In recent columns we have examined the National Association of FSA County Office Employees (NASCOE) proposal that the responsibilities for selling and servicing crop insurance policies be shifted away from insurance companies and into Farm Service Agency (FSA) county offices and the response of the American Association of Crop Insurers (AACI) to that proposal. Using the results of a study they funded, NASCOE contends that such a move would save the U.S. government as much as $1.9 to $2.5 billion a year.

Over the last several decades it has become fashionable to outsource or privatize essential public functions previously carried out by government employees. Those in favor of outsourcing assert either that private enterprise can carry out the activities more effectively, they can do it cheaper, or both.

It is not difficult to understand why those in the private sector make this argument; the resulting contracts are lucrative and they provide a steady source of income that is not subject to the usual ups and downs of the marketplace.

The case for privatizing government functions is also made by those who want to shrink the size of government. What is unclear is how outsourcing achieves this goal in those situations where the cost of the program remains the same or increases—all that changes is who writes the paychecks and supervises the employees. The size of the government’s budget remains the same or gets even larger.