This article, by Chiara Cordelli in the Boston Review, is worth reading. 

In “Why Privatization is Wrong,” Cordelli makes an important distinction between “small government” and “privatized government.” The former is a long-held ideal in American politics. The latter is closer to what Americans have now. As Cordelli puts it,

“Even in the United States, the breeding ground of neoliberal “small government” advocates, government spending has substantially increased in the last decades, and the overall workforce employed by the federal government has also gone up. However, its composition and modes of operation have changed. While the number of civil servants has remained more or less unchanged, the number of private contractors has grown significantly. Private contractors in the United States amount to about 12.7 million employees, a number far greater than the sum of the federal civilian workforce, U.S. postal workers, and uniformed military personnel (4.25 million). In the meantime, contractual exchange has become the main instrument of governing, to the extent that the administrative state has been redefined as “the contracting state.” In sum, while government is morphing into a nexus of contracts with private actors, private actors are, in turn, morphing into government.”

Cordelli argues, smartly, that privatized government – in which many key functions of the state are outsourced to for-profit corporations and in which extensive regulatory authority is delegated to private-sector organizations – is a threat to democratic legitimacy. 

And the piece suggests that Americans in particular have been bait-and-switched to mistake privatized government for smaller government.

The piece concludes with the idea we need a constitutional amendment to constrain the privatization of public functions and a call to “strengthen the legitimacy of public administration itself.” 

Even if you do not agree with those conclusions, the distinction between “small” and “privatized” government really helps to clarify the state (both literal and metaphorical) in which Americans find ourselves today.