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Running Government Like A Business

It means thinking and acting like landlords.

by James Leroy Wilson
March 24, 2005

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When I was in college majoring in political science, a marketing major friend said she was a Ross Perot fan, because he believed the federal government should be run like a business. My youthful “wisdom” thought that such thinking was naïve at best. After all, government isn’t a “business.” It makes no profits. It produces nothing that people can buy in the market. Statecraft must therefore operate by different rules than, say, entrepreneurship. Since government isn’t a business, I maintained, it shouldn’t be run like one.

I’m beginning to see that I was mistaken - perhaps not about Perot, but about running government like a business. True, government doesn’t “produce” goods and services for the market. Neither does a landlord - all he does is provide space. But the landlord’s business is not unlike that of any business. If utilitarianism is defined as the “greatest good for the greatest number,” smart business is the “highest acceptable price to the greatest number.” The owner of an apartment building will work with other landowners in the neighborhood to make that neighborhood as attractive as possible. He or she will also try to make his apartments as nice as possible. Attract as many renters at as high a price as possible. But if the rents are too high, the tenants will leave.

Government is often defined as a monopoly of force, as an agency that can coerce the people living within a certain area. This is true, but dwelling on this truth will make us miss the point. Government can not coerce people, unless it first controls the land on which the people reside. Government’s ability to use force on individuals is impossible if the government did not control the ground, the airspace, the seaports, and the most valuable natural resources in that area. Government’s ability to control individuals over a given area is derived from its control over the area itself, from its claim to be the “owner” of the land.

The question is of running the “business” - in this case, the State - soundly. A nation-state contains numerous political sub-divisions, such as states, cantons, or provinces. And these are often broken down further into counties, municipalities, and townships. Just as important, a nation-state is one of many on the globe - nearing 200 at last count. That is a lot of places to choose from for an individual, or a business, to call “home.”

How can a government be run like a business in this political marketplace? It’s hardly different from the real estate market. It comes down to making the country as attractive as possible for people to want to live there. And this is where government messes up, time and again. Ask a government bureaucrat or legislator if they would sign a lease in which the landlord would not charge rent but instead charge, say, 36% of the tenant’s income, with selected “deductions” if the tenant behaves in certain ways and spends money in ways the landlord believes are morally acceptable. They would laugh in your face for asking the question! Yet they see no problem with tying the “price” of living in this country - taxes - with personal income instead of the market rental value of their place of residence. It makes far more sense for the State to behave like a landlord.

This is easier to grasp if you imagine yourself the absolute monarch of your country. Your wealth depends on the wealth of your country. You want a satisfied citizenry, not a citizenry that will migrate or start a revolution to overthrow you. You would want to provide certain infrastructure, such as good roads, railroads, sanitation, and reliable courts of law, much as an apartment landlord would provide safe elevators and clean hallways. And, as the value of the land rises with the improvements you make on it, you would charge the people “rent” accordingly. With the revenue from these rents, you would invest in further improvements, and keep a little extra profit for the royal family. That is running the government like a business.

Of course, we do not live in an absolute monarchy, but rather in a democratic republic. How can a democracy be run like a business? Actually, it would operate much the same way, charging rents on land value, rather than taxing income, spending, and saving, as we do now. The purpose would be to make the country as attractive to live in as possible, with government revenue that is not spent on infrastructure divided equally among all citizens. Citizens of democracies for too long have been susceptible to acting on the basis of fear, envy, and prejudice. With a land-rent tax, they would think, instead, like businessmen: how do we make our community as attractive as possible to maximize revenue - and dividends - for us all?

To view government as a business enterprise is to place politics on a rational, as opposed to an emotional, footing. It also encourages a “we’re in this together” community spirit, because each will realize that their own prosperity is tied to the prosperity of the community as a whole. A place is well-governed if the people like to live there and others want to move there. And the best form of government is one that is run like a business.

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Draiman for Mayor of LA from Los Angeles writes:
February 25, 2011
Pension crisis
I do not think that any elected officials have a viable solution to the pension deficit issue which will continue to grow.
As I said before there is no simple solution. This is an issue that affects every level of government (City, County, State, Federal, Etc.). No one solution or one individual can solve this problem. It would take a committee with multitude of financial planners and an open mind to modify the plan as it progresses, when some facets of the plan do not work as anticipated.
But as the crisis grows, we as people of this great country must put our differences aside and work for the common goals and restore our City, State and the Nation to the spirit of our founding fathers.
I think that every politician or candidate should state what they propose to do to correct the situation and not attack their opponent or the opposition.
Tell me and or show me what you can do, not what the other did not do or did wrong.
Action speaks louder than words.
We need to remain vigilant, especially as the City of Los Angeles is facing a monumental fiscal crisis.
Public confidence in the integrity of the Government is indispensable to faith in democracy; and when we lose faith in the system, we have lost faith in everything we fight and spend for.
Thank you
YJ Draiman

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