The Possibilities and Limitations of Privatization

This is a review of Jody Freeman & Martha Minow, eds., Government By Contract: Outsourcing and American Democracy (Harvard Univ., 2009). After summarizing and analyzing the individual contributions to the volume, and delineating their disagreements, the review proceeds to identify areas of common ground among them: that policy should continue to be set by government authorities, that privatization is presumptively superior when the policy goal is efficiency, and that the presumptive efficiency of privatization depends on the existence of a competitive market for the goods or services being privatized. It suggests that the absence of genuine competition in many areas of government contracting cast grave doubts on the effectiveness of privatization, particularly as it was championed (although not implemented) by the second Bush Administration. The review then goes on to explore other reasons for privatization beyond efficiency, such as the possibility that private firms could be guided by, or even aid in articulating, public values. It concludes by arguing that the subject is too complex for any sweeping generalizations, and proposes that decisions in this area should be based on a micro-analysis of the government function involved