Can the Government be Run Like a Business?

During the election campaign in 2016, Donald Trump repeatedly stated that he planned to run the government like a business. He would use this as a unique selling point. All the previous presidents, as well as all of his competitors, were professionals like lawyers, doctors and so on. Donald Trump argues that since he was a businessman, he could do a better job of running the business like an enterprise.

Critics of Donald Trump would not agree with these points. They wouldn’t accept for several reasons. Firstly, Donald Trump was not a successful businessman as he often claimed to be. He had several failed businesses which had filed for bankruptcy protection. Also, he did not build his business. Instead, he inherited a multi-billion dollar empire and had been boasting about it throughout his life. He does not have the astute observation, the perseverance which is the defining traits of an entrepreneur. Hence, it is very unlikely that he will be able to run the government like a business.

However, in this article, we will understand why it is just not possible to run the government like a business. It does not matter whether the person running the business is Donald Trump or someone else.

The Purpose

The purpose of a business is crystal clear from day 1. Businesses exist to maximize their long-term profit. Any leader that helps them maximize their earnings is successful. Any leader who cannot achieve this feat is unsuccessful. The success or failure of a business can be clearly and objectively measured with the help of accounting parameters that have been set up. All units in the company share the same objective, i.e., the maximization of profits. This allows the resources to be apportioned in a way that benefits all. Everyone is aware of this objective. Hence, different stakeholders can come to a consensus about how resources should be allocated to achieve the objective.

However, this is not the case with government enterprises. The objectives of a government enterprise can be varied. The objective of the education department is to provide good quality education. At the same time, the objective of the defense department is to protect the citizens of the country. The problem is that both the objectives are noble. However, both the objectives are also in conflict with one another. The government has a limited budget. Every dollar that is gained by any of these departments is a dollar that has been lost by all the others. Hence, it is impossible for the government to have consensus over how the resources should be apportioned.

This lack of clear and well-defined objectives makes it impossible to run the government like a business. Until the goal is clearly known, how can it be achieved?

The Competition

Business firms face competition from the market. This means that if they do not perform up to the expectation, their customers have the option to stop taking their services and go to another competitor. This is not the case with the government. Even if an individual does not like the services being provided by the government, they have no power to do anything about it as an individual. Only if a sufficiently large number of people are facing the same problem and are willing to take action, can the service provider be changed? This process happens once every four or five years!

It is therefore not possible to run the government with the same efficiency as that of a business. This is because the government does not stand to lose anything even if their performance is not up to the mark. It is therefore difficult to motivate government employees to work harder.

Decision Making

The decision-making structure in a business organization needs to be completely different as compared to a political organization.

Businesses tend to have flat hierarchies. The decision making is decentralized. Shareholders can hire management to think about the long-term strategy and well-being of the company. On the other hand, executives can be hired to run the day to day jobs in a cost-effective manner.

The same is not the case with business. A government hierarchy is entirely different. The hierarchy is organized to ensure that one person does not have complete control over decision making. This is done to avoid fraudulent conduct by employees. However, it also slows down the decision-making process considerably. The number of checks and balances that need to be created in a government organization is much more than compared to a business organization.

The spread of Information

Businesses are obliged to disclose most of the information they have to shareholders. As such, shareholders have a pretty good idea about the external and internal environment at any given point of time. They also know the possible alternate course of actions and can analyze what the best alternative is.

The same cannot be said about the government. The level of classified information in a government’s operations is significantly higher. Also, the political leaders cannot disclose this information to the public. Hence, people do not know the context in which the decisions were taken and what were the alternatives.

Political leaders, therefore, do not face the same level of scrutiny and pressure as their business counterparts. Hence, it would be inaccurate to say that it is possible to run the business like a government.

To sum it up, Donald Trump seems to have misled the American population. It is impossible to run the government like a business whether he or anybody else do it.


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