Wednesday, August 19, 2009

Government is not a business

It's common for a political candidate to run on the idea that he or she was in business, and that experience will apply to government. The politician asserts that government ought to be run like a business.

This is a load of hooey. Gov Otter has tried to use this approach, and actually seems to persist in the endeavor, despite its lack of success. His approach has been somewhat businesslike. He has acted like the boss/owner/manager in that he seems to think that he can just hand down an edict and it will be carried out. Think of last year when he demanded $240 mil (or whatever it was) for transportation. He correctly identified the need, but, he's not the boss of the legislature and can't just order it to cough up the dough, and it refused.

Otter decided to align state employee compensation with the private sector, which is admirable. He actually managed to cut benefits, which he saw as being higher that the private sector. Great. Unfortunately, he hasn't managed to raise salaries like he said he wanted to, and it appears unlikely he'll get this done. He sure hasn't been talking about it much lately. Anyway, he hasn't been able to run the state like a business, and the result is that state employees are now worse off.

State government provides services, and does not earn a profit. It the state were a business, we'd have way fewer paved roads, for example, and the rural areas would still be rattling along on dirt roads. This would hinder their agricultural production, it would hinder getting crops and goods to market, and it would hinder their access to buying products. It would reduce the selection available in the cities and probably drive up costs.

That's infrastructure, and only government can afford the huge projects. Why would Micron, or HP, or whatever business, pay to repair the old bridge over the Payette River? They wouldn't. Well, I suppose some business might, but then they're going to charge dearly to use the bridge. How about paving the road to Murphy? Who'd do that? Given the cost, if a business were to do it and charge for it, either the cost to drive on it would be prohibitive, or the pay out would take a century. It just wouldn't happen.

Things like infrastructure are so important, and so unlikely to be provided otherwise, that only government can do it. I submit that health care is infrastructure. To put it in terms that uber businessman Walt Minnick can understand, health care is an investment in human capital. Really, it's not unlike roads, safety services, electricity, water and other utilities. A productive and ordered society must have it.

Human productivity goes down when the humans are sick, or are bankrupt because of medical bills. Just like leaving the rural areas to drive on dirt roads, which hurts the rest of the state, allowing people to be hurt or ill hurts us all in lost productivity.

Counties have an indigent fund that they use to pay hospital bills of indigents. That's taxpayer money. If we had universal health care, that tax goes away, a benefit to all the citizens. (Whether it goes away or just gets shifted is another question; depends on savings in the health care system.)

Anyway, I'm really sick of hearing that government should run like a business. How maddeningly stupid. That's precisely the same as saying business should run like government. Or that a train should run like a car. Or that an airplane should run like a submarine.


Serephin said...

Great post, but, c'mon -- be resonable... a subplane would be so cool. :)

Alan said...

Well, yeah, that's true. I think I read about one recently, now that you mention it.

Anonymous said...

Well put.

" care is an investment in human capital. Really, it's not unlike roads, safety services, electricity, water and other utilities. A productive and ordered society must have it."

Sara E Anderson said...

The only reason anyone ever makes money is because of ineffeciencies in the marketplace (i.e. profit). We're all middlemen.

fortboise said...

I worked in business for many years, and more recently I've worked as a contractor on some government projects. I get an occasional look into "how government works" as a result, and I have to say there are more similarities than differences.

Big bureaucracies have a lot in common, and certain improvements do apply to both.

But there's a more direct refutation of the silly notion of "if only": Dilbert. Scott Adams' humor is inspired by how well business works.

But that's at the detail level. Big picture, you're exactly right. Government's goal is to improve public welfare by protecting and enhancing the commons, and by constraining the abuses that arise from unequal economic power.

"Business" has a way simpler goal: make profit.

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