About this business of government, Mr. President5 April 2017
[Another version of this was posted on hbr.org last week under the title “The U.S. cannot be run like a business.”]
Dear Mr. President
As a neighbor in Canada who has long worked with businesses and governments around the world, I have some important news for you. America is not suffering from too much government so much as from too much business―all over government. Please understand this to avoid pouring more oil on the fires of America, and this planet.
Business in its place is essential, just as is government in its place, which is not all over business. Now, however, thanks to you and your cabinet, business need no longer just lobby government to get its way; it is government. You were elected to challenge the establishment; will the executives who came into your cabinet from ExxonMobile and Goldman Sachs do that? They are the establishment: that other, more powerful business establishment that has now displaced the weaker political establishment.
This is an old problem now being carried to a new extreme. In the early days of the Republic, Thomas Jefferson expressed the hope that “we shall crush in its birth the aristocracy of our monied corporations which dare already to challenge our government to a trial by strength...” Instead, later in that century the U.S. Supreme Court recognised corporations as “persons” in the law. Not long after that, in the new century, President Teddy Roosevelt was railing about the power of corporate trusts in American society, and in the 1960s President Dwight David Eisenhower warned of the “unwarranted influence…by the military-industrial complex.” Nevertheless, in 2010 the Supreme Court gave those corporate persons the right to fund political campaigns to their heart’s content. When “free enterprise” in an economy becomes the freedom of enterprises as persons in a society, to paraphrase Abraham Lincoln, government of the real people, by the real people, for the real people perishes from the earth.
Should government even be run like a business, let alone by businesspeople? No more than that business should be run like a government, by civil servants. As you well know, when an entrepreneur says “Jump”, the response is “How high sir?” You are now finding out what happens when a U.S. president says “Jump”. So far, so bad. Governments are relentlessly subjected to a plethora of pressures that many businesses, especially entrepreneurial ones like your own, cannot easily understand.
Business has a convenient bottom line, called profit, which can easily be measured. What’s the bottom line in government, say for terrorism? (Countries listed? Immigrants deported? Walls built?) What’s the bottom line for climate change? (Do you really believe it is jobs created?)
Running government like a business has been tried again and again, only to fail again and again. You must remember the debacle in New Orleans when Homeland Security was run by a businessman…of sorts. How about when George W. Bush’s Secretary of the Army promised to bring in “sound business practice”? He came from Enron, just before its spectacular collapse.
In the 1960s, Secretary of Defense Robert McNamara introduced PPBS (Planning-Programming-Budgeting System) to run government like a business. The obsessive measuring led to the infamous body counts of the Vietnam War. That bottom line was about as low as it can get. Then in the 1980s came the “New Public Management”, a euphemism for old corporate practices: isolate activities, put a manager in charge of each, and hold him or her responsible for the measurable results. That might work for the state lottery, but how about foreign relations or education, let alone, dare I mention it, health care? And now, at your request, your own son-in-law heads yet another effort to run government like a business. Back he comes with that old buzzword of citizens as “customers.” (Al Gore was using this misguided metaphor when he was vice-president.) You know what? I am not a mere customer of my government, thank you, as if I buy services at arm’s length. I am an engaged citizen of my country.
The place of business is to supply us with goods and services; that of government, aside from protecting us from threats, is to help keep our marketplaces competitive and responsible. Do you really believe that recent American governments have been overdoing this job, let alone even doing it?
I have a little book for you, Mr. President, called Rebalancing Society. It contends that a healthy society balances the power of respected governments in the public sector with responsible businesses in the private sector and robust communities in what I call the plural sector (“civil society”). The most democratic nations in the world today function closest to such balance, including ours in Canada and those in Scandinavia, likewise your own when Alexis de Tocqueville wrote about the community “associations” that helped to maintain democracy in early America. Indeed, during the decades following World War Two, the U.S. was far better balanced, as it experienced striking prosperity and development—economic as well as social―despite high taxes and generous welfare programs. Now, however, the country has lost that balance, and needs the plural sector to offset the fruitless swinging back and forth between left and right—government interventions by the public sector and market forces in the private sector.
Think back to the Berlin Wall, Mr. President. That wall fell on our Western democracies, because we misunderstood what brought it down. The pundits of the West claimed that capitalism had triumphed. Not at all. Balance had triumphed. While the communist states of Eastern Europe were utterly out of balance, on the side of their public sectors, the successful countries of the West retained a relative balance across the three sectors.
But with this misunderstanding, capitalism has been triumphing since the fall of that wall, and throwing America and many other countries out of balance the other way, in favor of their private sectors. Look around, Mr. President, at income disparities, climate change exacerbated by excessive consumption, and the unregulated forces of globalization running rampant around the globe. That is why we have seen votes like Brexit and your own, by distraught people unsure which way to turn, except against the “establishment”.
When enough people realize what has been going on, if not you, then a subsequent president, will have to restore the balance that made America great in the first place.
Cleghorn Professor of Management Studies at McGill University in Montreal
© Henry Mintzberg 2017. For elaboration of these arguments, please see Rebalancing Society…radical renewal beyond left, right, and center. Also my Harvard Business Review article “Managing Government, Governing Management”.
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