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?