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And Government Should Act Like Business WHY? [253*2]

Updated on December 25, 2014

The PANACEA

ALL THE WORLD'S PROBLEMS WOULD BE SOLVED if the federal government simply acted like business does; so goes the refrain from those who think "limited" government is better than "right-sized" government. The assumption is that because businesses have shareholders, members, or partners to report to that they take extreme care not to lose them money. Part of doing that is balancing their budgets (that seems to be the most important), accomplish rigorous capital planning, plan for future operating costs from capital expenditures, accurately estimate future costs of operations, accurately estimate current and future business environments, develop and implement effective marketing plans, and much more. These critics don't understand why the federal government (hereafter called government or gov't) can't/won't do the same thing. Their reasoning, of course, is if gov't did, then it would run as well as business does.

I beg to differ.

Government Is Not A Profit Making Business ... It Is Too Messy

U.S. CAPITOL in 1906
U.S. CAPITOL in 1906 | Source

Government Is Not A Profit Oriented Organization!

INSTEAD, GOVERNMENT IS A NON-PROFIT SERVICE ORGANIZATION whose service is described in the Preamble to the Constitution of the United States and whose organization to deliver that service is contained in the body of the same document. The target audience for whom the service is to be provided are the People of the United States who created it in the first place and some of whom staff the organization, i.e., the Legislative, Executive, and Judicial branches. By design, the "revenue" of the government to pay for the services are the taxes nobody wants to pay. Further, that revenue isn't dependent on the quality or quantity of the service provided, like it would be in a business, instead it is dependent upon the foibles of politicians and competing economic philosophies. Do you know of any business whose income has such a precarious basis?

Further, a "design flaw" was purposely built into the framework of government to prevent it slipping into the form of dictatorship which is prevalent in most businesses, or worse. That design flaw is called "checks and balances" and leads to the inefficiencies we see in government everyday. Generally, folks, the mess you see on Capitol Hill is supposed to happen, it isn't meant to be clean and pretty and fast; it was created to be ugly. (Having said that, the intent was that government nevertheless be effective in the end; but not having perfect hindsight, the framers left out a couple of things which would have prevented the gridlock we see today.) In other words, our government wasn't created to run like a business. If that is what the framers wanted, that is what they would have done in the first place, don't you think?

Business Is Really Not What It Is Cracked Up To Be

CRITICS ACTUALLY HAVE VERY FEW EXAMPLES in the business world they can point to as examples as to the way they think government should be run. Let's start with "Balancing the Budget", a favorite refrain. How many business or households do you know that actually do that in the short-term? If say "lots", then tell me why personal and business bankruptcies are so high? The definition of a bankruptcy occurs when debts exceed the ability to pay them, isn't it?

So, how has business done in this regard? The following table list several major corporations over the years that went down in flames for various reasons, but invariably, being in debt was one of them.


15 MAJOR CORPORATE BANKRUPTCIES SINCE 2001

 
 
 
Pacific Gas & Electric - 2001- $36B
Thornburg Mortgage - 2009 - $37N
Chrysler - 2009 - $39B
MF Global - 2011 - $41B
Conseco - 2002 - $61B
Enron - 2001 - $66B
CIT Group - 2009 - $80B
GM - 2009 - $91B
WorldCom - 2002 - $104B
Washington Mutual - 2008 - $328B
Lehman Bros - 2008 - $691B
American Airlines - 2011 - $25B
Energy Future Holdings - 2014 - $36B
Refco, Inc - 2005 - $33B
Calpine Corp - 2005 - $27B
JUST THESE 15 BANKRUPTCIES REPRESENT $1.7 TRILLION DOLLARS IN ASSETS (AND MUCH MORE IN DEBT THAT WAS FORGIVEN OR REORGANIZED)

Even well known brands have fallen by the wayside or diminished because they made the wrong strategic decisions. One that was used in a 400-level business class was Montgomery Wards. Sears & Roebuck and Montgomery Wards were great competitors in the late 1800s up through WW II. After WW II, Montgomery Wards chose the wrong business model and Sears chose the right one. This sent Wards on a slow, painful decline until it was forced out of business in 2000. (It has since reemerged as an on-line catalogue company known as Wards.) Kmart suffered the same fate after Wal-Mart came along and Sears made the mistake of buying them, trying to get into the discount business. Now Sears is going the way of Montgomery Wards.

