58 votes

Government Cannot Be Run Like a Business

Despite his big-government record as a governor, Mitt Romney has run for president as a conservative who would allow the free market to work. To bolster his credibility, he points to his success as CEO of Bain Capital. Romney led that company to become one of the largest and most successful private equity investment firms in the nation.

Many of his supporters have been able to look past the fact that he consistently raised taxes and pioneered Obamacare in Massachusetts because of this private sector success. They echo Romney’s argument that “the government should be run like a business” and believe that only a proven, successful businessman can do the job.

There are two problems here. The first is that history has already shown that successful businessmen are terrible for the free market whenever they get anywhere near government power. The second is that government cannot ever be run like a business. Its very nature makes that utterly impossible.

Regarding the first problem, one need only study the 19th century. If you don’t like the progressive movement, you can thank the 19th century Republican Party for creating the conditions that led to its birth.

The entire period is a record of big business getting together with government to intervene into the free market. Always under the pretense of protecting consumers, the true purpose of these interventions was limiting or eliminating competition for connected companies.

For example, Republicans wrote and passed the Sherman Anti—Trust Act. Standard Oil’s competitors were unable to deliver similar quality oil at the same price, so they went to the government for help. They successfully broke up a company that had over 300 competitors and had lowered its prices for decades, so that they could survive selling their oil at higher prices.

Rockefeller learned from this experience. Contrary to popular myth, Rockefeller was not a robber baron in the oil business. Like Romney, he had achieved his success honestly in the market through reinvestment, voluntary contracts, and his commitment that ““we are refining oil for the poor man and he must have it cheap and good.”[1]

However, when he got into banking, his strategy was different. Having seen the advantages of having government as a partner, Rockefeller made sure that he was well-represented at the secret meetings held on Jekyll Island to create the Federal Reserve System.

Pitched as a consumer protection against bank instability, it set up a government cartel that controls the money supply, interest rates, and most banking activity in general. Free market economists cite the Federal Reserve System as the chief cause of economic booms and busts, including those that led to the Great Depression and the 2008 housing crisis.

Railroads provide another example. 19th century government-subsidized railroads were plagued by fraud, waste, and recurring bankruptcies, while James J. Hill’s non-subsidized Great Northern Railroad operated profitably. Unable to compete, his subsidized competitors persuaded the government to pass the Interstate Commerce Act of 1887 and the Hepburn Act of 1906. As Thomas Dilorenzo observes, “What these two federal laws did was to outlaw Hill’s price cutting by forcing railroads to charge everyone the same high rates. This was all done in the name of consumer protection, giving it an Orwellian aura.”[2]

Romney’s economic policy as laid out on his issues page continues in the interventionist tradition. According to Romney, “History shows that the United States has moved forward in astonishing ways thanks to national investment in basic research and advanced technology.” He must read the same history books as Barack Obama. True proponents of free markets argue that entrepreneurs have moved the United States forward despite government intervention, not because of it.

Romney makes the distinction of “investing” in basic research rather than “politically favored approaches” to energy solutions. However, basic research is just another investment that should be made by private capital in the hope 0f profits, not by government for “the common good.” The latter is just more of Barack Obama’s collectivism repackaged. It will yield similar results: more bridges to nowhere, bankruptcies, and waste.

Despite the popular conservative misconception, government cannot be run like a business. Government simply does not exist under the same conditions as private firms. It does not receive its money voluntarily from its “customers.” The ability of customers to choose not to buy is the driving force behind all market innovation and efficiency. Private companies are not owned and run by more noble creatures. They are simply under conditions that force them to innovate and control costs in order to survive.

Contrary to the arguments made by Romney, Santorum, and Gingrich, there is only one role for government in a free market economy: to protect private property rights and enforce contracts. Regardless of good intentions, anything else the government does destroys the market. Only Ron Paul understands this. If you truly believe in free markets, he is your choice for president.

Tom Mullen is the author of A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.


[1] Folsom, Burton, Jr. John D. Rockefeller and His Enemies from The Freeman http://www.fee.org/pdf/the-freeman/0805FreemanFolsom.pdf.

[2] Dilorenzo, Thomas How Capitalism Saved America Three Rivers Press New York 2004 pg. 120

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Correct Tom. I've been saying

Correct Tom. I've been saying this all along. His private sector business experience means nothing when it comes to honoring the oath of office, which is in fact his job description: to protect, perserve and defend the constitution. That has nothing to do with private sector business experience but rather with his morals, his honor and his character. I think we all know where he stands on those things.

It not only CAN but it is run like a business!

