Yes. that's what I am referring to when I use the economists term "Regulatory Capture." Capture is not government intended, but it results when the private sector is allowed to large a say in the sincere government efforts to broaden competition, lower costs and improve efficiency. In those situations, as soon as profits may be on the line, the lobbyists will be mobilized to help write the legislation. I must always keep in mind that profits are the legitimate goal of the private sector. Any situation where something other than profits must be first is a legitimate place for government to play a useful role.
I have seen horribly inefficient Private contractors operate when they were turned loose with government money. Is this the fault of the Government, or is it the fault of the Contractors? The Grand Gulf Nuclear Power Station -- Brown and Root was the Prime Contractor, If memory serves correctly-- would be a fine example.
There are some projects that I think private industry, by itself, is inadequate for, and where the government plays a needed role. I would suggest the Manhattan project as one such, and the human genome project as another such. There are places where private business doesn't belong, and allowing it to to draw profits creates a conflict of interest -- the for profit prison system is a good example.
I have had reason to observe the NIH in operation over the years, I was a consultant for quite a few years, and have always been impressed with the efficiency, dedication, and competence of that very large Government agency. Another marvelously efficient operation is the Social Security administration, and yet another is medicare. Actually, the more I think about it, my impression has been somewhat the opposite of yours.
I have a preference for letting the Private sector operate wherever profit makes sense and both the buyer and seller can walk, or else where the magnitude of cost, required coordination, and goals is beyond the private sectors capability.
It seems, the U.S., with its mixed economy -- never the ideal mix from any one persons viewpoint -- has done reasonably well, especially when you consider democracies are run by committee.
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