Sharing power: public governance and private markets

TLDR

Since World War II, U.S. policy has increasingly relied on public‑private partnerships, with reformers urging privatization to boost efficiency, yet the government must act as a smart buyer when competition is absent to preserve sovereignty. Using case studies of the Superfund program and the Department of Energy’s nuclear‑weapon production, the author shows that rising market imperfections worsen governance and management problems.

Abstract

Reformers from both Left and Right have urged the US Govenment to turn as many functions as possible over to the private sector and to allow market competition to instil efficiency and choice. In fact, the Government has been doing just this for years: every major policy initiative launched since World War II has been managed through public-private partnerships. Yet such privatization has not solved government's problems. Kettl shows that the conditions essential for competitive markets usually do not apply to the kinds of programmes the Government assigns to the private sector. He uses case studies to demonstrate that as market imperfections increase, so do problems in governance and management. Extreme examples are Superfund programme and the Department of Energy's production of nuclear weapons. When competition does not exist, the Government must act as a smart buyer, knowing what it wants and being able to judge what it has bought. If it does not do so, the Government risks losing its sovereignty to the private suppliers. The author concludes that the issue is not more government bureaucracy, but a smarter bureaucracy, which, in turn, requires strong political leadership to build support for the resources needed and to change the bureaucratic culture.