Could someone please explain the following to me: why is running government like a business a good thing? How are they related? From my perspective, a business is fundamentally different from a government. How are they different? Let me list the ways: First, in a business, clients or customers are offered a good or service and voluntary pay for such goods or services. In a government, citizens have money forcibly taken from them. There is nothing voluntary about paying taxes, unless you consider jail a voluntary decision, which I suppose some may. Government funding is of necessity coercive and compulsory. With the exception of some lotteries and the rare donation to government services, governments rely on coercive tactics for funding. Hence, the IRS is armed to the teeth, lest someone is found in chronic disobedience to the fiat-type mandates.
Second, in the business world, there are always competitors. Even in the case of Microsoft, for instance, there are still open source operating systems like Linux, or the Apple-based or Unix-based operating systems to choose from. (Sadly, Amiga and Commodore were finished years ago. Those were the good ol’ days.) There are several different oil companies to choose from when we want to fill up our gas tank. There are several different car companies to choose from when we want a new car. Or a new computer, television, food product, real estate service, insurance, etc.
What is the net effect of competition? Profit-driven companies must satisfy a customer base to keep making money. They must be appealing enough to convince enough people to keep purchasing their product or service. Even if they are appealing to their customers/clients, they may lose market share or money if a competitor is even better, even in only one or two areas (i.e. image, service, price, quality). The net effect, then, is that for companies to stay in business, they must be continually looking for ways to improve themselves, to give themselves a leg up on the competition. Usually this is a multi-faceted approach. For instance, a retail outlet may revise customer service policy at the same time store layouts are changed. Otherwise, they run the risk of losing market share, losing money, or even going out of business. There’s little profit in going out of business. Unless, of course, the government bails you out.
Speaking of government, What about it? Governments do not really have competitors. It’s true, I may move into another country, but in any given country, I really don’t get a choice at government. I may choose whether to pay taxes or not, knowing full well the consequences of such choices. I may vote for an individual which may nominally represent part of my views as a cog in a vast bureaucratic machine which I have very little control over.
A man named Lysander Spooner thought that a monopolistic postal service in the 19th Century was unconstitutional. So he started his own private mail delivery service. He started making pretty good money. Now, for him to make good money, he had to have convinced (skeptics may say “hoodwinked”) enough individuals that his service was better than the good ol’ USPS. Impossible, you say? Surely you jest. The Supreme Court put an end to his fun and games when they ruled his business venture unconstitutional. That’s right: how dare you offer goods and services superior to a government-run monopoly such that individuals actually choose your service over the state-sponsored one! And so Lysander Spooner was essentially litigated out of business. Shame. I wish there was a private mail delivery service every time I go to the local post office.
So with no competitors, the government runs into the same sorts of problems that plagued centrally-planned economies, like the Soviet one which collapsed. Without the possibility even of losing market share, losing revenue, or losing customers (who would they lose customers to?), then what is the incentive to offer goods and services at increasingly lower prices or higher quality? There really isn’t one, aside from a disgruntled public, who has little choice in the matter anyway. So why improve medicaid or medicare or the military-industrial complex beyond election-level promises? There really isn’t much motive to do this. (And of course, we remember that election promises are often hallow and empty rhetorical devices.)
The third reason is related to this. When there is a problem in a private company, what is the reaction? If the problem is viewed as fixable, and there are sufficient assets available (either to use directly or to borrow against), then there is some restructuring based in cash flow or revenue. Mitt Romney, as I understand, was a fix-it expert in the private sector. Sometimes, a company will take a very risky measure of going into quite a bit of debt to finance a significant change (i.e. Ford). In this case, the benefits must outweigh the risks to be worthwhile. If the problem is not viewed as fixable, or depending on cash restraints, that program may be eliminated. For instance, large companies will sell off or spin off divisions and departments all the time, usually in the name of improving the bottom line (profit). In many instances, problems are sufficiently large and cash flow is sufficiently restricted that the company may go under. Going under represents a failure to meet market demands effectively. In other words, not enough customers were kept happy enough to patronize the company. Individuals choose not to spend money there anymore. The company is hampered by how much cash is flowing in; another way of thinking of this is by how much individuals are choosing their good or service over their competitor’s.
What happens, on the other hand, when government runs into a problem? Instead of change based on market demands (individuals’ voluntary choices), the answer is based instead on perceived bureaucratic or governmental pressures. Who wants to get rid of a government department? The answer is almost always more money, not less, to solve problems with regards to education, immigration, emergency response, welfare, security, etc. (This is from both sides of the aisle nowadays. There really isn’t a fiscally conservative party left.) It appears that nearly no one in Washington thinks the problem would go away or be lessened significantly if government’s role was downsized. This appears to not even be worthy of mention. This almost always means more money, regardless of the nature of the problem, or the fiscal constraints of the government. Actually, fiscal constraints on government appears to be an oxymoron these days. (“What fiscal constraints?” is the echo from Washington.) Deficit spending is the rule rather than the exception, which means the national debt is continually increasing. On the other hand, continually increasing debts make for bad businesses. Private companies actually have to pay them off to stay in business. Or, as I stated before, a government bailout is a historically-viable option.
These three differences, in my mind, constitute a wide gap between the private business sector, in terms of operations, incentives, and motivations, as opposed to the centrally-planned and fundamentally coercive bureaucratic government machine.
So why did so many support good ol’ Mitt because he will run government like a business? I just don’t get it.