Thursday, July 13, 2006

MBA Government: Using Public Power for Private Ends

In The New Republic, Clay Risen is of course correct to say that the collapse of the Bush administration demonstrates (among other things) the failure of the notion of the "MBA presidency." In retrospect, the more remarkable thing is that anyone would think that business principles represent a valid model for democratic governance in the first place. (And I write this as a person who has dedicated most of the last two decades of his life to writing and editing books about business principles.)

Oh, I know: The longing for an MBA president (which produced, in past decades, the illusory political boomlets for people like Perot and Iacocca) has obvious roots, especially the perceived inefficiency of government as contrasted with the perceived efficiency of private enterprise. (Actually there is just as much waste, fraud, etc. in the private sector as in government--sometimes a lot more.) And great business thinkers like Peter Drucker can certainly teach government leaders a thing or two about specific skills like increased productivity, customer-centered service, innovative information management, and so on.

But the idea that business management and government management are one and the same is ludicrous. Business management is about finding ways for companies to earn a large and growing profit by selling products and services to customers in a competitive marketplace. Government is about serving the needs of the citizens. The differences that flow from this basic divergence are huge:

  • Government is not about making a profit. If it were, the acknowledged goal of every administration would be to rack up the largest possible fiscal surplus. (Whereas Bush was so horrified by the existence of the Clinton surplus that he demanded massive tax cuts "to return the people's money.")
  • Government doesn't take in money by selling products and services (except in a very, very minor way, as when the Smithsonian Institution sells souvenir books in its guest shop). It takes in money through taxation--i.e., by force of law.
  • Government doesn't compete with any other organization (again, except in very minor or indirect ways, as when national parks "compete" with private resorts for leisure travelers). In fact, trying to set up a competitive government is called treason (the Confederate States did this a while back, as you may recall).
  • Governments can compel private individuals to obey them (within the confines of the law, generally speaking). Businesses can compel no one; they can only persuade.

If government is supposed to be run like a business, and the president is the CEO, what are the citizens? Are they the shareholders? (Then where are their dividend checks? And where do they sell their shares if they want to do so?) Are they the customers? (Then how do they switch brands, or ask for a refund if the product is faulty?) Maybe they're the raw materials that get fed into one end of the factory so that profits can be generated at the other end . . .

Given that the purposes, structure, mode of action, and arena of operations of government are all totally different than those of business, why exactly did anyone in the media or academia ever buy into the bogus notion that an MBA would be better equipped to run the government than a politician?

Perhaps the most important difference between government and business has to do with accountability. Both are accountable to the public, but that accountability is embodied in dramatically different forms. Government officials are chosen by the people either directly, through elections, or indirectly, through appointment by those who have been elected. To keep them responsive to the popular will, those officials are supposed to operate in public and faithfully observe restrictions on their power that are established by law and the Constitution and enforced through the system of checks and balances.

Businesses, on the other hand, are established by individuals who appoint themselves as leaders and organize the businesses in pursuit of their personal objectives. They can operate in relative secrecy and can do whatever the hell they want with the business (within very roomy legal limits). If Steve Jobs and his management team decide to stop making iPods and switch to manufacturing glow-in-the-dark neckties instead, they can do it. (And the ties would probably become cult classics overnight.) The only accountability pressure business leaders face--and it's enormous--comes from the marketplace: Will the people buy the stuff you sell or not? If not, you'll soon be out of business.

It's interesting to note that the Bush administration's basic method is to circumvent both forms of accountability by cherry-picking elements from government culture and business culture as they like. They certainly believe in exercising government power, with a vengeance--invading foreign countries, handing out taxpayer-funded contracts to cronies and partisan supporters, expanding police powers and curtailing civil liberties, and using unlimited debt to support expansive public spending on the projects they favor.

But they mimic the private sector in insisting on boardroom-like secrecy for their deliberations, corporate-style "discipline," "loyalty," and "sticking to message" from their subordinates, and use of the entire organization to foster their personal strategies and goals--much as a beleaguered CEO may marshal the resources of the company, from lawyers and PR flacks to marketers and financiers, in his defense.

If carried to its logical conclusion, the Bush method would create a sinister hybrid in which government is a mafia-like private enterprise that wields uncontrolled public power.

Thank God the Bush people may not be allowed to achieve that end, since we still have free elections in this country (I think).

And as one small element in the ongoing struggle, let's hope that the near-total discrediting of the Bush administration will go a long way toward dispelling the meretricious glamour that has hung around the notion of "running government like a business" for such a long time.

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