The Privatization of the U.S. Government

By James Hartree

Governments have been outsourcing public functions to the private sector for a long time. This is not new. The oldest known outsourcing of government functions is tax collection. A classic example comes from the Roman Republic. The Roman government auctioned off the right to collect taxes in provinces.

Private businessmen called publicani would 1) pay the Roman state a fixed sum upfront, 2) gain the legal authority to collect taxes from the population and 3) keep any surplus as profit.

In practice this meant private companies were performing one of the most fundamental powers of government: taxation. They were essentially early tax contractors. The system became notorious because tax farmers often extorted far more than the official tax rate.

So, as much as America would like to be unique in all things, government contractors are not. But there is a different flavor to companies like TurboTax and MVD Express: The interface between citizen and government is changing. It is going high gloss, well engineered, aesthetic — the government is getting a private sector skin. 

TurboTax and MVD Express turn governmental functions into consumer experiences. It should be no surprise that using TurboTax is more efficient than filing a 1040 Tax Form with a black pen, and sending it off in a letter carried by a pigeon. Looking at the 1040 Form (purely for research purposes), it is difficult, confusing, poorly worded and distinctly unaesthetic. It is almost bureaucratic. For the price of a convenience fee (a profit margin), you can avoid the inefficiencies of dealing with the government directly in favor of a nice, glossy, private sector experience. Think about the TurboTax interface — it is beautiful, modern and designed, unlike the coldly bureaucratic tax form. It is an experience. 

TurboTax has been especially insistent that I get on board. Between January 1st and March 10th, I must have been served over 200 TurboTax ads. I have the tagline committed to memory: “Tax was in need of updates. Now, taxes is a TurboTax expert.” For the low low price of $150 (which is about 50% of my tax return from 2024), I can have a TurboTax expert “in your neighborhood!” take care of it for me. I guesstimate that TurboTax has spent $2 advertising to me — and it is well worth it. I am 24 — I have another 65 or so years of filing taxes — so I am worth $20,000 of revenue to them. Not a bad return on investment.

That’s taxes — which, in my estimation, is the most intimate interaction that I have with the government. They have let private companies become the interface between citizens and itself in this seriously closed bedroom-door affair. How wide, I ask, is the private sector integration with the government? 

The answer is, very wide. The government is using private contractors for practically every function that a government has, including but not limited to:

Taxes: 

TurboTax/Sprintax

Surveillance: 

Open-AI (Anthropic said no)

Military Intelligence: 

Palantir– The data brain of the security state.

Car Stuff: 

MVD Express

Voting Infrastructure: 

Dominion Voting Systems, Election Systems & Software

Visa Applications: 

VFS Global – Handles visa application processing worldwide for many governments.

Identity Verification: 

ID.me – Used by the IRS, Social Security and multiple federal agencies for identity verification.

Prison: 

CoreCivic, GEO Group - Private prisons, (158 across the USA)

Welfare Programs: 

Maximus – Administers Medicaid, student loan servicing, unemployment insurance systems, and benefits call centers.

Conduent – Processes SNAP, EBT cards, child support systems, and state benefits.

Toll Road Infrastructure: 

Transurban – Operates major U.S. toll roads.

TrafficCom – Provides tolling infrastructure and electronic payment systems.

You have heard it said that the government is not very efficient. Cite the $40 trillion national debt, for example. Corporations are incentivised to be efficient because you need to be efficient to create shareholder value. Public offices rely on human decency, intrinsic motivation and public spiritedness, all of which are inconsistent motivations for the creation, maintenance and delivery of functioning products and services. If you only make money when things work, you make them work — more accurately  you make other people work on making them work. I think the basic economic premises here are very good and very sad. I am in favor of governments providing the private sector with opportunities to create solutions to infrastructural, executive and technological problems. I am (trying to be) happy that TurboTax exists. 

Where could this go? 

Imagine a future in which you never interface with the government. Taxes, voting, car registration, passport filing, audits, business licenses, deeds and mortgages, SNAP disbursements, unemployment insurance, public housing assistance, TSA, voter registration, public school enrollment. We already live there. You don’t ever have to see the government when filling these civic functions. So what’s next?

Imagine a startup called Kaptured — it runs a pilot program in Chicago where they install speeding cameras at their own expense, ticket people, process them and give the proceeds to the government (after keeping their 20%, of course). They scale nationally, and some competitors pop up. Landlords are making bank by renting out space to these companies for them to put up their cameras — and suddenly, it goes the way of electric scooters: 20 different companies, all with a slightly different processing system, all with a different app you have to download to pay your parking ticket. A budget competitor springs up — where you can watch ads to reduce your ticket. This little budget upstart is so successful that they end up making deals with all of the Kaptured knock-offs. So you get ticketed by Kaptured, and you download their app to discover a $200 speeding ticket. But an ad pops up for another little upstart called Ad-juice, which lets you watch ads instead of paying fees. 

Kaptured ends up buying Ad-juice. They have scaled nationally by now, and they want to start cornering other markets. They make a deal with the Chicago Police Department to train police officers at no cost to the local government. The police officers contract with Kaptured and work on a commission basis. For every legitimate arrest for an actionable offense, the cop makes $100, Kaptured makes $50 and the police department makes $50 without ever having to complete the arrest. Kaptured does so well that it ends up buying Corecivic (a real company, which, as of 2026 owns 86,000 prison beds, making roughly $117 per day off of each bed). But the marketing department at Kaptured, seeing an incredible opportunity for cross-sectional efficiency, forms a super PAC to lobby the government for reduced prison time for inmates who watch ads. They argue watching television increases docility, impotence and improves general wellbeing. It is a win-win. Less crime, less cost to the government and, for the prisoners, less prison time. 

I can barely handle being surveilled by the government, but I am horrified when I walk past a storefront, and an AI generated voice says, “You are being recorded. You are being recorded.” Imagine how a schizophrenic person would experience this situation. Allowing private companies roaming rights and letting the punishment of crime move to a commission based economic model  is a bridge too far. The thought of private companies policing me is unacceptable. Why? The government is not a corporation (so I am led to believe). It exists not for the sake of profit but for the sake of a more perfect union (ha!). Public surveillance is at least theoretically permissible because it is us surveilling ourselves. In some muddy sense, if a democracy surveils, it is because the people will it to do so. Caveat, caveat, caveat. But if a company essentially seeks profit (a good assumption as I measure it) and companies are allowed to police, they are incentivized to lobby for more things to become crimes. I think 99% of paths here lead to an authoritarian surveillance state. No, thank you.  

Here, then, is a bit of proposed legislation. 1) Companies are never allowed to surveil for the sake of profit. 2) Companies are never allowed to lobby for laws to be passed. 3) Policing remains public. Anyway, what do you daydream about?