In college debates about politics and the role of government, someone somehow always falls back on the roads. Someone has to build them. Whatever else, you surely have to grant that.
Then a libertarian pipes up and points out the long and varied history of private roads, citing this example and that from history. There are plenty.
But then someone else says that this is well enough and fine for small country towns or private estates but there is a public good that needs serving. If the roads were private, moguls would be charging people for the right to travel. Large landowners would create hard borders with no throughways. It’s thanks only to the government that we have the mobility provided by the interstates.
And so on goes the debate. Forever. As an undergraduate, I was supposed to care about this great wrangling over roads, but somehow the subject never really interested me much. I had an intuition that something was wrong with the terms of the debate.
Years later, I realized the problem. It is rather obvious when you think about it. Government doesn’t build roads. Private companies do, on contract with the government. That is a very different thing. In that sense, all roads are private roads: with materials produced by private companies, with laborers employed by private companies, and all equipment made and maintained by private companies.
That is the situation today. Obviously, if the government did not hand out such contracts, plenty of businesses would still have the skill and interest in building roads. It could also be profitable, and maybe the need to obtain profits would bring an element of rationality to the endeavor in a way that government infrastructure decision-making does not.
The main point here is that government is being given some credit for something that it doesn’t actually do. It is not literally building roads. Maybe some socialist states tried to do this in the past but not likely very well. It’s the private companies that know how to do stuff and do it well, and that is precisely why the government contracts with them.
How did all this contracting out start? Probably, as usual, it started with war. Government never invented a gun. That was done by private enterprise from the very beginning. Governments just found guns very useful and bought them for their own purposes. They took technology designed to increase security and deployed it to do what governments like doing the most.
At the end of the Great War, there was a great deal of public scandal when it was discovered that the manufacturers of guns, bombs, planes, poison gas, ships, submarines, and more were selling to all sides of the conflict, making money no matter who won or lost. There were Congressional hearings over this in the United States, and a big public turn against the entire munitions industry.
After that, of course, the issue became intensified. The more the government promised to do, the more it had to rely on private companies to do it. This is why so much of government today has been contracted out. It meant a transformation in the relationship between the market and the state.
Today, the U.S. government contracts for surveillance, satellites, computer services, infrastructure and security services, server space, transportation, data work, arms manufacturing, drones, disaster relief, health care, office supplies, building and construction, consulting services, and so much more.
The more you think about this, the more one wonders what precisely the government does on its own. There was a time when NASA tried to do it all but those days are long gone. It still attempts education but mostly on a state and local level and with huge infusions of private support, and plenty of backstop from private schooling and homeschooling.
Government used to run prisons but ever less so. Even tax collection is being farmed out. Waste collection even at the local level is ever more a private contract.
Interesting, isn’t it? We used to have these debates about socialism and capitalism but those dealt in ideal types that haven’t been much relevant for decades, even one hundred years, depending on how you define those terms.
If you think of socialism as government making and delivering things from soup to nuts, it simply does not exist in today’s world (though maybe North Korea is still trying; I don’t know). But it is the same with capitalism. If you define this as companies that make a go of it without government support at all, very few large businesses would qualify.
How many Fortune 500 companies are on the take? I have no idea of the precise amount but it must be quite a few. Grok estimates one-third to one-half. The more you dig into this subject, the more you will be shocked.
Here’s a principle of the market economy: the customer is always right. What happens when government itself becomes a main consumer of a particular company’s product? Now we have a problem that upends the whole spirit of capitalism. Instead of serving willing customers, it serves political interests.
All ideology aside, more and more, there seems to be a global consensus on how things should run. Governments should promise the moon to its citizens and pay private companies to deliver it. That is the way things work today. The public-private partnership is the essence of statecraft today.
There was never an announcement that this would be our new system. It just happened gradually as private firms demonstrated their superiority at making and doing things. The best of them then competed for government contracts, which are highly valued because they guarantee revenue flows without the exigencies of private consumer demand shifts.
It rather does make sense in some way. I was watching an interview with Elon Musk and all the government contracts his firms get and he made the very rational point that his companies can do what needs to be done far more cheaply and better than anyone else. He further said that while he doesn’t want government money, someone among his industries will be getting it and it might as well be his companies.
Again, it is hard to object to the point.
I’ve very much admired what DOGE and others in the tech realm are doing to shine a light on the failures of the public sector. That said, let me make a prediction. If it turns out that their solution to public-sector failure is for the government to enlist tech companies associated with DOGE and the gang of entrepreneurs who backed Trump, there is going to be a problem.
Their every effort will be compromised by accusations of conflict of interest. I have no doubt that many tech companies would do a much better job than the agencies today.
We really do need to have a serious debate about precisely what government should and should not do. Cutting back the wild visions of a government that does it all is a much better route than more expansions of public-private partnerships, which eventually corrupt both public and private.
The true capitalist spirit is the enterprise that makes a go of it on its own, relying on voluntary purchases from the consuming public, not infusions of tax dollars. This is the spirit we need to recapture, but doing so will require a dramatic change in the reach and scope of government power itself.
