Collaborative governance: Private roles for public goals in turbulent times

Collaborative Governance: Private Roles for Public Goals in Turbulent Times

Volumn , Issue , 2011, Pages

  Donahue, John D ^a   Zeckhauser, Richard J ^a   Breyer, Stephen ^b  

^a HARVARD UNIVERSITY   (United States)

^b NONE

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EID: 84866453203     PISSN: None     EISSN: None     Source Type: Book    
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References (293)

1. Samuel E. Finer, History of Government (Oxford University Press, 1999).
2. Some of our very favorites in This regard are Mancur Olson, The Logic of Collective Action: Public Goods and the Theory of Groups (Harvard University Press, 1965)
3. Robert Axelrod, The Evolution of Cooperation (Basic Books, 1984)
4. Oliver Williamson, Markets and Hierarchies (Free Press, 1975)
5. Ronald Coase, "Theory of the Firm," Economica 4 (1937). Both Coase and Williamson were awarded Nobel Prizes for their work, respectively in 1991 and 2009.
6. Robert Dahl, Who Governs? Democracy and Power in an American City (Yale University Press, 1961). Dahl's 1953 book with Lindblom, Politics, Economics, and Welfare, draws an interesting distinction between "polyarchy-controlled" institutions and "price-system controlled" institutions. Their treatment of polyarchy-controlled institutions deals with government agencies
7. collaborative governance imports private institutions into This domain. In the political science tradition we also admire Robert Putnam, Making Democracy Work: Civic Traditions in Modern Italy (Princeton University Press, 1993) and Bowling Alone: The Collapse and Revival of American Community (Simon and Schuster, 2000), and the work of John Elster, particularly The Cement of Society: A Study of Social Order (Cambridge University Press, 1989). A classic in the network literature is David Knoke and James Kuklinski, Network Analysis (Sage Publications, 1982)
8. an influential later contribution is Timothy Rowley, "Moving beyond Dyadic Ties: A Network Theory of Stakeholder Influences," Academy of Management Review 22, no. 4 (1997). In an example of the network literature with particular relevance to collaborative governance, Kevin McGuire argues that an informal network-originating mostly in elite law schools (nonprofit), seasoned in court clerkships or stints in the solicitor general's office (government), and currently or prospectively belonging to top DC law partnerships (private)-holds special expertise and exercises special influence over the institution at the pinnacle of the judicial branch. "Lawyers and the U.S. Supreme Court: The Washington Community and Legal Elites," American Journal of Political Science 37, no. 2 (May 1993). Some interesting ideas about goal congruence- why it's great to have in collaborative arrangements, and a problem when it's impossible to arrange-come up in William G. Ouchi, "Markets, Bureaucracies, and Clans," Administrative Science Quarterly 25, no.1 (March 1980). Other noteworthy contributions in the political science literature include Julian LeGrand, Quasi-Markets and Social Policy (Palgrave Macmillan, 1990)
9. Barry Bozeman, All Organizations Are Public: Bridging Public and Private Organizational Theories (Jossey-Bass, 1987)
10. R.A.W. Rhodes, "The New Governance: Governing without Government," Political Studies 44 (1996)
11. Anne Schneider and Helen Ingram, "The Behavioral Assumptions of Policy Tools," Journal of Politics 52, no. 2 (May 1990).
12. The Carnegie Endowment's Marina Ottaway explicitly characterizes (and critiques) the Global Compact-which stands as the poster child for collaborative governance on the international plane-as a lineal descendant of the European corporatism that, in a bad decade, can morph into fascism. "Corporatism Goes Global: International Organizations, NGO Networks and Transnational Business," Global Governance: A Review of Multilateralism and International Organizations 7, no. 3 (2001). A classic commentary on urban collaborative governance gone bad is Lincoln Steff ens, The Shame of the Cities (McClure, Philips, and Co., 1904)
13. Jorg Raab and H. Brinton Milward, "Dark Networks as Problems," Journal of Public Administration Research and Theory 13, no. 4 (2003)
14. Julia Sass Rubin and Gregory M. Stankiewicz, "The Los Angeles Community Development Bank: Possible Pitfalls of Public-Private Partnerships," Journal of Urban Aff airs 23, no. 2 (2001).
15. One good example here is Jody Freeman, "Collaborative Governance in the Administrative State," UCLA Law Review 45, no. 1 (October 1997). Martha Minow's work mostly deals with contracting, but there is much to learn from her writings that applies to collaboration as well. Her edited volume Partners, Not Rivals: Privatization and the Public Good (Beacon Press, 2002) and the book Minow and Freeman coedited, Government by Contract: Outsourcing and American Democracy (Harvard University Press, 2009), off er good overviews of how the mainstream (if a bit left -of-center) legal world thinks about these topics. A provocative book from another legal perspective is Jochai Benkler, The Wealth of Networks: How Social Production Transforms Markets and Freedom (Yale University Press, 2006).
16. We have already noted our admiration for Markets and Hierarchies but can also recommend a more recent Williamson piece: "The New Institutional Economics: Taking Stock, Looking Ahead," Journal of Economic Literature 38 (September 2000). Williamson explored the relative virtues of markets and firms in the organization of economic activity. Our volume, by contrast, looks at the merits of organizing activity across the boundary of the public and private sectors, which is why agency theory is critical for its analysis. While the agency-theory literature is enormous, we confidently recommend John Pratt and Richard Zeckhauser, eds., Principals and Agents: The Structure of Business (Harvard Business School Press, 1985). On alliance theory more generally, see Mancur Olson and Richard Zeckhauser, "An Economic Theory of Alliances," Review of Economics and Statistics 48, no. 3 (August 1966): 266-279, and Todd Sandler, Collective Action: Theory and Applications (University of Michigan Press, 1992). Sociologist Victor Nee has done crossover work in the economics arena that draws upon and complements concepts developed by Williamson (and also Mancur Olson), among others. "Norms and Networks in Economic and Organizational Performance," American Economic Review 88, no. 2 (May 1998).
17. Consider, for example, Farok Contractor and Peter Lorange, eds., Cooperative Strategies in International Business (Lexington Books, 1988)
18. Bruce Kogut, "Joint Ventures: Theoretical and Empirical Dimensions," Strategic Management Journal 9 (1988)
19. special issues of Organization Science featuring Mitchell Koza and Arie Lewis, "The Co-Evolution of Strategic Alliances"
20. Africa Ariño and José de la Torre, "Learning from Failure: Towards an Evolution Model of Collaborative Ventures" (which warns that increasingly popular collaborations "have been characterized by a high level of dissatisfaction with their actual outcomes relative to expectations")
21. Anoop Madhok and Stephen B. Tallman, "Resources, Transactions and Rents: Managing Value through Interfirm Collaborative Relationships": Organization Science 9, no. 3 (May-June 1998).
22. Ken G. Smith, Stephen J. Carroll, and Susan J. Ashford, "Intra- and Interorganizational Cooperation: Toward a Research Agenda," Academy of Management Journal 38, no. 1 (February 1995).
