Philip Johnston write that “Vested interests are protecting administrators and forcing cuts to vital services” in an article about PFI contracts (Public Finance Initiative).
But for the most part “privatisation” is a meaningless distraction. The only realistic way to reduce state expenditure is to actually shed state functions as the root cause is not which mechanism the state uses: direct employees funded with taxes or outside hired hands funded with taxes.
Either way, the people who carry out state functions are creatures of a system funded by taxes rather than subject to the rigours of actual market pressures… until everyone in the chain can go broke as a consequence of their actions, it is still a state structure regardless of who is making the wheels go around.
Indeed every time the state bales out a bank regardless of the moral hazard, they spread the decision skewing and insulated-from-consequence disease associated with being supported by taxes.
To reduce state expenditure, you need to get the state out of all but its “core business”. You need to remove whole function of what the state does, not just hire different people to do it. The real problem is a century of ‘mission creep’. Until you can countenance that you are not serious about reducing the bloated state.