What If We Tried Running Government Like a Government?

We’ve all heard it a million times: “why can’t government be run like a business”? I generally want to scream “because government isn’t a business….” but I generally settle for “Don’t you mean we need to run government in a businesslike fashion? You really don’t mean we should run government like a business…”

This notion that government is just like business, only less efficient, is often cited by people as the reason they support candidates for public office who, like Donald Trump or Carly Fiorina, have no government experience (and frequently, only the dimmest idea of what government is and does).

In a recent post–rant, really–Mark Sumner insisted that the recurrent theme that “government should be run more like a business,” is both dangerous and completely counter to the whole idea of democracy.

Government and business are not the same thing. In fact, there are good reasons why, in a democracy at least, any effort to run the government like a business should be seen as a hostile act.

After making the (obvious) point that the business of business is profit,  and the business of government is the common good, he goes on:

Well, those who still want to run government like a business would surely be thrilled at the idea of giving the president a pay raise of 16 percent a year—the average increase for Fortune 500 CEOs last year. In fact, CEO pay has risen 937 percent since the business-friendly 1980s, while presidential pay hasn’t even kept up with inflation. Come to think of it, when you compare average CEO pay to company revenues, it looks like President Obama should have pocketed about $124 billion last year. I think everyone can get behind that aspect of “running it like a business.” Right?

But then, the president would deserve that money, because unlike an actual president, as government CEO he’d have enormous freedom to ignore what anyone else said and run the nation as he wanted. Sell the Grand Canyon! Swap North Dakota for North Sudan! Fire the Congress! Yes, Mr. President.

I suppose that people could mean “run the government like a business” in terms of keeping the books tidily balanced. Only, of course, they don’t. Check out Amazon. Or Twitter. Or… well, just about any of them. Check out all those investment banks that invented more theoretical money than the GDP of the entire world, and then lost it.

I particularly liked his conclusion:

If you want a government that takes as much of your money as it can, delivers as little as possible, gives what it takes to a handful of the powerful, and is intrinsically unstable … Sure. Run it like a business.

And actually, there have been governments run this way. Plenty of them. There’s even a word for it. Starts with an ‘F.’ Just Google Mussolini, Benito. You can take it from there. Though, speaking of Mr. M, a lot of this “run it like a business” stuff seems to grow out of a longing for having one tough-talking leader at the helm. Maybe you should add Mugabe, Robert and Franco, Francisco and Dada, Idi Amin to that search. Like I say, this kind of government isn’t exactly a new idea.

On the other hand, if you’d rather have a government that’s interested in providing the best service to the greatest number of people, in rewarding everyone fairly, in protecting the weak from the powerful, then you have another choice. You need to run it like a government. That’s the only way you can, hmmm, what’s that phrase?

“Establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our posterity.”

That stuff. There’s no profit in that stuff. That’s why it’s nobody’s business … but should be everybody’s government.


  1. Forgive me for the indulgence, but here’s a post I made on facebook about this a couple weeks ago…

    I hear a lot of talk about the need to run our government like a business. I think it’s a simplistic and wrong headed notion. But, for a moment, let’s examine how that might work in practice. You could think of the 50 states as divisions of the United States of America Corporation. OK, take a look at this graph. That first vertical line represents the point where a state takes more money in from the Federal government than it sends in taxes and other revenues. Those 14 states at the bottom, they turn a profit for us. The other 36 states above them are costing us money to one degree or another. So…how many quarters should they get to turn that around? One? Two? And if they can’t start making a profit, they should be either sold off or shut down, right? I mean, this is supposed to be a business, isn’t it?

    If you want more detail on the makers and takers:


  2. May I suggest you print this and mail it to the Members of Congress who make up the Tea Party part of the House?
    Running government like a business was from the moment they took the oath of office, and continuing right down to this morning, their mantra and ideology.

  3. Sheila; this takes me back to the days of Goldsmith and the selling of Indianapolis to private businesses – many of them not in the state of Indiana. Another of your commenters can add to this as she was there when Mayor Bart Peterson walked into the shambles that remained of government in the City of Indianapolis. A microcosm of conditions in this entire country today – except the country is being sold/leased/given away to other countries.

  4. Re Jefferson’s warning – another research project is demanded. What exactly was the state of corporate activity which he saw as a threat? If 50% of voters next Nov. are aware we might elect a wise president.

  5. It’s interesting to me that as this notion that government should be run like a business has grown so have dysfunctionly run businesses.

    Many successful business leaders used to consider their business as a member of their community and taking care of customers meant many things. Then MBA schools fostered the idea that business’s only responsibility should be make more money regardless of the cost to others.

    That was accompanied the growth of financial entertainment media which empowered equity markets to reward executives lavishly and treat both customers and workers as replaceable parts.

