January 22, 2011
The 'Business' of GovernmentBy Jerry Shenk
Government is not and never will be a business -- although we would certainly benefit from having it run like one. Most politicians are not and never will be businesspeople. Yet neither of those things has ever stopped American politicians from conflating government with business or presenting themselves as management.
In his book 1984 and an essay, "Politics and the English Language," George Orwell demonstrated how political language can be used to deceive and manipulate citizens and create a society in which the people accept propaganda as reality. The political class in America is actively and at all times guilty of such linguistic chicanery.
President Calvin Coolidge said "The business of America is business." Most Americans agree. So in order to identify their public functions with familiar and accepted private-sector practices, state and national officials engage in another hyperbole: politicians, their supporters, and their enablers in the media have co-opted the language of business and intentionally applied it to governance.
Politicians try to convince Americans that government is a business. They would have us believe that, just like genuine businesspeople, elected officials are positively relevant to and capable of managing the economy and other government "enterprises." Politicians also want us to accept that, like owners of actual businesses, they somehow create jobs and add intrinsic value to our lives. In fact, very often, the greatest obstacle to success that private-sector employers face is the government itself.
Organized American businesses are classified in only a few forms: 1) sole proprietorships, or privately owned for-profit businesses; 2) partnerships, the same business form with more than one owner; 3) corporations, publicly or privately held limited liability businesses; and 4) cooperatives, limited liability businesses having members who share decision-making but which have no shareholders.
With the possible exception of not-for-profit cooperatives -- i.e., the failed Soviet model -- government resembles none of these business types.
Nevertheless, according to government officials themselves, one can scarcely make a distinction between government and business or between elected officials and businesspeople. But in the real world, little is shared by the two other than an interest in special deals for special business interests and the return of campaign contributions from business owners and executives to incumbents.
In the business world and in family budgets, spending is done judiciously to purchase products and services that will provide a benefit to the spenders -- value given for value received. In business and in private portfolios, investment means putting money into something intended to yield a profitable return. In government, "investment" is a code word for spending, often done with no concern for value or expectation of an intrinsic return or an improvement in productivity.
In business, revenue enhancement requires selling more products or services. In government, revenue enhancement means tax increases.
In business, spending cuts means...well, cutting spending. In government, spending "cuts" means freezing or marginally reducing the rate of increase in spending.
In the corporate world, $20 billion in revenues represents a sizeable business. In the United States government, $20 billion is a rounding error in an agency's budget or the annual value of un-reviewed, not competitively bid congressional earmarks. That's chump change to the political class.
While at the same time co-opting the language of business to deceive citizens, government ignores the rules and regulations it imposes on the businesses it mimics.
Not a single federal agency could withstand the same audit the government requires of corporations. While business people have done prison time for audit irregularities, politicians get reelected, and bureaucrats get promoted. The Social Security "Trust Fund" makes Bernie Madoff's Ponzi scheme look like a misdemeanor.
It would be illegal for a business to bypass the bankruptcy laws the Obama administration set aside to enable the United Auto Workers union to benefit from the General Motors bailout. The UAW was declared a winner at the expense of American taxpayers, senior creditors, and bondholders. In fact, the funds used to bail out the auto companies were taken from the Troubled Asset Relief Program. The TARP bill was passed to purchase assets and equity exclusively from financial institutions. No matter -- the government is unaccountable.
Taxpayers would benefit if government were run like competent businesses, but until we have an entire government which recognizes and accepts American taxpayers as shareholders, government has no legitimate claim to being even business-like. Until we do have such government, responsible stewardship of the public trust and treasure is unlikely. The American political class is in business for themselves.
Elected officials have fashioned government's image as a business in the public consciousness simply by defining it as one -- by treating legislation and regulations as "products," and by returning our own tax money to us in congressional earmarks as "dividends." We cannot allow politicians that conceit.
Congress has been called the Favor Factory. In markets for manufactured products, price, performance, and quality define winners and losers. Using those yardsticks, most areas of government are clear losers.
Though quality counts in business services, for soft products and services -- and in government -- controlling the message is the key to market and mind share. Since it manufactures nothing tangible, government follows the Orwellian model to capture and control minds.
Lately, though, Americans aren't buying it.