Wharton’s Peter Conti-Brown and Philip Joyce of the University of Maryland discuss the idea of government being run as a business.
Many political observers have argued for years that the federal government, with its multitrillion-dollar budget, should be run more like a business with the president acting as a de facto CEO. Enter President-elect Donald Trump, a candidate with no background in politics or public administration but decades of experience as a captain of industry. His upcoming term renews interest in the whole question. Peter Conti-Brown, a Wharton professor of legal studies in business ethics, and Philip Joyce, professor of public policy at the University of Maryland, consider the merits of his business experience as he steps into the White House. They made their comments on the [email protected] show, part of Wharton Business Radio on SiriusXM channel 111. (Listen to the podcast at the top of this page.)
An edited transcript of the conversation appears below.
[email protected]: I’ll throw the hard question out there first. Can you run the government like a business?
Philip Joyce: Well, I don’t think you can just decide that if you were a successful business executive that all of the things that you did are necessarily transferable to the government sector. And I think if you attempt to run government precisely like a business, then you’re going to find yourself relatively frustrated.
Peter Conti-Brown: I agree. I think that the instinct to want to have market structures, incentive-based compensation, command-and-control approaches to government as we see in business can come from anyone who’s gone and spent too much time at the DMV. It’s like, “Oh, this is miserable. If this were privately run, this would be very different.” But virtually nothing about the architecture of government, in the United States or in other places, corresponds to that model. Your interactions with Congress, your interactions with the public, with foreign countries, the entire fiscal dynamic, budgetary dynamics differ widely between public sector and private sector. To anyone who simply says, “Oh, this is an easy problem to which there’s an easy solution — just hire a CEO,” has not grasped the nature of either problem or solution.
[email protected]: So, does it need to be a mix? It feels like there are certain elements that you can take a business approach to, but it can’t be a 100%, all-in philosophy.
Joyce: Right. It’s interesting that Peter cites the DMV because the DMV in many places has been quite focused on trying to [improve] customer service. They’ve been trying to do things like, open at times when people are not working, as opposed to when they are working, and have people move more efficiently through systems.
I think that’s the kind of thing that may be amenable to some kind of private-sector techniques. Governments also do things that are similar in some cases. They run utility companies. In some states they sell liquor. All of those things we think could be amenable to practices from the private sector. But there are lots of things that governments do because private firms would not do them and because they would not find it profitable to do them. If I’m the postal service, it’s actually not profitable for me or efficient for me to deliver mail to far-flung places, but I have to do it anyway. A private firm would not do that or would figure out how to charge a price that would be sufficient to recoup their costs. Government as the provider of last resort has to do a lot of things that private firms either can’t or would not do.
[email protected]: 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.
Joyce: Right, and they should be. Businesses operate in the interest of the people who buy and sell things with them and the interests of their shareholders. But the shareholders of the United States government are all of the citizens, and we can’t simply decide that we want to ignore some of them.
“If you attempt to run government precisely like a business, then you’re going to find yourself relatively frustrated.” –Philip Joyce
Conti-Brown: That’s right. You can break this question into a lot of different pieces. One is philosophical concerns. There have been motivated debates about what government is or should be for centuries. On one hand, people would think [any government action is] coercion. On the other hand, it’s just the name that we give to the work that we do together. That’s a big philosophical, ideological difference. Another is just what is competence, what is successful management? The DMV examples, other kinds of examples, how do we motivate public employees? Can you do it in a way that is similar to motivations used by private firms? Do you have to have more public de-unionization in order to make that effective? Those kinds of debates, I think, are appropriately more in the weeds, more technical.
Anyone who viscerally resists the idea that you can use insights from organizational behavior, and private management, and apply them to government is also missing the mark. But the question is where are we going? At the big ideological level, to simply equate the provision of services and say that anytime it is done by the public sector it is going to be inefficient or corrupt is, again, too simple.
Joyce: I’m really glad that Peter raised this point. I think people conflate how well government operates with the question of whether they think government should do something or not. And the question of whether government should do something or not is basically a political question. The question that really we should be confronting is, once we have decided that government is going to do something, how can we set it up so that it does it most effectively? That’s completely separate from the question of whether you believe the government should be in the business of supporting the arts or subsidizing Amtrak or anything else, where there are perfectly reasonable debates on both sides about whether something is an appropriate role for government or not.
Conti-Brown: Philip’s point here is so key. Because of that conflation, what we have is a rerun of the existential debates anytime we have a discussion about competence and strategy. As a historian, I can say this is something that has just come up time and time again. The 1928 election, for example, was seen very much as an election of competence. It was a question about Herbert Hoover, who was seen as this great businessman, great bureaucrat from previous administrations in the private and public sector, who had delivered food and relieved the great famine after World War I. It was the rise of competence. Hoover, interestingly in 1960, helped to devise strategies about how to make government more efficient. We saw this was Al Gore’s pet project after the 1992 election as vice president.
The idea of trying to make government more streamlined by bringing insights from business is a very old one. But again, as Philip points out, because people fail