Open Source Politics: United States: The Government Is in Business
A very good post from an excellent blog on the stupidity underpinning one of the most common no-meaning proposals in modern politics - the idea that government should be run like a business. This idea has long legs, especially in the US where it goes back at least to Calvin Coolidge. (And wasn't he a brilliant success.) In Britain it is much more recent, post-79 at the earliest although its real application began in the John Major governments and picked up under Tony Blair. It's this sort of thing that leads to the Immigration Service being told they are inefficient "because your unit costs are too high" - it turned out the whizzy management consultants (whoop! whoop! bullshit warning!) had simply divided the total budget by the number of passengers through UK ports - forgetting a few other things like enforcement investigations inside the country, deportations, detention of deportees awaiting departure. Or the Ministry of Defence selling all the married quarters to a bank who would give them a lot of money up front - but then charge the ministry rent, demand that they pay dilapidations, and require that they could sell a percentage of the houses every year (but the MoD would have to pay to renovate them first).
Businesses generally don't do things that are against their own financial interests simply because it's in some rightwing snake-oil textbook. This is because they exist to do two things - to make money now, and to keep making it in the future. Classical economic theorists take as a standard assumption that firms are always and everywhere short-term profit maximisers, but what successful business really ignores the future? In fact, there is a really good way of spotting the ones who are looking to the future - they are successful now, because they prepared that success ten years ago. (Jack Welch of GE used to say that the short term was just that - ten years.) The problems arise when they do put on the blinkers. Success is institutional, and that means preparing the technology and the ideas and the culture now.
Governments, though, when they try to behave like businesses, usually come up with a parody of the textbook profit maximisation model. You can't spend £100,000 this year if it means £200,000 less next year. The treasury will not allow it. You must absolutely set numerical targets for everything. If your department gets into the papers, expect a posse of ministers to drop on your neck to Sort Things Out, because they think that this railroad tycoon fantasy is how successful businesses work. It's not - it's how Enron worked. In case you think that this is a rant against the Right, governments can be just as bad trying to run businesses as if they were government departments with the attendant conservatism and politicisation.
In the end, it's an issue of culture. A government that tries to be a business, just like a business that thinks it's a government, will fail because the two kinds of institutional culture evolved to face two different environments. Capital is one-eyed - it has only one responsibility to anyone, which is to make profits. Unusual for the Ranter? Not at all. You cannot expect businesses to take care of the social costs they leave behind voluntarily or to provide the rules within which they have to be to survive. That's like expecting a virus to contribute to the health service.
And that's why we need a government.