The difference between running a business and running a city boils down to this: Try closing a local, little used fire station to save a few bucks. Outraged neighbors of all political stripes would storm the city council in protest.
Now compare that to the silence that typically follows a corporate decision to close an underperforming branch bank or a surplus warehouse.
The reactions are different and for good reason. Although corporations and governments are organizations, that may be one of the few traits they have in common. The role of a business, any business, is to make money.
Successful companies typically accomplish that by producing products that consumers want. In addition, they must continuously find ways to reduce costs to better meet the bottom line.
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. Check out the video and learn about the three major differences that separate governments from businesses.
With Reaganism of the 1980's came the idealistic political stance that government should be run like a business with the President as both CEO and Commander in Chief and Americans as shareholders and customers. Here are three reasons why the government shouldn’t be run like a business.
- Profit vs. People: A corporation’s mission is to make profits. This isn’t just good business sense – it’s also a legally binding component of incorporating. Government’s mission is to to provide for all citizens through the “common good” – things like roads, schools, and police protection. In fact, if a government is profiting, then they are probably hoarding tax dollars for no good reason. Microsoft may be smart for keeping $36.1 billion in cash and liquid short-term investments, but the government would be letting people down if they sat on that much money and weren’t using it to keep the country running.
- Shareholders vs. Citizens: There are 535 people in Congress, the President, and nine judges. All of these politicians and judges answer to over 300 million Americans. That’s a lot of decision makers, but it’s this system of checks and balances that works to ensure each person’s voice is heard. It isn’t perfect (lobbyists/special interests/and corruption still exist), but consider the alternative. As a minor shareholder in a major company you wouldn’t even have the opportunity to vote on major business decisions—like whether or not to remove a failing CEO.
- Customers vs. Constituents: Companies have the luxury of dumping a line of business because it isn’t profitable or choose to streamline their offerings to serve just one sector of the population. Government agencies do not have this option. This is a good thing. Imagine if Apple ran the government. Fire and Police departments would only answer calls to the homes of twenty-something hipsters, we’d have to use iTunes to file our taxes, and all legal disputes would be resolved at the Genius Bar. It would be horrible.