Why Government Shouldn’t Be Run Like a Business

Muncie, Indiana – We’ve had several recommendations on our Facebook page demanding that public officials and the government should operate like a business, or the ideal conservative stance of the 1980’s Reaganism.

The primary difference between running a business versus running the government is a business is motivated to generate a profit. Government’s mission is to provide for all citizens through the “common good” by funding things like roads, schools, parks, police and fire protection.

For instance, try closing a small, but rarely used fire station to save a few bucks. Outraged neighbors of all political stripes will raise a fuss with city council in protest (South Mock Avenue Fire Station). Try increasing park fees on citizens while reducing services and see what happens at Parks Board meetings (Proposed PCR Fee increases by Sharon McShurley in 2011).

Now, suppose a local bank decides to close down an under-performing branch bank on the west side of town and move employees throughout their remaining branches. A handful of people might be upset they have to drive a little farther to cash their check, but they won’t be fuming all the way to the Mayor’s office.

While Muncie suffers from declining revenues due to loss of industry, a large percentage of non-profit property owners (51%), and constitutional property tax caps, public officials struggle to find revenue to provide for the common good.

For instance, Muncie Community Schools doesn’t have enough revenue to support all our schools, nor do they have the money to bus the kids to school in 2014, so they are presenting options to the public and asking for your vote on a referendum in November allowing them to charge more in property taxes so they can pay for their contract with a busing company.

If a business did not have enough consumers willing to buy their product, they would have to make some tough decisions impacting owners and employees, and to a lesser degree, existing customers. These decisions are made in the boardroom or in private offices.

However, when a school corporation is faced with a similar issue, the reactions are a lot different because meetings are published in the newspaper inviting public comments on how decisions impact the community, or the common good.

A business must produce a product or service that consumers want or need. They must determine the right selling price, should they carry inventory, or decide how to properly capitalize the business. Ultimately, the decisions they make are based on the demand of consumers. You might think your product or service is incredible, but without consumer demand to buy your product, you’ll not be in business for very long.

Although governments must respond to the desires of their constituents (consumers) by providing necessary services (products), here the path diverges because public officials, unlike those in the private sector, must balance meeting the bottom line with the expectation that they will also provide for the common good, however that’s defined. If they choose wisely, they get re-elected. If they don’t, they get replaced.

For instance, there are three branches of our federal government: legislative, executive and judicial. So we have a total of 545 people in Washington: 535 people in Congress; the President; and nine judges. Not very many people considering they answer to the common good for over 300 million Americans. As we’ve seen over the past decade, when those decisions tend to favor one class of people over another, the public gets restless because the common good is not being served.

As you can tell, governments shouldn’t operate like a business since they have two separate and distinct missions. When our elected officials falsely claim that government should run like a business, or even worse, a residence, then we should doubt their decision-making ability. To debunk the myth on how government budgets should be handled like a residential budget, check out the Roosevelt Institutes article which states, “A sovereign government bears no obvious resemblance to a household.”

We have no idea how these people get elected to serve in a public capacity, but this analogy is used often by Minority Speaker, Mitch McConnell and Speaker of the House, John Boehner. Tea Party members and candidates use it often, which is one sure sign they shouldn’t be one of the 545 representatives in Washington.

Check out this short video explaining the difference between the goals and missions of business vs government. The line sometimes get blurred when businesses and governments enter into business arrangements, but for the majority of cases, these facts hold true. Muncie Voice is looking at several such quasi-business/government arrangements for future articles.

Created by OnlineMBA.com

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Todd Smekens

Journalist, consultant, publisher, and servant-leader with a passion for truth-seeking. Enjoy motorcycling, meditation, and spending quality time with my daughter and rescue hound. Spiritually-centered first and foremost. Lived in multiple states within the USA and frequent traveler to the mountains.
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