Privately-run prisons and ACC could be the start of corporatisation which has exploded in America.

Private enterprise, we are told, is efficient and innovative. Unlike its unfancied ugly sister, the clunky and costly public service, it is sleek, smart and desirable.

That's why it makes sense to let big business run our prisons, and let private insurers have a bite of the accident compensation cherry.

The idea that business does it better and more cheaply is an article of faith for many proponents of privatisation.

The cynical among us remember that before bailouts became fashionable in the rest of the world, we had our own taxpayer rescues: Air New Zealand, BNZ, TransRail.

And if we're not ready to trust the motives of big business, blame it on the global credit crisis and bailout-beneficiaries like Goldman Sachs, memorably described by Rolling Stone writer Matt Taibbi last year as "a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money".

As Taibbi writes, "organised greed always defeats disorganised democracy".

Our Government's determination to shrink the public service - 1500 jobs cut and more promised - is matched only by its drive to give business more of the state pie.

It has built its case for a privately built and run prison in South Auckland and the mooted "competition" for ACC on what appear to be perfectly rational grounds: lower costs and superior services.

Bill English assures us the prison will need to provide better services for less money than the public service best-practice model.

That seems sensible, if a little improbable. But it's easier said than measured, says a recent study of Florida's private prisons, which found no evidence to support claims that private prisons are cheaper to run or better at reducing reoffending than public prisons.

Still, that's what accountants and lawyers are for - so expect whatever tough-sounding conditions and accounting contortions are needed to produce a politically palatable contract.

With ACC, it's all about the accounting. Under the pay-as-you-go model before ACC's profitable work account was last privatised by National, everything's rosy: The scheme is in rude good health, with more than $11 billion in assets, and according to a 2008 PricewaterhouseCoopers report it performs as well or better than most other schemes around the world. Importantly, our model means more coverage for more people more quickly.

But under the fully-funded insurance model, which requires reserves to cover the entire lifetime cost of an accident at the time it happens, ACC is in deep crisis. It must cut services and privatise.

Why would any business be interested in such a crippled scheme? A report by analysts Merrill Lynch suggests Australian insurance companies are in for a $200 million bonanza if ACC is opened up for competition.

What of the halfway house: the kind of public-private partnerships favoured by the Government? An investigation by the UK Independent highlighting the true cost of private finance initiatives doesn't inspire confidence. PFIs were a Tory idea adopted by Tony Blair to pay for public projects while keeping Britain's public debt below 40 per cent of GDP. But according to the Independent, they locked the Government into decades-long contracts that will cost taxpayers 37 times the value of the projects (in all £262 billion for public-sector projects valued at £55 billion).

There's been little debate on the morality behind the state contracting out its responsibility for punishment and rehabilitation, for example, and the consequences of attaching a profit motive to sentencing and imprisonment. In the US, judges have been charged with taking millions in bribes for sending teenagers to privately run detention centres.

In her book The Shock Doctrine Naomi Klein writes that in the US, even the "core" functions once thought "so intrinsic to the concept of governing that the idea of handing them to private corporations challenged what it meant to be a nation-state", are no longer off-limits.

The rise of corporatism - "big business and big government combining their formidable powers to regulate and control the citizenry" - has led to parts of the military, interrogation, spying and homeland security being corporatised and outsourced.

The homeland security industry "which barely existed before 9/11, has exploded to a size that is now significantly larger than either Hollywood or the music business". As the New York Times noted in 2007, "contractors have become a virtual fourth branch of government".

"When information about who is or is not a security threat is a product to be sold as readily as information about who buys Harry Potter books on Amazon ... it changes the values of the culture," writes Klein.

"Not only does it create an incentive to spy, torture and generate false information but it creates a powerful impetus to perpetuate the fear and sense of peril that created the industry in the first place."

The public service has its faults, but while the line between public and corporate interests may have become blurred, important differences remain.

As a former comptroller of the US, David Walker noted in 2007: "There's something civil servants have that the private sector doesn't. And that is the duty of loyalty to the greater good - the duty of loyalty to the collective best interest of all rather than the interests of a few. Companies have duties of loyalty to their shareholders, not the country."