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Shadow Elite: BP And Government's Titanic Failure -- Outsourcing Its Talent (And Power)

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We can all rest easy. One of the experts in Washington this week to brainstorm solutions to the oil leak knows a thing or two about blockbuster disasters ..... Titanic director James Cameron. It sounds absurd, but actually it may be an inspired idea: Cameron is an expert at underwater filming and remote vehicle technologies. He now says BP turned down his offer to help. But he wasn't turned away by the EPA: the truth is that government needs as much expert talent as it can get.

President Obama himself has made it clear who has the know-how, and it's not a government agency or even the world's mightiest military: he said last week that the Defense Secretary and the Chairman of the Joint Chiefs of Staff told him that "the federal government does not possess superior technology to BP." And while many Americans insist that the U.S. government should step in and take over, Coast Guard Commandant Thad Allen, who is heading the federal response to the spill, essentially said, get real: "to push BP out of the way would raise a question, to replace them with what?" The upshot: the government has little choice but to rely on BP, the company federal investigators are now probing on possible criminal charges.

It begs the question: why is there no effective counterweight within the government able to step in when disaster strikes, or to keep tabs on industry behavior to prevent disasters from happening? It is because over the past 3 decades, government talent, experience, technological know-how and power has been overtaken by private companies. The work and status of regulators and other government employees has been increasingly demeaned, devalued, or outsourced to contractors beholden to a bottom line, and key agencies haven't kept up with the vital technology. That has left the government without the competitive tools, manpower, resources or mandate - businesses are "superior," to hear the U.S. military tell it, and often even drive the regulatory agenda to suit their interests (Here's the latest Huff Post reporting on BP's formidable lobbying machine.) Janine examines these trends up close in her book Shadow Elite.

We seem to have taken it as a given that some business activities are so complex that it would be wildly impractical and expensive to acquire and retain the talent and technology that would allow government oversight power to keep up. How much would it cost the government to understand all the relevant off-shore drilling technology at play in the Gulf of Mexico? Or to grasp the very latest workings or "innovations" of Wall Street? Or have public servants regulating the car industry actually know the guts of the computer programs that now run our vehicles? If you think all that would cost too much, just total up the costs - in lives, livelihoods, life savings and tax dollars that have been lost in these three cases: the oil spill, the economic collapse, and the Toyota recall. It only seems impractical or expensive until disaster strikes.

In the case of the oil spill, one proposal from Interior Secretary Ken Salazar is to create, as described in the New York Times, "a kind of parallel technological universe in which government would have .. robots .. and ... other tools necessary to help control a big blowout." Try to imagine the political response to that idea before the April blowout: it's too expensive, government doesn't need these high-price gadgets, the industry can handle this.

That attitude traces back to at least the Reagan era, when politicians began attacking government and regulatory power -- determined to restrain the growth of government, or, rather, give the appearance of restraint. The irony is that politicians actually created a bigger, more expensive and far less accountable shadow government, by farming out vast amounts of work to businesses.

Today upwards of three-quarters of the work of federal government, measured in terms of jobs, is contracted out. This has been part of a fundamental redesign of governing: contractors do the work of government but ultimately answer to someone else -- not you, the taxpayer -- but typically a company with an eye on maximizing profits. This may encourage contractors to cut corners on safety or ignore societal consequences. Meanwhile some oversight agencies have grown to look less like regulators and more like arms of the industry they are supposed to be policing, as was the case with the oil drilling "regulator", the Minerals Management Service. And throughout the government, regulatory agencies and beyond, there's been a drain of institutional expertise, information, talent and authority.

Take the CIA, where companies were soliciting active-duty intelligence officers during lunch hour in the cafeteria. (Some were later banned.) CIA director Michael Hayden complained in 2007 that his agency had begun "to look like the farm system for contractors around here." One reporter Tim Shorrock wrote this about top intel officials leaving for the private sector:

It's a privatization of the highest order, in which our collective memory and experience in intelligence -- our crown jewels of spying, so to speak -- are owned by corporate America.

In another corner of the intelligence world, a full 95 percent of workers at the very secret National Reconnaissance Office, which runs U.S. spy satellites, are full-time contractors.

While many knowledgeable public servants have been lured over to the private sector and/or into roles as contractors, those who have chosen public service as their career have been demeaned, either implicitly or explicitly.

An explicit and egregious pattern of devaluing government experience and expertise could be seen at the hands of top players in the administration of George W. Bush. In Shadow Elite, Janine calls them the Neocon core - an informal group of a dozen or so neoconservatives, who've worked with each other in various incarnations for some thirty years to realize their goals for American foreign policy through the assertion of military power. In their drive to invade Iraq, core members sidelined the government process and showed disdain for both career public servants (such as CIA analysts who didn't support their positions) and expertise.

W. Patrick Lang, who earlier served stints as both a Defense intelligence officer for the Middle East, South Asia and Counter-Terrorism and a director of Defense HUMINT (human intelligence collection) for the Defense Agency, recalls a revealing conversation he had with Undersecretary of Defense for Policy and Neocon core member Douglas Feith in his office in early 2001. When Feith learned that Lang is an Arabist, he asked him "Is it really true that you really know the Arabs this well, and that you speak Arabic this well? Is that really true?" When Lang replied in the affirmative, Feith responded "That's too bad."

Feith's comment is a glaring example of contempt for government expertise. More subtle was the case of the Clinton administration's plan to "reinvent government". The implication was that federal workers -- lumbering, inefficient and risk-averse -- needed business to jump-start (or replace) them. The Clinton White House also undermined financial oversight power -- by letting banks diversify into new businesses and by letting derivatives go unregulated -- two key factors in the economic collapse.

As for the oil industry, it had effectively hijacked its regulator -- using its power to argue, conveniently, that only they, the regulated, had the expertise to regulate themselves. Unfortunately, they were largely right: it appears now that the U.S. has little choice but to rely on BP for the expertise to oversee the mess they made. This makes further mockery of Kentucky's Republican Senate candidate Rand Paul, who recently blasted the administration as anti-business and "un-American" for trying to put a "boot heel on the throat of BP." The truth is BP could have used the heel well before the spill. But after decades of ceding power to private industry, the government doesn't have any boots left in the closet.

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