Government Is Not A Business
James Hall - From the Left
Sartre is right when he claims there is no real government surplus, but
wrong when he compares government to a business. Government shares some features with business, and is sometimes likened to
a service industry, but fundamentally it isn't a business at all. And trying to run a government as though it were a
business is a recipe for trouble, if not disaster.
I agree with Sartre that the idea of a government surplus is political
flimflam, a way for politicians to congratulate themselves for having more tax money than they have current tax expenses.
But the extra money being taken in right now is in Social Security payroll taxes, and that's money that will be needed to
pay for future Social Security checks. The Gore plan, which would have used this money to buy bonds and pay down the
national debt, was a good one and would still work. The "surplus" would pay off part of the national debt, which would
lower pressure on interest rates and make it easier for business to borrow, improving the economy. As bonds the "surplus"
would increase in value and delay the time when aging Baby Boomers push the Social Security surplus into a deficit.
Unfortunately the events of September 11 are going to eat into this surplus.
Instead of buying bonds and reducing the national debt, Congress will use the money for government spending and therefore
assume an obligation to pay it back out of general tax revenues at a future date, adding to the debt or at best decreasing
it at a slower pace. There's little that can be done about this--we need this spending to fight the war in Afghanistan,
rebuild the Pentagon and New York City, and pay for the increased security that a terrorist war requires of us.
And that's one of the things that makes government different from business.
Business is about supplying products, but what product does government create? What service? One can't categorize
the national defense, the maintenance of a national infrastructure or the defense of civil liberties as either a product or
service. Individual liberty or public order is not subject to the constraints of profit or loss, nor should they be.
There is no price tag on the flag, no financial statement in the Constitution and no stockholders, board of directors, or
CEOs placing a dollar value on the nation. Forced mergers or hostile takeovers are not possible without bloodshed.
Yes, governments are a part of the economy and are run on economies of
scale. Armaments and armed forces cost money, as do courts of law, law enforcement, regulatory agencies, etc.
If agencies can do their jobs faster, better, and cheaper, that's all to the good. Recent efforts to run government
more like a business--like Al Gore's "Reinventing Government" program--which cut over 100,000 federal jobs and saved millions
of dollars during the Clinton administration, are welcome.
But not all of them make sense. One of the reasons for civil service,
for example, is to make government employees responsible to the people they serve and less beholden to their political bosses/superiors.
Many of the checks and balances that we our government limited are expensive, too. It costs money to provide legal counsel
to defendants charged by the state who cannot pay their own way. It costs even more money to defend convicted felons
from the death penalty, the most severe sanction a government can levy. (It would be far cheaper to punish them with a life
sentence and warehouse the felon for forty years.) But this is money spent by the government to protect the innocent
and the liberty of those who find themselves opposed to the government.
As Sartre notes, companies operate with a motive towards their own profit.
But the government's profit lies not in the money it collects--that's decided by its own citizens through their elected representatives--but
by the welfare of those citizens. Consider the words, "We the people of the United States, in order to form a more perfect
union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure
the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of
That's a very different Mission Statement than one you'll hear from any
corporation or privately owned business. Certainly no organization whose business is nation-building should expect to
make a profit, or even break even. Most developed countries operate from a position of debt, not profit, something that
would be intolerable to a corporate stockholder. It makes them terrible businesses, but great governments, whose citizens
wouldn't have it any other way.
Sartre's putting words in my mouth once again. Go back, gentle
reader, to my Counterpoint and you will see what I actually said--that government can profit from the use of sound business
practices, as it has done with Gore's "Reinventing Government," in adopting economies of scale and improvements in efficiency.
That aside however, the real point is that a government is a very different organization from a business, and we don't accurately
judge a government using a business model. If we start our own business, we do it to make a living, make money, to create
something that people will buy. None of these reasons are anything like the reasons the founding fathers relied on to
establish our Constitution.
Sartre would have us believe that the true calling of capitalism is
go give us what we want, not what makes a profit. Why then, when light bulbs can be made that burn for decades, can
I only buy ones that last for weeks? Why can't I a buy a car that lasts longer than a decade and gets more than 30 m.p.g.
when prototypes last three times as long with five times the gas mileage exist? Why does the cost of prescription drugs
drop precipitously over the border of the US, whether one goes north or south? Why does the cost of Coke and a hot-dog rise
through the roof when I go to Disney World or Universal? Is it because, as Sartre says, I want all these things to be
this way? That these businesses are meeting my need to change light bulbs and eat expensive hot-dogs?
No, Sartre, business is about making a profit, and it is with profit
alone that business is concerned. How do we judge a company's viability in the stockmarket--by the wonderful products
it creates or by its profit margin? And don't forget that where there is absolutely no consumer desire for a product
or service, business will create that desire through advertising. Remember Pet Rocks, Sartre? How about Chia Pets?
Because it's all about profit, business will convince us that our bodies stink, that we have bad breath, are losing our hair,
our teeth, our eyesight, need more insurance, and we must buy their products to compensate for all these commercially created
inadequacies that our ancestors took for granted.
Contrast the profit-making motives of companies and corporations with
the motives the founding fathers cited in creating the United States: 1) to form a "more perfect" union; 2) establish
justice; 3) insure domestic tranquility; 4) provide for the common defense, 6) promote the general welfare; 7) secure liberty
for current and future citizens. These are fundamentally different motives accomplished in fundamentally different ways
from the business model. We don't want a government that makes a profit, we want one that establishes order, ensures
justice, and secures our liberty.
In the final analysis, one wonders how anyone can liken government
to a business. Does our president have the powers of a CEO, or are they unimaginably greater? (Think of the implications
of being the Commander In Chief, or the power to issue executive orders.) Is our legislature anything like a board of
directors? Our judicial system like a corporate legal department? Is consumerism equivalent to citizenship?
The scope of government, its power and responsibility are so much greater that only the unimaginative, pedestrian shopkeeper
can liken his little economy to the nation's political economy. We can pity him, but we just can't believe him.
James Hall, From the Left