Government As Business Can Profit Taxpayers

April 29th, 2005 by Leave a Comment

By Benita M. Dodd

Is there any hope that government can ever operate successfully like a business? And why should it? Practical answers to these questions are central to promoting limited government and market-based solutions to public policy.

To many Americans, running government like a business seems an impossible and even undesirable goal. Liberals are especially astonished at the thought: Why, they ask, should “good” government be required to mirror those “greedy” capitalists” and “corrupt” corporations? Others maintain that “profit” – which has mysteriously become a dirty word in some circles – should not be the goal of government. And profit is the business of business.

The cynics insist that there’s no competition in the public sector, so the bloated government monopoly tends to rest on its laurels while getting fatter and happy. That, they say, brings the inevitable consequences of inefficiency, self-perpetuation and a lack of accountability. Libertarians worry that a businesslike approach would simply make government more effective in expanding and that the only solution is to shrink government. Still others worry that government moves toward efficiency will cause agency workforce reductions and – gasp! – outsourcing.

Somewhere along the line, government’s limited role expanded to crutch and nanny. Now, instead of a culture of personal responsibility, acceptable responses to actual and perceived problems include:

  • Why isn’t the government doing anything about it?
  • There ought to be a law.
  • The funding level is insufficient.

Is there any better reason for government to learn from business? Certainly, government must never have a profit motive, and should never compete with business. But money should be the bottom line. That is, the necessary services should be provided to constituents in the most efficient and economic fashion. Government’s shareholders, or taxpayers, “profit” by keeping more of their hard-earned money in their wallets to use on the consumer products and services they can actually choose.

Competition comes into play, too. When they become aware of how much government is taking from and demanding of them – allegedly for their own good – savvy taxpayers start weighing the costs versus the benefits. They reconsider where they live and what they want and are willing to pay for that. Concerns about waste, regulations, quality of life and quality of education all come into play, along with the taxes and fees they must pay. They shop around, deciding between the city of Atlanta and Cobb County; Florida and Georgia; North and South. These choices will undoubtedly expand as Americans voice their resentment of big government by ballot box and pocketbook.

Unlike the private sector, government has traditionally been reluctant to change to meet changing times and demands. As President Ronald Reagan noted, “No government ever voluntarily reduces itself in size. … Government programs, once launched, never disappear.”  Had government funded the Pet Rock, the Department of Housing and Urban Development would still have a stockpile for building walls. Fortunately, Americans were saved by an entrepreneurial fizzle. 

The private sector analyzes the problem and decides whether it’s more cost-effective to eliminate or repair. Only recently, motivated by budgetary crises, have governments considered eliminating unnecessary, redundant or ineffective government programs.

A February 2005 report by the Government Accountability Office reported how several states sought to improve efficiency by creating commissions to examine agencies’ budgets.  In the report, “Performance Budgeting: States’ Experiences Can Inform Federal Efforts,” the GAO noted: “Although each of these commissions did result in some improvements, the extent to which the commissions’ efforts assisted in addressing budget shortfalls was somewhat limited because most recommendations were not implemented.”

Georgia Governor Sonny Perdue has committed to implementing the emerging recommendations of his Commission for a New Georgia, whose task forces examined government for inefficiencies. From fleet management to finally establishing just how much property state government owns and leases, their findings are an eye-opener. The government has even used eBay to sell redundant equipment. And, reinforcing his corporate intentions of making Georgia the best-run state in the nation, Perdue has appointed a Chief Financial Officer and Chief Operating Officer.

The parallels between efficient government and the private sector can seem unlikely, but there are numerous ways in which business practices can better government. And like an educated consumer in the marketplace, a knowledgeable taxpayer benefits.


Benita M. Dodd is vice president of the Georgia Public Policy Foundation, an independent think tank that proposes practical, market-oriented approaches to public policy to improve the lives of Georgians. Nothing written here is to be construed as necessarily reflecting the views of the Georgia Public Policy Foundation or as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature.

© Georgia Public Policy Foundation (April 29, 2005). Permission to reprint in whole or in part is hereby granted, provided the author and her affiliations are cited.

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