Governance, Privatization, and Systemic Risk in the Disarticulated State

Abstract

With the United States grappling with the greatest economic downturn since the Great Depression, questions are emerging about whether outsourcing contributes to the instability of government service production. In this article, the authors explore systemic risk in privatized service implementation networks. Reliance on networks of private agents for service production contributes to the disarticulated and fragmented state and increases the potential for systemic crisis if shocks to the network occur, putting vulnerable clients at risk. Government must focus on understanding systemic risk in networked governance arrangements and building resilient networks to avoid crises, the authors argue. Finally, potential research on systemic risk in networked governance arrangements is discussed.In public administration as governance, it is essential that we do not diminish our institutions to such an extent that we lose our capacity to support the development of sound public policy, as well as our ability to effectively implement that policy.