23. While work in This area varies enormously in quality, one entirely respectable (and relatively early) collection is Harvey Brooks, Lance Liebman, and Corrine Schelling, eds., Public-Private Partnership: New Opportunities for Meeting Social Needs (Ballinger, 1984). Eugene Bardach's Getting Agencies to Work Together: The Practice and Theory of Managerial Craft smanship (Brookings Institution Press, 1998) deals with intrasectoral collaboration but is otherwise very much part of the intellectual tradition we aim to advance here. Stephen Rathgeb Smith and Michael Lipsky work related terrain in Nonprofits for Hire: The Welfare State in the Age of Contracting (Harvard University Press, 1995), as does John D. Donahue's The Privatization Decision: Public Ends, Private Means (Basic Books, 1989) and parts of The Warping of Government Work (Harvard University Press, 2008). Other noteworthy public-management texts that contribute to This conversation include Barry Bozeman's All Organizations Are Public: Bridging Public and Private Organizational Theories (Jossey-Bass, 1987)
24. David Osborne and Ted Gaebler's Reinventing Government (Addison-Wesley, 1992)
25. Donald Kettl, The Next Government of the United States (Norton, 2008), and indeed most books by Donald Kettl
26. Phillip Cooper's Governing by Contract: Challenges and Opportunities for Public Managers (Congressional Quarterly Press, 2003)
27. Lester Salamon's edited The Tools of Government: A Guide to the New Governance (Oxford University Press, 2002), especially Salamon and Ruth Hoogland, "Purchase-of-Service Contracting," pp. 319-339
28. Steven J. Kelman, "Contracting," pp. 282-318
29. and Paul L. Posner, "Accountability Challenges of Th ird-Party Government," pp. 523-551. Recent books and articles whose concerns and conclusions comport particularly well with ours, or else contrast with them in productive ways, include: Kettl's The Transformation of Governance (Johns Hopkins University Press, 2002)
30. Stephen Goldsmith and William D. Eggers, Governing by Network: The New Shape of the Public Sector (Brookings Institution Press, 2004)
31. R. Scott Fosler, Working Better Together: How Government, Business, and Nonprofit Organizations Can Achieve Public Purposes through Cross-Sector Collaboration, Alliances, and Partnerships (Independent Sector, 2002)
32. Chris Huxham, "Theorizing Collaboration Practice," Public Management Review 5, no. 3, 2003
33. Ann Marie Thomson et al., "Conceptualizing and Measuring Collaboration," Journal of Public Administration Research and Theory 19, no. 1 (2009)
34. David Van Slyke, "Agents or Stewards: Using Theory to Understand the Government-Nonprofit Social Service Contracting Relationship," Journal of Public Administration Research and Theory 17, no. 2 (2007)
35. Barbara Crosby and John Bryson, "A Leadership Framework for Cross-Sector Collaboration," Public Management Review 7, no. 2 (2005)
36. Keith Provan and H. Brinton Milward, "A Preliminary Theory of Interorganizational Network Eff ectiveness," Administrative Sciences Quarterly 40 (1995)
37. Rosemary O'Leary and Lisa Blomgren Bingham, eds., The Collaborative Public Manager: New Ideas for the Twenty-first Century (Georgetown University Press, 2009).
38. These percentages are calculated from Office of Management and Budget, Budget of the United States, Fiscal Year 2010, historical table 15.4, and U.S. Department of Commerce, Bureau of Economic Analysis, National Income and Product Accounts, table 3.10.5, both accessed online in late May 2010.
39. John D. Donahue, "The Wrong Question about Business and Government," Governing, April 28, 2010.
40. The murky boundary between "public" and "private" organizations poses a chronic risk of imprecision. A generation ago two scholars observed that a "number of competing approaches have been used to define the public-private distinction, and each has diff erent implications.... To avoid continuing the confusion, provisions for definition must be considered in planning for future research." James L. Perry and Hal G. Rainey, "The Public-Private Distinction in Organization Theory: A Critique and Research Strategy," Academy of Management Review 13, no. 2 (1988): 185. This is a sensible plea, oft en reprised by other authors, and generally ignored.
41. The comptroller of Texas attempted to strip Unitarianism-one of America's oldest denominations- of its status as a tax-exempt church in 2004, on the grounds of excessive heterodoxy, but reconsidered aft er mild local protests and louder national ridicule. Ken Herman, "Unitarians Get Religious Status aft er Intercession," Austin American-Statesman, May 25, 2004, p. B-1.
42. We discuss port protection in even more detail, invoking a metaphor that we adore, in "The Tummler's Task," a chapter in a forthcoming volume edited by Mark H. Moore.
43. http://www.harrisinteractive.com/harris_poll/index.asp?PID=940.
44. http://www.harrisinteractive.com/harris_poll/pubs/Harris_Poll_2009_01_13.pdf.
45. Howard Pollack, George Gershwin: His Life and Work (University of California Press, 2007), p. 188.
46. Surprisingly, though governments have been around and providing public goods for thousands of years, the underpinnings of the public goods concept were not understood until 1954, when Paul Samuelson wrote "The Pure Theory of Public Expenditure," Review of Economics and Statistics 36, no. 4: 387-389. Samuelson, the first American to win the Nobel Prize in Economic Sciences, died in December 2009 as This book was nearing completion.
47. It is actually always more complex, in that government itself is the agent of the citizenry. In some of our examples we assume that This agency relationship is working reasonably well in others we explore the implications of potential lapses in government's fidelity to citizens' interests for the relationship between government and its private agents.
48. From 1970 to 2008 the average was around 31 percent, ranging rather narrowly from 29 percent (in 1973, 1974, 1999, and 2000) to 33 percent (in 1983, 1991, and 1992). The governmental share bolted its historical range as the overall economy shrank and emergency measures swelled public spending, reaching 36.1 percent in 2009. But we expect This spike to last only a few years. Office of Management and Budget, Budget of the United States Government, Fiscal Year 2011, historical table 15.3.
49. The right decision rule is actually more nuanced. It is worth undertaking a collaboration even if the chance of a substantially better outcome is small, so long as the cost and risk are similarly small. More important, if a successful collaboration can be replicated, with the payoff multiplied, even risky experiments become desirable.
50. State-run colleges and universities would seem to be a salient exception. Despite the fact that they collect most of their funding from the government, they still receive substantial contributions from their alumni. The largest endowments for state universities are those of the University of Texas system ($11.6 billion) and the University of California ($5.2 billion). One possible explanation is that they are in a sector (higher education) where they have privatesector counterparts that routinely solicit significant alumni donations. Th us contributing to one's alma mater seems to be standard practice. Interestingly, and consistent with our theory that generosity comes only with control, major portions of most of the largest endowments have actually been privatized. Th at is, private foundations own and have responsibility for these funds. They award them to special purposes, such as athletics or scholarships, as opposed to putting the money into some general fund.
51. These two broad rationales for collaboration-better outcomes and more resources- frequently work in tandem. Individuals and institutions may predict that their involvement will produce better outcomes-and thus a superior return on resources-which will amplify their willingness to contribute resources to the enterprise.
52. See John D. Donahue, "Parks and Partnership in New York City A: Adrian Benepe's Challenge" (Harvard University, Kennedy School of Government Case Program, 2004), and also Rebuilding Central Park: A Management and Restoration Plan (MIT Press, 1986).
53. Public Law 105-220, 112 Stat. 936.
54. For one perspective, see John D. Donahue, Lisa Lynch, and Ralph W. Whitehead, Jr., Opportunity Knocks: Training the Commonwealth's Workers for the New Economy (Massachusetts Institute for a New Commonwealth, 2000). For a more detailed assessment of an earlier but closely related legislative approach, see Larry L. Orr et al., "Does Training for the Disadvantaged Work? Evidence from the National JTPA Study" (Apt Associates, Bethesda, MD, 1994).
55. The basic terms of the choice between internal production and contracting-out are described in John D. Donahue, The Privatization Decision: Public Ends, Private Means (Basic Books, 1989), chap. 5.
56. Eff ective contracting is a challenging task. The government encounters a range of risks: erring in determining its requirements, mishandling the translation of these requirements into contractual terms, choosing poorly among competitors, and inadequately monitoring the provider's performance. With security, or any protective measure, a distinctive contracting challenge is that it protects against low-likelihood events. Little is learned when such events do not occur. Th us absent eff ective monitoring of, say, private airline security firms in 2001, deficient performance may make itself known only aft er a disaster, as the United States saw on 9/11.
57. This general theme appears in the literature of regulation as relating to the preference for performance standards over specification standards. Performance standards give the regulated firm the ability to determine how best to meet the requirements of the regulation.
