Rick Charlie

Why do we want Government to run like Business?

When did we start thinking Government should be run like a business?  Well, historically it started in the business boom of the roaring 1920’s.  The industrial revolution created many very wealthy and powerful men.  One of them became President: Warren Harding

Historians rate this newspaper magnate turned President (#29) as the second worst president in history. This would begin a “three-peat” of poor performing presidents culminating in the crash of the stock market in 1929.  Thus ending the concept of running the government like a business.  Unfortunately, the idea is back.

But why would we want to in the first place?  Well, government is terribly inefficient.  Just look at the DMV for example, or the Post office.  Horrendous customer service, and they often lose money.  But would market structures, incentive-based compensation, command-and-control approaches to government as we see in business make a difference there?

Unfortunately, the way government (here and in most other industrialized nations) isn’t and cannot be set up that way.  The budgetary and financial dynamics are just not the same, nor should they be.  (And let’s not even think about negotiating with foreign governments.)

The administrators of government have far too many people to work with, please, and otherwise collaborate with.  There are also far more rules setup in what has to happen and by who.  Business is much more fluid in its who’s and what’s.  It can be because it’s efficiency is driven by profit – pleasing customers and shareholders.

In a democratically elected government the shareholders and customers are one in the same – the constituents.  And financially, sales and taxes are equally not the same.  They are almost diametrically opposite of each other.

Government is in the business of providing social value mostly through services.  This is something that business simply cannot provide profitably.  We are seeing this in the privatization of prisons for example.  How would one provide safety in Fire, police and military across such a vast area profitably? Government is looking out for the concerns and welfare of millions of citizens, whereas businesses are focused on the bottom line and being the best company financially that they could be.

So how did we get here?  I think Professor of Public Policy at UMD Philip Joyce brings to the table the best answer to this question, and that is:

“People conflate how well government operates with the question of whether they think government should do something or not.” ~ Philip Joyce

Whether government should actually DO a thing is completely different from HOW it is done. Healthcare is a prime example (and another arena that is proving that it should not be run like a business).  Whether you like it or not, government has been involved in healthcare of the people almost since inception.  A healthy constituency serves the greater need of the public sector.  Something a government should do.  We have to get past the argument that is does this, and keep to the task as to how.

We also tend to mix too many issues together that relate to government, laws, and their ability to actually help or do anything about any particular issue.  Laws to protect our water are there again for the safety and good of the populace.  They may be completely inconvenient to business that may need to dispose of a lot of waste.  Time is a factor here.  Sure maybe nothing is problematic for a while, but 30 years from now when the river is dead, the business is gone who is going to pay to clean it up?

And the next question is, when did we start believing that “success” in business will equate to “success” in government?  Negotiating a contract, and negotiating a treaty require entirely different skills, and command entirely different assets to bargain with and failure has entirely different consequences.  Bankrupting a company can be a bona fide strategic option in business (see trump business success 101).  Bankrupting a government, especially one as large and globally influential as ours, is simply a massive disaster.

Let’s move on and away from this idea of running things that are designed to assist the human needs of people (Churches, healthcare, government) as a profit driven business, and let them be run as they were intended, by the people who know how to run them.  Maybe we can finally start debating then, how it is we can best move forward.

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