The Business of Government

Americans like to believe that government should be run like a business. That belief–pernicious and naive– helped elect Donald Trump, and its persistence is evidence (as if any additional evidence is needed) of the public’s profound lack of civic literacy.

Should government be run in a businesslike fashion? Of course. Is managing a government agency “just like” managing a business? Not at all.

A former colleague recently shared an article addressing the differences between business and government. Addressing the “myth” that anyone who can run a successful business can manage government, the author noted

This is not a 21st-century — or even a 20th-century — phenomenon. In a classic 1887 article, Woodrow Wilson, then a professor at Princeton University, maintained that there was a “science of administration” — arguing, in effect, that there were principles of management that transcended the context in which they were applied. “The field of administration is a field of business,” wrote Wilson. “It is removed from the hurry and strife of politics.”

Later observers and scholars of public administration thoroughly discredited this notion. The pithiest statement on the topic came from Wallace Sayre of Columbia University, who argued in 1958 that “public and private management [were] fundamentally alike in all unimportant respects.” In 1979, Graham Allison, then dean of the Kennedy School of Government at Harvard, used Sayre’s comment as a launching point from which to examine similarities and differences. He noted that both private firms and governments must set objectives, develop plans to achieve those objectives, hire people and direct them toward the achievement of objectives, and manage external environments. But he observed that the way in which these things occur is often fundamentally different from one sector to another.

The article lists some of the important ways in which private enterprises differ from public ones.

Government is about this thing called the “public interest.” There is no such animal in the private sector. Private firms care about their stakeholders and customers; they do not generally care about people who do not invest in their businesses or buy things from them. Thus, accountability is by necessity much broader in government; it is much more difficult to ignore particular groups or people.

Private-sector performance is measured by profitability, while performance measurement in government needs to focus on the achievement of outcomes.

Compromise is fundamental to success in the public sector. No one owns a controlling share of the government…. The notion of a separation of powers can be anathema to effective private management. It is central to the design of government, at least in the United States.

Government must constantly confront competing values. The most efficient solution may disadvantage certain groups or trample on individual or constitutional rights. In the private sector, efficiency is value number one; in government, it is just one of many values.

Government has a shorter time horizon. In government, the long term may describe the period between now and the next election. Thus there is a strong incentive to show relatively immediate impact.

Government actions take place in public, with much scrutiny from the press and the public. There is no equivalent of C-SPAN showing how decisions are made in the corporate boardroom. Corporate leaders do not find it necessary to explain their every decision to reporters.

When corporate executives are elected to run cities or states, they often expect to operate as they did in their companies, where they made the decisions and others obediently carried them out. But legislative bodies–even those dominated by the political party of the chief executive–are not “minions.” They too are elected officials, and they bristle (rightly) when a mayor or governor or president presumes to issue orders. Successful relations between the legislative and executive branch require negotiation, diplomacy and compromise–and those aren’t management skills generally found among corporate CEOs.

Trump and most of his cabinet nominees lack any government experience. Most also lack any education relevant to the missions or operations of the agencies they have been tapped to lead. They don’t know what they don’t know.

And it has become quite obvious that the concept of “the public interest” will be new to all of them….

26 thoughts on “The Business of Government

  1. How similar this time is to the age of the Robber Barron’s. The difference is that in that age they bought middlemen who were politicians. How much more efficient is Trump by cutting out the middleman?

  2. The water in Flint Michigan is an example. The following is from the New York Times: “All too prevalent in this Flint water investigation was a priority on balance sheets and fi- nances rather than health and safety of the citizens of Flint,” said Schuette,

  3. This describes the reasoning used to justify the current trend in public education, or as most would call it, privatization. Betsy DeVos, the nominee for Secretary of Education, is a champion of this philosophy that she has also coupled with the religious ideology of Mike Pence, and she has used her financial resources to literally destroy Detroit public schools with failing charter schools. Those of us that have been defending our public school systems since the assaults of Mitch Daniels and all of the other “reformers” that have come along since then, know that it is difficult to fight against these people, even when there is overwhelming evidence that their ideas and philosophies are wrong and destructive. For me, as a public school teacher, it is like watching a car speed toward a cliff and no matter what I say or do the driver of the car keeps speeding toward inevitable doom. How do we stop this?

  4. “And it has become quite obvious that the concept of “the public interest” will be new to all of them….”

