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Essay: The Bottom Line of Treating Government as a Business

Ever since the Reagan administration, there have been increasing demands that government be run like a business. Even something as unbusiness like as higher education has been roped into this thinking, with public universities coming under increasing pressure to show how they provide economic value rather than how they fulfill their traditional public good of leading the intellectual progress of mankind. Such thinking is misguided. Governments and businesses have vastly different goals. Business exists to make a profit, governments to provide goods and services that either are not economical for businesses to provide or are so important they should not be produced just for profit.

Measuring a business’s success is thus easy -- does it make a profit. Measuring the success of a government is much more difficult. Start with how a government decides upon its goals. In the US this is complicated and messy, a process that allows many interest groups to influence the outcome on the theory that public discussion will result in an outcome that serves the greatest good with the widest support. In business, a chief executive can decide on a goal and then assemble a team that lets her pursue it with no cross purposes. Which brings us to the embarrassing roll-out of Obamacare. If the government were run as a business, there would have been no embarrassment.

Once a chief executive settled on the goal of providing health insurance to all Americans, then the government as business would have found the most efficient solution. In the US that would be slightly tweaked Medicare or Medicaid for everyone, in business terms simple brand extensions of mostly successful products. But government is not a business; its decision making is not so easy. So instead, our system behaved as it was designed and came up with a government solution. It is beside the point that Obamacare is the ultimate proof of the old saw that a camel is a horse designed by a committee. To curb the potential power of government, and to make sure the voices of multiple interests are heard, our system is designed to produce unruly camels instead of swift, beautiful horses.

The difference between government and business also becomes apparent in how the challenge of harnessing the resulting camels is approached.

Were the government run as a business, then contracting would be much simpler and responsibility much more clear-cut. Consider the fate of Ron Johnson, not our esteemed senator, but rather his namesake, the former Apple executive hired to redo the JC Penney retail firm. Johnson had the power to dictate huge changes in how Penney did business, but did not do the detailed work needed to make the change successful. The result was a disaster and Johnson was unceremoniously ousted after just 17 months.

Like Johnson, President Obama did not keep close enough track of efforts to implement his signature program, but the President will not lose his job over it because in American government, the chief executive serves a fixed term. This is how the system is designed, in part as a reflection of its shared decision making and in part to give the chief executive the ability to take unpopular but necessary steps. Furthermore, if government were run like a business, then the chief executive would have the ability to modify a program to make its implementation easier as logical fixes became apparent. But the US government is set up so that the President needs Congressional approval for such fixes, and in the case of Obamacare, the system made that impossible.

In addition, the Supreme Court used its power to make implementation of Obamacare even more difficult by ruling that states could decline to expand Medicaid under the program, as was originally planned. Both are examples of the checks and balances written into our system that make it impossible for government to be run like a business. Yes, those checks and balances add to government mess and create inefficiencies. But for more than 200 years, Americans have lived with the system, and usually thrived under it. Government, our founding fathers decided, is too important to be treated simply as a business.