    Now nothing should be run as businesses currently are.

  6. We have exhibit A here in Indianapolis. Our state has awarded the task of public education to for profit charter schools. How is that working out?

  7. Sheila, this is your greatest blog post yet!

    And like others have mentioned, it would be wonderful if we could get this info into the the hands and minds of the Tea Party advocates. My belief is that it would be difficult to convince them to read it, let alone to believe there might be some truth to it.

    As a side note: A couple weeks ago I met with the President of a large philanthropic organization in Indy. Working with the State government is one of her responsibilities. She has held this position for 20+ years and mentioned that in the past few years she has witnessed state government employees more unhappy and downright miserable than ever before and that they have been leaving in large numbers. There wasn’t time to get into details, but the timeline and political party reference made it clear that Mitch Daniels’ and Mike Pence’s style of governing are at the root of it.

  8. Pete, Milton Friedman has been credited with creating the idea that corporations should exist solely for the profit of shareholders. Before the article that he wrote in the NYT on September 13, 1970, businesses actually cared about their communities and their reputations in their communities.

    He was the leader of the Chicago School of Economics at the time he wrote that article and here is a quote from it:

    Any business executives who pursued a goal other than making money were, he said, “unwitting pup­pets of the intellectual forces that have been undermining the basis of a free society these past decades.” They were guilty of “analytical looseness and lack of rigor.” They had even turned themselves into “unelected government officials” who were illegally taxing employers and customers.

  9. Nancy, thanks, I didn’t have that background.

    It’s not unusual for deep experts to be blinded to the big picture and therefore have to simplify complexity to support the narrowness of their field. I suppose it’s an oversized ego thing.

    While executive compensation has grown like a weed their responsibilities have shrunk down to simply make more money regardless of the cost to others. Soon they will be replaceable by computers.

  10. Thanks prof K and all. When I was in school in the 60’s, there was talk of Corporations needing to be “Good Citizens”. They needed to be part of the community and responsible actors. But hey…that was in the Progressive 1960’s WI. It sure would be nice to get back to that. some of the CA Tech kids are getting that, in their own way. If business, large and small, can get back to behaving better, that will go a long way towards improving our common lot in life.

  11. When a business or corporation is corrupt, the government can come after it. On the other hand, when a governmental body whether Federal, State, or Local is corrupt, who can come after it?

    Case in point from the Commonwealth of Kentucky as described in this recent article from the Kentucky Center for Investigative Reporting, a nonprofit group of Pulitzer Prize-winning journalists, journalists from the old school of reporting. The corruption discovered was in the Kentucky Public Protection Cabinet. Go figure that one.


  12. This idea of “Corporate Good Citizens” was bogus from the get go. It was feel good marketing. The purpose of business was and always will be to make a profit for the owners or investors. Columbus was not bankrolled on his epic journey as a NASA type voyage of exploration. The expectation was profit from trade.

    Milton Freidman did not father the idea of Profit be the sole reason for Corporate existence. The idea precedes him at least back to the British East India Company. The British East Company became not only a powerful trading force but also employed it’s own private armies and navy.

    We have some who feel that Corporations should be unencumbered by any government control. Somehow an “invisible hand” will protect us. At the other extreme would be the grocery store down the street should be owned and operated by the government.

    The critical difference I see is Corporations and Business Entities exist to make a profit for their owners and investors. Government should exist to provide services for the betterment of all of society. There is and should be a balancing act between Business and Government. We see here locally in Indianapolis another step: Crony-Capitalism. The Colts and Pacers receiving huge amounts of tax subsidies and the sole owner Carl the Carpenter not receiving any subsidies.

  13. Louie, public vs private ownership is the same concept as socialism vs capitalism. Socialism is about serving all of the people and capitalism is about serving customers and workers while creating profit for owners of the means (although in today’s equity trading world the owners are typically so transient as to be squatters more than owners).

    As far as I know all governments today are mixes of socialism and regulated capitalism, the variable being the relative proportions.

    Socialism can serve at the pleasure of the people in democracy or at the pleasure of powerful minorities in all other -ocracies.

    Nothing new here.

    To me the key that separates fully functional and less so is only and always democracy. Nothing else needs fixing here.

    Conservatives are attacking democracy. They need to be voted out of power. If we can’t do that we don’t deserve freedom. We haven’t earned it.

  14. Some businesses aren’t run like businesses any more–the profiteers who aren’t competitive because they don’t have any new ideas, innovative approaches, or quality services to sell, so they work on politicians to let them take over aspects of the government’s business. After all, taxes must be paid, so they see it as a free pool of money they can connive to get for themselves by claiming to offer superior services. They are never required to prove the superior worth of their services. So, you have charter schools, Blue Indy, Corrections Corporation, the Medicare contractors, the list goes on and on, none of which does a better job than the government did. That Justice Center deal would have required taxpayers to build the facility and they pay to lease it from privateers. These profiteers make their money mostly on benefits that would have been paid to government employees, which costs us all in the long run.