    I do not know if this comes under the heading of “government” or “business” or “government as business” but I believe it certainly is in “the public interest” if anyone out there can answer my question. And has anyone else had this problem in recent months?

    I have used and had the same AOL E-mail address since early 1999; a few months ago I began getting mail returned via Mailer-Daemon who changed my correctly entered recipient address to “outlook.com”. Marv and I exchange occasional E-mails; 5 or 6 times this has happened when I attempted to send him messages yesterday and again this morning. I was given an address of postmaster@c-point.com to report this problem to but this morning that was returned via Mailer-Daemon. Being infected with paranoia and fearing Trump conspiracies regarding “freedom of speech” via the Internet; I am now fearing to send E-mail messages. His is not the only address resulting in these returns but it is the same two addresses, yahoo.com and gmail.com. Any ideas as to source or solution?

  5. “How do we stop this?” We can’t, sorry to say. The country is going over the cliff and little can be done except to not go with it, keep faith with our principles and values, and prepare to pick up the pieces. This is not to say that we do not protest. We should continue to speak up loudly and clearly, stating our positions in clear language that all can understand. We should educate our own children in the meaning of freedom, the responsibilities of that freedom, and live out the Bill of Rights in our daily lives.

    We cannot see the road ahead, only the warning signs of disaster. Let us all heed those signs with the faith that at the end of the road we will have prevailed.

  6. I choose the MPA over the MBA because I believed working for the public sector was a more intellectually challenging and noble career. In business there is just one one goal: Profit. In the public sector work there are multiple, competing and often intangible goals to manage. What a far more interesting and ultimately rewarding career I naively thought. My biggest regret is that I didn’t take myself and my highly regarded SPEA degree and get the hell out of Indiana where public service was viewed as a second class profession. Alas, this short-sight view of public service has infected the rest of the nation. I still believe that working for the public good is the only career I would want to dedicate my life to. It is just a shame that I feel that my life’s work is viewed as worthless and inconsequential.

  7. “And it has become quite obvious that the concept of “the public interest” will be new to all of them….”

    I don’t think this concept will interest any of them at all.

  8. To JoAnn Green, it would appear that those people with whom you exchange emails have been hacked. The hackers create an account with the same username but a different provider. For example janeandsally@gmail.com would become janeandsally@hotmail.com. They then set up automatic forwarding so that any mail sent to the gmail account gets forwarded to hotmail. The people being hacked will need to delete that forward command. Some of their contacts may need to delete them and renter, because some services update email addresses automatically and the phony address may be in their contact list. It’s kind of a tedious procedure.

  9. Let’s flesh out how what Sheila’s remarks work in the real world, of how the purposes of business and government can diverge where a buck can be made. Tillerson, the current nominee for Secretary of State and the CEO of Exxon-Mobil, after we placed new sanctions on Russia due to Putin’s annexation of the Crimea, ignored the spirit if not the letter of the sanctions (national interest) by going to St. Petersburg and making a deal with Rosefelt, the big Russian oil company, whose leader is a lieutenant of Putin, the same Putin who three years earlier had conferred the Russian Order of Friendship on (you guessed it) Tillerson. I blogged more than once on this connection in which I described Tillerson as just another oil-soaked Texan who got lucky.

    The Trumpster framers are in whitewash mode with the media telling us that Tillerson was an Eagle Scout as a youth, to which I replied that that was then and now is now, pointing out that Hitler was once an altar boy as a youth, too, and we all know how he worked out as an adult.

    Tillerson was recommended to Trump by Trump’s kids who said they were “blown away” by the credentials offered by Tillerson, but credentials for what? Guiding a huge company through deals with a Russia under sanction, deals with dictators the world over in Exxon-Mobil’s eternal quest for oil? The fact is that he has no credentials for the office because his whole life and being is in making a buck, not public service, and I fear greatly, as with Trump’s appointment of others to his cabinet who are similarly disadvantaged though rich, that we are set to see a convergence of making a buck (or saving one for further distribution to the already rich) with national goals and policy, an all too frequent attempt to mix oil with water. The United States of America, unlike corporate America, is dedicated to service to its citizens, not making a profit, which is the major difference between national and corporate goals. Let’s not confuse them, as Tillerson has done.

