Running like a business

Preamble: I was on a forum for an online game which has just had some substantial upcoming changes announced.  Someone who disapproved said that the changes were just to make it easier for the developers to maintain and adjust things regularly in the future, which is harder under the current system, and protested: “But isn’t that your job?”

And I thought: no, it isn’t their job.  They’re a private company.  Their job is whatever they say it is.  We’re their customers, not their employers.  Employers get to decide that employees’ jobs are, and if both employers and employees choose well, customers keep them afloat.  These are three completely distinct roles.

And suddenly I found myself thinking about government, and the thought occurred to me: when someone says they want to ‘run government like a business’ – well, I’m an economist, and there are all sorts of fiscal and financial reasons why that’s a suboptimal move, but it’s also an interesting psychological stance.  US government has its famed ‘by the people, of the people, for the people’ credo; Canadian government is more or less expected to be the same thing but we lack a lot of that founding mythology that our southern neighbours specialise in.  (Canadians in court have been known to try to plead the Fifth Amendment.  Le sigh.)  The point is, government is supposed to be something we do for ourselves and with each other.

Businesses aren’t like that – businesses have employers, employees, and customers.  If a government is run like a business, who fits into those roles?  Presumably civilians are the customers, receiving government support and keeping or not keeping the current government afloat; civil servants are the employees doing the work on the ground; elected officials are the employers?  But a customer doesn’t get to choose employers.  Shareholders do, in publicly-traded companies, but shareholders are a much smaller set than customers.

A customer takes what they can get, does what they can with it, and goes to a different store next time if they’re completely dissatisfied, but the idea of trying to bring down the regional manager rarely comes up.  A shareholder, on the other hand, is powerful.  It’s part of our zeitgeist now, that executives care so much about pleasing shareholders that they’ll do ridiculous things with serious long-term consequences (firing vast swathes of their workers) for the momentary boost of shareholder approval.  Every share is equally valued, but some individuals have more shares than others.

Writing all of this out, I think most elected officials would be terrified if government were actually more run like a business, because in that model, you can’t afford to have the approval of only half your shareholders.  That’s the sort of thing that leads to total ruinous collapse of the business*.  What we have right now is each party (both in Canada and the US) treating their ideological base as shareholders and every other base as customers – as long as they serve the immediate desires of those few, everyone else can just chew on it**.  It’s even more exacerbated in Canada, of course, since we have minority governments (governments led by the party that got the most votes, but still received less than half of the total votes – we had a series of those).

So to recap the convoluted metaphor: our gover’biz has employers (elected officials), employees (civil servants),  major and minor shareholders (the party base that shares their ideology) and customers (the rest of the population).  I distinguish between major and minor shareholders in order to distinguish between voters who clearly benefit from the successes of a party (e.g., corporations getting tax cuts from neoliberals) and those who may think they benefit but are actually still kind of marginalised and downtrodden (e.g., religious folks who support the most superficially religious party even though it is economically devastating even to themselves).

I’m not sure where this ends up.  In reality, it’s a lot easier to switch stores than it is to switch governments or move countries.  In reality, it’s possible to be a shareholder in more than one company – even in competing companies.  What I do know is that every time I’ve heard someone say they want to run a government like a business, I’ve been 100% sure that they wanted everyone listening to think of themselves as customers, because when customers aren’t shareholders, that just leaves even more shares for those who already have them.

*Mind you, depending on your country and your economic situation, you might feel that we’re heading into ever-greater depths of total ruinous collapse, so maybe the metaphor works better than I thought.

**Obama may be the exception here, as he seems to frequently ignore his shareholders in his attempts to draw in customers to become shareholders.  The problem being that his customers hate him and everything he will ever do.  He still needs to be elected next time, but mostly because every other option is absolutely devastatingly awful, not because he personally is just that awesome.  (Campaign slogan: “Not as much of a disappointment as I could have been.”)

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5 comments on “Running like a business

  1. Brin says:

    (Canadians in court have been known to try to plead the Fifth Amendment. Le sigh.)

    They can’t at least plead the Thirteenth?

    (I looked that up a while back for this exact purpose. I also recently phrased my saying that a Star Trek character should have insisted on a lawyer as “I plead the Tenth”.)

  2. Will Wildman says:

    Indeed so, Brin, although as I understand it, there’s a pretty major distinction between our 13th and the US 5th – the US version allows a person to refuse to testify; ours still requires that the person testify, but makes them immune to any consequences if they say something self-incriminating.