58. In Aesop's original fable, there are four animals, and the lion takes everything. We deal primarily with a two-animal case-government and its private collaborator-and use "lion's share" in its currently accepted meaning, albeit one faithless to Aesop, namely, the largest portion
59. The sum total of gains and losses by diff erent parties needn't be zero. Indeed, if a firm utilizes its discretion to gain market power, others will lose more than it gains.
60. We thank Brian Sullivan, the CEO of Recovery Engineering over its entire career, for information. Zeckhauser, his thesis adviser, served on the board of the company.
61. Other firms tempted to bid on the production contract would need to include a factor in their bid to cover any costs that they didn't know enough about to estimate correctly. Recovery Engineering's information advantage almost certainly deterred some competitors and led lessinformed firms to set their production-phase bids far too high. The firm's competitors were consciously seeking to avoid what game theorists label the "winner's curse," a misfortune oft en experienced by individuals who win the bidding at a traditional "high-price wins" auction, say, for a piece of furniture. The cursed fail to draw the appropriate inference that their win implies that everyone else had a lower valuation than they did, implying that they should have curbed their estimate about the quality and value of an item.
62. Our desalinator story has a very happy ending for Recovery Engineering, for consumers, and hence for the government. Building on its initial success with specialized purifiers for military applications, it moved into the much larger market of water filters for home use, developing the PUR brand. This fostered competition in that market, where Brita then had an exceptional market share, leading to lowered prices and improved quality for consumers. The firm eventually grew to seven hundred employees, went public, and in 1999 was sold to Procter & Gamble.
63. To be fair, Admiral Th ad Allen, the federal point person on the BP spill, had extensive experience responding to catastrophe as the temporary deputy to the head of the Federal Emergency Management Agency in the recovery aft er Katrina.
64. In the charter school one of us was involved in launching, the statewide standardized tests were generally viewed with contempt by the students, and it was considered a point of honor among the brightest to refuse to take them seriously.
65. If we had merely assigned chapters to the individual better able to write them, the book's style would have wobbled back and forth. In fact, we collaborated heavily on every component to ensure that both sets of preferences were well served-a more costly approach than government can pursue in most collaborations.
66. One of us has framed This as a distinction between the intensive accountability that characterizes the market economy and the extensive accountability that characterizes government. See John D. Donahue, The Warping of Government Work (Harvard University Press, 2008), chap. 5, and also "The Right Kind of Accountability," Governing, April 16, 2008.
67. Katherine McIntire Peters, "U.S. Port Security Measures Cover the Waterfront," Government Executive, September 10, 2004.
68. U.S. Government Accountability Organization report GAO-04-838, "Maritime Security: Substantial Work Remains to Translate New Planning Requirements into Eff ective Port Security" (June 30, 2004), p. 4.
69. U.S. Government Accountability Office, "Nuclear Waste: Action Needed to Improve Accountability and Management of DOE's Major Cleanup Projects," GAO-08-1051 (September 2008).
70. An alarming photo showing the bomb factory's proximity to Denver is on p. 47 of Kim Cameron and Marc Lavine, Making the Impossible Possible: Lessons from the Cleanup of America's Most Dangerous Nuclear Weapons Plant (Berrett-Koehler Publishers, 2006).
71. U.S. Government Accountability Office, "Nuclear Cleanup of Rocky Flats: DOE Can Use Lessons Learned to Improve Oversight of Other Sites' Cleanup Activities," GAO-06-352 (June 2006), p. 8.
72. Chap. 3 of Cameron and Lavine, Making the Impossible Possible (pp. 75-99), deals with This in depth, though its hagiography is both a little shallow and rather tilted toward the private players in the collaboration.
73. U.S. Government Accountability Office, "Nuclear Cleanup of Rocky Flats," pp. 4-5, 17, 20-22, 56 and Cameron and Lavine, Making the Impossible Possible, chaps. 6 and 7.
74. U.S. Government Accountability Office, "Nuclear Cleanup of Rocky Flats," p. 4.
75. NASA eventually shift ed its aspirations from oversight to what it called "insight"-a less intensive form of monitoring that left much to the contractor's discretion. Some shuttle managers, intensely concerned that the growing knowledge gap between NASA and United Space Alliance imperiled flight safety, called for eff orts to reunite decision-making authority with flight operations, either by unwinding the delegation or by making shuttle operations more conventionally private.
76. This paragraph draws on technical material summarized in Gunnar Arbman et al., "Eliminating Stockpiles of Highly Enriched Uranium" (Swedish Nuclear Power Directorate, April 2004), accessed April 2006 at Pugwash Conference Web site, http:/www.pugwash.org/reports/ nw/heu-200415.pdf, pp. 13-14.
77. This paragraph draws on data published by the Nunn-Turner Initiative, at http://www.nunnturnerinitiative.org/db/nisprofs/russia/fissmat/heudeal/heudeal.htm, accessed February 2006.
78. Richard A. Falkenrath, "The HEU Deal and the U.S. Enrichment Corporation," Nonproliferation Review, Winter 1996, p. 62.
79. Statistics and historical facts in This paragraph are from Marc Humphries, "Privatizing the United States Enrichment Corporation," CRS Issue Brief 95111 (Congressional Research Service, December 4, 1996). At the time it was spun off, USEC (like many Energy Department units) was heavily outsourced, with a nucleus of around 160 government employees supervising several thousand Lockheed-Martin contract employees who actually ran the enrichment facilities.
80. Quoted in Eric Moses, "Uranium, Inc.," Government Executive, April 1, 1997.
81. Terry Langeland, "Megatons to Mega-problems," Bulletin of the Atomic Scientists 58, no. 3 (2002): 54.
82. David M. Schanzer of Janney Montgomery Scott, quoted in Daniel Gross, "Turning Arms into Energy, If Not Much Cash," New York Times, January 13, 2002, sec. 3, p. 4.
83. Sale price from Langeland, "Megatons to Mega-problems," p. 54
84. GAO reference from Humphries, "Privatizing the United States Enrichment Corporation."
85. Langeland, "Megatons to Mega-problems," p. 55.
86. Details are presented in Nancy Dunne, "U.S., Russia Set for Uranium Deal," Financial Times, February 26, 2006, p. 6, and in Kenneth Bredemeier, "A Nuclear Power Fissure," Washington Post, August 19, 2002, p. E-1.
87. Langeland, "Megatons to Mega-problems," p. 56. See also
88. Falkenrath, "The HEU Deal and the U.S. Enrichment Corporation," p. 63.
89. Friedrich Nietzsche, "The Wanderer and His Shadows," in Human, All Too Human: A Book for Free Spirits, trans. R. J. Hollingdale (Cambridge University Press, 1996), p. 360.
90. The U.S. Department of Education defines charter schools as institutions that "provide free public elementary/secondary education under a charter granted by the state legislature or other appropriate authority." National Center for Education Statistics Statistical Analysis Report, Overview of Public Elementary and Secondary Schools and Districts: School Year 2001-02 (U.S. Department of Education, May 2003), Glossary of Key Terms.
91. Data from U.S. Department of Education, National Center for Education Statistics, National Assessment of Educational Progress, Long-Term Trend Assessment, at http://nces.ed.gov/nationsreportcard/ltt/results2004/, accessed December 2005.
92. Charter schools typically face a financial handicap in that state and local payments cover current spending only, leaving them in the lurch for capital costs. Countering This, to a degree, charters tend to have better access to grants and donations than do conventional public schools.
93. The school's Web site is http://www.agassiprep.org/. In his autobiography Agassi writes with pride and passion of the school, and reports that on any given day Shaquille O'Neal, Lance Armstrong, or Muhammad Ali might drop by. Open: An Autobiography (Alfred A. Knopf, 2009), p. 381.
94. The recent large-scale study that is most negative on charter schools, the CREDO (2009) study from Stanford University, looks at evidence from sixteen states. In five, charters outperformed traditional public schools in six they underperformed. See http://credo.stanford.edu/reports/MULTIPLE_CHOICE_CREDO.pdf, and, for our online appendix to This chapter, http://press.princeton.edu/titles/9401.html.
