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Taking Care of Business the Private Sector Way July 25, 2010

Posted by Bill in Uncategorized.
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How often have you heard somebody declare the government should be run like a business? They think that if government were run the way businesses are run that taxes would automatically be lowered, government spending would drop and government efficiency would increase. Well all anybody who thinks that government should be run like a business has to do is look at the recent travails of companies such as BP, the Texas Rangers, General Motors or AIG. The business news is replete with companies that have needed government bailouts because they couldn’t meet their obligations, or indictments of high level officials because of illegal activities, or companies going bankrupt because of poor spending practices.

Those who advocate running government like a business say that these companies are the exception, not the rule, but they overlook some key differences between government and business. First and foremost, businesses exist to make money. Governments exist to provide services for citizens. Some of the most expensive services provided by government do not bring in any money– security (Police), protection (Fire), defense (Military), infrastructure (roads, highways, bridges.) Local government can charge for providing water, sewage and trash pick up but at the most they can only charge enough to break even on these services. User fees for Parks and Recreation Services, Community Services, Museums and Libraries do not begin to cover the cost of maintaining these services.

So right at the outset we have two very different organizational models. If something is not profitable for private business, they are going to unload it, but just watch what happens when a municipality announces that it is cutting back on Police or closing down swim pools or reducing Library hours.

The other problem is that private business does not have the sae standards of accountability as government. If a CEO wants to promote his son to a VP position, he can do so, and not many people are going to say anything about it to his face. If a mayor or City Manager were to make his daughter the head of a government department, there would be plenty who had something to say about it. While it is possible for public officials to make some crony appointments, because their appointments usually have to be approved by a legislative body of some sort it is much harder to do than if you are the CEO of a company who only has to face stockholders once a year at an annual meeting.

Public organizations also have to go through an open bid process for purchases. If a CEO is at a trade show and sees a computer system he likes, he can go ahead and spend millions of dollars on it without having to check with anybody else. Heck, if his wife runs a computer company, he can spend millions of dollars on her system without having to check with anybody else. A public official, however, has to post a request for bids, listing the criteria under which bids will be evaluated and then have a committee examine the bids and give input into which one should be awarded. Then the bid still has to be approved by the legislative body.

If you apply for a job in the public sector and don’t get it, you can file an open records request and get information about the other people interviewed and the one who was hired. You can receive candidates’ answers to interview questions, notes from the selection committee, the employment applications and even the list of selection/rejection reasons. If you apply for a job in the private sector and don’t get it, you can try calling the hiring manager and asking why you didn’t get the job, but she doesn’t have to take your call and she doesn’t have to respond to your question if she does.

Private sector organizations can engage in backroom negotiations, washroom conferences, and conduct business on the golf course. Public sector organizations have this little thing called Open Meetings or Open Government where most meetings have to be announced in advance with an agenda posted, and the meetings have to be open to the public. If it’s not on the agenda, it can’t be discussed.

I have worked in both the public sector and in the private sector and in my experience, people who come from the private sector into the public sector have a difficult time making the transition because they aren’t used to conducting their business in public. They want to make shortcuts, make purchases without going through the bid process and hire who they want.

So for those who say they want government to operate like a business, think about it. Do you really want government to conduct business in private? Do you really want to lose that public accountability, the right to make sure that you can view your government in action on any given day and time? Do you really want to remove the system of checks and balances under which government operates? Yes, you may get a lean, mean government machine out of the deal. But you could just as easily get a BP Oil or an AIG.



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