As much political uproar as private "security companies" [looks pointedly at Blackwater, now rebranded "Xe" after certain flagrant behavior in Iraq] have caused, it's important to remember that the perils of outsourcing core competencies are nothing new.
Rewind European history back to the Italian city-states of the late Middle Ages and early Renaissance, and you'll be knee-deep in mercenary...errrr..."security services." Back in the day, the local name for them was "condottieri." The seafaring Republic of Venice--being pathologically averse to the idea of a conquering hero returning in triumph to be acclaimed ruler of the city--employed them in lieu of keeping a standing army.
The essential problem, however, was that such sell-swords worked for themselves first, and would happily switch sides for a better offer. But the great downside of the condottieri system of warfare was that hired mercenaries (from commander on down) had nothing to defend. Meaning that they had every incentive to live to see the next payday--even an age when the fall of a city gave even the lowliest foot-solder three days' license to destroy, loot or rape anything that crossed his path. Thus battles tended to devolve into inconclusive skirmishes which decreased the risk of war--for the mercenary, anyway--with every likelihood of continuing the pay-out in the next campaigning season.
But the most insidious side-effect of all, at least if Norwich's interpretation (p. 372) is to believed, was that the city-states had over a century of outsourced skirmishing to forget how to defend themselves in a larger war. And so the rather feckless King Charles VIII of France had little trouble making good a tenuous heriditary claim to Naples and rolling up Florence on the way. Inevitably, the disparity between conquering and administering chased Charles back to France--though perhaps too quickly to drive home the lesson that the French and Austrians were to give until the 19th century.
And in the light of that historical narrative, I wonder whether this will not, in fact, be the fate of American enterprise, as the so-called "wisdom" of contracting rather than hiring also outsources that sense of petty insecurity. As Norwich points out, the lexicon of the condottiero (with notable exceptions like Bartolomeo Colleoni) did not include the term "loyalty." Partly because the ultimate focus of the outsourcee is not the outsourcer's "greater good," but the next paycheck. But mostly because loyalty cannot truly be bought; it must be earned.
