A few weeks ago we started an irregular series examining some of the phrases our candidates like to spout during political campaigns. Here’s one we hear from time to time:
“Government should be operated like a business and should live within its means.”
Now, who could argue with that? Government should live within its means. In Missouri it has to live within its means. The state constitution forbids deficit spending. It’s why the governor withholds money appropriated by the legislature or vetoes spending the legislature has approved. Once the legislature sends the governor a budget, it’s up to the governor to make sure the state lives within its means.
What kind of business? Maybe we can get some ideas from looking at the occupations of the people who serve in the legislature. We have our rule book for the Missouri Senate in front of us and it lists the occupations that members of this part of the legislature say they have in their fulltime jobs:
Education Director (for union)
Construction marketing representative
Retail Home Furnishings
Real Estate Broker
Next year, by the way, the Senate will gain a car dealer who will replace the “business owner” who owns a Coca-Cola bottling plant. The member in retail home furnishings recently sold out and is now a college president. He could not come back for another term because years ago the voters throughout Missouri decided voters in his district could not elect him to another term in 2010.
So, of the businesses listed here, which one should we pattern government after? The lawyers? Like a union? The banker? The electrician? How about running state government like a hospital? Given the real estate market these days, running state government like a real estate broker could be pretty perilous. Should we run state government like a car dealership? How about a utility company?
What do businesses do when the profit margin or investment return margin gets too low? They lay off workers, which the state has done. They reduce benefits, which the sstate has done. They declare bankruptcy, which the state has avoided, and reorganize, which the state is doing in several ways. They close and auction the assets, which the state government is not likely to do.
So in these regards, state government already operates like a business.
Here’s one big, really big, difference. When income slows, or when expenses rise, businesses can and often do increase their prices. Businesses, unlike government, like to make profits and many of them are not reluctant to increase their rates or their retail prices. The cost of electrical supplies goes up—customers pay more to have a new light switch installed. Detroit says the new model of car will cost $200 more; the dealer doesn’t like to hold his sales price at last year’s level. More uninsured people show up in hospital emergency rooms; hospitals increase costs to those with insurance. Utilities have to pay more for natural gas and coal to keep the generators spinning; they get a fuel adjustment rate increase and pass along the costs to consumers. .
When wholesale prices go up, business often pass on those higher prices to the consumers. We don’t know of many gas stations that are paying higher wholesale prices for fuel this year than last year that are still selling gas at last year’s prices, or the year before. We’ve seen old prices on some pumps in a few gas stations. But weeds are growing around those pumps and the sign doesn’t light up anymore, and the convenience store is empty.
If, then, we operate government like a business, we’ll want to make sure we maintain our profit levels even as wholesale costs increase. Government’s prices for service are paid in taxes. Maintaining profits could mean increasing taxes to keep the profit levels at acceptable places, if government was operated like a business.
But wait, taxes are bad. Candidates also make a lot of hay by promising no new taxes, or to fight for low taxes, or jsut plain to lower taxes or even to eliminate some taxes..
Government should be run like a business. Except it should lower prices and certainly not ever raise them.
Heaven help the businesses that are run like the government in that scenario.
Suppose the lawmaker’s business was run the way he or she thinks government should be run. No price increases. In fact, price reductions. Staff cutbacks. Service cuts. Layoffs. Giving money to others in hopes they’ll pay you back with a lot of interest if their business develops. No capital improvements on the building. An increasing backlog of needed repairs.
“Government should be run like a business.” We think we’ll have to ask for a little more information when a candidate tells us that. Maybe the next question should be, “Could you afford to keep; your business operating without ever increasing prices, in fact cutting them? Could you afford to keep your business operating if you never spent money fixing the roof, updating the wiring, paying competitive salaries? And as long as you’re at it, why don’t you run your business and pay yourself the kinds of salaries you earn as lawmakers or the kinds of salaries you approve for other state workers?”
The lawyer-candidate might want state government run like a business. What would the lawyer-candidate’s business look like if it was run like he or she wants state government to be run? Bet legal advice would be a whole lot cheaper.