What Would It Mean for Governments to Compete Like Businesses?

My starting premise is that we can and should approach government as a business -- in particular, one in need of a new "business plan" for how to confront a changing competitive environment, with changing demand for its services, and a cost structure out of line with its revenue base. Many will take issue with the premise that government is, or can fruitfully be thought of, as at all like business. So, let's take a little time to discuss this assertion.

The shibboleth persists in politics that government can and should be run "like a business." In fact, an entire presidential candidacy was premised on this notion just last year. But that facile view is not what I mean by "the government business." It's pretty clear that governments do not actually operate like businesses for a vast number of reasons:

• The employees, for the most part, cannot be fired, and thus have little reason to hit performance metrics, let alone respond to the views of management.
• The politicians ostensibly overseeing all this are guided by a complex set of conflicting motives and incentives and have little reason to work together or move in the same direction. These managers and executives are in turn guided by the demands of shareholders, investors, and consumers who themselves have contradictory and often ill-defined expectations for the organization.
• Most of this results from the fact that governments aren't guided by the same profit motive as private-sector businesses. That isn't necessarily bad in itself -- in fact, a lot of what we expect and want governments to do is precisely those activities that are not profitable (or, at least, where profit cannot easily be captured). But the lack of a single, clear metric makes managing government, and assessing how the whole enterprise is doing, a lot more difficult.

So it's not my contention that governments operate "like businesses" or even that they would be better served to do so.

Read more at The Atlantic.

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