Tuesday, March 28, 2017

Government Isn’t A Business

Here we go again, reinventing government.

Trump plans to unveil a new White House office on Monday with sweeping authority to overhaul the federal bureaucracy and fulfill key campaign promises — such as reforming care for veterans and fighting opioid addiction — by harvesting ideas from the business world and, potentially, privatizing some government functions.

The White House Office of American Innovation, to be led by Jared Kushner, the president’s son-in-law and senior adviser, will operate as its own nimble power center within the West Wing and will report directly to Trump. Viewed internally as a SWAT team of strategic consultants, the office will be staffed by former business executives and is designed to infuse fresh thinking into Washington, float above the daily political grind and create a lasting legacy for a president still searching for signature achievements.

“All Americans, regardless of their political views, can recognize that government stagnation has hindered our ability to properly function, often creating widespread congestion and leading to cost overruns and delays,” Trump said in a statement to The Washington Post. “I promised the American people I would produce results, and apply my ‘ahead of schedule, under budget’ mentality to the government.”


Kushner proudly notes that most of the members of his team have little-to-no political experience, hailing instead from the world of business. They include Gary Cohn, director of the National Economic Council; Chris Liddell, assistant to the president for strategic initiatives; Reed Cordish, assistant to the president for intergovernmental and technology initiatives; Dina Powell, senior counselor to the president for economic initiatives and deputy national security adviser; and Andrew Bremberg, director of the Domestic Policy Council.

Ivanka Trump, the president’s elder daughter and Kushner’s wife, who now does her advocacy work from a West Wing office, will collaborate with the innovation office on issues such as workforce development but will not have an official role, aides said.

We’ve seen this before.  Someone running for office promises to run government like a business and get rid of all the red tape and bureaucracy.  It makes a great sound bite, but there are problems with the comparison.

For one thing, government and business may have similarities in terms of structure: they both work out of offices, they have a corporate structure in terms of chain of command, they have departments that handle various duties such as finance, legal, and public outreach, but there the similarities end.  Businesses exist to provide a product or service to a segment of the public and in doing so make a profit, thereby staying in business.  They don’t necessarily exist to serve all of the people all of the time and their most important product is a profit and a happy board of directors.  Governments, on the other hand and in the words of Thomas Jefferson, “are instituted among Men, deriving their just powers from the consent of the governed,” and the goal of that government is, as the Preamble to the United States Constitution succinctly puts it, “to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity”.  With all due respect to capitalism, that is not the mission statement of a business, and if it tried to do that, it would go out of business in a hurry.  That’s why we have government; to do the things no business should attempt or be expected to do.

The chief complaint of those in favor of running the government like a business is that government is slow, bureaucratic, and at times wasteful.  They have a point, but then this is a large and very complex country with a multiplicity of challenges and situations that face our most basic needs; getting essential services to the all the people both fairly and without endangering life and property isn’t like running a lemonade stand or even a Starbucks.  In my world, the task of providing elementary and secondary education to all the children of my county and meeting their needs is incredibly complex; it’s not a one-room school anymore.

And if there is anyone who is going to attempt to make government perform like a business, the last person who should be doing it is Trump.  His record of bankruptcies, shoddy and questionable dealings, and hyperbole in trying to pass off cheap crap as the crown jewels is well-documented and the stuff of civil suits.  If anything, he should be the first-year MBA seminar in how not to run a company if morality and honest practice are to be considered.

The best historical model of how Trump operates and probably how Jared Kushner would SWAT government is enshrined in business lore to the point that the very name has become a term for disaster.  Ladies and gentlemen, I present to you the Edsel.

Developed at the height of the fabulous ’50’s, it was to be the car of the future with styling and features to stagger the imagination and set the tone for cars to come.  Ford Motor Company invested millions of dollars in the concept, created a whole separate division, and built up the hype to the point that when it was unveiled in September 1957, the automotive world couldn’t wait to see it.

It turned out to be all of the above on a grotesque scale.  The styling was too radical — or laughable — even for the finned and chromed cars of the era, and underneath, it was just another Ford with a lot of features that either didn’t work or were just too much for the public who were still getting used to the idea of automatic transmissions.  Not only that, they weren’t very well built.  Ford, in an effort to keep costs low, built the cars on the same assembly lines as Fords and Mercurys so the people putting the car together might in their haste put the wrong parts on the vehicle coming down the line.

The car quickly became a laughing stock and furious efforts by Ford to save it by toning down the styling, cutting back on models, and merging the new division with Lincoln-Mercury failed.  A little more than two years after the Grand Opening the plug was pulled and the name Edsel entered the lexicon of America as a synonym for ignominious failure and a cautionary tale in business schools everywhere.

Given the record so far, I fully expect the name Trump to become the Edsel of government and a model for how not to run a country.

Bonus Track: At my request, CLW offered some thoughts on the subject.

As you note, the objectives of government and business are diametrically opposite. Businesses serve themselves. They exist to generate profit for the shareholders, and to insure not only their continued existence but their growth and success. The only real reason companies provide good customer service is that it tends to be good for further business, not out of some altruistic sense of “good.”

Government, on the other hand, is there to serve the country and insure its objectives: peace, tranquility, general welfare, etc. In that sense, the government could be considered the largest US non-profit. And everything about a non-profit is different — they exist for altruistic reasons, they often run extremely lean, they distribute or reinvest all profits, and they attract an entirely different employee. Employees of government or a non-profit are usually there because of the overall mission, and often forego more lucrative occupations in the for-profit world.

As organizations, government needs very different leadership. At the very least there’s scope. The US Gov’t has 4+ million employees (and perhaps that many contractors). That makes it at least twice the size of the world’s largest private employer Wal Mart with just over 2 million. The sheer scope of that means the organizational challenges are staggering. It takes an incredible depth and breadth of leadership skill to manage that, and it’s not a part-time job. That’s why the career employees in government are so important: they provide the experience and skill necessary to lead such a mammoth organization.

Finally as someone noted on the interweb the other day, we’re not customers of government, we’re the board of directors. You don’t do right by us, you’re fired. Try that at Koch Industries…

To expect someone like theDonald, or worse Jared Kushner, who have zero proven track record at managing organizations of more than a few thousand, to “fix” an organization that is 1000x larger is simply ridiculous.

Governing is the only profession where having no experience and open disdain for the mission is considered by some to be an asset.

5 barks and woofs on “Government Isn’t A Business

  1. “The chief complaint of those in favor of running the government like a business is that government is slow, bureaucratic, and at times wasteful.”

    And of course, no business is ever slow, bureaucratic, or wasteful. Ever. Except when dealing with consumers.

  2. Someone should send young Kushner a copy of the Constitution since his father-in-law has no clue as to what’s in it. And someone should point out to him that a CEO serves at the pleasure of the board of directors (unless, of course, the board cedes all decisions to the CEO) whereas the President isn’t the sole source of governance. He/she is one among three as shown in the Constitution. The CEO can hire and fire, can choose his employees, while the members of the House and Senate are elected by the people. I suspect Hamilton and Madison thought to deliberately slow down decision making as a way to protect the many from the impulses of the few. Such as Kushner.

    Perhaps this administration could learn a thing or two from Al Gore who was charged with streamlining the government. Red tape was written into the Constitution.

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