  10. Interesting problem. I sense that the effect of the squestor cutbacks was that it reduced the resources available to do the work. However, the “Work” did not change, but could even have grown. For example, the number of tax returns, the number of people seeking assistance. The impact can be that fewer returns get reviewed and the time it takes to get assistance just grows and grows.

    This can happen in business, also. But it just might be that a business approach might just hold people accountable for mission goals, or at least have the goals be known….ie how long does a veteran have to wait for healthcare.

    Business will also look at redundancy, ie why do we have a separate hospital network just for veterans…why not everyone goes through one system. Along that line, business folks might be smart enough to realize the single payer system is best for efficiency. Fat chance of that!

    Sooooo, I’m just saying, let’s be hopeful, but hold government responsible for results!

  11. Teresa,

    “For me, as a public school teacher, it is like watching a car speed toward a cliff and no matter what I say or do the driver of the car keeps speeding toward inevitable doom. How do we stop this?”

    You can’t stop the driver of the car from going over the cliff, but, hopefully, you can jump out beforehand.

    be-fore’hand adv., adj. ahead of time; in anticipation

    Theresa,

    “We cannot see the road ahead, only the warning signs of disaster. Let us all heed those signs with the faith that at the end of the road we will have prevailed.”

    I don’t agree. We can see the road ahead; DISASTER is inevitable. The facts are all there. They just have to be presented before January 20th.

    in-ev-i-ta-ble (in ev’i-te bel) adj. [<l in-, not+evitabilis, avoidable] certain to happen; unavoidable–in-ev'i-ta-bil'i-ty n.–in-ev'i-ta-bly adv.

  12. When I was Mayor – we did some things in a business-like manner – something I learned in not-for-profit administration from great Board members from Delco and Chrysler. That approach worked well. However, I kept very close attention to outcomes; that, after all, was what we were about. I did learn that when folks say ‘government should be run like a business’ what they often mean is, “government should be run like MY business; to benefit ME.”

  13. Humanity builds institutions seeking the power and influence of numbers. Government and corporations and churches and small businesses are institutions but there are many others as well.

    While everyone wants power, the truth is it must be balanced with freedom and freedom must be for all or it is merely power in disguise.

    There is no right sized government or business or any other institution. What brings success is balance.

    Liberal democratic government, well done, seeks equality. Everyone’s needs met, for all are equal stakeholders in government.

    Corporate and military institutions seek hierarchical authority for efficiency and order.

    Progress is primarily a function of innovation and while there are environs that either promote or discourage innovation it ultimately can’t be planned, it occurs generally through the good fortune of the right person being in the right place thinking about the right thing at the right time.

    In a balanced economy the material needs that allow equal opportunity for everyone generally come from government like health, safety and environment, education, health care, public safety, legislation, enforcement and justice, necessary housing and food, infrastructure, fiscal structure, energy, etc.

    Material needs that are optional are supplied competitively by corporations under the regulation of government to ensure competition and fair treatment of consumers.

    Everything is balanced, networked, and collaborative or competitive based on whether it is necessary or optional.

  14. No. Government is, by definition, a non-profit entity present for the sole purpose of organizing the various aspects of the society it presumes to govern. A business is there to make money. Period.

    Ask a pharmaceutical executive and he/she will tell you that they don’t care about curing people or diseases, they are there to make money. Extend this thinking and you immediately see why health care and education should be rights, not profit centers.

  15. Nancy,

    “David Houle is a well-respected visionary regarding our business and political climate. His predictions ALMOST always come true.”

    Thanks for the important link.

    We all need to remember that Donald Trump is leading the Tea Party. The Tea Party is a movement within the Republican Party. They have taken it over. We don’t have a multiple party system like much of Europe and like Germany had in the early 30’s. As of January 21st, the Tea Party will display its true self as a movement apart from a political party.

    Adolph Hitler’s National Socialist Party (Nazis) was a movement. It also was a political party and it won an election that put Adolph Hitler into power. After Hitler assumed power, the Nazis, immediately became a movement, elections were just for show.

    David Houle is missing the above point in his prediction of a THIRD PARTY. Our only chance is a THIRD FORCE which can match-up with the Tea Party MOVEMENT before the time comes when elections won’t matter.

    “….And the popular “win/win” concept that has emerged out of the humanistic psychology movement is also too frequently a chimera—a trade-off kind of enterprise calculated more to produce good feelings than outstanding good results. To say it again, the tendency is deep in us to grow self-congratulatory even when, for the long term and for the widest interest, we have failed.”

