We’ve all heard some variation of it — as we grow older, we learn more about life, have greater insight into it and become wiser. Sometimes it’s true, sometimes it isn’t. There are endless examples of the latter, but two I find particularly appalling are often repeated by those who should know better: government should be run like a business, and business executives know best how to improve the economy. Neither is true.
While it’s possible to utilize best business practices in government in terms of management of staff, building effective teams and setting goals (and then measuring progress), the primary function of business is to generate profits by offering goods and services, whereas government is about creating an infrastructure that serves the needs of citizens and business for the greater good. In modern industrial societies, governance is vital, complicated and expensive, but it’s not about making a profit.
In addition, for very practical reasons, services are made affordable so even those who have limited financial resources can have access to them. This means, for example, that postal services and public transportation might not cover their costs with the fees charged, but the benefits to society are far greater than the deficits incurred. The costs of infrastructure (building, repairing, expanding roads, bridges, tunnels, airports and so on) can be hundreds of billions (work done by businesses and their employees), and even when there are tolls and fees for using these, the revenues will not always cover all fixed annual costs for completed projects. The investments by taxpayers are repaid many times over by the ability of businesses and individuals to accomplish what would be difficult or impossible otherwise.
The skills and abilities needed for governance are actually greater than those for business in terms of the diversity of services and functions government provides. Governance is quite unlike the narrow focus of companies in their fields of endeavor. Those who insist privatization increases efficiency and effectiveness while reducing costs have not taken into account that government administration costs are typically less than those of private companies, and there are no added margins for profits. And, while executives in private enterprise do have to meet or exceed customer expectations to succeed, they do not have to deal with the expectations of citizens (potential voters), which are typically more complex and diverse.
Businesses don’t always make profits, and some can lose money for many years. Governments typically run deficits because the ability to cut costs is limited by a multitude of competing interests, public policy requirements and rapidly changing dynamics (economic crises, natural disasters, military conflicts among them) that cannot wait for revenues to catch up or increase. National governments rarely have mandated balanced budgets because of so many variables, and the few that do have so many exceptions built in that the mandates are largely superficial.
As for the ability of business executives to deal more successfully with economic, monetary and fiscals policies than those from other backgrounds, the differences between business and government once again are critical to governance. The needs and special interests of business are not the only criteria for those who govern. They must balance a variety of competing needs and interests while trying to achieve results that are positive and sustainable for society as a whole. Business generally prefers less regulation and environmental requirements, but public health and safety and the greater good (quality of life) demand regulations of many kinds to avoid what goes wrong in the absence of them. Self-regulation rarely comes close to matching these demands.
Buying, running and selling companies require skills that are not particularly transferable to the requirements for responsible governance. Employees and citizens are vastly different challenges, and the practicalities of meeting civic responsibilities are far broader than what is required to focus on business fundamentals. Many who are critical of the president, governors and mayors have no idea the complexities involved and the compromises needed to effect change. Global business is complicated, but the variables are fewer in number and the constituent base consists of shareholders and customers, not citizens.
All of which is to make a pragmatic case for why government and business are very different for many reasons. Those who want to be president cannot make a viable case that business experience is superior for that role because government should be run like a business. It is disingenuous at best to make such an analogy, and intellectually dishonest to continue to do so. Voters should know and understand why.