One of our readers asked about the "privatize" the department remark. This was in fact a remark attributable to Walter Williams and Walter's goal was to insulate the department as much as possible from the inefficiencies of public university life as possible. Clearly, he could not eliminate the inefficiencies, but he could try to minimize them and that is what he did as the chairman of the economics department at GMU.
I once asked Peter Berger what the secret was to a long and distinguished career as a scholar. He said bluntly, look the modern university is a dysfunctional workplace, the best you can do is try to insulate yourself from the craziness with your own research center and with private donors. And Berger taught for much of his career (though not exclusively) at private universities, not large public universities.
The best diagnosis of the dysfunctions of large public universities can be found in James M. Buchanan's Academia in Anarchy (Basic Books, 1970). Unfortunately, this is the one book left out of Buchanan's Collected Works.
The basic analysis is straightforward --- if the customers don't pay, the managers do not have control, the workers get to manage, etc., etc., don't be surprised when the organization is screwed up. Williams's remark (and governing strategy) was meant to shift the incentives that one confronts in the modern public university, and to align those incentives in a way that would reward individuals for quality teaching and relevant research.