The idea that government should be run like a business is a popular one. This betrays a basic misunderstanding of the roles of the private and public sector. We should no more want the government to be run like a business than a business to be run like the government.
Those popularizing this notion feel this way because they see business as more efficient. This must be the case, so the logic goes, or the entity in question would lose market share and go bankrupt. Only the fit survive. Meanwhile, government agencies face no backlash. This is why we have long lines to get driver’s licenses, poorly maintained hospitals, and so on. Were there a choice on where to be licensed to drive, then such offices would be forced to make the customer’s experience a positive one or they would go elsewhere.
Whilst we might all grant that there are exceptions, the general question still stands: does it make sense to run government like a business? The short answer is no. Bear in mind, first, that “efficiency” in the private sector means profit. Hence, to ask that the government be run like a business is tantamount to asking that the government turn a profit. The problem, in a nutshell, is that not everything profitable is of social value and not everything of social value is profitable. Reality TV, pornography, fashion, sports, and gambling are all of questionable social value, but each is quite profitable and exists in the private sector. Meanwhile, few would argue that the Army, Navy, Air Force, Coast Guard, police department, fire department, libraries, parks, and public schools are of no social value, and yet they could not exist if they were required to be profitable. Imagine maintaining a standing military by selling subscriptions door-to-door: “Hello, my name is Captain Johnson, and I represent the Australian Army. Are you afraid of foreigners? Would you like guaranteed protection against invasion, pillaging, enslavement, and more? Please see our brochure for our three levels of service.” There would, of course, be a few subscribers, but nothing approaching the level necessary to truly protect Australia from attack.
To reiterate, the key issue is this: not everything profitable is of social value and not everything of social value is profitable. The proper role of government is the latter. Those arguing for a business model for government must necessarily be ready to shut down all government functions that do not earn a profit, regardless of their contribution to our well-being. And if the public sector is being run properly, that should mean every single one. If it’s profitable, they shouldn’t have been doing it in the first place. There is no need for the government to start a chain of hamburger stands, hardware stores, or coffee shops. Rather, they run child protective services, the National Park Service, and the Air Force. Profit is the realm of business, while unprofitable but socially useful tasks are the responsibility of government.
This is not to say that every government agency is actually performing a useful public service or that it is not wasting resources (by whatever standard). Nor am I arguing that there are not many private sector activities that add greatly to our well-being. The point, however, is that saying that government is inefficient because it does not turn a profit is the equivalent of saying that Mitchell Starc is a poor full-forward or a poor halfback because he doesn’t kick enough goals. He’s not supposed to!
This has been a remix of John Harvey’s article at Forbes magazine for an Australian audience!