Privatization v. “Marketization” of Government Functions

-        Movement to reduce government inefficiencies

o     Full-time government employees expensive

o     Might be cheaper to contract for services when needed

-        But principal-agent issues in non-competitive markets create difficulties

o     Too much competition produces perverse incentives for contractors

o     Too little competition produces inefficiency & waste

-        Does a market exist -- buyers and sellers of the service compete to set the price – or are government services transferred to private ownership?



 


Federal Bureaucracy and Democratic Control

-        Should president or Congress direct agencies?

-        How autonomous from political influence should agencies be?

o     Regulatory agencies could be harmed by partisan political interference

o     But agencies develop interests and agendas of their own

o     Is agency fulfilling the public good?

-        How autonomous from citizens, firms and associations should agencies be?

o     Iron Triangle and issue-networks

o     Risk of “agency capture”

o     Do they serve the public or serve government?

-        Bureaucratic Discretion

o     Should agencies not enforce “bad” laws?

o     Should the public good override bad legislation?