October 26th, 2011
08:49 PM ET

Stanger: Why big versus small government misses the point

Editor's Note:Allison Stanger is Russell Leng ’60 Professor of International Politics and Economics and Chair of the Political Science Department at Middlebury College Middlebury College. She is the author of One Nation Under Contract: The Outsourcing of American Power and the Future of Foreign Policy.

By Allison Stanger - Special to CNN

The Occupy Wall Street movement has sparked diverse reactions  - applause, disdain and much in between.  But what strikes me as most interesting is what is not being said by anyone: No one is arguing that the system isn’t broken.

Republicans claim we can get the country back on track by budget cuts that continue to starve government; when government is itself the problem, the solution is to fund less of it.  Democrats argue that repairing our nation’s dysfunction must start by reining in business to prevent a repeat of the financial crash of 2008. But the debate over whether big business or big government is the real enemy misses the real crux of the matter: the big government versus big business narrative is history.  The interests of big business and big government increasingly intersect in ways that effectively make them one and the same.  Both have an interest in maintaining the status quo, because the status quo serves the interests of both Wall Street and Washington elites.

These mutual interests are easy to miss, because most Americans misunderstand the shape of government in 21st century America.  For example, the right criticizes President Obama for “growing government at record pace.” It is true that the federal government has never been bigger in terms of the sheer amount of money it burns through.  But it has also never been smaller in terms of the number of people it employs.  The number of people on the direct government payroll today is roughly the same as it was in 1966 but the size of the federal budget in that same period of time has more than tripled in real terms.

So who is the doing the work of government?  A big part of the answer is contractors.

In a process embraced by both Democrats and Republicans alike, the federal government has over time been slowly hollowed out, with Washington handing over its analysis, evaluation and execution duties to the private sector whenever possible, both as a perceived means of reducing costs and of increasing efficiency.  This blind faith in the superiority of market solutions has had one large unintended consequence.  Government has become wholly dependent on the private sector to do its daily work, blurring the once firm line between business and government.

Add in the revolving door that spins so rapidly between government, K Street, Wall Street and what Tom Friedman has called the contractor-industrial complex, and the illusion that there is still a sturdy and independent government that can defend the public interest and stand up to the interests of organized money is further exposed as wishful thinking.  This is an underappreciated aspect of Washington’s dysfunction and our present predicament.

Prosecuting the most prominent rule-breakers like Goldman Sachs’ Rajat Gupta is a step in the right direction to restoring some sort of balance between the interests of the 1% and those of the 99%.  But it will do nothing to address the core problem of a government that has embraced outsourcing as a solution to any problem and in the process lost its sense of those things that only government can do well, as well as its very ability to promote the common good.

The views expressed in this article are solely those of Allison Stanger.

Post by:
Topics: Economy • Protests • United States

soundoff (56 Responses)
  1. Melissa

    ".....and in the process lost its sense of those things that only government can do well....."

    Government doesn't do anything "well". We just need to admit that anything we do give the government responsibility over will never be as efficient or of the quality that we expect it to be. THAT is why we need to limit what the government does do and let the private sector handle the rest.

    October 26, 2011 at 9:14 pm | Reply
    • imaguard

      I think government-run fire departments do pretty darn well. I'd hate to stand in front of my burning house desperately making cell phone calls to private fire companies to get over here as fast as they can to put it out, then handing me a BILL.

      October 26, 2011 at 9:30 pm | Reply
      • alcspi

        These are "LOCAL GOVERNMENT functions not federal.

        October 26, 2011 at 10:09 pm |
      • Truth Hurts

        Really? I think 85% of you don't know who or what makes up the Federal Government. The next time you boat and get in trouble, do away with the Coast Guard and see how well you do. Do away with the NIH and see how well medicine in this country does. The Federal Government rightfully undertakes tasks that are far too risky for the private sector. They may not be perfect, but the work that they do is hard and risky. Just how many private insurance companies would even offer disaster insurance without the prodding and subsidies of the Federal Government? And everyone who wants to complain about NASA, half of the things in your home, your very computer and the Internet – all thanks to the Federal Government.

