What Is A Business?

Kevin Williamson at NRO discusses The Donald’s performance in filling personnel openings in the federal government and find it wanting.  We agree with that but then he goes on to say:

Businesses, nonprofit corporations, and religious congregations are all worthwhile forms of social organization, but they are not interchangeable. There is something poetic about the fact that our contemporary populist conservatives, avowed foes of progressives and progressivism, are in thrall to one of the most ancient and enduring of all progressive errors: the belief that the government (and society) can be run the way a business is run, as though a nation were only “one big factory,” as the socialists used to put it. One of the problems with running the government like a business is that the government is not a business.

He also throws in a comment about Hoover finding out how different government is from business.  We think that Kevin has confused theories of business management with business.  As Wikipedia notes in the first paragraph on Fredrick Taylor, scientific management was in vogue during the progressive era:

Frederick Winslow Taylor (March 20, 1856 – March 21, 1915) was an American mechanical engineer who sought to improve industrial efficiency.[2] He was one of the first management consultants.[3] Taylor was one of the intellectual leaders of the Efficiency Movement and his ideas, broadly conceived, were highly influential in the Progressive Era (1890s-1920s).

Scientific management’s influence waxed in the Progressive Era but has waned since.  Yet lots of folks think of business as scientific management.

Sidebar One: We recently saw the worst Dr. Who episode, Oxygen, in history.  It is quite an accomplishment because the show started in 1963 although there were some years without the series.  We should have checked the credits to see if Jeremy Corbyn was listed as one of the writers.  Folks, especially TV and movie writers, misunderstand business and capitalism.  End Sidebar One.

What is it that makes a business a business and what makes it different from other social organizations?  Secondly, why do folks want the government to be run more like a business?  Obviously, a business is the only one on Kevin’s list with a purpose, in fact, the primary purpose, to make a profit.  Yet businesses make profits in very different ways.  Take our two local successful supermarket chains.  One has service, service, service.  If a pregnant woman wants an chimichanga then you know where to go.  The other has efficiency.  Prices are low and, if it comes frozen or in a can or a bottle then they have it.  Businesses focus on making a profit but they have a culture that helps them focus on how they do it.  Now businesses are not 100 percent successful at creating such a culture but they have periodic reporting that helps evaluate the entity.

Sidebar Two: Yes there are problems with a focus on short-term accounting reports.  Such emphasis can lead to unethical behavior.  We have not yet had time to perfect accounting in our retirement but we still think that periodic reporting helps decision making.  End Sidebar Two.

We see the difference between a business and most government units is that the business is closer in having all employees pulling together towards a common goal than the government units.  Our accounting department in the 1990s was highly successful because all the faculty members agreed on a purpose of focusing our placement efforts on public accounting firms that were not what is now the Big Four.  It set us up well for the 150 hour environment in the next decade too.

A less successful model is the change in focus from teaching to learning at the university.  Not all instructors have adopted the learning model but a substantial percentage have and the percentage is increasing.  Moving from teaching to learning is fraught with challenges but it reflects a business mentality.  We shall see if it really works.

We think that when folks call for the government to be run more like a business that they recognize the different in focus and want government to focus on what it is supposed to do.  There are at least two problems.  First, government is trying to do many things.  As just one example, the FDA tries to protect people from unsafe drugs and support the creation of useful drugs.  The trade-offs are unclear.  Second, leadership is more of a challenge in government because of the political process.  There is real disagreement about what the government should do.

Kevin needs to realize that business has left scientific management behind but the progressives have not.  The government should try to be more like a business but the first order of business is to determine the organization’s mission.  Conservatives and progressives disagree on the government’s mission.  That disagreement puts government employees in a difficult position.  We think moving toward a business model is a good idea but we need to recognize what the value of the business model is.  It starts with understanding the purpose of the organization.

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