Steve Frisch: “It’s Time to Kill This Tired Old Cliche That Government Should Run Like a Business”

By SteveFrisch

Editor’s Note: Steve Frisch offered the following comments on his Facebook page in response to the article linked below, about Trump’s appointment of his son-in-law Jared Kushner to a “swat team to fix government with business ideas”

So I don’t think it’s a terrible idea to create an office to advance innovation in government. How we approach issues and how government provides services should always be getting a fresh look.

I am profoundly uncomfortable with the idea of putting someone in charge who has absolutely no experience in government, and whose success in business was inherited, reporting directly to someone else with equally no experience in government.

Government and business are not the same thing.

Government does the stuff business can’t do or won’t do because there is no profit in it, or the profits to be realized in it have such a long return on investment that the private sector won’t invest in it. The purpose of business is to maximize profit (much to my chagrin) and serving all of the people does not necessarily maximize profit.

Add to that the fallacy of the basic concept that competition inherently provides lower costs and higher efficiency. That concept has been disproved time and time again, in certain areas of investment. Sometimes it just provides an advantage for profit making businesses.

Let’s just take the example of pharmaceuticals. Costs are higher in the US with a basically unregulated market than they are in any other developed nation on earth, largely because government refuses to play the role of negotiating prices and centralizing supply.

Some things are simply so costly that the only way to provide them is for government to take on the burden. Infrastructure, basic research, national defense, and governance itself are prime examples.

The purpose of government as defined in our Constitution is to ‘promote the general welfare.” If one breaks that down based on the meaning of the words, it means, “to support or actively encourage advancements for most or all of the people that improve health, happiness or fortune.”

In essence business, with a mandate to maximize profits to shareholders, and government, with a mandate to promote the general welfare, have sometimes diametrically opposed objectives that are often in competition with each other….that is why we have governments, because what is good for GM is not necessarily what is good for the country.

The idea that reforming government to be like a business also ignores a basic reality of government itself, which Trump just learned by getting his ass handed to him over health care; government is inherently about collaboration between interests to get the best possible deal. Henry Paulson famously said, “You succeed in Washington by collaborating.” Business may be increasingly about collaboration but that ethic has not reached the board room yet; in the board room business is about making decision that affect shareholder value.

Finally this gets down to one basic truth, that not everything that is profitable is of social value and not everything of social value is profitable. Kim Kardashian is profitable but has low social value (I would argue the same of The Apprentice). Research has high social value but low profit. There is no worse place to be in business than “the first” one who pioneers a new idea or technology. They bear all the development cost and have to share the profit.

It’s time to kill this tired old cliche that government should run like a business. What we really mean is that government should run efficiently, should provide value, and should promote the general welfare.

There is no worse way to get to that ideal than to give the reins to a guy whose sole qualification for digging into the issue is running his parents real estate fortune.

If one is serious about governing one puts seasoned professional with a track record in the area of expertise being addressed in position of management authority.


Steve_FrischSteve Frisch is President of Sierra Business Council and one of its founding members. Over the last 20 years Sierra Business Council has leveraged more than $100 million of investment in the Sierra Nevada and its communities through community and public-private partnerships.  Sierra Business Council also manages the Sierra Small Business Development Center focusing on advancing sustainable business practices and linking new and expanding businesses to climate mitigation and adaptation funding. Steve manages SBC’s staff and programmatic development.

Prior to joining the Sierra Business Council, Steve owned and operated a small business in Truckee. Steve serves on the board of the California Stewardship Network, the Large Landscape Practitioners Network, the National Geographic Geo-tourism Council, Capital Public Radio, and Leadership For Jobs and a New Economy.  Steve is also a former Fulbright Exchange Program Fellow, sharing information and knowledge gained in the Sierra Nevada in China and Mongolia.  Steve is a graduate of San Francisco State University with a B.A. in Political Science.


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