Run Government Like a Business? Yeah, which business?

It is a favorite suggestion of Republicans: government should be run like a business. A recent example is from a Republican candidate for Governor named Phil Moffett. His commentary in the Herald-Leader may be here: [Note the Herald-Leader tends to hide their content after a few days]

Moffett notes a number of real problems, and I agree with him on some of the solutions. I agree that disruptive students should be removed from the classroom, and I support some forms of Charter Schools.

But the idea that government functions should be run like a business has always amused me. According to the Small Business Administration, one third of small business fail in the first two years, and over fifty percent fail within five years. That is a dismal success rate. The suggestion that government should be run like a business implies that businesses are uniformly efficient and well managed. But the numbers suggest otherwise. The concept also suggests that businesses are somehow unique in their ability to plan for the future, but if anything, the numbers say exactly the opposite.

I also wonder what business they are talking about. Certainly there are well run businesses out there. But we do not compare runners against Olympic athletes. Many businesses fail because of fraud. Remember Enron, or what about Bernard Madoff? Businesses men are no more or less noble than politicians.

You may have seen this headline: Plunging home sales could sink recovery.

Here’s the full story:

There is such a glut of excess housing that it is not only depressing home prices but it is causing potential buyers to be exceedingly cautious. They do not want to buy a house only to have the price go down. And the price could go down because there are so many excess houses out there.

And why are there so many houses available? Because of the business decisions of home builders and bankers and mortgage lenders (and certainly also decisions by government regulators and bureaucrats). If businessmen are so smart, how did they create this recession? And if they are so smart why didn’t they realize that was happening? And if you want to lay it all at the feet of government bureaucrats (at agencies like HUD and Fannie May and Freddie Mac) then you are admitting that all of those businesspeople were duped. But how could they be duped if they are so smart? Perhaps it is because they are not so smart after all.

Government can certainly learn things from business. But the idea that government should be run like a business is silly and simplistic.    

Author: Mike

I am a patent attorney in Lexington, Kentucky. My law firm web site is I ran for State Representative in 2010 and lost in the primary. Many of these posts are based on writing that I did for that election. Rather than delete it all, I decided to dump it onto the internet.

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