Public Administration Review • May/June 2001,
Ronald C. Moe
Congressional Research Service
The Emerging Federal Quasi Government:
Issues of Management and Accountability
In recent years, both Congress and the president have
turned to hybrid organizations (Fannie Mae, National Park
Foundation, Polish-American Enterprise Fund, for example)
to implement public policy and functions that traditionally
have been assigned to executive departments
and agencies. Hybrid organizations, which possess legal
characteristics of both the government and private sectors,
tend to generate considerable support and criticism.
Today [in 2001-rg], associated with the federal government alone, there
are literally hundreds of hybrid entities that have collectively
come to be called the “quasi government” (Seidman
1988). The relationship of this burgeoning quasi government
to elected and appointed officials is of growing interest,
and some concern, as it touches the heart of democratic
governance: To whom are these hybrids
accountable? How is the public interest being protected
against the interest of private parties?
The scope and consequences of these hybrid organizations
have not been studied extensively. Basic definitional
issues resist resolution. Even the language used in
discussing the quasi government is in dispute. Should
quasi government management be discussed in the language
.
.
.
.
.
..
Conclusion: Quasi Management of
the Quasi Government
The arguments between competing management philosophies
aside, is anyone minding the quasi-government
store? Quasi-government hybrids do receive oversight from
time to time. It may be directed by executive agencies (for
instance, Federal Railway Administration oversight of the
Union Station Redevelopment Corporation) or by congressional
committees (such as House Banking Committee
oversight of Freddie Mac), but such oversight is as likely
to be protective or promotional as it is critical. Today, the
Office of Management and Budget is almost exclusively a
budget-driven organization with little capacity to review
and assess the quasi government (Moe 1999a). Comptroller
General David Walker’s statement, cited in the preceding
section, reveals the General Accounting Office has also
moved away from its traditional public law focus on ensuring
agencies’ compliance with general management
laws, instead promoting performance-based exercises. The
General Accounting Office itself is becoming, or trying to
become, the model “performance agency” in the federal
government.
Who is minding the quasi-government store? Nobody.
For entrepreneurs, this is not cause for alarm. The fewer
general management laws (“red tape”) informing the government,
both direct and quasi, the better. Market principles,
emphasizing competition, risk taking, outsourcing, cooperative
agreements, and management autonomy, are encouraging
the growth in the quasi government.
For constitutionalists, on the other hand, growth in the
number and varieties of hybrid organizations and their autonomous
management is a symptom of decline in the
democratic system of government. While government activities
of a commercial character are legitimately subject
to marketization in practice (for example, the Federal Deposit
Insurance Corporation or St. Lawrence Seaway Development
Corporation), the legal wall between the sectors
needs to be maintained as a bulwark of citizen
protection against misuse of government of authority by
parties with private interests.
The American Revolution was ignited, in no small measure,
by the practices of an early quasi-governmental hybrid
entity, the British East India Company. With broad
authority from Parliament, the company collected taxes
according to its own rules. The citizenry of Boston in 1773
staged a “tea party” to express their opposition to this type
of public management. While we do not anticipate another
tea party, there is, nonetheless, sufficient evidence today
of nonaccountable activity going on in the quasi government
to give pause to any concerned citizen.
The debate over the current and future course of the
quasi government is centered on fundamentally opposing
principles. Under limited circumstances, and after meeting
a heavy burden of proof, hybrid organizations may be
a creative response to a specific set of circumstances. By
their very nature, however, hybrids carry risks for a democratic
polity. The management of these risks is among the
most critical government responsibilities. The quasi management
of the quasi government is itself a risk to the citizenry
that needs to be understood, addressed, and ultimately
reduced so that full democratic governance can be restored
to our republic.