95. In principle, such tasks can be outsourced quite readily, though This occurs rather rarely in practice. See Donahue, The Warping of Government Work, 101-136, for some evidence and observations on This issue.
96. cIn the language of Chester Finn and his colleagues, "Although answerable to outside authorities for their results... they are free to produce those results as they think best." Chester Finn, Jr., et al., Charter Schools in Action (Princeton University Press, 2000), p. 15.
97. SRI International, "Evaluation of the Public Charter Schools Program: Final Report," Report prepared for the Office of the Deputy Secretary (U.S. Department of Education, November 2004), p. 32. As of 2002, nearly one-fift h of charters relied on management firms for at least some services See also Alex Molnar et al., Profiles of For-Profit Education Management Organizations 2004-05, Seventh Annual Report (Education Policy Studies Laboratory, Arizona State University, Tempe, Arizona, April 2005), p. 13, table 2.
98. In This view the community has no quarrel with whatever definition of "education" a family happens to embrace, but simply wants to make sure they consume at least a certain amount of it per child. If This is the only rationale behind public spending on K-12 education, the exercise of preference discretion by charter schools is not really a problem, since any educational vision that attracts students is as valuable as any other. Note, though, that if This is the only rationale behind public spending for education, a shift to pure school vouchers would be a simpler and equally valid reform strategy.
99. If test results captured all that matters about charter performance, and if a sturdy accountability structure motivated charter schools to maximize test scores, then dealing with preference discretion would be a minor chore. It would not matter whether a charter school's teachers and administrators inwardly cherished ethnic pride, the Socratic method, phonics, self-esteem, traditional values, artistic creativity, or Esperanto. They would either align their preferences with the production of high test scores, or suppress them. However, management becomes much more complex as the spectrum of legitimate educational missions widens, implying that tests can capture only a fraction of what matters.
100. Nitpickers could observe that inferior performance by lottery losers might be due to some discouragement eff ect, not an inferior education. Alternatively, inferior performance by winners might be due to laziness, because they "knew" they would be lucky in life.
101. U.S. Government Accountability Office, Report to the Secretary of Education, "Charter Schools: To Enhance Education's Monitoring and Research, More Charter-School Level Data Are Needed," GAO-05-5 (January 2005), p. 21, table 4.
102. SRI International, "Evaluation of the Public Charter Schools Program: Final Report," p. 18.
103. The challenges presented by incomplete information flow have motivated an extensive literature in economics. The classic article is George J. Stigler, "The Economics of Information," Journal of Political Economy 69, no. 3 (1961): 213-225.
104. Joseph E. Stiglitz, "The Contributions of the Economics of Information to Twentieth Century Economics," Quarterly Journal of Economics 115, no. 4 (2000): 1441-1478. Major contributions to This field have been made by George Akerlof, Kenneth J. Arrow, and A. Michael Spence. All authors cited here have won the Nobel Prize for their work.
105. There is a large literature, both theoretical and empirical, on the advantages and risks of the characteristically American collaborative approach to workforce development. For an excellent empirical overview, see Howard Bloom et al., "The Benefits and Costs of JTPA Title II-A Programs: Key Findings from the National Job Training Partnership Act Study," Journal of Human Resources 32, no. 3 (Summer 1997): 549-576.
106. Cary Coglianese and David Lazer, "Management-Based Regulatory Strategies," in Market-Based Governance: Supply Side, Demand Side, Upside and Downside, ed. John D. Donahue and Joseph S. Nye, Jr. (Brookings Institution Press, 2002).
107. Justice Breyer's Harvard Law School class, taught with Richard Zeckhauser from the 1970s till the 1990s. Background and basic information on the Cooperative Compliance Program can be found in "Motivating Job Safety," chap. 10 of Making Washington Work: Tales of Innovation in the Federal Government, ed. John D. Donahue (Brookings Institution Press, 1999).
108. Susannah Zak Figura, "Safer Days Ahead," Government Executive, March 1, 2000.
109. Each sector faces its own sequence of decisions over how to handle its share of the work. Within the public sector, how should responsibilities be parceled out across federal, state, and local government, and between military and civilian units? Within the private sector, should each company handle its own security, or should industry-spanning associations defend against shared threats?
110. The woefully inadequate and terribly coordinated policies in the few days surrounding Hurricane Katrina in August 2005 show the impossibility of developing eff ective collaborative arrangements predominantly on the fly. Hurricanes are diff erent, to be sure, from terrorism threats, but in many ways simpler. For example, they give considerable advance warning.
111. From "Politics as a Vocation," in From Max Weber, ed. H. H. Gerth and C. Wright Mills (Oxford University Press, 1946), p. 78.
112. Thomas Hobbes, Leviathan (Oxford University Press, 1881), p. 95.
113. The Pennsylvania Associators figure in David Hackett Fisher, Washington's Crossing (Oxford University Press, 2004). Their origins and organization are described on pp. 26-28.
114. Robert H. Patton, Patriot Pirates: The Privateer War for Freedom and Fortune in the American Revolution (Pantheon Books, 2008).
115. Peter Singer, Corporate Warriors (Brookings Institution Press, 2002).
116. Sometimes the choice of public or private security arrangements is less consequential than it seems. Paul DiMaggio and Walter Powell have argued that institutions performing similar tasks tend to conform to similar models of operation, whatever their formal structure. Paul J. DiMaggio and Walter W. Powell, "The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields," American Sociological Review 48, no. 2 (1983): 147-160.
117. Security is very likely better than it was prior to September 11, 2001-though the rarity of hijacking both before and since makes quality in general and risk levels in particular hard to measure-but it is less clear that the increment of safety is worth the sharp increase in costs, or that the TSA performs better than would have an upgraded private system. The gross flaws in the previous contractual model did not preclude structuring a sturdier arrangement. The work, however vital, is readily specified: inspect every passenger and every piece of luggage to ensure that no weapon can be smuggled onto an airplane. Contractual provisions could mandate (at a commensurate price) that screeners be citizens, college graduates, psychiatrists, or martial-arts experts, or meet whatever other qualifications are judged essential. Evaluation is much more straightforward for airport screening than for many other functions that are delegated contractually. The performance of individual screeners can be gauged through devices, now routinely in use, that periodically project the phantom image of a gun, knife, or bomb onto an innocent X-ray screen. The performance of screening contractors could have been evaluated, to almost any desired degree of stringency, by a corps of plainclothes inspectors constantly testing security with dummy weapons or bombs and levying painful financial penalties for any lapse. Several large firms already operate in the industry, and entry is relatively easy, making airport screening far more competitive than many other outsourced functions. Such arrangements are not merely hypothetical they were and are the norm in many European countries that are sadly familiar with terrorism.
118. The public's attitudes toward the appropriate provision of security may be strongly shaped by the most recent dramatic failure. Government eff orts to deal with Hurricane Katrina, which bring to mind many comparisons with protection against terrorism, may have dampened enthusiasm for government as the guarantor of security. High-profile failure may promote a "throw the rascals out" attitude that drowns out analysis.
119. A systematic hazard involving payoff discretion is embodied (though experts diff er as to the degree) in the Terrorism Reinsurance Act of 2002 (TRIA). This law was enacted in response to complaints that private terrorism coverage had become expensive, and sometimes unavailable, in the wake of the 9/11 attacks. There were respectable arguments to be made for and against major government participation in the insurance market. TRIA ended up socializing the upper range of losses from terrorism damage to property, that is, making the government reimburse such losses. Therefore, insurance companies will get little payoff for reducing their exposure to the catastrophic risks for which government bears most of the cost. This will dampen those companies' incentives to price their services high enough to motivate the insureds to invest in risk reduction. Kent Smetters of Pennsylvania's Wharton School has suggested that under TRIA, private owners of vulnerable assets will underinvest in security when much of the cost of a catastrophic incident falls to government. TRIA's origins, provisions, and incentive eff ects are discussed in Smetters, "Insuring against Terrorism: The Policy Challenge" (paper prepared for January 2004, Conference of the Brookings-Wharton Papers on Financial Services, draft of February 4, 2004).
