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which has had profound but underrecognized consequences, was the deregulation of the media, especially TV. Until the 1980s, television networks had a mandate to serve the public good through public-interest programming, a fair balance in reporting, and access to the airwaves through the so-called Fairness Doctrine. This mandate was completely eliminated in the wave of deregulation. TV station owners became interested in one overriding goal: making profits through advertising and mass viewership. The fragile ability to promote public education and awareness was abandoned. The arrival of our media-saturated age was given a major boost.

The Privatization of Public Services

The general belief of the Reagan administration, sustained through several administrations till now, was that private providers of services should replace direct government provision, even when the government is financing the services. Thus, the government has massively stepped up the contracting of military services such as base operations, judicial services such as management of federal prisons, and social services, including health care, education, and income support. In each of these areas, private companies on contract to the government now provide the services that were once provided directly by the government. As with deregulation, tax cuts, and limits on government spending, the outsourcing phenomenon has been a bipartisan strategy since it was unleashed in the Reagan administration.

As the public has discovered during the course of the Iraq and Afghanistan wars, private contractors now implement an astounding array of military activities. This form of contracting is treacherous, as it is highly vulnerable to abuse: favoritism in allocating contracts, kickbacks, nonperformance of contracted services, over-invoicing, and more.

The notion that the private provision of public services will automatically deliver more value for money than the direct government provision of services is built on a series of confusions. Most of the services in question are public goods, so that private competition is inherently lacking. Government outsourcing is therefore tantamount to converting a public monopoly to a private monopoly, with no competition regarding the quality of services. Nor does the free-market ideology acknowledge the pervasive abuses of the contracting process. Contractors are often selected fraudulently as the result of bribes or on political grounds in return for campaign contributions. Congress routinely pays for expensive weapons systems that are opposed by the Pentagon, because local military contractors win the political backing of their congressional delegations.

The End of Government as National Problem Solver

The final legacy of the Reagan Revolution is the most important of all. Since the early 1980s, Washington has stopped serving as a national economic problem solver. From the 1930s to the 1970s, when a major national problem presented itself, the federal government tried to solve it. That included reducing unemployment in the 1930s, winning the war in the 1940s, building the national infrastructure in the 1950s, fighting poverty in the 1960s, and confronting environmental and energy threats in the 1970s. It was taken for granted that major economic problems required policy leadership and federal engagement.

How different our national life has been during the past thirty years. By declaring government to be the problem and not the solution to America’s economic ills, Reagan inaugurated a new mind-set as well as a new set of policies. If you are an average citizen, don’t expect Washington to address your concerns. If you are a special interest, however, come take a seat at the regulatory table; the regulations will be expunged or rewritten to suit your needs. As new challenges—including globalization, climate change, financial instability, and soaring health care costs—have come along, special interests rather than the national interest have been at the political center stage.

Reagan’s Bad Diagnosis and the Meager Results

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