    “As caveman and cavewoman, believing that the gods had so decreed, we could shrug off the fact that the TARGET of the hunt had escaped. Raising grains on the world’s savannas, even if our ingrained stubbornness blinded us to elegant solutions, we usually still had our land and the next season to wrestle with the consequences.”

    “Even in the Industrial Age, flexibility and elegance in thinking weren’t overly needed or valued, not by Frederick Taylor, the nine-teenth-century genius who more than anyone else created the organizational blueprint for the times, nor by most of his managerial descendants-in-spirit.”

    “Now though, it matters.”

    “Realizing this, some opinion-shapers and management theorists argue for faster response times. As a model, some of them look to the so-called O.O.D.A loop–the cycle of observation, orientation, decision, and then action described by our Air Force after studying why some pilots were better in wartime dogfights than others. [As a matter of fact, John Boyd’s O.O.D.A. loop was the subject of much of my presentation at the Sun Tzu’ Art of War Conference at Vanderbilt University back in February of this year] Certainly, there are times when fast responses are advantages, or critical.”

    “But O.O.D.A. isn’t the answer when the challenge is to weld NEW ALLIANCES, wield power in radically new fashion, or wrench loose from limiting perspectives.”

    “What do we mean by “elegant”? Looking in our “Webster’s Third New International Dictionary,” we discover the meaning we are after in definition 1 (d): characterized by [SCIENTIFIC] precision, neatness, and simplicity.”

    “Strategy of the Dolphin: Scoring a Win in a Chaotic World” by Dudley Lynch and Paul L. Kordis (New York: William Morrow and Company, Inc., 1988) pp. 22-23.

  16. Marv,

    I do agree with your observation of a movement, rather than a third party. It could develop into a valid third party some day, but an outside movement is what is needed now.

  17. Not only do they “not know what they don’t know”, they don’t care, either, and that’s the big story here. The headlines every day point to one ethical problem after another, such as the disclosure yesterday of the “pay to play” scheme involving his children and million dollar access and photo ops. How about involving his children in sensitive government briefings? In a private company, this would not be a problem. Trump did it and doesn’t know why we object. Yesterday, Gingrich opined that Trump could simply “pardon” himself or his kids for any wrongdoing. They understand the power aspect, not the responsibility and patriotic aspect of the Presidency. Never forget why he wanted to be President–the power, the adulation, being the biggest of the big shots.

    The rules regarding the Presidency were formulated under the ASSUMPTION that the President is, first and foremost, a patriot, not a power tripping narcissistic asshole like Trump. How many times has he said that he is not required to divulge his tax returns and he is not required to divest himself from his businesses? Technically, that’s true, but all candidates for the last 40 years have done it, even Jimmy Carter, whose sole asset was the Carter Peanut Packing business. Sold it, lock, stock and barrel. He did it for the country, to avoid any appearance of impropriety for decisions he would be making as President. Trump will not. Without his family being completely divested from anything belonging to or carrying the Trump name, there will be ethical problems, but, importantly, he just doesn’t care because he’s not a patriot. There will be crisis upon crisis, and lying Kellyanne can only try to ignore questions, and pivot blame to the Clintons, the Obamas, and the Democrats so long. That’s just the problems we know about. Without divulging his tax returns, we can never know just how deeply entangled he is with foreign governments. There are those who speculate that Russia likely has something it could use to blackmail Trump. After all, they are expert hackers. That would explain why he dismisses Russia’s involvement in the election and the lack of interest in doing anything about it. A patriot would be outraged, he would treat this as an act of war and retaliate. Someone looking to expand his business interests in Russia wouldn’t.

    Will the Republicans in Congress somehow wake up one day, discover patriotism and impeach this turd? That’s our only hope. I still want to wake up from this nightmare.

  18. On the first day in MBA school, we learned the business of business is to make money, period. The business of government is to provide service to all the people. Budgets constrain the ability of government to do this. Laws that put various agencies at cross purposes also constrain them. The biggest obstacle in the path of most of the agencies of the federal government is the Congress and that’s as it should be, when their goal is to serve their co,nstituents. When their goal is to shut down an agency (EPA comes foremost to mind), it is another matter altogether. Now they will have the cooperation of the Administration and we will all suffer for it.

