The government has forfeited its monopsonistic (i.e. sole employer) buying power over government-funded jobs killing people and breaking things, so the taxpayers are having to shell out much higher pay, either to Blackwater mercenaries or in six figure re-enlistment bonuses to U.S. military servicemen to keep them from going over to Blackwater. From the taxpayers' point of view, it's a ridiculous situation.
This is not a unique case restricted to the military. Much of the demand for privatization of traditionally governmental jobs comes from government employees themselves who want a competitive job market for their skills. For example, the folks who run state lotteries have been working for years to get the state lottery business privatized so they can transfer from a civil service job to a "private"-sector job ... running a state-licensed monopoly. It's the best of both worlds!
As a taxpayer, I'm tired of paying to train somebody in a government job, then, when they are finally productive, having them jump to an privatized for-profit job that costs me two or three times as much.
I want our monopsony back!
(I've also been wondering, how did the Blackwater company decide to name themselves after a particularly lethal complication of malaria? Were "Black Plague" and "Black Death" already trademarked by somebody else?)
By the way, mercenaries are not some brilliant 21st Century innovation that nobody ever thought of before. Renaissance Italy, for example, used lots of mercenaries and how'd that work out for them? There are good reasons why advanced societies got rid of their reliance upon mercenaries. Same with Max Boot's brainstorm of using lots of illegal aliens in our armies. These are old, old ideas. Machiavelli discussed the downsides of mercenaries and foreign fighters in Chapters 12 and 13 of The Prince.
The mercenary captains are either capable men or they are not; if they are, you cannot trust them, because they always aspire to their own greatness, either by oppressing you, who are their master, or others contrary to your intentions; but if the captain is not skilful, you are ruined in the usual way.
And if it be urged that whoever is armed will act in the same way, whether mercenary or not, I reply that when arms have to be resorted to, either by a prince or a republic, then the prince ought to go in person and perform the duty of captain; the republic has to send its citizens, and when one is sent who does not turn out satisfactorily, it ought to recall him, and when one is worthy, to hold him by the laws so that he does not leave the command. And experience has shown princes and republics, single-handed, making the greatest progress, and mercenaries doing nothing except damage; and it is more difficult to bring a republic, armed with its own arms, under the sway of one of its citizens than it is to bring one armed with foreign arms. Rome and Sparta stood for many ages armed and free. The Switzers are completely armed and quite free.I conclude, therefore, that no principality is secure without having its own forces; on the contrary, it is entirely dependent on good fortune, not having the valour which in adversity would defend it. And it has always been the opinion and judgment of wise men that nothing can be so uncertain or unstable as fame or power not founded on its own strength.