        October 26, 2011 at 10:32 pm |
      • Alex

        Better get used to the idea...it's been the case for YEARS with ambulance service in some towns.....and if, as happened in my family, you have to be urgently transfered to a larger, more specialized hospital in another city, the local ambulance company demands CASH....no checks or credit cards. Had to rush to Credit Union of employer (a certain State) to get the greenbacks while family member was waiting to be put into ambulance for trip.

        October 27, 2011 at 6:39 pm |
    • Interested48

      Have you ever had a loved one on Medicare or Medicaid? The government does that extremely well. Our elderly would be living under a bridge if it weren't for these government programs. Yes, these programs do need to be evaluated for waste but they also need to be recognized for the wonderful job that they do, as well.

      October 26, 2011 at 9:35 pm | Reply
      • alcspi

        Have you ever considered that personal responsibility should be the major factor in determining our care in old age?

        October 26, 2011 at 10:09 pm |
      • Michael

        Amen. My elderly mom almost died a few years back due to a ruptured aorta (yes, aorta....she was very lucky....it happened while waiting for her cardiologist in her office which is in a hospital). Medicare footed the bill that saved her life. The idiotic trolls that scream about "personal responsibility" would probably just say to let them die. Those people are the very face of evil and everything that Christ was against.

        October 26, 2011 at 10:45 pm |
      • j. von hettlingen

        Here we have an evidence that these social programs are still in government hands, not outsourced to any contractor.

        October 27, 2011 at 9:05 am |
    • iRex

      And the private sector has served the people so much better. Worlds more expensive healthcare, yet 35th in quality. Bankers going hog wild and screwing the economy, almost plunging us into a second Great Depression, which the Government, not the Private Sector saved us from.

      Government isn't the answer to everything, but free market capitalism isn't either. There are no silver bullets or one size fits all solution, and out dismantling of the protections out grandparents or great grandparents put in place has shown that less Government doesn't lead to a better America.

      October 26, 2011 at 9:50 pm | Reply
      • alcspi

        Do you propose communism? It never worked and never will.

        October 26, 2011 at 10:11 pm |
      • Michael

        OK...gotta call out the vapid "communism" response. You people are part of the problem. Someone says that that answer lies somewhere between the extremes of Big Government and Unbridled Capitalism and the best they can come up with is extremist drivel. Extremism is the problem in this country today......both from the right and the left. The answer lies in the middle.....taking the best ideas from the spectrum and putting them to work for the good of all (i.e., "America"). That's what made this country great and the extremists are the enemy within.

        October 26, 2011 at 10:50 pm |
    • Mark

      Nonsense, you still don't get it and some strange blind faith that the private sector is good at everything – I spent my entire career in corporate and even I would NEVER support that position.

      October 26, 2011 at 9:51 pm | Reply
    • hrmmm

      It's hard to say what THE problem is because it's highly complex. The idea that you can narrow it all down to a discrete formula such as people – government + private sector = success ... is just... well, go and read the article.

      The lines are blurred and it's really difficult to say where the problem lies because the causal arrows are all over the place. Business has a MAJOR effect on state action and the other way around. Then there's government contracting as the author talks about. That IS how the government delegates out to the private sector. Fed, state, and local agencies create quasi-markets in which contractors compete (in theory) for government contracts to complete work. It's the same way a large corporation outsources to smaller companies that compete to offer cheaper and more efficient services. It's the same logic behind Walmart, once you get something good going and have a predictable demand for services (or taxation in the case of gov't) then you can produce and sell at cheaper rates. Why not fully privatize, as in, drop services altogether? As others have noted, it doesn't make sense to have completely private services in some sectors because there need to be ground rules to make sure that services actually reach all who need them (such as the fire company example). Of course, therein lies another debate that must occur case-by-case: what does gov't need to provide and for whom? That debate will not be solved here, it is the core argument in a democracy.

      October 26, 2011 at 9:52 pm | Reply
    • Bob

      Funny how the GOP constantly praise the VA medical system. And studies show that the VA and Medicare have a third the bureaucratic cost overhead of the private health systems. There are some things where the government's size and the fact that the government is 100% profit-driven greatly enhance the "customer satisfaction". Who would you rather have decide whether they should refuse your medical treatment, the guy who is trying to make the quickest, cheapest buck or a government employee who ultimately has to answer to your Congressman and Senator?