  15. Louis, while businesses have always intended to make a profit there really used to be businesses that focused on providing quality products or services and most did care about their reputations. Executives were not paid the outrageous salaries and bonuses that exist today. Stockholders made a fair return on their investments, but not by turning their employees into indentured servants or moving their jobs to another country.

    Milton Friedman actually had been credited with the beginning of the end of corporations actually having a conscience.

  16. If a business person has not been committed to high quality products or services, to high employee morale, and to the community at large, that person is not likely to be comfortable with or successful in government service.

    Folks from private sector businesses often evidence an inherent dislike for transparency, yet our government ‘business’ must comply with open records and meetings laws, nepotism prohibitions, competitive bidding of contracts (rather than crony capitalism), and MUCH more. Those in government always have the media looking over their shoulder in a way that businesses find difficult to comprehend, let alone accommodate and withstand. That’s not to say that all businesses are corrupt, just that the rules by which both businesses and government must play are MUCH different. Keeping secrets to protect business profits is ‘doing what comes naturally’ in the private sector but can land you in scandalous headlines and jail in government.

  17. There are evidences that there exists a ‘hidden hand’. When there were Mom and Pop storefronts all over town, competition insured it’s operation. If Sam’s Fish Market looked at you wrongly, you’re simply cross the street and go to Joe’s. You can’t do that with CVS and Walgreen’s. The same stockholders own both. That’s why they’re always across the corner from each other.

    The solution: Simply break them up. Slow and costly progress? Certainly, but the alternative is proving worse. At the rate we’re going, we’re being governed by a visible hand: The 1%. And their agenda is more war, more planet destruction, more hunger and neglect for you. More returns for them. This is simply a game they play. Who can buy the most toys and have the most women? Why?

    Evil. We are governed by evil.

  18. George Lakoff, a cognitive brain scientist who holds forth at the University of California, Berkeley, (and who happens to have earned his PHD at IU), has laid out the dimensions of the brains of Democrats and Republicans and how we got that way. Lakoff is an expert on framing and writes extensively on how we can lose an argument with Republicans when we allow them to seize the agenda by framing the issue, with differences ranging from a moderator’s question to a candidate on “Why do you love your wife and children so much?” to “When have you quit beating your wife?” The “framing” ends the discussion, but Lakoff tells us how to brush off Republican (read Fox News framing) and turn the tables on such framers. I recommend reading his books on this topic, some of which are in paperback.

    He sees Democrats as nurturing in personality and Republicans as brain-wired for autocracy, literally equating sections of the brain and research to bolster his theories of how members of the two parties are different in their political outlooks. Interesting.

    We have more to worry about than Friedman, the Chicago School and others who say that the whole purpose of corporate existence is to “enhance shareholder value.” Now courts have adopted such a view, which therefore presumably means that corporate deportment does not include concerns for the corporate workforce, the environment, or anything else – or if so – subordinate to the primary rationale for their existence. When Henry Ford decided to pay his workers the unheard of wages of five dollars a day long ago in putting Model Ts together, some of his stockholders sued him for not putting shareholder value above wages paid. We have come to such a point now that not putting shareholder value first is considered to be a breach of fiduciary duty.

    When myopic greed masquerades as fiduciary duty enforceable in court, it is clear to me as a lawyer that those of us who are expecting any corporation to be Mr. Nice Guy can forget it now that they have judicial cover (which translates into a form of a moral blanket). What to do? Elect people to state and federal legislatures who change the rules of corporate governance, and be prepared for the corporate propaganda machine that such legislators are “anti-business” and will drive businesses out of the state etc. Stricter requirements are not anti-business; they are rather pro-people, and are necessary since corporations’ raison d’etre is to “enhance shareholder value.”
    I thus note in passing that Volkswagen “enhanced shareholder value” when it knowingly used software which poisoned the air beyond allowable limits; that pharmaceutical companies “enhance shareholder value” when they acquire and/or merge with competitors and can thereafter enjoy lesser competition and monopoly pricing, or go for overseas inversion to beat the tax rap etc., but how are we the consuming public affected? Adversely at best, so let’s vote in senators and representatives both at state and federal levels who author legislation to straighten out corporate deportment and judicial interpretation as well.

    It can be done. Corporations and governors and courts don’t pass laws; legislatures do, so let’s elect people to both state and federal legislatures who will expand corporate responsibilities beyond mere money-making and then regulate their predatory practices and other such excesses in the interests of both shareholders and consumers, and let’s do it as soon as possible.

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