...run by the MAFIA.

The only remote resemblance

the governement has to a business is the use of management.

And the current government is too big to manage and what is being managed is being managed horribly.

The law cannot make a wicked person virtuous…God’s grace alone can accomplish such a thing.
Ron Paul - The Revolution

Setting a good example is a far better way to spread ideals than through force of arms. Ron Paul

bad management

If it's being managed horribly, then it will lose customers and go out of business, right? No? How come?

I kind of disagree

Government can be operated like a business in some senses. In a business you could never stay in business and sustain yourself by continuing to operate at costs greater than your profits. Shoot, if you're operating at that level, you have no profits and need to cut and restructure. This can easily be applied to government. it's the biggest thing business lesson that needs to be applied, so to say it can't, is to ignore one of the most crucial business principles that needs to be done with government.

Your entire argument goes out

Your entire argument goes out the window when you say "this can easily be applied to government."

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lol...right...

I can't easily apply a principle in theory to government? The principle can be easily applied, but can it be carried out? that's what you're getting at. I'm just saying, once again, it's a principle that can be applied to government operation. I said nothing about how easy or hard it would be to execute it.

Then what is your point of

Oh, then if you only want to commit to the idea in priciple, then what is your point of even bringing it up?

It's not as if people don't understand the principle of budgets and operating costs. What's the use of saying that government can be run like a business in theory if in reality it is not so easy.

I can run my family like a business, in theory, too.

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and you have the right to do that if you want

The guy is saying it can't be run like a business, and I'm saying it can in at least one regard. End of story.

Yes, I have the right to, but

Yes, I have the right to, but I said "in theory" because it would be impossible in practice because of the nature of a family. I'm not going to fire my kid if he screws up and hire a new one to replace him.

I understand the point you are trying to make - that like businesses, governments should not spend more than they take in. That makes sense and people understand that concept. But that's not something that is relegated to just businesses. That is something that should be true for any kind of organization that deals with resources. It applies to the Boy Scouts, to Churches, individuals, and like I mentioned - families.

The reason I replied to your comment is because you chose to express your disagreement with the original post. You claim that it can "in some senses" be operated like a business. And then you go on to state a universal truism about finances that applies to almost everything.

By your reasoning, why could we not say...

"Government can be operated like a non-profit in some senses."
"Government can be operated like a bank in some senses"
"Government can be operated like a co-op in some sense"

The issue is not that I disagree that expenditures should not exceed revenue. It's that by making such a superficial comparison, you are not making any point at all and not bringing anything to the discussion. Picking out and stating an obvious financial fact that applies anywhere and using it to claim that it is proof that governments and business can be operated similarly is ridiculous.

That is fluff. The real issues being discussed here are in the details such as the fact that the government's "customers" do not give it revenue voluntarily.

I am not saying that you are wrong per se since you cherry-pick "in some senses". I am saying that you are not making any useful point. If you are going to disagree with the original post, have some solid insight.

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you're still completely missing my point

maybe I'm not expressing it well, but I'm done talking about it. You're making a huge issue out of nothing. You're attacking me more in depth than any point I was trying to make and yet you criticize me. Instead of cherry picking on terms yourself, why not just agree to disagree. There is truth to what I'm saying as you recognize yourself, how you apply it and see it is up to you. You're not really contributing much to the conversation either by making a huge deal out of a small thing. It's not as complex as you're making it. It's absurd. This conversation has gone on way too long over nothing.

Our government is not a

Our government is not a business.The money it gets to operate is not a business transaction it is no way a voluntary transaction.The only money it has it has to steal from people and businesses.Our governments role is to protect property rights and defend the nation,that's it.

You're not getting it

You're stating the obvious, yet regardless of how they get their money, the simple fact remains - and it is a particularly applicable business principle - you cannot continually operate at costs that exceed your income/profits. To do so is foolish and will bankrupt any business. The same can be said of government, they can't continue to operate at levels more costly than their projected income, it will and has bankrupted them/us. It's a simple business thing that can be applied to government. That's why I said I kind of disagree. Just like a business, because of the governments actions in this regard, no matter what (even ignoring what the constitution says for a moment), you need to cut and restructure in order to survive.

I'm not saying government is exactly like business, which is why I said I "kind of" disagree, but there are applicable principles as far as business operations go. This point/principle is my main argument to how I "kind of" disagree.

I get what you're saying but

I get what you're saying but it's not the case. There's no such thing as a budget in gov't. If they need more money they get the fed to print it, borrow it from China or raise taxes. They NEVER cut AND have no incentive to do so. They literally grow money on trees.

