Government as a business?

I saw the image above posted on Facebook the other day. The idea that government should be run like a business seems to get a lot of support from voters. Candidates often tout their private sector experience and how well they ran their businesses, and others (e.g., Carly Fiorina) are criticized for poor performance. Yes, I know that there are multiple ways to evaluate Fiorina’s time at HP, but putting that debate aside, the importance of business experience clearly resonates for many, especially GOP voters. This seems so wrong to me.

What is the job of a business? To provide some good or service that has a value to the customer and generates a profit for the owner(s). It is a profit-driven endeavor, and businesses that cannot maintain a profit, or the promise of a profit someday, fail. Do we really want government to operate that way? Do we want government to turn a profit? I guess that depends on who the customer and who the owner is. If we’re the owners, then a profit is great. But are we the owners? Aren’t we the customers? Do we use or do we provide the goods services that government offers? We use the roads, we use the post office, we use the military, we use the protection from disease, we use the research advances. Sure, many of us provide manpower for those things to happen, but in the end, it seems like we’re more customers of government goods/services than we are providers. So, if government is run like a business, we should be getting as much out of the customers as possible, perhaps fairly like some businesses, or unfairly like others. Either way, we should be maximizing revenue streams, because what business doesn’t do that. Increased, not decreased taxes. That doesn’t sound like the kind of government that any of these people are calling for, does it?

What about efficiency? That’s a supposed hallmark of the private sector, right? Business is lean and efficient, but government is big and wasteful. That’s what they say, but is that fair? Many people think that competition in the private sector makes it more efficient than government. They point to the DMV as the great example of incompetent people working for the government, and draw the conclusion that those incompetent people would never “make it” in the private sector. First, I should point out that my DMV, New York State, Buffalo area, is incredibly efficient. The offices are like well-oiled machines and people are moved in and out very quickly. This has been helped by putting most DMV interactions online, reducing the need for an in-person visit to the DMV. More importantly, I think the comparison here is just unfair. Even if your DMV is bad, and the people behind the desk are slow and barely competent or incompetent, are you comparing them to the right part of the private sector? Are you telling me that you’ve never had a bad experience calling customer service for your cable or internet service? Are you telling me that you’ve never gotten a wrong answer from somebody at your local computer superstore? Sure, the front-line people in government may not be as competent as the CEO of a major electronics company, but why are you comparing the clerk at the DMV to the CEO in the first place? Seems a bit apples to oranges to me.

What about fraud? That’s rampant in government, so we’re told. Medicare fraud is certainly expensive. As pointed out here, it’s hard to determine exactly how much money is lost to fraud each year, but it could be somewhere between $17-57 billion. That sounds like a lot, but consider these two things: 1) Medicare is big. Medicare covers approximately 46.4 million Americans. If we use the highest of the fraud cost estimates, that means fraud ends up being about $1,200 per person in the program. Compare that to private insurance. Well, that’s not so easy because fraud statistics aren’t made public by private companies. These aren’t numbers that are readily available and when statistics about health care fraud are given, then usually include private and public insurance. What about looking at fraud in auto insurance. That’s something that the government doesn’t provide. But, as pointed out by the Coalition Against Insurance Fraud, there are many types of auto insurance fraud, and it’s clearly pretty common. So even in the private sector, which is supposed to be efficient, there is plenty of fraud, and plenty of money lost to fraud.

How else should government be like a business? When a product or service doesn’t sell, or isn’t used by many people, businesses generally discontinue that product or service. But isn’t that a key role of government? The National Center for Advancing Translational Sciences (NCATS) is part of the National Institutes of Health (NIH). NCATS gets a line-item budget in the Labor, Health and Human Services, Education, and Related Agencies appropriations bill. This is the law that provides funding for all of the NIH. As part of their mission, NCATS maintains GARD, the Genetic and Rare Diseases Information Center, and has a whole research program focused on rare diseases. A product that isn’t used by many people, that would be discontinued in the private sector, and this is just one of many examples.

So do we really want the government to run like a business? What part of that is is that we’re looking for? I don’t know, because I’m not one of these people, but my honest guess is that they don’t know either. My guess is that they just think it would be better, because they’ve been told over and over that government can’t get it right, and everything the private sector does is done better than government could. Other than being told that’s true, I simply don’t see where that sense comes from. The NIH is an amazing public entity. The CDC collects and manages huge amounts of data and helps doctors and scientists prevent and fight disease. NASA put people on the moon, collects huge amounts of data about the world we live in, sent a robot to Mars, just to list a few. Most of us like having weather reports to help us plan our weeks, or at least help us figure out what to wear. You may think that information is all coming from some private company, like Channel 7 News, or the Weather Channel…sorry, try again. Pretty much every weather model for predicting the weather, at least in the US, comes from the National Centers for Environmental Prediction, part of the Federal Government. More specifically, part of the National Weather Service, which is part of the National Oceanic and Atmospheric Administration (NOAA) . Sure, the private sector takes this information and gets it from the government to your television set or radio or smartphone or web browser, but there would be nothing to send without the government. NOAA maintains an array of satellites that feed us information about weather systems, tropical storms, hurricanes, coral reefs, fires, volcanoes, and much more. Is this expensive? Sure is. NOAA had a 2014 enacted budget of $5.3 billion. Tell me what private sector business is going to spend that much money to give us what NOAA does. Not one. That’s why we need NOAA.

What about the Post Office? They’re pointed to as an example of waste and poor business, but how fair is that? The USPS is facing a new era with fewer people using mail, that’s for sure, but how well do they do their job, and at what cost to the taxpayer? The second part is the easiest to answer: no cost to the taxpayer at all! The USPS has operated without taxpayer dollars since early in the 1980s. They do not receive federal dollars, they are not part of the budget process, even though they are clearly mandated by the US Constitution. That alone is pretty amazing. How well do they do their job, and what is it that they do? They own and operate the largest civilian vehicle fleet in the world and employ more than 600,000 workers. They’ll deliver an envelope from one side of the country to the other, in about 1 or 2 days for 49 cents. Let’s compare that with the private sector: to send an envelope from New York to California costs $39.50 for standard overnight or as low as $21.42 for 5-day delivery. Sure, FedEx provides tracking services and some other things that the USPS might not include in the 49 cents, but they charge almost $21 more to send the same letter the same distance, in more time. This is partly because FedEx is not there to provide a service. They are there to make a profit. I don’t blame them for this, and I’m not passing any judgement on them for doing that. It’s what businesses do, and I’m thrilled that many of these businesses are there. Apple is there to make a profit. They create wonderful devices, that I love to purchase, but they exist to make a profit, and without that profit (or the promise of a profit someday), they go away.

That’s not what the government is there for. The government is there to protect us. To provide services. Not to make a profit. Of course they should do these things as efficiently as possible, and if that’s all that’s meant by the meme at the top of this post, then I’m right there with that message. But I somehow doubt that’s what people are thinking when they say that government should be more like a business, if they’re thinking much about it at all, at least past the first nine words.


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