Run government more like a business

Op-ed views and opinions expressed are solely those of the author.

Want to see blood rushing to the face of a government bureaucrat, or watch his/her eyes bulge? Say this to him: “Government ought to be run more like a business.”

The reaction from most public supervisors, some elected officials, and most of the mainstream media, is some sputtering, perhaps a splash of spittle, and a blurt like: “WHAT!? Government can’t be run like a business, because business is trying to make a profit and government is not!”

What about that? Does it hold water? For starters, public officials and the media usually misunderstand the business person’s meaning when we say “government should be run like a business.” That doesn’t mean government should seek profits, but it does mean government shouldn’t spend more than it takes in. It means government employees should be fired when they don’t do the job. It means they should be rewarded when they go above and beyond. Just like in the private sector.

Every experienced business person I know understands the structural difference between government and business, and the purpose of each. These two institutions need not be incompatible in terms of how they are run; the same management skills can be applied to manage both. Valid business operating principles work in both environments.

The notion of running government like a business has nothing to do with making profits. It has to do with elected officials choosing to promote sound business principles within the public agency to which they are elected. It means committing to public financial integrity, holding staff accountable, voting for lean and balanced budgets, and not incurring large debt that shackles future taxpayers. The notion requires avoiding both public programs that use actuarially unsound fiscal projections, and incurring costs that are not firmly determined in advance. It means officials actively seeking business expertise when their own knowledge is insufficient. It involves doing a cost/benefit analysis on major public projects. All of these are sound practices that make good sense, wise principles to embrace whether seeking profits or not.

Running government like a business means supervisors making public employees responsible for their actions, and terminating them promptly when they fail to do the job. It means fighting the expansion of bureaucracy. It requires establishing systems of promotion that reward initiative and merit, and that do not reward “getting by” and lackluster performance; it means a personnel system in which raises are not automatic or based on tenure or seniority, but a system in which raises and promotions are based on talent, merit, and performance.

All this is possible in any government agency that has no profit motive at all. When all these initiatives are demanded in a government structure, the result is higher efficiency, less cost, and spending taxpayers’ money reasonably. Profit has nothing to do with it.

In the public sector, delivering a quality program or service at lower cost, and on time, is the equivalent of delivering a profit in the private sector. When a government agency does its job without automatically spending every dime in its budget every year, it is serving the public purpose by using sound business principles. Again, profit is not part of this process.

Signs that government is failing to operate in businesslike ways: negligence in prioritizing capital spending; automatic raises; restricting outsourcing when it would increase efficiencies; failure to honestly separate “wants” from “needs”; no merit pay for good teachers; businesses closing down or failing to open because of unconscionable permitting obstacles by government; padding budgets with pork and “turkeys” to fund liberal wish lists, and borrowing too much money that future generations must repay.

That’s what business leaders mean when we say, “Government should be run more like a business”.

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John R. Smith

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