The only way you could even "kind of" compare gov't to a business is if you could prevent them from doing those three things which you cannot therefore, it's nothing like a business.

Yes

Business has a feedback mechanism known as profit and loss. Government has only profit. The losses are forced onto the taxpayers.

What Romney did in business was to buy companies and then

sell them of piece by piece, making huge profits, while the workers of the company lose their jobs..

In the same way, Romney in government would continue the policies under Clinton, Bush and Obama until the sovereign states go bankrupt, then by whatever means possible, sell them off one by one to the bankers until there is nothing left..

thats how i see it..

Post it!emalvini, for the

Post it!

emalvini, for the sake of freedom, make your comment here a post!! If you got the time, plug in some quotes and information supporting your thesis. If not, still it can be read by many. Please post it! Your thesis would be a fantastic essay!! If you can't do it, emalvini, Tom, are you listening?!?! lol

School's fine. Just don't let it get in the way of thinking. -Me

Study nature, not books. -Walton Forest Dutton, MD, in his 1916 book whose subject is origin (therefore what all healing methods involve and count on), simple and powerful.

They also played pump and

They also played pump and dump with the stock.

RON PAUL 2012 * Restore America * Bring The Troops Home
http://www.texasuncensored.blogspot.com

I... I...

I... I love you... You've said EXACTLY what I've been saying for months about Standard Oil and the railroad companies. And I mean exactly! And the whole thing about the Gilded Age not being laissez-faire. Amazing! Exactly what I've been saying! And you've stolen my exact thoughts on running government like a business.

For proof, see this post I made 20 days ago. I specifically discuss the Gilded Age, Standard Oil, and the railroads. INSANITY!!!:

http://www.reddit.com/r/Anarcho_Capitalism/comments/pa1a2/we...

Check out LibertyHQ, where I aggregate the all best articles on libertarianism by topic! For now, the "Issues in Libertopia" section is the most developed. Find a link to it below:

LibertyHQ

Pointers

Tom, a few recommendations about writing:

1/5) the fact that offers nothing and takes up space.

Alternates:

a. Many of his supporters have been able to look past that he consistently raised taxes and pioneered Obamacare in Massachusetts because of this private sector success.

b. Many of his supporters have been able to look past his raising of taxes....

c. Many of his supporters have looked past his consistent tax raises....

2/5) Spell out a number when it's the first word of a sentence unless the sentence, or line, is in a stat sheet, where space is small.

3/5) Simple series are without a comma before "and." Two rules apply to commas before and:

a. The series is complex, permitting thought continuity.
b. A subject follows and.

Examples:

a. I'll take roast beef, chedder cheese, bell peppers, mayo, mustard, letter and onion on my sandwich, and a bag of chips on the side.
b. Sammy walked home from school yesterday and stopped by Barry's Bagels to talk with David, and from there they went to the park to play basketball.

4/5) Overuse of "that"

"The first is that history has already shown that successful businessmen are terrible for the free market whenever they get anywhere near government power. The second is that government cannot ever be run like a business. Its very nature makes that utterly impossible."

Better:

The first is history has already shown successful business.... The second is government cannot be run like a business. It's very nature makes that (<--almost proper use) utterly impossible.

Almost, because your use of that is a pronoun, which is a replacement for a singularity that is a word or phrase whose words are next to each other, not a replacement for an idea, something nebulous, a thing implied or thing conveyed from a whole such as paragraph or composition unless rules (below) are followed. Your that refers to government cannot ever be run like a business and it, your that, should follow immediately afterward without a different thought between it and its referent. Your paragraph had two thoughts and "It's" in the last sentence points to your two thoughts, leaving room for confusion. The two thoughts are:

1) Business men are terrible for the free market whenever they are near government.
2) Government cannot ever be run like a business.

If #2 was followed by a semi colon, the connection would have been clear, placing "It's" (well, "it's") in place of government and that in reference to government cannot ever be run like a business.

Better still:

"The first is history has shown successful businessmen are terrible for the free market whenever they get anywhere near government power. The second is government cannot ever be run like a business. Government's very nature makes business managed government utterly impossible."

conveyed from a whole unless....
1) unless that is in the next sentence separate from the paragraph it refers to and is separate from the paragraph after it.
ex.
PARAGRAPH

That's how it's done.

PARAGRAPH

2) unless that refers to the composition. Here, that would be in the composition's last sentence which would be separate from the composition.
ex.
COMPOSITION

That's all there's to it. (<--last sentence)

5/5) Keep parts of the past perfect and past progressive together

The first is that history has already shown....

