1. "Small government people" demanding that the government stop providing services, because the private sector is better at everything.
2. Government services get outsourced to vendors, NGOs, non-profits, etc.
3. These vendors need to justify that they are effective at their job, producing mountains of paperwork.
4. Government offices fill with beurocrats to review all that paperwork.
5. Some of those vendors turn out to be doing a bad job.
6. People complain about how the private sector is incapable of providing these services. <--- We are here.
7. Government pulls funding, starts providing these services itself.
8. Go to step 1.
At least, that's what happens when everyone's operating in good faith. When people are criticizing in bad faith, step 7 is 'Pull all funding for services with no replacement' and step 8 is 'Complain about tent cities and people sleeping on benches.'