What happens when these firms, with their inexorable expansionist logic, bite off more than they can chew? We pay anyway. We paid G4S; we will pay it again when its prisons catch fire. We will pay A4e when it finds no jobs, we will pay Serco when its probation services fail. We will pay because even when they\’re not delivered by the public sector, these are still public services, and the ones that aren\’t too big to fail are too important. What any government creates with massive-scale outsourcing is not \”new efficiency\”, it is a shadow state; we can\’t pin it down any more than we can vote it out. All we can do is watch.
The thing is, those near perfect social democratic states, the Nordics, outsource just about everything they can. Fire services and ambulances for example.
Seems to work pretty well too.
Indeed, there\’s a strong argument that if you want to have a large state then you\’ve also got to have an efficient one. If said state is 25% of the economy then you can, arguably, get away with it being featherbedded and bureaucratic. It\’s only 25% of the economy, after all. When it\’s 40, 50% of the economy such inefficiency would be too much of a drag on general living standards. Thus the more you ask the state to do, to pay for and organise, ensure the existence of, the more you need to contract it out in the name of efficiency.
As, err, the Nordics that we are advised to emulate indeed do.