The following is an extract from a white paper that I sent to selected New Jersey legislators. A link to the complete paper, including references, is at the end of this post.
Pundits are fond of pontificating that “government should be run like a business.” What they are really saying is that since businesses answer to shareholders and must squeeze out every cent of profit, those who run a successful business must constantly keep their eye on the bottom line. From there, it’s an easy leap to the conclusion that every decision made by a business or government entity should be viewed through a fiscal lens.
Like all simplifications, the pundits’ manifesto has some grain of truth, but upon closer inspection one realizes that the real world is much more complex.
First, running an entity “like a business” is not a recipe for success. Remember Borders? People Express? Enron?
Like running a government, running a business requires the use of continually improving tools and techniques. But tools in and of themselves are not the answer.
Take, for example, Lieutenant Governor Kim Guadagno’s “Red Tape Commission.” No one can argue that the elimination of red tape is a good thing. Or can they? Some so-called red tape provides the checks and balances necessary to ensure that promoting a good business climate does not have the side effect of destroying the environment or putting unsafe products in the hands of consumers. So while the elimination of unnecessary red tape is a desirable goal, one must wonder if that’s the real impetus behind this commission. The Guadagno Commission is a Band-Aid, not a long-term solution. As we will describe later, the real goal is the elimination of waste, not red tape. There’s a difference.