The Role of the Private Sector in Government

We spend an awful lot of time talking about what government should and should not do in our society. Most of the time the argument revolves around whether or not if left to its own devices would the private sector do better. Usually proponents of privatization use the logic that privatization provides choices, and choice breeds competition. The result of competition is business must optimize all aspects of their enterprise to achieve success. Implied in their success is reward for all involved. Part of the thirty year mantra that echoes through our collective conscience is the private sector can just do it better. Our fetishized notions of corporate success seem to derive from the propaganda designed by corporations to lure investors. In many cases however, there are few if any incentives for business to meet the needs of the population, and often result in the bloat of government rather than reducing its size.
The most obvious example of this is the outsourcing of our war efforts. It used to be the job of soldiers to build and support the war apparatus along with the responsibility of engaging in the actual warfare. They built their barracks, they cooked their meals, and they attended their ill. This required a much large armed services which made it all but impossible to pursue war without a draft let alone congressional approval. The result of shifting to private contractors in the war effort has resulted in an increase in military operations around the globe. In addition private contractors demand higher fees because of the dangers of working in a war. The problem is there is nothing the market can do to reduce this cost. The military needs the support provided by the private contractors, there is a small finite number of companies capable of provide the work needed in the time frame necessary. Even without collusion companies can demand higher than usual prices if the need is great enough.
This exemplifies one of the key problems with hoping on the private sector can do what the government used to do. I’ve stated this many times before the government rarely does things out of want but out of need. In other words there is no choice. Sure there may be a number of businesses offering to do something for you, but at the end of the day you have to choose one of them because you can’t do it yourself. Competition can only flourish when there is an alternative to do without. In many aspects of life doing without is not an option. In most cases this is where government steps in. We cannot do without a police force, if we were to privatize the police force there is nothing that would encourage private contractors to keep prices down, nor is there much incentive to provide the same level of security for everyone. Why investigate the murder of a poor citizen with the equal fervor of the wealthy, they can’t pay for the service at all.
This brings us to another issue with the notion that the private sector can fill the shoes of government. If a private company fails they simply cease to exist, if government fails society as we know it ceases to exist. People may not realize but the entire purpose of modern corporations is to make their deaths less destructive to their creators. If you open a store and someone walks in slips on a loose tile they can sue. If you’re incorporated they sue the business, if not they sue you personally. By relying on corporations to take the place of a shrunken government we are relying on an entity whose sole purpose is to shift blame onto a fake entity that can be created and destroyed at the discretion of it’s creator who is accountable to no one.
Don’t misunderstand, this is not a diatribe designed to bring about the end of corporations. Corporations play a vital role in our society. Without the concept of corporations it is quite likely Columbus would not have even entered the ship sailing business (many trade ships were sponsored by corporations). In fact this ability of corporations to take risks propels innovation. The thing is for every Apple computers, there are thousands of computer companies that never made it. For every Starbucks there are thousands of coffee shops that didn’t make it past their first year of operations. The thing is we cannot afford to have thousands of companies failing to build bridges and roads. We cannot survive thousands of companies failing to protect our water supply. We need a pragmatic, risk averse entity that takes on the role of ensuring the vital necessities of life are available and safe.
Still even with a well oiled governmental machine, there will be instances where the private sector would do a better job, and should be employed by the government. For example government will have a government building built from time to time. It is not necessary for the government to have a full staff of builders on staff capable of building a court house whenever the need arises. It is something that governments will always have to do but the infrequency of the event would mean there would be a great deal of idle time for the workers that would result in either layoffs or wasted resources. By the same token the maintenance of the court house would be an ongoing constant affair that should have a support staff.
Over the last thirty years there has been an outsourcing of maintenance and support staff. This practice strips the government of its knowledge base on how things work. Having dedicated public servants whose goal is to ensure that government remains a well oiled machine is vital to a competent government capable of making the pragmatic, risk averse decisions necessary to keep the nation vibrant. As a result of this government becomes more susceptible to whatever risks corporations are willing to take. The reason this transpires is natural. When government does a task on it’s own it is essentially creating the option of doing without. As a result competition flourishes in the private sector as they are in part competing with the government. When, however, politicians decide to try to take advantage of that competition by replacing the government force with a private force a vital aspect of the competition system is compromised and in the long run routinely results in higher cost.
The point is government and the private sector live in a dynamic symbiosis. Too much of either will result in a slow response to the needs of society, and increased cost. There can always be debate on how much of either is too much but the discussion must have the prerequisite that government will always have to be part of the solution.