      October 26, 2011 at 9:54 pm | Reply
    • ludvig

      Actually the Reactor Plant Contractor (Private Sector) had my federal shipyard refuel their nuclear reactor prototype in New York State. Actually I've had more trouble with businesses than I've ever had with the government which has performed their job well. The last time I went to DMV, I had about a 15 minute wait sitting in a chair until my business was successfully completed, being given a temporary driver's license extension because the private sector contractor that was contracted to make the replacement driver's license was incompetent and could not complete the job on time.

      October 26, 2011 at 10:04 pm | Reply
    • Rush

      Melissa...you are an idiot.

      October 26, 2011 at 10:17 pm | Reply
    • RobinMO

      Medicare is much more efficient and cost-effective than private health insurance. Medicare actually commits 97% of collected revenues for patient care compared to 70-75% for private insurance. Medical research sponsored and conducted by the NIH has been far superior to private research. The problem is that private pharmaceuticaal companies have made millions of $$$ off drug research funded by the governemnt. What a rip off.

      October 26, 2011 at 10:29 pm | Reply
    • firecoachk

      Why do you hate our brave military, Melissa?

      October 26, 2011 at 10:48 pm | Reply
    • Peter Ruetters

      The private sector works really well, Melissa, like the banks, mortgage companies, auto makers and all the others that cost us billions in "defered taxes" and bail outs. Don't make me laugh. The private sector is there to make money, period.

      October 27, 2011 at 6:44 am | Reply
    • Judy

      Melissa, I am always amused at how the federal government's handling of projects on their own is portrayed by the right as being inefficient, corrupt and devoid of any redeeming qualities. However, we never hear the right mention TVA (Tennessee Valley Authority), a government program initiated in the 1930's which built a series of hydroelectric dams on the Tennessee River and its tributaries. These dams not only provided cheap electricity to a region of the country that was desperately poor and isolated, but also help to prevent frequent flooding of the area. In turn the availability of cheap electricity lured the Aluminum Co of America (Alcoa) to build a huge plant in the areat for extracting aluminum from ore and providing real jobs for many of the poor residents. This highly successful, efficient and profitable Federal project is still operating with great success in the area. Of course, the right doesn't like to mention this highly successful federal program as it punches holes in their arguments against Federal programs. .

      October 27, 2011 at 4:34 pm | Reply
    • Judy

      Melissa, I am always amused at how the federal government's handling of projects on their own is portrayed by the right as being inefficient, corrupt and devoid of any redeeming qualities. However, we never hear the right mention TVA (Tennessee Valley Authority), a government program initiated in the 1930's which built a series of hydroelectric dams on the Tennessee River and its tributaries. These dams not only provided cheap electricity to a region of the country that was desperately poor and isolated, but also help to prevent frequent flooding of the area. In turn the availability of cheap electricity lured the Aluminum Co of America (Alcoa) to build a huge plant in the areat for extracting aluminum from ore and providing real jobs for many of the poor residents. This highly successful, efficient and profitable Federal project is still operating with great success in the area. Of course, the right doesn't like to mention this highly successful federal program as it punches holes in their arguments against Federal programs. .

      October 27, 2011 at 4:38 pm | Reply
    • sleveless

      Hello Melissa

      DId you actually READ the article?

      If everything were to be done by the public sector would we be handing-over the role of regulation and oversight of all the public sector TO the publich sector.

      Excellent article.

      October 27, 2011 at 11:36 pm | Reply
    • jimmy cracorn

      When is the last time the country was invaded by another army? I think the Government does allot of things well. They also do allot wrong though. The same is true with just about anything though. Gov. Private business, Churches, Cops, whatever, there is always good and bad.

      October 28, 2011 at 1:53 pm | Reply
  2. Michael

    The question we ask today is not whether our government is too big or too small, but whether it works - Barack Obama [inaugural address]

    I believe the GOP has figured out that their goal of reducing the size of government is advanced when they succeed to make government as dysfunctional as possible.

    October 26, 2011 at 9:15 pm | Reply
    • yes, yes

      yes and yes

      October 26, 2011 at 9:39 pm | Reply
  3. Bleepul

    Wow. One of the first rational pieces on CNN in a long time. Thanks Allison for not contributing to the hype and hyperbole (though you could stand to lose the 1% and 99% labels). If more people actually thought about things instead of blindly followed the tribal leaders this country might get back on track.