    Star Trek is one of those series that has a tendency to make all cultures American – every doctor, no matter what time, space, culture, or species they come from, apparently takes a vow to ‘do no harm’.

  3. **Obama may be the exception here, as he seems to frequently ignore his shareholders in his attempts to draw in customers to become shareholders.

    There is a fable for that:

    The Goatherd and the Wild Goats

    A GOATHERD, driving his flock from their pasture at eventide, found some Wild Goats mingled among them, and shut them up together with his own for the night. The next day it snowed very hard, so that he could not take the herd to their usual feeding places, but was obliged to keep them in the fold. He gave his own goats just sufficient food to keep them alive, but fed the strangers more abundantly in the hope of enticing them to stay with him and of making them his own. When the thaw set in, he led them all out to feed, and the Wild Goats scampered away as fast as they could to the mountains. The Goatherd scolded them for their ingratitude in leaving him, when during the storm he had taken more care of them than of his own herd. One of them, turning about, said to him: “That is the very reason why we are so cautious; for if you yesterday treated us better than the Goats you have had so long, it is plain also that if others came after us, you would in the same manner prefer them to ourselves.”

    Old friends cannot with impunity be sacrificed for new ones.

    I generally have difficulty finding that because I always assume it’s about sheep. I should know better, feral goats are not unusual, feral sheep are. Feral talking sheep presumably even more so.

    I have been told, by a somewhat less than reliable source, that the right not to testify described in the fifth amendment is basically a way to avoid torture. You can say, “I won’t talk,” and not get a response of, “We have ways of making you talk.”

    Given that in Salem a man was crushed to death in hopes of forcing him to enter a plea, I can see how one might worry about what would happen to those who refused to testify. Oddly, I have no idea what happens nowadays if one refuses to enter a plea. (I’m guessing it’s not crushing until the person enters a plea or dies.)

    On the actual topic of the post, if government were run like a business not on the road to bankruptcy, I’d imagine all of this, “We can’t afford to make basic relatively inexpensive repairs now when interest rates are low and people want to give us a loan, we’ll have to let everything break down so it’ll be much more expensive to fix and maybe interest rates will be higher and credit will be tighter,” bullshit we’re hearing in the US (I have no idea what’s going on in Canada, last I heard you were being run by an asshole iIrc but that was a while ago) wouldn’t fly. I’m having trouble seeing, “Save a tiny bit now so we’ll lose a whole bunch later,” as a viable business model.

    On the other hand, driving businesses in the general direction of collapse in favor of short term gains does seem to be becoming fairly popular.

    Business tends to be about investment, as near as I can tell. Spend something now (say on raw materials and workers) and end up with more money in the long run (say when you sell your products.) Yet everyone I see talking about running government as a business seems to think that involves not spending money and definitely not investing in anything.

    Anyway, economist, does anything I just said make sense? Because I’m just sort of pulling this out of thin air as I’ve had less than one class on business in my life.

  4. Will Wildman says:

    I concur with your thinkings here – people who talk about ‘running the government like a business’ also are not paying attention to the risk/ROI ratios and the quantities of investment a company with a budget like Canada or the US would actually be doing. Not to mention that areas like infrastructure have fantastic returns at zero risk, like any actual private company would love to have.

    Canada is being run by a conservative fool, but it’s worth noting that our extreme-right is the US ‘centrist’, so we’re not plunging to the depths of doom quite so fast, I think. Admittedly, I may not be up on news to the degree I should be.

    It occurs to me that, if the US were going to be run like a business, it would also be expected to supply health insurance for everyone.

    Between the sensible investments, implied health policy, and empowerment of the masses, the whole ‘run it like a business’ thing sounds better all the time. It’s just not what people actually mean when they say that.

  5. Between the sensible investments, implied health policy, and empowerment of the masses, the whole ‘run it like a business’ thing sounds better all the time. It’s just not what people actually mean when they say that.

    In addition, another major advantage of actually running the government as a business is that we would have a multi-year budget. It’s extremely difficult to have any long-term vision when you have no idea what next year will bring. When we’re on a continuing resolution because Congress hasn’t passed a budget at all, it’s even worse. Any good business has at least a five year business plan that allows them to invest now knowing what things will look like a few years down the line.

    Do other countries with parliamentary/Congressional budget approval all have single year budgets or does anyone have multi-year?

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