120. Eric Lipton, "Audit Faults U.S. for its Spending on Port Defense," New York Times, February 20, 2005, sec. 1, p. 1.
121. This would be the case whether the urban port is owned by a private firm or by a public agency such as New York's Port Authority.
122. John W. Pratt and Richard J. Zeckhauser, eds., Principals and Agents: The Structure of Business (Harvard Business School Press, 1985 paperback, 1991).
123. House Appropriations testimony of May 10, 2001, quoted in Kirsten Lundberg, "Smarter Foreign Aid?" KSG Case Program, C-15-04-1778 (Harvard University, 2004), p. 8.
124. Quoted in Stephen Mufson, "Holmes Calls for Abolishing AID, Increasing Support for Taiwan," Washington Post, January 12, 2001, p. A6.
125. Holly Wise, quoted in Lundberg, "Smarter Foreign Aid?" p. 5
126. Global Development Alliance, 2008 report, USAID, December 2007.
127. General Accounting Office, "Student Loans: Direct Loans Could Save Money and Simplify Program Administration," HRD-01-144BR (September 1991).
128. Statements on Introduced Bills and Joint Resolutions, Senate, August 11, 1995, The Congressional Record via THOMAS, accessed November 24, 2005, http://thomas.loc.gov.
129. Extension of Remarks, June 9, 1995, The Congressional Record via THOMAS, accessed November 24, 2005, http://thomas.loc.gov.
130. Jonathan D. Glater and Karen W. Arenson, "Lenders Sought Edge against U.S. in Student Loans," New York Times, April 15, 2007.
131. General Accounting Office, "Student Loans: Direct Loan Default Rates," GAO-01-068 (October 2000), p. 8.
132. Glater and Arenson, "Lenders Sought Edge against U.S. in Student Loans."
133. Karen W. Arenson, "Columbia to Pay $1.1 Million to State Fund in Loan Scandal," New York Times, June 1, 2007.
134. "The Widening Student Loan Scandal" (editorial), New York Times, April 8 2007.
135. Sam Dillon, "Spellings Rejects Criticism on Student Loan Scandal," New York Times, May 11, 2007.
136. Tamar Lewin, "House Passes Bill to Expand Student Aid," New York Times, September 17, 2009.
137. Leslie Crawford, "Valencia's Formula for Getting Ahead Is by Th inking Big," Financial Times, October 26, 2005, p. 6, and "Historia de las ciudad de las artes y las ciencias," at http:// www.cac.es/historia/index.htm, accessed November 2005.
138. Kirsten Lundbert, "Too Many Parents: The Governance of the Rose Kennedy Greenway," Kennedy School Case Program, 2006.
139. Anthony Flint, "City, Pike Seen Near Parks Plan
140. Dismantling of Artery Spurs Race for Role," Boston Globe, February 21, 2004, p. A1.
141. Thomas Palmer, "10 Named to Govern and Raise Money for Greenway," Boston Globe, December 1, 2004, p. C5.
142. "A Problem with the Greenway Solution," Boston Business Journal, July 16, 2004.
143. An Armenian Heritage Park, with a fountain and sculpture in remembrance of the Armenian genocide and all subsequent genocides, and a labyrinth in grass and stone that represents life's journey and that will take thirty minutes to traverse, was expected to add some interest when it opens in late 2010.
144. The 1962 speech is excerpted, and its context described, in Edward R. Annis, Code Blue: Health Care in Crisis (Regnery Gateway, 1993), pp. 67-70.
145. Lawrence R. Jacobs, "Institutions and Culture: Health Policy and Public Opinion in the U.S. and Britain," World Politics 44, no. 2 (1992): 203.
146. All figures in This paragraph are drawn from or calculated from data in Statistical Abstract of the United States 2010, tables 127, 134, and 215.
147. Quoted in Jacobs, "Institutions and Culture," p. 197.
148. Robert Ball memo of 1961, quoted in Jacobs, "Institutions and Culture," p. 204.
149. Timothy Stoltzfus Jost, "Medicare and the Joint Commission on Accreditation of Healthcare Organizations: A Healthy Relationship?" Law and Contemporary Problems 57, no. 4 (1994): 25
150. Barry Meier, "Sparks Fly over Industry Safety Test," New York Times, December 22, 1995, p. 3-1.
151. Susanna Duff, "Two Vermont Hospitals Abandon JCAHO Accreditation," Modern Healthcare, August 19, 2002, p. 20.
152. The Center for Medicare and Medicaid Services was long known as the Health Care Finance Administration.
153. See "Remarks by Dennis O'Leary, M.D." from July 20, 2004, reproduced at http://www.jcaho.org/news+room/press+kits/gao/talkingpoints.htm.
154. FY 2005 outlays for these seven agencies combined were about $154 billion, as calculated from Office of Management and Budget, Budget of the United States, Fiscal Year 2006, historical table 4-1, "Outlays by Agency 1960-2010."
155. Office of the Inspector General, "The External Review of Hospital Quality: The Role of Accreditation" (Department of Health and Human Services, July 1999), p. 13.
156. Michael J. Astrue, "Health Care Reform and the Constitutional Limits on Private Accreditation as an Alternative to Direct Government Regulation," Law and Contemporary Problems 57, no. 4 (1994): 75.
157. July 20, 2004, O'Leary remarks from press release cited above, n. 35.
158. Dennis O'Leary's compensation of $860,000 from Modern Healthcare, May 2, 2005, p. 26
159. Mark McClellan's of just under $137,000 from Committee on Government Reform, U.S. House of Representatives, 108th Congress, 2nd session, "United States Government Policy and Supporting Positions, 2004 Edition" (U.S. Government Printing Office, 2004).
160. David R. Hodge, "Spirituality and People with Mental Illness: Developing Spiritual Competency in Assessment and Intervention," Families in Society 85, no. 1 (January-March 2004): 36-44.
161. Walt Bogdanich, "Small Comfort: Prized by Hospitals, Accreditation Hides Perils Patients Face," Wall Street Journal, October 12, 1988, p. 1
162. Gilbert M. Gaul, "Accreditors Blamed for Overlooking Problems," Washington Post, July 25, 2005, p. A-1.
163. In 2004, the Massachusetts Group Insurance Commission initiated a system under which health plans had to rate their doctors in diff erent categories based on both quality and economy. Patients going to doctors in lower-ranked categories incur higher deductibles. See http://www.pioneerinstitute.org/pdf/ROE13.pdf. The main Web page for the initiative is http://www.mass.gov/gic/annualreportb.htm.
164. In parallel fashion, teachers quickly learn that their interests are not served if they give failing or even marginal grades.
165. Some parts of This section are adapted from John D. Donahue, "Parks and Partnership in New York City," Kennedy School of Government Case Program CR16-04-1743 and CR16-04-1744 (Harvard University, 2004).
166. Moses's workforce shrank considerably from This federally funded high-water mark during the Great Depression and by 1963 was only around ten thousand
167. Anna Quindlen and Michael Goodwin, "New York City Park System Stands as a Tattered Remnant of Its Past," New York Times, October 13, 1980, p. 1.
168. Details on the formation of the Central Park Conservancy are drawn from interviews from a lengthy presentation by Elizabeth Barlow Rogers, now on the faculty of Bard College, available electronically at http://www.elizabethbarlowrogers.com/lecture/index.html and from historical material on the Conservancy's Web site at http://www.centralparknyc.org/thenandnow/ cpc-history/.
169. Rebuilding Central Park: A Management and Restoration Plan (MIT Press, 1986)
170. "Agreement between the Central Park Conservancy and City of New York, Parks and Recreation," dated and signed February 11, 1998.
