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Should government be run like a business? And facts to arm yourself with in this debate [1]
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Date: 2023-07-24
The government should be run like a business? You’ve heard that for years, right? Even before it was used as a reason to vote for a businessman who filed bankruptcy repeatedly (eyeroll implied here). Let’s break that down, shall we?
First, “business” is a very broad, and vague term. What are we talking here? Big business? Small business? They are very different entities after all. For starters, 1 in 5 new small businesses fail in their first year. 30% fail in 2 years, and half fail in the first 5 years. According to Forbes. That’s quite the risk for the average person considering starting their own Mom & Pop shop. That’s a terrifying risk for an entire country. Right? It seems that we have a bit more to lose on that front. “Hey, we gave it a shot.” doesn’t really cut it when you’re talking about bankrupting an entire country, let alone the richest country in the world. Maybe I’m just too conservative to be willing to take such risks? If my small business fails, I suffer. If the country fails, 320+ million people suffer.
What do you have to lose?
Now, let’s talk about the difference between “small” business and big business. I put the word “small” in quotes, because these days that is defined as a business with less than 500 employees. Over the years, I’ve known a lot of people who owned their own businesses. I can’t think of one that comes even close. Hmm. Maybe some of the people I served drinks to at the country club? Hell, Justice Kennedy was a member there, so I suppose it’s possible, but I’m thinking most of them didn’t quite reach that number either. Out here, among us “average” people, most of the entrepreneurs I’ve known had employees that they could count on their fingers, and knew every one of them by name. Even those who were successful, and made a comfortable living from it.
In fact about 80% of “small” businesses have no employees at all (again according to the Forbes article linked in the first paragraph). 16% have 1-19 employees. Leaving only 4% of the 33+ million small businesses in this country with 20 or more of the 500 employees that qualify the business as “small”. Don’t ask me why 20-499 is a category on it’s own. Doesn’t seem logical, does it? I have some theories, but it’s already in my nature to go off on tangents, so I’ll just move on for now.
Data source Forbes
Small business is “big” in some aspects. Apparently they currently account for 99.9% of all businesses in this country. That honestly surprised me. They “employ” (remember that 80% of them are just employing themselves) nearly half of all workers in the private sector. Over 60 million people. Which comes out to over 46% of the workforce. Big bucks, right? Actually the average small business owner makes $69,000/yr. For those without employees, it’s under $50,000. Which was a nearly $4,000/yr increase between 2012-2019. Not nearly the major increase as big businesses have seen, but more about that later.
Data source census.gov
I happen to personally be in that 80%. I started a small (more like micro) business of my own last year. I wish I was making $50,000/yr! Starting with an idea, a shoestring budget, and grabbing myself by my boot straps, it’s a slow process (come to think of it, none of my boots even have straps — as a product of the 80s I still just buy the ones I think are cute — although some of them do have shoestrings). See? I wasn’t kidding about going off on tangents. Where was I? Oh, yeah. It’s not like I have an advertising department (or even an advertising budget). I had a stellar credit rating, and plenty of credit cards, but when you start using that credit, your rating takes a hit. Some big banks will actually drop your credit limits, further damaging your credit score, raising your interest rates, and your options. Helluva viscous cycle. Gee, I can’t imagine why so many new businesses fail so quickly. Before this becomes an article about why more people don’t start new businesses, let’s get back to the title of the article. Well, right after I indulge in a silly photo of one of my pairs of boots. Since it brings me joy because it reminds me of the colorful 80s.
See? No straps
Ok, joyful break over. Back to the grim reality:
So, with half of all small businesses failing within 5 years, maybe that’s not the way to run a government. From start to failure, that averages out to about the time period of one presidential term. Far too risky! How about big business? Should we run government like a big business?
Big businesses these days are mostly run by CEOs. They are about short term profit. Often concentrating on little more than the next quarter’s earnings. Despite the negative things we could say about the Robber Barons (and there are plenty of those) they did have the long term in mind for their businesses. They personally owned them. They passed them down to their children, and envisioned the companies that they built lasting for generations (that faulty estimation could be yet another article in itself). They had a vested interest in their long term success. Things have changed a bit over the the century in between. In fact they’ve changed pretty dramatically just over the past couple decades. The average time on the job for a CEO is 5 years. CEO pay has skyrocketed 1,460% since 1978! Their salaries were 399 times as much as a typical worker in 2021. According to the Economic Policy Institute, and for my fellow chart-nerds, along with the one below, you can find more of them here.
Why should they care what happens in year 6, right?
It’s good to be a CEO these days
That’s just CEOs in general. A study of the 300 top US companies released by the Institute for Policy Studies (IPS) in 2022, found the average gap between CEO and median worker pay jumped to 670-to-1 (meaning the average CEO received $670 in compensation for every $1 the worker received). The ratio was up from 604-to-1 in 2020. Forty-nine firms had ratios above 1,000-to-1 . With these top CEOs making an average of $10.6m, and the median worker making $23,968. Maybe CEOs are more about their own enrichment, than the wellbeing of the company, or its employees, let alone the customers or the greater good of society at large? It seems like that might be a possibility.
