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A more extreme, and in many instances, more controversial solution to the perceived and real inefficiencies in the bureaucracy is privatization . In the United States, largely because it was born during the Enlightenment and has a long history of championing free-market principles, the urge to privatize government services has never been as strong as it is in many other countries. There are simply far fewer government-run services. Nevertheless, the federal government has used forms of privatization and contracting throughout its history. But following the growth of bureaucracy and government services during President Johnson’s Great Society in the mid-1960s, a particularly vocal movement began calling for a rollback of government services.
This movement grew stronger in the 1970s and 1980s as politicians, particularly on the right, declared that air needed to be let out of the bloated federal government. In the 1990s, as President Bill Clinton and especially his vice president, Al Gore, worked to aggressively shrink the federal bureaucracy, privatization came to be embraced across the political spectrum.
http://govinfo.library.unt.edu/npr/whoweare/history2.html (June 16, 2016). The rhetoric of privatization—that market competition would stimulate innovation and efficiency—sounded like the proper remedy to many people and still does. But to many others, talk of privatization is worrying. They contend that certain government functions are simply not possible to replicate in a private context.
When those in government speak of privatization, they are often referring to one of a host of different models that incorporate the market forces of the private sector into the function of government to varying degrees.
Kevin R. Kosar. “Privatization and the Federal Government: An Introduction,”
CRS Report for Congress , December 28, 2006. https://www.fas.org/sgp/crs/misc/RL33777.pdf (June 16, 2016). These include using contractors to supply goods and/or services, distributing government vouchers with which citizens can purchase formerly government-controlled services on the private market, supplying government grants to private organizations to administer government programs, collaborating with a private entity to finance a government program, and even fully divesting the government of a function and directly giving it to the private sector (
[link] ). We will look at three of these types of privatization shortly.
Divestiture, or full privatization, occurs when government services are transferred, usually through sale, from government bureaucratic control into an entirely market-based, private environment. At the federal level this form of privatization is very rare, although it does occur. Consider the Student Loan Marketing Association, often referred to by its nickname, Sallie Mae. When it was created in 1973, it was designed to be a government entity for processing federal student education loans. Over time, however, it gradually moved further from its original purpose and became increasingly private. Sallie Mae reached full privatization in 2004.
https://www.salliemae.com/about/who-we-are/history/ (June 16, 2016). Another example is the U.S. Investigations Services, Inc., which was once the investigative branch of the Office of Personnel Management (OPM) until it was privatized in the 1990s. At the state level, however, the privatization of roads, public utilities, bridges, schools, and even prisons has become increasingly common as state and municipal authorities look for ways to reduce the cost of government.
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