Republicans want to run government like a business

In election year speeches you’ll hear Republicans say that government should be run like a business.  That sounds good — I mean everyone knows how awful the government is, right?

And I’ll give them credit:  they do try to run government like a business.  Which makes for really bad government.

Just this week, Treasury Secretary Paulson came up with an efficient 4-page plan for the $700 B bank bailout.  Everything was to be done in secret, with no oversight by congress, and no right for review or legal action in the courts.  This is just what you’d do if you were still running things at Goldman Sachs, a private partnership on Wall Street.  Only one problem:  this is government, and he’s saying “trust me” with $700 B of our money.  This guy was part of the team that created this financial disaster in the first place — trust me?  I don’t think so.

Paulson, like many Republicans, makes the mistake of confusing business and government.*

Business has competitors.  Government does not.  If a business does something stupid or horrible, it is driven out of business by market forces.  If a government does something stupid or horrible, there’s not much to protect you and me.  They’re the ultimate monopoly, with the force of all law behind them.

Business thrives on secrets.  Government does not.  A business with no secrets has no advantage, and is soon out of business.  If a government has too many secrets, it can’t be in touch with the populace and will make increasingly perverse decisions.  Of course government must have some secrets (military action and intelligence depend on them), but most of the time secretive governments have something bad to hide.  Too many secrets leads to too much power, and democracy loses.

Businesses gain advantage by acting more quickly and unilaterally.  Government does not (except for war).  In most governmental activities, it’s important to be inclusive and gradual, to make sure that some new law or policy doesn’t hurt people.  Government is a blunt instrument, it can never be clever or “surgical” the way a nimble business can.

Businesses excel by making something that everyone covets.  Governments excel by doing a great job at the stuff that nobody wants to do.  Libraries, roads, public education, sewers, commodity postal service, coast guard, land management — infrastructure like this does not make for sexy business opportunities.  Nobody really covets government services, but everybody needs them.

Peter Drucker, the dean of American management consultants, once wrote: “Businesses shouldn’t fix problems, they should pursue opportunities.”  If you look at what government is tasked with, all they do is fix stuff that’s broken — anything that’s really visionary will die in the political process.

American business only has the accountability to its stockholders:  if you can make it look like you made money, nobody can touch you.  American government was designed with continuous public accountability and checks and balances to prevent tyrany.

Businesses exist to maximize profit.  Governments exist to maximize social welfare.

So all the things that businesses are good at really don’t apply to the jobs that government has to do.

If you look for governments that are run like a business — with a CEO at the top and an unbroken chain of command that responds to commercial stimuli — you find dictatorships.  Nazi Germany.  Banana republics.  Maybe even China.  Really efficient at some things, but not so hot for the citizen.

Wise Up!   Unilateralism and centralization of power are the hallmarks of a strong executive in business.  They are also the hallmarks of a dictator in government.  Don’t fall for the idea that government can be run like a business — these are just nice words that lead to really bad outcomes.

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*For what it’s worth, I’ve got an MBA and was a VP at two publicly traded companies.  I know a little about business.  I also worked for 7 years as a consultant to the government, and I took every government class that was offered at my university, so I know a little bit about government.  I’ve spent more money on the US government (taxes) than on any other single item in my life, including my house.  So I’d like it to be more efficient.  But that’s not what government does.