Lifestyle Thoughts

A Primer On Why Good Business Doesn’t Equal Good Government

3 minutes to read

Of all the qualities we want in our politicians, ‘successful’ is one that is hard to actually make an argument against. The foremost reason for this is that success is kind of a tricky thing to define and very much up to personal interpretation.

While we all want to be successful in whatever it is we do, success means something different for all of us. It takes very different skills to be a successful painter than it does a network administrator. Some see success as a series of dollar signs, others see it as a more wholesome endeavor.

The point is: success might be universally-desired but it itself not a universal trait. It moulds itself to individual context. However, this nuance (like many others) is often lost (deliberately or otherwise) when it comes to politics. From Donald Trump to Malcolm Turnbull, the assertion is often made that successful management of a government comes from the same place as successful management of a business.

Here’s the short version of why that’s not quite the case:

Governments Aren’t Really Trying To Make A Profit

If we take the traditional economic definition of an entrepreneur as someone capable of effectively managing risk, labor, capital and land in order to generate profit, the gaps between the skill set of a good public servant and private business person quickly become apparent.

Traditionally, the government takes taxes from those it governs and uses it to implement policies and services on their behalf. Fiscal sustainability and economic responsibility are important to good government, but by definition a government that doesn’t meet the criteria of the social contract is a bad one.

Scott Morrison
Scott Morrison. Source.

A lot of important public services can’t or fundamentally shouldn’t be monetized. The whole premise of a public good is that it’s paid for collectively by the public for the public. Monetizing on top of that inevitably begins to muddy the waters. Good governments make peace with that fact and work to offset it by investing in productivity and efficiency gains in other areas. While being able to deliver a service or product that people are willing to pay for is definitely a useful skill, it’s not the end-all-be-all it’s often made out to be when it comes to government.

 We Don’t *Need* A Surplus

While having a surplus budget is *nice*, it’s hardly necessary. We’re not paying taxes so the treasury can rack up a high score while shorting other important public services. Say it with me people: “household budgets are not the same as government ones.” The global economy has pretty much designed so that governments can easily acquire the funds they need to enact policy through organizations like the IMF and World Bank, then give back to those organizations in due course.

Remember when we had an actual economist as treasurer, I do. Source.
Remember when we had an actual economist as treasurer, I do. Source.

As long as it’s sustainable and our international credit rating is