171. In the third year and beyond, the Conservancy would also receive half of any increase, over a baseline, in net revenues the city earned from concessions in the park, but total city funding was capped at $4 million.
172. "Agreement," pp. 15-16.
173. Nearly forty major movies have filmed scenes in Central Park under the Conservancy's stewardship.
174. The Many Faces of Central Park, Central Park Conservancy Annual Report, Fiscal Year 2002 (2003).
175. This section draws on the 2003 brochure cited above, as well as on one author's observations in the fall of 2003. The Many Faces of Central Park, p. 13.
176. Guy Trebay and Eddie Borges, "Central Park Sell Out: With Little Public Input, a Private Elite Is Set to Take Over the Crown Jewel of Urban Parks," Village Voice, October 14, 1997, p. 44.
177. Bette Midler interview in Good Housekeeping, October, 2000, reprinted on New York Restoration Project Web site, http://www.nyrp.org/, accessed January 2004.
178. Peter Hellman, "On Harlem River, Hope Floats," New York Times, October 30, 2003, p. D-9.
179. Figures are from census data accessed in December 2003 from http://www.census.gov/ main/www/cen2000.html: Data Set: Census 2000 Summary File 4 (SF 4)-Sample Data Geographic Area: Census Tract 289, New York County, New York.
180. http://www.nycgovparks.org/sub_about/parks_history/historic_tour/history_reinventing _parks_recreation.html, accessed December 2003.
181. Hellman, "On Harlem River, Hope Floats."
182. Dianne Pucin, "For Women, It's a Whole New Ballgame," Los Angeles Times, November 30, 1998. 1997-2005 championship information at http://www.ncaasports.com/rowing/womens/ history, accessed November, 2005. In 1997, when women's rowing first gained official NCAA status for Title IX purposes, Ivy League schools had won sixteen of the twenty-two past national championships. Dan Brown, "Scholarships Th reaten Ivy's Success in Women's Crew," Yale Daily News, April 8, 1997.
183. http://www.ncaasports.com/rowing, accessed December 2003.
184. NYRP Web site, http://www.nyrp.org/boathouse.htm, accessed December 2003.
185. Hellman, "On Harlem River, Hope Floats."
186. Information on Peter Jay Sharp Boathouse programs, including the regattas, from the New York Rowing Association Web site at http://www.nyrowing.org/peterjaysharprc/rowing _programs.html, accessed in November 2005. Information on the Oxford-Cambridge alumni races from http://www.oxalumny.org/pastevents/archives/2005/04/, accessed November 2005.
187. "Rowing Gains a Following," New York Newsday, November 5, 2005.
188. The federal and state governments also lost tax revenues when donors to the boathouse subtracted their gift s from taxable income. But whether these deductions should be added to the public cost of the boathouse depends on whether donors increased, or simply redirected, their charitable giving at Midler's urging.
189. Historical section of Bryant Park Web site, http://www.bryantpark.org/history/bryant-park -today.php, accessed January 2004.
190. Deirdre Carmody, "Vast Rebuilding of Bryant Park Planned," New York Times, December 3, 1983, p. 1.
191. A business improvement district-or "BID," as it came to be called-would seek the consent of a majority of businesses within a geographically bounded area to levy an incremental tax, or "assessment." (Legally only 49.5 percent of property owners had to consent to a BID before assessments would be mandatory for all businesses in the district, but in practice officials required more like 70 percent agreement before endorsing a BID.) Each BID had to be approved by the state legislature. But once the legislature blessed the arrangement, the supplemental taxes became legal obligations, collected by the government and passed on to the private BID to fund extra street sweeping, security patrols, or other "public services" within the boundaries of the district.
192. These included an environmental impact statement the Uniform Land Use Review Procedure hearings before Community Board 5 the blessing of the City Planning Commission, the Board of Estimate, the Landmarks Preservation Commission, and the Art Commission and approval by the State Legislature. Carmody, "Vast Rebuilding of Bryant Park Planned."
193. "Management Agreement for Bryant Park between the City of New York and Bryant Park Restoration Corporation," July 29, 1985, signed by Mayor Ed Koch, Parks Commissioner Henry Stern, and BPRC Chairman Andrew Heiskell, sec. 4, pp. 7-8.
194. Bruce Weber, "Town Square of Midtown," New York Times, August 25, 1995, p. B-1.
195. "Remodeling New York for the Bourgeoisie," New York Times, September 24, 1995, p. B-1.
196. Weber, "Town Square of Midtown."
197. "Our Mission" section of the BPRC Web site at http://www.bryantpark.org/park-manage ment/mission.php, accessed February 2004.
198. Glenn Collins, "All the Pretty Horses, and a 6-Ton Gear Drive," New York Times, June 1, 2002, p. B-5.
199. Eleanor Blau, "Pigeons on the Pill Bring Cleaner Bryant Park," New York Times, May 28, 1994, p. 23
200. Robert F. Worth, "In Bryant Park, Hawks Are Circling and the Pigeons Are Nervous," New York Times, April 17, 2003, p. D-1. In 1994 Parks Commissioner Henry Stern conceded defeat in the struggle against pigeons in the public park network, saying his department had fought a "long twilight struggle with pigeons, and it's coming out in favor of the pigeons" (quoted in Blau, "Pigeons on the Pill Bring Cleaner Bryant Park").
201. http://www.34thstreet.org/partnership/index.php.
202. http://www.grandcentralpartnership.org/home.asp.
203. Quoted in Terry Pristin, "For Improvement Districts, Restored Alliance with City," New York Times, February 18, 2002, p. B-1.
204. Elaine Louie, "Chronicle," New York Times, August 26, 1995, p. 20.
205. Bryant Park Web site rules page, http://www.bryantpark.org/park-rules.php, accessed February 2004.
206. Weber, "Town Square of Midtown."
207. The brochure also mentioned, on p. 3, that not only the Restoration Corporation but also the parks department had to approve the event. Bryant Park: The Events Guide (Bryant Park Restoration Corporation, 2003).
208. "Bryant Park Restoration Corporation, Proposed Operating Budget with Comparison to Current Year Operations, for the Year Ending June 30, 2004," provided by the New York City Department of Parks & Recreation.
209. Faith Hope Consolo, quoted in Denny Lee, "You're a Hot Park When Everyone Wants Your Name," New York Times, April 27, 2003, p. 14-6.
210. Interview with Donahue, October 16, 2003.
211. Interview with Donahue, September 4, 2003
212. Estimate by Benepe, interview with Donahue, September 4, 2003.
213. This is a rough estimate, based on the assumption that fully loaded personnel costs account for around 80 percent of the parks department's expense budget.
214. "Partnership for a New Generation of Vehicles: A Declaration of Intent," joint press release of September 1993.
215. Details from Kennedy School of Government Case "From Confrontation to Cooperation: How Detroit and Washington Became Partners" (Harvard University, 1997).
216. Justin Hyde, "GM Says Precept Concept Car Achieves 80 mpg in Tests," Associated Press State and Regional Wire Service, Business News section, October 20, 2000.
217. Nedra Pickler, "Partnership May Not Reach Goals for Aff ordable 'Super Car' by 2004," Associated Press State and Regional Wire Service, Business News section, August 13, 2001.
218. Ed Garsten, "Bush Abandons High-Mileage Program for Hydrogen Fuel-Cell," Associated Press State and Regional Wire Service, Business News section, January 9, 2002.
219. One of the authors was the "site visitor" sent by the Innovations in American Government award program in the course of the FDA's successful candidacy for one of the Innovations in American Government awards issued in 1996. Some material in This section draws on the site report.
220. Calculated from Office of Management and Budget, Budget of the United States, Fiscal Year 2006, historical table 3.2, "Outlays by Function and Subfunction, 1962-2010."
221. "Priority" status goes to drugs that promise new therapeutic possibilities, while "standard" is for new competitors to drugs on the market. The time lines listed are for new products there are comparable performance goals for reviews of new facilities or new uses for existing drugs.
