Why
not to Run Government Like a Business?
By
Josh Sager
In the past few decades, many politicians have propagated
the idea of “running government like a business” in order to cut spending and
reduce the debt; this concept is fundamentally false due to the fact that
governments and corporations have diametrically opposed goals and operate in
entirely different manners.
The purpose of government is to provide for the
common defense, ensure the rule of law, and to advance the common good. Some
services are necessary for society to function and are incompatible with the
private sector due to fairness issues as well as the free rider problem; these
services are seen as fundamentals that should be provided to everybody regardless
of the ability to pay. The military serves to ensure the populace’s safety from
external threats such as invasion or terrorism; domestic law enforcement
organizations, fire protection and emergency services are all vital services
that the government provides in order to ensure the rule of law and general
safety inside of a country. Industrial/banking regulations, public education,
government grants for research, and the national infrastructure are government
run programs intended to provide for the common good of society as a whole. The
government exists to serve society through preserving order and providing
services that cannot be effectively an equitably provided by the private
sector. Governments are akin to beehives, where there are numerous smaller
parts that exist in order to assist the society as a whole, regardless of
whether there is a benefit to the part.
The purpose of a vast majority of corporations is to
make a profit for its investors; those that do not have a profit motive are
considered non-profits and often exist to advocate social causes or perform
charity work. Regardless of how a business makes money, whether it sells retail
goods, develops new products, or provides services to consumers, it exists purely
for the profit of those who own it. There is no requirement that a corporation
provide services to those who cannot afford them, nor is there a requirement
for a business to increase the public good. By cutting costs, and more efficiently
producing goods or performing services, a business competes with others and
eventually grows larger. Corporations resemble amoebas in that they are shapeless,
amoral masses that exist only to feed, grow, and consume other, smaller,
entities in competition for scarce resources.
The fundamental flaws in the ideal that government
can be run like a business are the amoral nature of corporations and the
massive free-rider problems inherent to society.
The most basic flaw in ideal of a government run
like a business is the absolute disconnect in goals between governments and businesses.
Corporations need to pay their workers enough to entice them to work, but they
are not obligated to work to improve their worker’ wellbeing. Governments exist
for the sole purpose to serve their citizens’ interests. This fundamental disconnect
means that while government can be run in a business model to minimize costs,
services to those who are disadvantaged will inevitably be cut. By cutting
services to increase efficiency, equality inevitably suffers and the core ideal
of government as a protector of
all citizens is lost.
The educational system illustrates an example of the
goals disconnect problem inherent to government run like a business: A
corporate outlook into public services leads to decreased costs, but also
massive decreases in quality. Cost cutting measures in public schools, such as
reducing teacher compensation or decreasing supplies available to students, may
reduce the overall price of education but they also damage the quality of the
service. Unfortunately, many citizens cannot afford private schools, thus they
cannot find alternative education in a market and are stuck with a subpar
education. Our country’s education system, like many other public services,
will suffer greatly when the profit motive eclipses the service itself as the
goal of the program. The goal of education should be education, not turning a
profit by supplying defective services to those who are unable to attain
alternative educations in the name of saving money.
The organizations intended to work to preserve
social order, such as police and prisons are areas where the profit motive
becomes very dangerous to society. When police forces and our legal system
become profit oriented, justice takes a backseat to money. A profit driven
police force will hand out excessive fines and unnecessary charges in order to
increase its own bottom line. We already see this problem in local police
departments that are funded by fines; when the police run low on funds, the
number of fines as well as the harshness of the fines increases as the police
attempt to make up for lost funding. While this is only a minor example, it
demonstrates just how dangerous adding the profit motive to the justice systems
can become.
The private prisons in the USA are an example of
where the profit motive has already taken over a public service. Private
prisons are paid by the government to house prisoners just as publicly run
prisons do; the major differences are that the private prisons are not legally
as culpable for abuses of inmates, and they have an incentive to get more
people locked up. As decided by the Supreme Court in the recent Minneci v.
Pollard case, inmates in private prisons cannot sue the state or the private
prison corporation for abuses suffered in the prison. As all corporations seek
to maximize profit and private prisons make money based upon the number of people
imprisoned, private prisons corporations have lobbied politicians to increase
the number of people in prison. The increased penalties for drug use, harsher
illegal immigration consequences and three strikes laws are all example of how
corporate lobbying has led to increased numbers of people imprisoned for a
profit. Should anybody feel comfortable that corporations can infiltrate the justice
system with their profit motive, and make money by imprisoning you, guilty or
innocent? Where government is run like a business, money is made at the expense
of the people who are least able to defend themselves from abuse.
In addition to the differences in goals between government
and corporations, governments must deal with massive free rider problems.
Corporations operate on the simply principle that in order to get something,
you must pay for it. Governments exist to support and protect all citizens,
regardless of whether they can afford to pay taxes. When a government is run
like a corporation, the poor and disabled are deemed freeloaders (Ex.
reductions to welfare and disability) and cast aside by those in power in order
to save money.
Poor and middle class citizens benefit from
government programs such as education and law enforcement while in a profit
driven entity, they would be unable to afford such services. Private education
and security services are available to those who can pay, but not at the price
that we all pay through taxes. It is seen as a moral imperative to provide justice,
defense and some basic services for the least of society. Unfortunately, it is
very difficult to integrate a moral imperative into a purely amoral profit
system, as these systems are based around making money rather than helping
society. If profit overshadows equality and fairness as the goal of the government,
the poor see their services cut, as they cannot pay for them. The reduction of
education and the decrease in support leads to less upward economic mobility
and creates a downward spiral.
In public services such as law enforcement or the
military, it is virtually impossible to integrate a profit motive without
completely perverting the ideal of the institution. The military protects the
country as a whole and should operate on these principles rather than a profit
motive. We need only look at Blackwater (or whatever they are calling
themselves this week) to see the end result of a for-profit military. For law
enforcement, the major ideal is to promote social order, not make a profit. In
addition to the issues already discussed, profitized police forces cannot
enforce the law equally where the profit motive overshadows justice. If
somebody does not pay taxes due to poverty the police must still protect them, a
situation which demonstrates the textbook definition of the free-rider problem;
a problem which is incompatible with the profit motive of businesses.
The next time you hear the term “running government
like a business” you should understand what it entails. Reducing costs and
services so that the rich no longer need to support the poor and perverting the
goals of public institutions to save money rather than providing for society.
There is an important reason that government and businesses are separate: Governments
provide services for society and care little for making money, while businesses
exist to make a profit, regardless of whether they fail to take care of those
who cannot afford their services. These operating methods and ideologies are fundamentally
different and thus should not cross over between the two types if entity.
While I rarely write comments, I must tell you I greatly enjoy reading your essays. Keep them coming!
ReplyDeleteIt doesn't matter whether someone made a profit or not when you receive a service. The only thing that matters its whether its quality price ratio is good, and whether it is safe.
ReplyDeleteGovernment can run businesses, and businesses can perform the roles of government...if the people who are in charge of them are exceptional leaders, and are held accountable for their results.