Conservatives often compare a government to running a business. They do this many times and in many different ways. They do this often to justify business experience as interchangeable with governing experience. They use it to justify calling government inefficient compared to businesses because it can't turn a profit. They do it to justify their position that the government should run budget surpluses. They do it sub-consciously when people like Stossel issues challenges like, "name one thing government does better than business".
While I have many intellectual objections to thinking of government like a business, I think that even if you accept this tortured metaphor, that conservatives use it incorrectly(big surprise, I know). The way that they screw it up is that they completely get wrong who a government's customer and employee is. It also leads to bad conclusions of government spending.
Once a correct metaphor is constructed, the policy recommendations deducted from the metaphor completely changes.
Since taxes, payed by the U.S. citizens are its revenue stream, The usual metaphor of "government as a business" portrays U.S. citizens as it's customers. This shows a poor understanding either business or civics or both. A customer that buys goods from a company does so willingly. A customer as the option of going to another company or, failing that, walking away from the transaction completely. U.S. citizens do not have this option. With the exception of tolls, taxation is compulsory. U.S. citizens must pay it. I suppose there is always the option of running to another country, but that seems excessively burdensome for a customer. Normally a customer just needs to go to another store to change what business it buys from, not uproot their entire family.
Wait a tick... "uprooting the family to change business" that doesn't sound like a customer going to another store, that sounds like an employee changing jobs. Indeed the only way that the "government as a business" metaphor makes sense is make U.S. citizens the employee, not the customer. Government motivates citizens by either offering them money to do work, or threatening their livelihood by throwing them in jail or fining them. An employer does the same thing, offering them wages to work for them. Once working for a company, the threat of ending your only source of income - your livelihood, can be a powerful motivator. If one is the sole breadwinner of a family it can be an even more powerful motivator than threatening an individual with jail time.
At this point, you might say "wait-a-minute", an employer PAYS its employees. The federal government doesn't pay its citizens, the citizens pay the federal government in taxes. It's an excellent point and normally where the "government as a business" metaphor starts to break down. However, it breaks down only because you're thinking of a business such as a factory or a retail shop. But, if you think of a business like a staffing firm, a consulting firm, or a law firm, the metaphor continues to stand. A law firm only makes money when its employees make money by offering their services to a client. A lawyer of the firm would bill, say, 200$ an hour, of which the firm takes half. The more hours the lawyer bills, the more money he makes as well as the firm. Does this arrangement sound familiar? It should, it's called an income tax. The more money you make, the more money the federal government makes. If you think of the government as a law or consulting firm, then the "government as a business" metaphor can survive to see another day.
So, if in our tortured metaphor, the federal government is the businessemployer and U.S. citizens are the employee, then who the hell is the customer? That's easy, the customer is foreign governments and business. This would make total sense, even to an austrian economist. The wealth of a company is it's capital(machines and people) plus it's profit. The wealth of a nation can be seen as the resources inside of the country(its capital) and it's profit from trading with other countries. For example, a computer consultant firm would call it's building, it's computers, and computer programming books its assets or 'capital'. The federal government would call it's entire land, mountains, building on that land, oil and natural resources under that land, its capital.
So why did I go through all this? Because once you see the "government as a business" metaphor through this lens, it completely changes how you look at government spending and other public policy prescriptions. Remember, this isn't a business like a factory where employees are a cost, its a consulting firm where the company only makes money if the employees are working and billing hours to a customer. When viewing citizens as employees of a consulting firm rather than customers, it changes how you treat them. Instead of viewing them as customers you want to extract money from, you view them as capital and something to invest in.
If citizens are a customer, you want to give them as little service as possible in exchange for them giving you as much money as you can convince them. This would fit conservative's view that government is evil. It can only benefit at the expense of its customers(charging more, or giving less).
However, if you view citizens as employees of a law firm, then you can see how what benefits the citizen(employee) also benefits the government(law firm). If the company spends money on educating it's employees they'll make more money and benefit the company. The same thing applies to a government. If it invests in education, then citizens are more productive and make more money for the government.
In a staffing firm, if an employee isn't billing hours they aren't making money for the company. The staffing firm has 3 options:
1. Fire himher
2. Let that person sit around doing nothing
3. Find work for them to do that benefits the company
4. Get the person more education until they can find work
In our "government as a business" model, an employee that isn't working is someone who is unemployed. Since option number 1 isn't possible for a government to do(unless you consider deporting the unemployed an option) we must decide what to do with the unemployed from options 2,3, and 4.
Option 2 is what our country currently does. We let our unemployed sit around collecting a meager stipend. It seems to me that options 3 or 4 would be better. A good computer consulting firm would educate their employees and get them training when they aren't employed. Failing that, they might bring them back to the company to work on low-priority internal projects. At a consulting firm it might be upgrading their email servers. In a government it might be filling pot holes or volunteering at a library.
If option 3 sounds familiar it is because its just another way of looking at a Job Guarantee that I and other MMTers promote. If government is a company, why is it letting its employees do nothing? Sure, it wants them to go out and find better, higher paying work, but if they can't then it should put them to work doing other things to benefit the company(country). Those things can either be specifically tailored to the individual's skills, or it can be one of a dozen things that most people can do. Read to children, wash graffiti, or even neighborhood watch.
I could stretch this "government as a business" metaphor even further to illustrate other things. Like how a government deficits is looked at wrong because we don't consider the capital assets backing it up. We could also explore internal vs. external currency, but that would make this diary excessively long. I can do a followup if there is interest.
Much of this analysis is based on Modern Monetary Theory (MMT). It's a (relatively) new "Post-Keynesian" economic school of thought. If you're interested in learning more, please follow our group, Money and Public Purpose. Also, there is a small, but growing MMT wiki that is worth checking out.
Thank you for reading and reccing
