Privatization: Documenting Government Retrenchment from Production and Analyzing the Distributional Consequences

• In Event: 50404 - Risk and Uncertainty in the New Economy, from Labor to Finance

Abstract

This paper presents the first-ever macroeconomic evidence of the privatization of the U.S. economy. As a social phenomenon, privatization has been widely studied and debated since the 1970s. However, systematic attempts to quantify the overall level of privatization in the U.S. have been lacking. Few studies have attempted to operationalize the concept, preventing a deeper analysis of privatization. I remedy this hole in the literature by identifying where to find privatization in economic indicators from the Bureau of Economic Analysis. My findings are that the U.S. productive economy has privatized substantially since 1970, while government has simultaneously been privatized from within by contracting work out to the private sector. Autoregressive distributed lag regression models provide evidence that corporations and shareholders consistently benefit from government contracting while labor, government, and capital investments do not benefit. To conclude, I discuss the implications for the withdrawal of government from the productive economy.

Author

• Nathan Meyers, University of Massachusetts-Amherst