The point, of course, is that history is full of businesses making bad decisions and ruining themselves and the lives that depended on them. Then we have hundreds, or maybe thousands, of major enterprises devoted to committing legal fraud on the public and employees such as Enron, WorldCom, CitiGRoup, AIG, Angel Food Ministries, State Farm, Athena Capital Research, BP, Massey Energy, and so on. Exactly why should the government use these as examples of how to conduct the business of government?

Critics are going to have an extremely difficult time coming up with even a small list of corporations (I can actually think of one, Battelle Memorial Institute, a contractor who used to work for me) for whom the government ought to emulate even if they can get around the serious problems created by the lack of a profit motive and the horrible decision making processes endemic to the Constitution. I think the critics of how the government does its budgeting need to bring their focus back to the real world and be practical. What they want rarely happens even in the world of business let alone trying to fit a square government peg into a round business hole. They need to come to terms with the fact that government is a square peg and work within that paradigm; within that reality.

WHAT IS YOUR OPINION

Do You Think Government Can Be Run Like A Business?

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Do You Think Government OUGHT to be Run Like a Business?

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DEMOGRAPHIC POLL

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© 2014 My Esoteric

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    • cmoneyspinner1tf profile image

      Treathyl FOX 

      3 years ago from Austin, Texas

      How are you my man? One last remark and I'm done. Constitution or not. No matter what form of government – the country's population consists of the Haves and Have-Nots. Most of the governmental organizations are set up to serve the Have-Nots. Laws and regulations, policies and procedures, administrative and operational processes which are necessary to effectively and efficiently run the government units should be put in place and implemented. “Business-like” practices or whatever! How will we all know if that's being done? Because the citizens who are supposed to be receiving the services will be served! If not – perhaps the performance evaluations of management staff working on those agencies should reflect that! Indeed … if they're not doing their jobs, maybe they need to get the axe! That's all! Bye bye! :)

    • My Esoteric profile imageAUTHOR

      My Esoteric 

      3 years ago from Keystone Heights, FL

      Thank you Theresa and Anne.

      And yes, @cmoneyspinner1tf, it stands to reason governmental organizational units should use "best practices" where possible; but not even the business world is very successful at that. Congress and the Executive branch have one impediment to acting in as efficiently and effectively as the best-run businesses can, however, it is the Constitution. It was with conscious intent that government, especially the federal government be as messy as it is. That point was made in my first management class when I became a supervisor and a bright light went on when the instructor went into the detail of why. But the bottom line was to do several things, all preventative in nature; 1) prevent a monarchy from developing, 2) prevent a figurehead executive, 3) prevent tyranny by the majority, and 4) prevent tyranny by the minority.

      Happy to see you all again and hope the holidays have been good for you.

    • phdast7 profile image

      Theresa Ast 

      3 years ago from Atlanta, Georgia

      Esoteric - Excellent article with good examples and as always, sound reasoning. Hope you have a Blessed New Year. Theresa

    • Anne Pettit profile image

      Anne Pettit 

      3 years ago from North Carolina

      Government is not supposed to be about the bottom line or profit. It is about service to the people.

      Of course, fiscal responsibility is critical, government is not about income or return to its shareholders.

      What government does is what business cannot

    • cmoneyspinner1tf profile image

      Treathyl FOX 

      3 years ago from Austin, Texas

      I don't really see where it could be detrimental for civil servants to utilize or apply practical and prudent business principles and policies to efficiently run a government agency as long as the BOTTOM LINE still reflects:

      APPROPRIATE AND ADEQUATE SERVICE RENDERED TO THE PEOPLE.

      “It's just business.” I mean if organized crime syndicates can run their rackets across international borders and keep it going, how hard can it be for government agencies to effectively administer and operate their organizational units and accomplish their mission? They have mission statements, organizational charts, a budget, “watchdogs” peeking over their shoulders, and if all else fails they can write their Congressman OR the POTUS!! “It's just governing a free country!”

      Hello my friend! Yes I'm still hanging around cyberspace causing trouble, mischief and mayhem! How about you?

    • My Esoteric profile imageAUTHOR

      My Esoteric 

      3 years ago from Keystone Heights, FL

      Thank you Anne, I appreciate you taking the time to read it. Happy Holidays.

    • Anne Pettit profile image

      Anne Pettit 

      3 years ago from North Carolina

      Very well written and informational.

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