Correct: The first is history already has shown....

NOTE: The word "already" almost always weakens writing and is excessive and unnecessary because of the emaciation. Work to avoid its use. Let your words that would surround it show when something occurred. Already is OK for emphasis and clarity; regular use of it is a crutch because what surrounds it lacks crispness and clarity.

Tom, your writing has improved -- a lot -- since 2008. You write more short and medium length sentences than you did then. Because of that change, your sentences lengths vary, providing your compositions punch, where once they droned on and on. Keep up the good work, Tom.

School's fine. Just don't let it get in the way of thinking. -Me

Study nature, not books. -Walton Forest Dutton, MD, in his 1916 book whose subject is origin (therefore what all healing methods involve and count on), simple and powerful.

Nice pointers

These pointers are useful to all writers and bloggers. The smarter we sound, the better we sound!
Thanks!

Thanks for noticing

Thanks, pm17brad. I'm glad I got a reply to my comment and that it was found useful. I hope Tom thinks it's useful too and knows it wasn't meant to demean him.

I like Tom's work. He tackles subjects that are intricate and historic. His subjects demand space, but the length of his essays still stretch out. Overall, though, his writing has improved, most notably in these areas: redundancy, say-nothing opinion and improperly worded opinion, information overdose and punctuation use. All but the last trait, there's less of them. The last trait, punctuation, he uses correctly more often and makes better use of it than he did four years ago.

As satisfying as it is to write to people who want to learn about the subjects he writes about, someone with his ability should aspire to reach a bigger audience. If he wants to do that, his essays will have to go on a diet. Which is difficult. I know, because I struggle writing compactly.

pm17brad, you're right, the smarter we sound, the better we sound! Speaking about smartness, I spotted a punctuation mistake in my comment. lol. Do you see it? It's near the end.

School's fine. Just don't let it get in the way of thinking. -Me

Study nature, not books. -Walton Forest Dutton, MD, in his 1916 book whose subject is origin (therefore what all healing methods involve and count on), simple and powerful.

Excellent piece. Government is force. Is it proper to use

lethal force or the the threat thereof to do business?

No?

Then that is why Government cannot be run like a business.

And why business should not be run like a government.

Great post, Tom! I wish

Great post, Tom!

I wish more people would stop to think about things like this instead of go with their first knee-jerk reaction when the economy goes bad. Our businesses need to be more successful, so make our president a successful business man. This is such a sophomoric opinion, it's scary how many people truly believe it. I suppose it's easier to buy that idea straight up than actually doing any thinking.

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Thank You Tom

...great points and I hope they are expanded as "Romney is a successful businessman" is often heard. I have some members of my family who seem to be stuck in that rut and I will send this to them as it is apparently going to be a continuing argument (that is until they finally see the light, ie Ron Paul)

fonta

Hey, Romney's experience is perfectly applicable:

First, you get the USA in more debt and pocket some money in the process.
Next, you sell off the good bits of the USA to China, pocketing a bit more money.
Finally, you walk away with your profits and let the remainder of the USA go bust.
Success!

(Anyways, all you need to know about Romney and his status quo cohorts is when they say anything that sounds good they are usually lying. For the free market? Liars. Will even attempt to balance the budget? Liars. Will really try to return power to the states? Liars. Fiscal conservative? Liars. If even just 1/2 the Republican party voters could bother to see through these obvious lies, none of the liars would stand a snowball's chance in hell of winning the nomination.)

Running govt like business is a leap toward fascism

A corporatist will have the success of the corporation (government) as his first priority over anything else! The ruthless practices of doing business (governing) will continue to unseen extent.

We don't need the government to succeed in protecting the big corporate interests. We need government to get out of the way!

For more information about the national security obsession, phony patriotism, power elite propaganda and other signs of fascism, check the "Fourteen Defining Characteristics Of Fascism" by Dr. Lawrence Britt.

Tom, I have a BIG favor to

Tom,

I have a BIG favor to ask...

I am really busy right now and don't have time to research or develop an idea I've had about Santorum.

I see Santorum as "☪The Ayatollah Santorum". He wants to dictate moral code and now wants to blur the lines between church and state.

Is that something you feel you could flesh out?

I would soam it around the web, try to get it up on Drudge and elsewhere.

Let me know.

Thank you

Btw, I like how RP puts it. Government should be the referee.

donvino

Great points...

Run the country like a business is dumb. Only if they would be willing to fire themselves, which I think not...

reedr3v's picture

Very good points, and I like the trend

toward a more succinct post.