    October 26, 2011 at 9:36 pm | Reply
  4. Mark

    Very good piece. This idea of small versus large is a simpleton's logic for a complex problem that has evolved over decades – not just the last three years. This is not government versus business either – if you still think that way you definitely do not understand governance.

    October 26, 2011 at 9:52 pm | Reply
  5. Newmalthus

    big versus small government misses the point

    Right. Its really Young vs. Old.

    October 26, 2011 at 9:58 pm | Reply
  6. Four and the Door

    Obama is systematically spending our country into the dirt. If we did not have the Republican House, certainly our debt would already be on its way to probably $17 or $18 trillion with no work being done to address it. As it stands, the next couple generations of Americans will need to make severe sacrifices to have any hope of getting this huge debt load under control. There are enough threats to our country without having half of our federal government revenues taken up by just paying interest on the mountain of debt. Turning it around will not be possible with such a large expensive financial burden on our economy such as a large bloated government. We cannot let this be the undoing of our great American society.

    October 26, 2011 at 10:10 pm | Reply
    • Rush

      another blinded idiot heard from...swell...

      October 26, 2011 at 10:20 pm | Reply
    • Rush

      3/4 of the Federal Debt has been created under Republican Presidents. Look it up and shut the hell up.

      October 26, 2011 at 10:21 pm | Reply
      • Four and The Door

        I don't see your point. Because Obama is a Democrat this gives him justification to run up another $5 trillion? With nothing to show for it? I don't think so.

        October 26, 2011 at 10:37 pm |
      • Occupado

        Wrong, Rush. Obama campaigned against the George Bush deficit. Instead, he's tripled the George Bush deficit.

        And he's driven the value of the dollar down to force the price of gas up so we all buy little electric automobiles.

        October 27, 2011 at 2:06 pm |
      • LMo

        Wrong, Occupado. Bush's debt upon leaving office was $10,699,804,864,612. Obama's, as of 8/1/12 is $15,907,138,660,280. No where near "tripled." And no president can drive the value of the dollar down OR the price of oil up.

        Here's a list of 50 things that can drive the value of the dollar down: http://www.currencytrading.net/features/50-factors-that-affect-the-value-of-the-us-dollar/

        August 10, 2012 at 4:14 pm |
  7. sr

    When the government is contracting out to the private sector, the usual incentives that govern the market and create market discipline are absent. So the usual perceived advantages of the private sector over the government may be diluted or non-existent in that scenario. Perhaps this explains the skyrocketing costs of running the federal government even as more of it is de facto run by the "private" sector.

    iRex, your criticism of the private sector seems misplaced to me. Both healthcare and banking are some of the most heavily regulated industries in the country. They are "private" only in name. Known facts more than adequately demonstrate that political decision-making and government mismanagement of banking was a major contributing factor to the mortgage lending meltdown.

    October 26, 2011 at 10:14 pm | Reply
  8. james

    Everybody wants a simple solution to a complex problem, while common sense is displaced by political rhetoric, partisan bickering and out of context talking points. The whole thing has become a circus and no particular politician or party is our savior.

    October 26, 2011 at 10:24 pm | Reply
  9. Brian

    THANK YOU!!! I have been saying this for DECADES. The size of government is both relative and irrelevant. The question is whether government is effective; it should be as big or as small as it needs to be to get the job done, the real problem is we can't agree on what government should do. Big government is not the problem. STUPID government is the problem, as this dysfunctional congress has proven.

    October 26, 2011 at 10:31 pm | Reply
    • Four and The Door

      By size, Republicans mean the cost of government. In fact that is fundamentally important. If you do not have an economy to afford the government , who is going to pay for it? ( oh, I know... all of the billionaires, right? )
      Currently we have bought about $15 trillion more government than our economy could afford. It is immoral to pass this deep deep hole to the next generation. They deserve better.

      October 26, 2011 at 10:51 pm | Reply
  10. David Balkin

    If government can't even figure out how to efficiently specify, outsource and monitor required services from professional contractors, is there a reason we should expect government to be able to efficiently self service those same needs?

