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P3s: Larry Summers's Progressivism?

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A couple days ago, I posted something here on the Howard Dean/Stephen Goldsmith joint effort to promote excellent P3s. I received many follow-ups off-line wondering whether, given the deservedly controversial character of P3s, they were a good idea for America.

Where did P3s come from? Are they just Reaganomics painted with the warm bipartisan glow of accountability and grassroots activism? Can P3s be progressive?

In 1988, Lawrence Summers, then a 34 year-old Harvard University Professor, was an adviser of Governor Michael Dukakis in his run for president against Vice President George H. W. Bush. Summers, described himself as an "eclectic Keynesian." P3s were at the heart of this approach.

In an interview with Financial World in 1988, Summers stated his convictions: "I believe in 'leveraged liberalism.'" He went on to explain how, in an era of budget constraints, we could "achieve social objectives with minimal government spending.: This wasn't however just any privatization.

The idea was that government should not tell the private sector how to run public works through service contracts. Rather, the "ideas have to bubble up rather than bubble down." In other words, the government is not there to raise investment dollars. Instead, Summers argued: "Government money should only go where substantial sums of private money are available." With the financial crisis and budget deficits, this off-balance sheet solution to creating public works has come back into fashion.

The language of leveraged liberalism pervades our new approach to creating public goods. There is nothing necessarily wrong with this.

However, the tail should not wag the dog. P3s themselves are not inherently progressive.

Many so-called successes have shut citizens out of decision-making processes, been rife with insider dealings, undermined worker job security, displaced large numbers of people without adequate compensation, been economic disasters, produced projects that privatize benefits while under-producing public goods.

Not all projects have done this, of course. Many have promoted progressive goals. However, more often than not, projects have produced public goods because of effective community-driven campaigns. Project planners have dragged their feet and done much screaming to resist change. To paraphrase Frederick Douglass, P3s, from Illinois to Kuala Lumpur, have conceded nothing without demand.

The yardstick of P3 progressivism must be based upon actual practice.