Working in Iowa
Running Government Like a Business and Other Really Dumb Ideas
Mar 17, 2010
By Dave Swenson
By Dave Swenson
For the umpteenth time I endured a lecture last week about the gross inefficiency of government at all levels, and that what government really needed was to be run like a business. As I was amidst polite company, I was polite and mostly listened. When I asked the pontificator if he had ever actually worked in government he assured me that he visited the state Capitol regularly and those forays provided him plenty of insights into what was wrong with the entire governmental structure. In terms of credibility, this admission was analogous to claiming you were an expert in porcelain because you visited the toilet daily.
He and any number of self-styled private sector “experts” are more than willing to inject their business savvy into the governmental sphere. Either things work right or heads will roll, they say. And what things will they get right? Actually, they are really, really unspecific. I hear about a pet peeve or two about DNR permits or business regulations, but they certainly cannot tell you much about the array of services and responsibilities in the Departments of Human Services or Inspections and Appeals, the important regulatory responsibilities of the Iowa Department of Agriculture and Land Stewardship, or the workings of the Commerce Department. The problem you see is that folks who pop off at the mouth about governments usually don’t have a clue about what governments do or why.
First things first, we have governments to provide goods and services that the market does not or will not provide in an equitable manner. In short, government exists because, given the needs of humans, our markets fail. Because the market fails laws, regulations and programs must be implemented to supply essential and democratically desired public goods.
We measure governments’ successes different than we measure businesses’ successes. Governments, granted, are to be as efficient as possible, but the effectiveness of government action trumps raw efficiency. Where a private firm can discontinue an underperforming product or drop an unreliable supplier, the public sector cannot ignore a slow learner, dismiss the needs of the disabled, refuse to assist an unmarried mother and her child, or fail to repair a section of unsafe roadway. While it might be economically efficient, to do so would be unconscionable.
And that is the main difference between business and government. Though it may claim otherwise, business has no conscience. Business is an exchange mechanism of producing goods and services for profit. It is by its very definition amoral in construct and effect. The public sector, on the other hand, is obliged to attend to both the moral and ethical foundations of citizens’ needs to include serious attention to the fair and equitable allocation of society’s resources.
Governments in fact use or adapt every procedural, management, human relations, and administrative structure and innovation that business develops. It may take some time, but one way or another there has not been a business or management fad that did not work its way into government. The fledgling discipline of public administration derived much of its foundations from the fledgling discipline of business management in the post WWII period. Modern business sector planning and management methods have been adapted and adopted regularly, and those that work endure. Those that don’t work don’t endure.
The state of Iowa has been implementing Toyota – inspired (no kidding!) lean processes designed to work through structural, procedural and communications issues to speed and improve government service delivery. Those processes have been applied in at least 18 state departments over the past four years, and currently they are being implemented in its episodically dysfunctional and scandal-ridden Department of Economic Development.
Those agencies and their very valuable employees were not being taught to act like businesses, they are being taught how to more effectively provide government services to all manner of client using principles that appeared to work well in business systems. The goal wasn’t to maximize profit; it was to maximize program effectiveness in an era of shrinking public resources yet growing demands.
And to those who would tout the unassailable virtues of business, perhaps we might look to the following notable firms to supply us with business leadership and guidance to steer our ships of state into safe waters: Aloha Airlines, Chrysler, Countrywide, Circuit City, General Growth, General Motors, IndyMac, Nortel Communications, Pilgrims Pride, R.H. Donnely, Readers Digest, Sharper Image, The Tribune Company, Vera Sun and Ziff-Davis. They all went bankrupt in the last couple of years.
Their problem is they ran their businesses like businesses. There’s a lesson to be learned in that.
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Dave Swenson is a long-time analyst of Iowa political, social, and economic issues. He is a staff research economist at Iowa State University and an extension-to-communities economics educator. He also teaches community and regional planners (those nefarious agents of totalitarian control) how to do economic things in their profession.