    October 26, 2011 at 11:06 pm | Reply
    • Judy

      David, the problem with the government not efficiently specifying, outsourcing and monitoring required services from professional contractors is that these matters are usually dictated by the contractor's lobbyists who usually write or unduly influence the programs and how they are outsourced and monitored. And, of course, all of this is done in a way to benefit the contractor, not to protect the people's interests. The very lucrative contract to Halliburton for providing services to the military in Iraq and Afghanistan was not even put out for bid; it was simply given to Halliburton. Intereting, particularly in view of the fact that Vice-President Dick Cheney had been Halliburton's CEO prior to his running for VP.

      October 27, 2011 at 3:44 pm | Reply
  11. Alessandroid

    If I were in the party of, by and for the 1%, I wouldn't accuse people of class warfare. I wouldn't want to give the 99% any ideas.

    October 26, 2011 at 11:07 pm | Reply
    • Alessandroid


      October 26, 2011 at 11:09 pm | Reply
  12. Samara

    Actually, we already have the second highest corporate tax in the world. What the people at occupy wall street are saying is to keep politics and money separate. Corporations and other interest groups use money to persuade politicians to swing toward certain policies. It is not class warfare; it is warfare against corruption. The class disparities are direct consequences of capitalism. We can't lower taxes for the poor; it will lead to inflation and the government can't afford any tax cuts.

    October 26, 2011 at 11:10 pm | Reply
    • Judy

      Samara, Yes we technically have a high corporate tax rate, but effectively it is one of the lowest in the world because there are so many loopholes that corporations actually pay comparatively little in federal taxes.

      October 27, 2011 at 7:48 pm | Reply
  13. Dennis Ferguson

    OWS is the best thing that has happened to this country in 30 years.

    October 27, 2011 at 7:50 am | Reply
    • Occupado

      Jimmy Carter happened 30 years ago.

      You're not trying to say that was a good thing, are you?

      October 27, 2011 at 2:04 pm | Reply
  14. Occupado

    It's not big government. It's the private sector versus the public sector. The public sector cannot exist without a vibrant, robust private sector. In lean economic times, the public sector, which is heavily unionized, creates a HUGE drag on the private sector, making a recovery all the more difficult if not impossible.

    In FDRs day the public sector could stimulate the economy - because it wasn't unionized and the pension obligations didn't exist. FDR even said it would be "insanity" to allow the public sector to unionize. It was JFK who gave the public sector the right to unionize. The unions crept in during the boom days of the 1990s when they realized the private sector moved offshore.

    Now we're stuck with them.

    October 27, 2011 at 9:18 am | Reply
  15. T.C.

    This is an insightful and long overdue article. Government contractors are getting rich, very rich, while doing no work and subcontracting all of the work they contract out to low wage workers. Government contractors are the new aristocracy. I say give us our f n cake. The entire idea using Government contractors was to eliminate paying for the $800 Hammer, now we're paying for the $8,000,000 Executive condo's instead.

    October 27, 2011 at 2:21 pm | Reply
  16. michael

    your end is near America theirs is no hope you have been ruined and you will have to fight your way back to freedom i assure you these companies intend to keep your nation!

    October 27, 2011 at 7:55 pm | Reply
  17. michael

    You would not be is such debt if the company's did not have their hand in the peoples pocket! The worlds biggest rip off!

    October 27, 2011 at 8:01 pm | Reply
  18. michael

    The only question now who will the government protect the companies are the people? If the people fight for there freedom!

    October 27, 2011 at 8:03 pm | Reply
  19. jimmy cracorn

    I think the answer to all of this is to get all private money out of the political process. Although I don't like the idea of more taxes to fund politics it would be allot better than the free for all we have now. It would also mean that politicians would be financially obligated to whoever payed for their ride to the big leagues.

    October 28, 2011 at 1:56 pm | Reply
  20. Text Message Marketing,SMS Marketing

    Great comments. Very interersting site. Good read. I'll be coming back for more information. Keep up the good work.

    November 28, 2011 at 8:52 pm | Reply
  21. Mr. Review

    Great comments.I appreciate your web site.It was interesting and informative. I'll be coming back for more information. Keep up the good work.

    December 13, 2011 at 12:26 am | Reply

Post a comment


CNN welcomes a lively and courteous discussion as long as you follow the Rules of Conduct set forth in our Terms of Service. Comments are not pre-screened before they post. You agree that anything you post may be used, along with your name and profile picture, in accordance with our Privacy Policy and the license you have granted pursuant to our Terms of Service.