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Exploring the Appropriate Relationship Between Government and Business

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.

By Richard T. Moore
March 13, 2019

Donald Trump’s election signaled the first time that a prominent business person has been elected to the presidency without having held some prior elected or major appointed public position. Clearly, other business leaders such as Ross Perot have sought the presidency, and still others like Howard Schultz, former Starbucks CEO, may seek the office in the future. Certainly, business leaders aren’t the only ones who claim, “Government should be run like a business.”

In early 2017, Peter Conti-Brown, a Wharton professor of legal studies in business ethics, and Philip Joyce, professor of public policy at the University of Maryland, commented on the relevance of Donald Trump’s business experience to government on Wharton Business Radio. Conti-Brown noted that the instinct of business leaders is, “To want to have market structures, incentive-based compensation and command-and-control approaches to government…But virtually nothing about the architecture of government, in the United States or in other places, corresponds to that model.”

Joyce explains that while government, especially in a democracy, is unlike a business organization, there are some efficiencies from the business world that, “May be amenable.” The Wharton moderator of the discussion noted that, “Government is looking out for the concerns and welfare of millions of citizens, whereas businesses are focused on the bottom line and being the best company financially that they could be.”

Nearly thirty years ago, journalist David Osborne and veteran city manager Ted Gaebler authored the best-selling, “Re-inventing Government,” the seminal book on making government work efficiently and entrepreneurially. “The most influential book of the past twenty-five year,” as Robert J. O’Neill, Executive Director of the International City Management Association (ICMA) described it. More recently, Governing Magazine published an article by Stefaan Verhulst entitled, “25 Years Later, What Happened to Reinventing Government?” Verhulst notes that states and municipal government have improved operations with performance management, information technology, attention to customer satisfaction and, in some cases, performance-based budgeting. Some efforts were also developed at the federal level through Vice President Al Gore’s National Performance Review.

While the, “Reinventing Government” movement enjoyed a level of administrative success on the executive side of government, some innovations were viewed as weakening the system of checks and balances provided by legislative bodies, whether through city councils, town meetings, state legislatures, or—as Donald Trump has recently experienced—Congress. Performance budgeting, in particular, challenges budgeting and appropriations prerogatives of legislatures at all levels.

The basic problem, I believe, in making government operate on a more business-like footing is that business leaders seem to have a very limited understanding of how government works. John T. Harvey, a professor of economics at Texas Christian University, in a 2012 article in Forbes, entitled, “Why government should not be run like a business,” asked, “…Does it make sense to run government like a business?” The short answer is, “No.”Professor Harvey notes that “efficiency” in the private sector means profit. Hence, to ask that the government be run like a business is tantamount to asking that government turn a profit. “The problem,” he states, “in a nutshell, is that not everything that is profitable is of social value and not everything of social value is profitable.”

Writing in The Conversation, University of Birmingham (UK) Leadership Studies Professor, Scott Taylor, writes that, “Business and politics will never be separate, but the assumption that leadership is the same in both serves neither activity nor context.”

Although many business leaders seem unable to transfer their business leadership skills to government leadership roles, and business efficiency isn’t necessarily the best metric for government success, there are clearly areas where business influences government and government influences business.

Consequently, it is vitally important that leaders of business and the professions understand government, how it works and how to ethically interact with those who make public policy. Jim McNerney, CEO of Boeing from 2005 to 2016, told an audience attending Northwestern University Kellogg School of Management’s, “Brave Leaders” series,

“In the 70s and 80s, businesses practically ignored government. But not anymore. You simply can’t succeed today without dealing with government. And you don’t have to work in a company that sells to government customers. Whether it’s expanding regulatory costs, trade and tax policies, commercial diplomacy or any number of other intersections, government decisions can have a major impact on your business. So, you can choose to be at the table—or on the menu. It’s important enough that I’m telling our emerging leaders that they should be looking for a Washington or global capital market experience before they hit mid-career.”

To that suggestion, I would add state and local government experience as well.

Author: Richard T. Moore has served in both elective and appointed public office at local, state, and federal levels of government. He served for nearly two decades each in the Massachusetts House and Senate, as well as being chosen as President of the National Conference of State Legislatures. He also served in Washington, DC as Associate Director of FEMA in the Clinton Administration and as a Presidential Elector in 1992. A former college administrator and adjunct assistant professor of government at Bentley University and Bridgewater State University, Mr. Moore is a long-time member of ASPA serving terms as Massachusetts Chapter President and National Council member. He was the lead Senate author of the landmark Massachusetts Health Care Reform law (2006) and of the Massachusetts Health Care Cost Containment law (2012). His email address is [email protected].

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