Think that the allegations of misconduct by employees of Blackwater USA are a classic illustration of market failure? Tyler Cowen doesn’t agree. He argues that the behavior of any contractor--even a provider of military services--is bound to reflect the priorities of those who hire him.
If Blackwater is assigned to protect a top American official, who is later assassinated, Blackwater may lose future business. A private contractor doesn’t have a financial incentive to protect Iraqi citizens, who are not paying customers. Ultimately, this reflects the priorities of the United States military itself. American casualties are carefully recorded and memorialized, but there is no count of Iraqi civilian deaths.
Actually the blackwater guys have a harder and more dangerous job than most american soilders. "Force protection" insulates american soilders...we have all the best armor and armored vehicles and various incredible systems. But the blackwater guys have to buy a lot of that stuff themselves...so they aren't as heavily protected on convoys...a lot of them are former soilders or marines who realized that they could make beaucoup bucks doing the same thing they did in the service...but then realized that they didn't have as much protection, that there wasn't as much discipline...that no one really cared about the ROE...that they had less radio time with Sherrif Net, that Medvac was more difficult, that calling up for EOD didn't work the same way. Basically a bunch of 25-35 year old ex-military with basic body armor/automatic weapons driving unarmoured civilian Chevy Tahoes and herding immigrant drivers from India and Pakistan around as security for KBR convoys and others. I knew a guy that signed up with them...he wanted to make 120k a year. I haven't heard from him...but I assume that it is substantially more dangerous, than even a typical duty tour as a soilder.