One of the most egregious examples would be former Florida Governor, and current Senator Rick Scott. When the federal investigation of Columbia/HCA became public in 1997, it was only a few months before their CEO, Rick Scott, left the company. Found guilty of the largest Medicare fraud in history (at the time, because, of course it has been topped since then), and fined $1.7 Billion , you’d think his tenure as CEO would be considered a failure. Right? How much money could you or I cost our workplace before we were out of a job? While Rick did leave his job, he didn’t exactly have to file for unemployment. Scott left with $300 million in stock, a $5.1 million severance, and a $950,000- per-year consulting contract for five years. For what? A job well done? Don’t even get me started on how, after committing fraud against the government, he gets to work in government. Let alone end up in a position to inspire this meme:
I made it thru talking about Rick Scott without using profanity even once. I’m so proud of myself!
How would that business model translate in government? Who would be the equivalent of the CEOs? Or the shareholders? Or the consumers? Or the minimum wage workers? Who is benefitting? What about price gouging? So many unanswered questions!
Extreme greed without concern for how that effects anything or anyone else aside — business are in the business of making money. Even the greatest bosses of small businesses, who genuinely care about their employees, and their customers, have to make money. Hard to stay in business if they don’t. Profit is, and needs to be, the goal. That’s just reality, and logic. Despite over 99% of businesses being “small”, large corporations still command most of the revenue in this country though.
I know this is more than a decade old, but I hope it gets the general point across.
I do apologize for not finding a more recent chart. I’m remembering why I write stories here so rarely. I take fact checking very seriously. I imagine professional writers have better tools to look up facts & figures. Or, at the very least, knowledge of the best sources to go to. Being just a random, average citizen, I’m limited to generic Google searches. Because of that, I tend to spend days trying to make sure that my “articles” are accurate. Then one fact check leads me to other numbers and statistics that I think are relevant, and it goes on and on like that. So, at this point, I’m willing to settle for that one, before I go down yet another rabbit hole. It’s in my nature to want accuracy. Not to mention that beyond that, I know that Daily Kos readers tend to be very knowledgeable, and very well informed, and would correct me. How embarrassing! Sometimes I envy the MAGA crowd for their apparent lack of a shame gene. Then again, sociopaths don’t worry about that either, and I’d still rather be me than be a sociopath. Or a MAGA for that matter.
Between the podcasts, and the rallies, and the rap videos where would they find the time?
So what conclusions can we come to so far to answer the original question?
Clearly the small business model is much too risky.
The big business model is about the largest profit, for the smallest group of the elites involved. And that’s before we even address any of these things:
Government subsidies for these big businesses
Government bail outs
Health insurance
Food stamps
Unions
How would any of those things translate to the government running like a business? If the government is the “business”, then who is the “government” in this scenario, that all too often has to keep them afloat? Or keeps them in check? Well, at least to some extent. We do still have regulations, as toothless as some of them may be (again, that could be a whole other article in itself), but imagine how bad no regulations or guardrails would be?
Big businesses don’t have to care about how they effect the economy. The domino effect of worrying about this affecting that, which would in turn cause … and on, and on. There is a reason that there is even an option to acquire a master’s degree in economics, and no options for degrees in balancing a checkbook, or managing a household budget. Just me? Anyone else feel like their head might explode when someone voices that comparison?
According to the Cato Institute, the federal government spends more than $100 billion a year on business subsidies. With the bulk going to big business.
Add to that the estimated $95 billion from state and local governments.
Indirectly, there are also the government programs for food stamps, unemployment insurance, health insurance, housing assistance, reduced school lunches, etc. Are these programs really “welfare” for the masses? Or are they “corporate welfare”? How many people would work for any company that didn’t pay enough to cover basic necessities like eating and living indoors? Those companies would inevitably be forced to pay higher wages in order to fill the positions. Government to the rescue! They’ll help cover some of those expenses, so the companies can keep paying as little as possible to their employees, and keep those multimillion dollar profits going to the elite few.
I know a tweet isn’t the most credible way to prove a point
Remaining true to my commitment to accuracy, yes, I fact checked that tweet. There are plenty of memes floating around out there addressing the same issues. While they do still get the general point across, unfortunately they don’t all stand up to fact checking. Nothing like ruining a valid point with poor math skills! Aargh! Drives me nuts! This tweet however matches up with an Oxfam International study from 2017. And that was pre-pandemic! We’ve all heard about how the insanely wealthy have just got wealthier since then. We’ve seen the memes. Sometimes it’s hard to believe that it could possibly be that high. Must be at least a little exaggerated. Left-wing-demonize-the-rich propaganda, right? Well, according to this article from that liberal rag, Forbes, those were pretty accurate. Although Elon Musk’s numbers might have possibly changed since that article was posted? I know I’m not living up to my bleeding heart liberal tag, but I just don’t have it in me to feel sorry for him. I guess I’m just not quite that “woke”.
Conclusion?
Business is in the business of profit
Government in the business of society as a whole
Government (at least in the U.S.) is supposed to be of the people, by the people, for the people
Business tends to be of the elite, by the people, for the elite
Personally, I can’t see how government being run like a business would work. So, I can see how it could work. They are very different things, with very different goals.
And we haven’t even talked about how many of them don't pay taxes! A government runs on taxes, and businesses do everything to avoid paying taxes. So where would this business-government hybrid fall on that issue?
As usual, I’ve gone on for much longer than I intended, or anticipated. If you’re still reading, I take it as a huge compliment that you found my cathartic rambling interesting enough to hold your attention this long.
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