Is government a business?

Date posted: February 22, 2012

We’re in an important political election year, and so many political issues are being discussed. Some people argue that government should be run like a business. But what does this mean? And can it work? N.C. State University economist Mike Walden answers.

“Well, I think people look at businesses and they say, ‘Gosh, businesses have one clear objective: that is to make profits — make as many profits as they can after their expenses.’ And that really drives business decisions, and in some sense makes business decisions very, very easy because the focus always is on that one objective.

“And I think people would like to be able to say, ‘Well, we can do the same at the government level and have that one objective for government.’ The problem is, you don’t have government in the business, if you will, of making a profit. Government exists to do a lot of things — many of which are things that businesses won’t do because they can’t make a profit.

“In some sense you could argue education, or in some cases transportation, or national defense, or medical care: All those myriad … things that the government does.

“So I don’t think you can transfer that logic of the profit motto from business to government. Now what you can do, though, I think, is where you do have a clear goal of government, for example, building a bridge or building a highway. And you know that you want to accomplish that — you can work to do that in the most efficient way that you can. So there you can transfer those business principles.

“So I think it depends on what level of government you’re looking at in terms of the overall goals of government. They are much more complicated than they are for business. But in terms of implementing those goals where you do have measurable goals, then, yes, you can implement some business principles to do that in the most efficient way possible.”

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