222. Performance reports for FY 2004 can be found at http://www.fda.gov/ope/pdufa/report 2004/default.htm. It is important to note that other factors may also explain the acceleration in review. The healTheconomist Ernst Berndt and his colleagues attribute only around two-thirds of the speedup to PDUFA. Ernst R. Berndt et al., "Assessing the Impact of the Prescription Drug User Fee Act on the FDA Approval Process," National Bureau of Economic Research Working Paper No. 10822 (October 2004). Two other scholars note that FDA resources were already rising prior to PDUFA, and attribute much of the increase in approval speed to pressure from patients and their advocates. Daniel Carpenter and A. Mark Fendrick, "Accelerating Approval Times for New Drugs in the U.S.," Regulatory Aff airs Journal 15, no. 6 (June 2004): 411-417.
223. General Accounting Office, "Food and Drug Administration: Eff ect of User Fees on Drug Approval Times, Withdrawals, and Other Agency Activities," GAO-02-958 (September 2002), p. 16.
224. Susan Okie, "What Ails the FDA?" New England Journal of Medicine 354, no. 11 (March 17, 2005): 1063-1066.
225. Calculated from Office of Management and Budget, Budget of the United States, Fiscal Year 2005.
226. General Accounting Office, "Food and Drug Administration: Eff ect of User Fees on Drug Approval Times, Withdrawals, and Other Agency Activities," GAO-02-958 (September 2002), p. 15, fig. 5, and p. 16, fig. 6.
227. John Carey and Amy Barrett, "Lessons from the Vioxx Fiasco," Business Week, November 29, 2004.
228. According to the FDA's inspector general, nearly a fift h of staff ers reported pressure to approve drugs despite concerns. Office of Inspector General, "FDA's Review Process for New Drug Applications: A Management Review," OEI-01-00590 (March 2003). And an internal FDA study cited by the New England Journal of Medicine found that 65 percent of the postmarket studies firms promised to do as a condition of approval were never undertaken. Okie, "What Ails the FDA?"
229. Ricardo Alonso-Zalzibar, "Congress Weighs New Restraints on FDA to Improve Drug Safety," Boston Globe, November 29, 2004.
230. Graham is quoted in Simon Frantz, "How to Avoid Another Vioxx," Nature online (December 4, 2004), at http://www.nature.com/news/2004/041220/pf/nrd1629_pf.html, accessed October 2005.
231. Gardiner Harris, "House Passes Bill Giving More Power to the F.D.A.," New York Times, September 20, 2007, p. A-18.
232. FDA data referenced in Okie, "What Ails the FDA?"
233. See Edith Stokey and Richard Zeckhauser, A Primer for Policy Analysis (W. W. Norton & Company, 1978), which is generally considered to be the pioneering text in the arena of policy analysis.
234. Details of the settlement with Aggregate Industries can be found on the Boston Globe's Web site at http://www.boston.com/news/local/massachusetts/articles/2007/07/28/big_dig_payment _for_fraud_at_50m/. See also the official Transportation Department report at http://www.oig.dot.gov/StreamFile?file=/data/pdfdocs/Aggregate_Plea_PRjuly27.pdf, accessed in November 2007.
235. This theme of selecting for prealigned interests, a mainstay of agency theory in economics, has been extended into the political science literature by our colleague Jane Mansbridge: "A 'Selection' Model of Political Representation," Journal of Political Philosophy17, no. 4 (December 2009): 369-398.
236. Gardiner Harris, "House Passes Bill Giving More Power to the F.D.A.," New York Times, September 20, 2007, p. A-18. Some skeptics still questioned the basic logic of PDUFA. For example, see Jerry Avorn, "Paying for Drug Approvals: Who's Using Whom?" New England Journal of Medicine, 356, no. 17 (April 26, 2007).
237. This section on federal job-training policy prior to the Workforce Investment Act draws on John D. Donahue, The Privatization Decision: Public Ends, Private Means (Basic Books, 1989), chap. 9.
238. The most important evidence on JTPA was assembled in a massive study funded by the U.S. Department of Labor, conducted by a team of researchers assembled by Abt Associates, and published by the Urban Institute. Larry Orr et al., Does Training for the Disadvantaged Work? Evidence from the National JTPA Study (Urban Institute Press, 1996).
239. Donahue was a Labor Department policy official as these debates played out, and broadly favored tilting discretion in the job-training arena toward individuals rather than either public or private institutions.
240. For one sample of the reassessment as the Workforce Investment Act became ripe for reauthorization or replacement, see U.S. Government Accountability Office, "One-Stop Infrastructure Continues to Evolve," report GAO-07-1096 (September 2007).
241. Atul Gawande, the famed surgeon, academic, and New Yorker essayist, has chronicled the improbable impact of simple checklists. Looking across endeavors ranging from operating an airplane to operating on a patient, he observes that most mistakes are those of ineptitude-not making proper use of what we know-rather than ignorance, and he finds that checklists can dramatically reduce such errors. Simply by making sure everyone in the operating room knows each other by name-through a checklisted protocol for introductions before the procedure starts-operating room personnel can cut surgical complications by 35 percent, mostly because team members become more likely to speak up when they spot a problem during the operation. http://www.leanblog.org/2010/01/dr-gawande-checklists-featured-on-npr/. More generally see The Checklist Manifesto (Metropolitan Books, 2009).
242. We are convinced of the metaphor's objective merits but feel bound to disclose that both authors enjoy attending the circus, sometimes together, while one is married to a descendent of P. T. Barnum.
243. Fred Badna, Hartzell Spence The Big Top (Simon and Schuster, 1952), pp. 101- 102.
244. Martin Landau and Russell Stout, Jr., "To Manage Is Not to Control: Or the Folly of Type II Errors," Public Administration Review, March/April 1979
245. See John D. Donahue, The Warping of Government Work (Harvard University Press, 2008), for evidence and arguments on This theme.
246. Both of us, for many years, have been doing what we can to nudge the curriculum of Harvard's Kennedy School toward training in the skills most central to collaboration, for precareer, midcareer, and executive-education students alike.
247. They are not entirely irrational, either, of course. If you care a lot about the norms and relationships and habits of mind that faith-based organizations or for-profit firms or whatever tend to inculcate, you will want there to be a lot of your preferred organizational form, and you might quite logically incorporate This desire into the schedule of preferences that you deploy as a citizen.
248. Amos Tversky and Daniel Kahneman, "Judgment under Uncertainty: Heuristics and Biases," Science, n.s., 185, no. 4157 (September 27, 1974): 1127-1128.
249. The comparative advantage approach was first developed for international trade, assessing which countries had a relative advantage in producing diff erent goods. In the original example, England could gain by trading wool to Portugal for wine as long as it had a relative advantage in wool, even though it could produce either good using less labor than Portugal used.
250. Millennium Poll on Corporate Social Responsibility (Environics International, Ltd
251. Prince of Wales Foundation
252. The Conference Board, Toronto, 1999).
253. Google's strong support for hybrid cars comes to mind. The corporation buys only such vehicles, subsidizes its employees when they buy them, and is subsidizing research in This area. Admirable. But it is also the case that Google owns trivially few cars relative to its $150 billion market capitalization, while the firm has received extraordinary favorable publicity for This move. It has made contributions in the $1 and $10 million range, not much for a company worth as much as Google. If the company committed to an eff ort to diminish by, say, 20 percent the electricity it uses to run its operations, that would represent a major environmental benefit, but it would also be extremely expensive and less newsworthy.
254. Chicago Park District Web site, Grant Park history, at http://www.chicagoparkdistrict.com/ index.cfm/fuseaction/parks.detail/object_id/83AA6305-ADBE-4D8A-B333-004449057EA9, accessed September 2007, and "Say No to Museum in Park" (editorial), Chicago Sun-Times, September 21, 2007, p. 35.
