From the Statehouse

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By Maureen P. Dakin

As summer reaches its peak, I thought I’d share some thoughts and perhaps give you some ideas to ponder about government and business. It’s been decades since I studied political science at the University of Vermont so I did a little research to refresh my memory. I must say, my ideas on the topic have changed over the years.

“If I ran my business like government, my business would be bankrupt” …“Why can’t government be run like business?” We have heard this said in many different venues, by many different people, over many years. Let’s discuss.

A Chief Executive Officer and boards of directors or sole business owners are motivated by profit. Government cannot make a profit. Balanced budgets, yes. Profits, no. After all, governments raise taxes and taxpayers often fund programs that are not their personal priorities. Business partners or shareholders have a say in how the business runs and how to use profits, but for the most part, agree on the end result.

Government is designed with checks and balances that allow very few bills to become law, and those that do are a result of compromise among hundreds of people. It’s hard to even imagine how anything can happen in Washington D.C. Little gets done as evidenced by the current state of affairs there (there are 435 members of Congress and 100 Senators!) Natural tension among the three branches of government is healthy and intentional in our form of government, but we are witnessing a demise of statesmanship and out of control partisanship.

A business is accountable to its shareholders who expect to see a good return on their investments, and to customers who expect a safe reasonable service or product offered at a reasonable price. Besides the checks and balances in the structure itself, voters have the ultimate responsibility for holding their representatives accountable. Low voter turnout and efforts to make voting more restrictive coupled with the outrageous amounts of money funneled into the process create a very different system of accountability.

If a division of a business is unprofitable, that division can be eliminated. If consumers decide not to buy a widget the business produces it can eliminate that division. We have the Vermont Corrections Industries that make some very fine furniture while teaching inmates skills. However, there are strict restrictions regarding how and where these products can be sold so as not to compete with private industry. To reiterate, missions are different.

Good customer service is critical to satisfied consumers who can take their business elsewhere. Such is not the case with government. We complain about long lines at the Department of Motor Vehicles and the Social Security Office. We grow frustrated at the length of time to have phone calls returned from the Department of Taxes. And I don’t even want to touch the subject of Vermont Health Connect in this article! Everyone at some point is a government customer. (It’s a different discussion as to the appropriate scope of government.)

Susan Mulligan, in an opinion piece in U.S. News and World Report on Dec. 15, 2011, wrote, “When you run a business, you can grow or shrink to accommodate the market. This is not so easy for the federal government. True, ‘government’ — be it regulation, reach, subsidies, whatever — can be shrunk, but you can’t shrink the size of the country or the needs its citizens have. If the needs are not filled by government, they need to be filled by a private entity or individual. It’s not impossible, and sometimes it’s best. But the need doesn’t just disappear because the federal government isn’t attending to it anymore.

“When you own a business, you can fire people who are either under-performing or too expensive. The federal government can’t fire Social Security recipients, or disabled school children, or prison inmates or anyone else who — by sheer nature of what they cost versus what they contribute — are a financial drain.”

I believe government can adopt certain business principles, such as sound accounting, results-based accountability, wise investing, and administrative functions. But government has a social mission as well. Vermont Businesses for Social Responsibility is an example of business using some profits to impart social missions into the business culture.

Not every business-person can transition to government service. Motivation, accountability and customer base are all different. “It is vain to advocate a bureaucratic reform through the appointment of businessmen as heads of various departments. The quality of being an entrepreneur is not inherent in the personality of the entrepreneur; it is inherent in the position which he occupies in the framework of market society.” (Ludwig von Mises, 1944, as quoted by Sheldon Richman in Foundation for Economic Education, Dec. 1, 2005.) Richman concludes, “…the businessman won’t change the bureaucracy; the bureaucracy will change the businessman.”

On the surface it seems simple that business and government should and could be run the same way, but I find that the underlying differences between the two are too great to incorporate without careful consideration. It’s important for legislators at every level of government to keep that in mind as we search for solutions

It was fun to do some research for this article as I strive to represent you better by understanding not only the issues, but the premises on which our founding fathers built our country. I hope it gives you some ideas to ponder or to discuss when conversation at a summertime barbeque needs changing or wanes, but keep it friendly!

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Maureen P. Dakin represents Colchester in the Vermont House of Representatives.