    Not on point, the VA does have just one system, but with 160 medical centers and another 100 or so clinics, it makes sense to have an organization that reports up from 22 separate areas of the country. The VA had to offer services to over one million new veterans over the past 10 years. Without the requisite increase in budgets for medical personnel, they have been unable to meet the demand. Is that a surprise to anyone?

  19. Good link Nancy concerning David Houle’s prediction of a Third Party or Third Force. As a Bernie Bot I would welcome this. I would love to see Bernie just step away from Democratic Party and plan something for 2020.

    As far as running government like a business, there is this gigantic hoax about the efficiency of the business model. A business can fail or suffer losses for any number of reasons – a failure to keep up with technology, etc. Then we have the issues where fraud enters into it, such as Volkswagen and their lies concerning emissions, Enron, a plethora of once dominant airlines that no longer exist, Studebaker, Packard, etc. Oh let’s not leave out Wells Fargo and their recent problems.

    The McMega-Media and various right wing think tanks (there is an oxymoron for you) that perpetuate the magic of the market myth.

    I have been reading a book – Don’t Make No Waves, Don’t back no Losers, by Milton Rakove written in 1975, about Mayor Daley the Elder. A man named Sidney Lens is quoted, ” Chicago government is of, by and for the few thousand members of interlocking power elites.” He goes onto say, “The Daley style of city politics may be a portent of the future.” Further he says, “The style presents a handsome visible front but glosses over or ignores the truly desperate social and economic problems of the people.”

    I came to this conclusion of interlocking power elites during the 1980’s and 1990’s. A shadow government if you will layered upon the Republican and Democratic Parties. Politics in Indianapolis confirms Sideny Len’s statements, of a power elite and of a handsome visible front. We have the power elite, including the local McMega-Media, that marketed and then imposed the idea of building stadiums at tax payer expense for the Colts and Pacers. No dissent was permitted, both political parties supported this Corporate Welfare. Downtown Indianapolis is all bright and shiny (a Hollywood False Front), but move out except for a few selected gentrified areas and you have neighborhoods devolving into waste lands in some cases of boarded up houses, pot holed streets etc.

    So IMHO, the interlocking elites could have cared less if it was Hillary or the Trumpet. The power elites could care less about social issues, it is all about maintaining or expanding control to best profit off the system.

  20. Thanks for this. I’ve bookmarked it and will use it for future reference when needed for those trumpers.

  21. A wonderful study in the business of governing is how Franklin Roosevelt was easing the U.S.into WWII before Pearl Harbor made that entry an imperative. The memory of WWI was still very fresh, and Americans wanted no part of another war. But the free world was in peril, Churchill was begging constantly for U.S. entry into the war, and FDR had the political balance, temperament, timing, and skill to bring the country along while offering other than boots-n-the-ground assistance through creations like lend-lease.

    After Pearl Harbor, FDR cajoled American manufacturers into production of wartime machinery and supplies, but a number of those manufacturers continued supplying Hitler. Profits took first place over American interests. Noticeably, Secretary of State nominee Tillerson has defied State Department guidance in order to make a profit regardless of the consequences to the USA or to local citizens in those countries. Tillerson is reported to have great negotiating skill, but apparently he didn’t have the interest to use those skills to serve BOTH his shareholders and America.

  22. I will also bookmark this as it is one of the best explanation of why privatization does not work in the long run for the general welfare. Just look at the privation of our prisons where there in an incentive to keep people in prison because of the money to be made keeping those facilities full. Then there was our own Governor Bayh that closed the mental institutions and turned those people out in the streets because it cost too much to house and care for them thinking for profit industry could care for them. It simply didn’t happen.

  23. There is a similar analogy to business and the shared governance of institutions of higher administration. We have struggled to make shared governance a reality at the University of Indianapolis and we get criticized by our board of trustees for this. However, the president of our university is not qualified to make decisions on math curriculum or chemistry curriculum or nursing curriculum. Somewhere I read that the average lifespan of a business in the US is 26 year and the average lifespan of a university is 100+ year and lengthening (need to check my facts on this but point is that the lifespan of a university is much longer than for a business). I attribute this to the fact that institutions of higher education with shared governance use a much higher proportion of the brainpower of their employees than do businesses. Maybe businesses could learn a thing or two from universities and governments of representative democracies.

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