255. This historical background draws on Timothy J. Gilfoyle, Millennium Park: Creating a Chicago Landmark (University of Chicago Press, 2006), pp. 5-30. It is worth starting with a bit of history and noting what did not happen. When Frederick Law Olmsted created Central Park in New York in the second half of the nineteenth century, he worked on commission to the city's government. When Robert Moses reshaped New York's park system-and much of the rest of the city-in the mid-twentieth century, he was a municipal employee. But the startling transformation of that Chicago tract, as the twentieth century gave way to the twenty-first, took place in an era when resources for vast public undertakings were scarce, and expansive minds were more frequently found in the private sector. Diff erent times required a diff erent model.
256. The mayor-who shocked Chicago by declaring that he would not run for reelection in 2011, instead of dying in office like his father-exceeded his father's tenure shortly before This book was published.
257. Andrew Martin and Laurie Cohen, "Millennium Park Flounders as Deadlines, Budget Blown
258. Poor Plans, Constant Changes Slow Progress, Drive Up Price-and City Taxpayers May Have to Help Make Up Diff erence," Chicago Tribune, August 5, 2001.
259. Gilfoyle,Millennium Park, pp. 82 and 364.
260. Martin and Cohen, "Millennium Park Flounders."
261. Noreen S. Ahmed-Ullah, "Millennium Park Wows VIP Visitors: President of Czech Republic, Entourage, Get Whirlwind Tour, Chicago Tribune, April 28, 2006.
262. Martin and Cohen, "Millennium Park Flounders."
263. Andrew Herrmann, "$475 Million Millennium Park Set to Open July 16," Chicago Sun-Times, March 11, 2004, p. 8.
264. http://www.forbes.com/lists/2005/54/58EE.html, accessed September 2007.
265. Tara Burqhart, "4 Years Late, Chicago Gets Millennium Park," Associated Press Online, May 15, 2004.
266. Where no specific source is given, general information on Millennium Park comes from one author's experience with the park and the other's perusal of the detailed Web site at http:// www.millenniumpark.org/.
267. The technological and logistical challenges behind This artistic feat are discussed in Emily Nunn, "Millennium Park's Spouting Faces," Chicago Tribune, January 27, 2005.
268. Anish Kapoor quote from Millennium Park Web site.
269. Zagat Survey online, at http://www.zagat.com/, accessed October 2007.
270. Gilfoyle, Millennium Park, pp. 291-292.
271. Ahmed-Ullah, "Millennium Park Wows VIP Visitors."
272. We recognize that privacy is important, but it should not be an overriding trump card, and existing encryption technologies should be sufficient to adequately protect the privacy of medical records while researchers learn from them.
273. A poorly functioning system, like a patient with many maladies, is hard to diagnose. Minor problems may be thought to be major, and vice versa. What is required, but extremely difficult to conduct in the highly charged political atmosphere surrounding U.S. health care and health insurance, is a dispassionate examination of what is wrong. See Katherine Baicker and Amitabh Chandra, "Myths and Misconceptions about Health Insurance," Health Aff airs 27, no. 6 (September/October 2008).
274. Additional spending will come from the Health Information Technology for Economics and Clinical Health (HITECH) Act, which went into eff ect in February 2010. It provides bonuses be paid to hospitals and physicians who adopt and use qualifying health IT. Letter from Robert A. Sunshine, acting director, CBO, to Charles B. Rangel, chairman, Committee on Ways and Means, U.S. House of Representatives, January 21, 2009.
275. For a thoughtful and optimistic analysis from the progressive point of view, see David M. Cutler, Karen Davis, and Kristof Stremikis, "The Impact of Health Reform on Health System Spending," The Commonwealth Fund, the Center for American Progress, Issue Brief (May 21, 2010), vol. 88.
276. Recent estimates are that as many as half of all patients do not faithfully follow their prescription medication regimens, leading to more than $100 billion spent on avoidable hospitalizations. Better adherence to antihypertensive treatment alone could prevent eighty-nine thousand premature deaths annually. See David M. Cutler and Wendy Everett, "Th inking Outside the Pillbox-Medication Adherence as a Priority for Healthcare Reform," New England Journal of Medicine, April 7, 2010, 10.1056.
277. See David Cutler and Richard Zeckhauser, "Extending the Theory to Meet the Practice of Insurance," in Brookings-Wharton Papers on Financial Services, ed. Robert E. Litan and Richard Herring (2004), pp. 1-53, which argues that extensive coverage for small expenditures means that what is labeled health insurance is not really insurance at all. We could extend This line of reasoning to the U.S. financial system, and its regulation, and identify ways that wrongheaded approaches to collaborative governance contributed to the meltdown of 2008-2009. While diff erent observers allocate blame for the calamity in diff erent directions, we suspect most would agree that the government and the private sector did not have an eff ective collaborative relationship for managing systemwide risks. Indeed, the relationship was so poorly structured that neither party could even recognize its inadequacy. The view of the meltdown espoused by one author of the present volume is reflected in Richard Zeckhauser, "Causes of the Financial Crisis: Many Responsible Parties," in New Directions in Financial Services Regulation, ed. Robert Glauber, Thomas Healey, and Roger Porter (MIT Press, forthcoming).
278. See Gilfoyle, Millennium Park, pp. 278-279, for relevant observations on the Crown family's interaction with Plensa. This practice of marking legacies through public structures was well known in Renaissance Italy. See Jonathan K. Nelson and Richard J. Zeckhauser, The Patron's Payoff: Conspicuous Commissions and Italian Renaissance Art (Princeton University Press, 2008).
279. Gilfoyle, Millennium Park, pp. 164-165.
280. "Our Sky High Cloud Gate," Chicago Sun-Times, May 27, 2005.
281. Mike Robinson, "Former Chicago Park Official Pleads to Fraud at Millennium Park," Associated Press State and Local Wire, September 1, 2005.
282. Figures are from Herrmann, "$475 Million Millennium Park Set to Open July 16," p. 8.
283. Gary Washburn, "Garage at Downtown Chicago Park Failing to Pay Its Way," Chicago Tribune, January 19, 2005.
284. Martin and Cohen, "Millennium Park Flounders."
285. Kelly Kleiman, "Who Owns Public Art?" Christian Science Monitor, March 30, 2005.
286. Daley's control over all major, and many minor, decisions is discussed in Gilfoyle, Millennium Park, p. 351, and in Burqhart, "4 Years Late, Chicago Gets Millennium Park."
287. Gilfoyle, Millennium Park, p. 174.
288. There is no corporate leader among President Obama's top cabinet officers or top officials. A Republican administration would probably have many.
289. For the summary of empirical research on Medicare spending cited in This paragraph, we are indebted to Baicker and Chandra, "Myths and Misconceptions about Health Insurance."
290. Michelle M. Mello, Amitabh Chandra, Atul A. Gawande, and David M. Studdert, "National Costs of the Medical Liability System," Health Aff airs 29, no. 9 (September 2010): 5.
291. One-eighth of the Medicare budget is spent on individuals in the last thirty days of life. See Peter H. Schuck and Richard J. Zeckhauser, Targeting in Social Programs (Brookings Institution Press, 2006), p. 61.
292. It is not just that government, private actors, and the public-in the aggregate, and as individual patients-each have a role to play. As we have seen, This intricate interplay of the three sorts of actors applies to every instance of leverage, successful or not. One reason that health care is especially hard is the requirement that the individual play her role well. Health care involves complexity, uncertainty, and consequences that play out over time, three factors that notoriously bedevil people's eff orts to make good choices in their purchase of insurance or their consumption of health care.
293. Jeffrey Liebman and Richard Zeckhauser, "Simple Humans, Complex Insurance, Subtle Subsidies," in Using Taxes to Reform Health Insurance: Pitfalls and Promises, ed. Henry J. Aaron and Leonard E. Burman, (Brookings Institution Press, 2008), pp. 230-252