COLUMN:Government is not business
June 10, 2002
In the economic quagmire into which the state of Iowa has sunk, one campaign mantra seems to be the panacea for a state with an aging population, desiccated small towns, an exodus of college graduates and a last-place national ranking in raising venture capital.
Run government like a business.
Such a motto seems simplistic pabulum designed to reassure voters and assure political advantage. The simple fact is that the state of Iowa cannot be run as business. Whether it should is a matter of opinion.
First, businesses are allowed to go into debt. Want to expand your operation? Take out a loan to fund a new building. The state of Iowa is required by law to balance its books. Without a referendum approved by popular vote, deficit spending is not an option.
Second, customer service is the cornerstone of a successful business. Civil servants are the antithesis of customer service. When no competition exists, the customer is never right. Can you imagine sitting down at a Deparment of Transportation office and being offered a discount on your next order of vanity plates if you have to wait too long for a license renewal? Dissatisfied with your taxes? Get online and find a competitor that will offer lower rates.
Business sales often reward the salesmen with commissions. Imagine if state employees enjoyed a similar incentive for performing their duties. If a state trooper issues $1,000 in speeding tickets, give him a 10 percent cut of the gross. Motivation in the private sector is corruption in the public sector.
Government exists to do for us collectively the things we cannot do individually. Business exists to provide choices for us to accrue the goods and services we want or need.
Government is something in which we tacitly agree to participate. Business stays afloat by responding to demand.
Without agreeing with a government, one can still benefit from its protection and infrastructure. In contrast, goods and services offered by a business are acquired willingly by those able to pay.
A worthwhile government service may be a poor business idea, and vice versa. For example, how would a for-profit business manage to deliver welfare? Would the considerations be for the bottom line or for the poor? Should Iowa divert state money to start a fast-food chain specializing in agricultural products and turn the profits over to the Department of Agriculture?
Businesses choose a service or a product and try to find the niche in the market. Government has to face the unexpected and form policies in response. The government could not decide to focus on social services and liquidate law enforcement in alignment with its new mission statement.
In running a business, profit only exists if production costs do not exceed revenue. In other words, to stay afloat, prices have to go up or goods and services must be cheaper to produce. Government may find the task of producing the same services at lower prices impossible, but it can always raise revenue.
Despite promises to run government like a business, Iowa voters are assured that their taxes will not go up. At minimum, this indicates that the business our candidates wish to run is not profit-minded. At most, failing to raise taxes at a time when the state is woefully short of money and to continue providing services at previous levels means that the name of the business our state will become ends in a dotcom.
On a final note, we have seen in recent months that choosing to run a business like government is also poor model. Like government, Enron decided to pool other people’s money to meet common goals. Unfortunately, the people who put their retirement money into Enron did not realize they were actually buying junk bonds and that the common goals did not include the common good.
In the interim between the primaries and the November elections, consider the role of government and whether that role is really the same as the role of business.
The contrasts are evident and the comparisons are weak. Government is not a business, nor should it be.
Rachel Faber Machacha is a graduate student in international development studies from Emmetsburg.