Run Government Like a Business? NEVER!

We hear it all the time from the right – “Government should be run like a business!”  I disagree.

Any business the size of our government would use its massive market power to quickly snuff out its competitors, and then begin expanding into new markets.  Government has a monopoly on industrial insurance, and they’re just aching to get into the health insurance business, so why not auto, fire, life and all of the other lines as well?  As long as they’re running the liquor stores, why not branch out into tobacco, pornography, and finally just general retail?

No, government should not be run like a business.  But it should learn to think like one.

We all want out of this economic recession.  And both the Democrats and Republicans agree that in order to get out, we need job creation.  Where they differ is on the relative value of public sector jobs versus private sector jobs.  Democrats believe we can use government to prop up employment and bridge the economic downturn, while Republicans believe we need to offer incentives to businesses to grow and create new private sector jobs.

The reason for the difference is that Democrats are looking at jobs solely from the perspective of the person receiving the paycheck.  Who cares who signs the paycheck or what your job description is as long as you can pay your mortgage, right?  But if that’s the case, why make a person work at all?  Why not just pay people to stay home and bond with their children?

The important thing to consider, even more so during a time of economic crisis, is the value (benefit produced) of the job, not the cost (paycheck).  Private sector jobs have an inherent value test – if the value produced by the employee does not exceed the cost, then the private sector is forced to eliminate that position and deploy those resources in a way that will produce value greater than cost (this is called “profit”).  If they do not, they lose money and eventually go bankrupt.

Government does not have this automatic feedback loop.  It is this efficient deployment of resources that people are clamoring for when they say that government should be run like a business.  And if elected officials ignore these cries long enough, governments may get to meet the private sector boogey-man called “bankruptcy.”

To avoid this, our state needs to evaluate each and every public sector job based on the value it provides to our society.  The duplicate distribution network we have established for liquor sales is one example.  It may provide paychecks, but it does not provide societal value.  That is not to say that the regulatory and enforcement efforts of the LCB provide no value – they do, and they should be enhanced because this is a function that can ONLY be performed by government.

Other examples may not be as clear-cut, but they are out there.  Our elected officials just need to be trained to identify them.  Electing candidates who understand the private sector is one way to accomplish that.