washington, aggressive investigative Congressional hearings, angry protestations from the companies, substantial news media attention about these findings? No. The silence was deafening.

That was then, and this is now, 2010, in the historic "change we can believe in" administration of Barack Obama. The issue of outsourcing our democracy is not remotely of interest to the latest occupants of 1600 Pennsylvania Avenue. And that should not exactly be surprising, in the entwined mercenary culture of Washington. For example, according to the Center for Responsive Politics, political contributions to the 2008 presidential candidates doubled compared to 2004, $1.748 billion up from $880.5 billion, and candidate Obama raised more than twice what incumbent President George W. Bush collected in 2004. Gosh, did inflation go up that much?

The problem isn't just the increasing price of power in this democracy and what that means for a government theoretically, according to Lincoln, "of the people, by the people, for the people." Another protector of the public, the vaunted Fourth Estate, could be all over this subject, a "uniquely qualified," "trusted source" of news for the American people, holding those in power accountable. Where are the traditional journalistic watchdogs in all this? Early retired, tightly leashed or asleep.

Arianna Huffington is absolutely right to flag the smarmy preening of former Treasury Secretary Robert Rubin, writing a 2,500-word essay about the economy in Newsweek, his accompanying bio conveniently failing to mention his own key leadership role at Citibank, which had to be saved by the America people. Of course that was shameless and self-serving of Rubin, and is emblematic of the new class of influencers Wedel has dubbed as "flexians," but a theoretically independent news media outlet, Newsweek, also shouldn't have allowed that kind of misrepresentation.

Nor should America's TV networks have allowed dozens of former generals to pose on the air as "independent" analysts about the Iraq war while simultaneously becoming rich as defense industry consultants, quietly traveling on then Vice President Dick Cheney's private jet to tour Guantanamo or getting daily talking points from the Pentagon. Did you notice how many national television networks apologized to the public after David Barstow's terrific Pulitzer Prize-winning New York Times series exposing this farce? None, of course, but they could have at least acknowledged it as a news story, which they also didn't do. So much for news media accountability -- but when exactly have we had that?

Bravo to Janine Wedel for this significant book, and to Arianna Huffington for calling it to the public's attention.

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