Should Government be run like a business?

Should government be run like a business? We grappled with this question, during our Master of Public administration (MPA) degree at the Maxwell School of Citizenship and Public Affairs in 2011, the year I graduated. It was a question that was as relevant then, as it is today – with a certain presidential candidate arguing that we must just focus on America’s interests and run the show like a business. In this world-view, there is no reason why the goods of government – governance itself – cannot be bought and sold. Afterall, this is a market-based economy. This approach to running government can be best described as New Public Management (NPM), which gained ascendance in the 1970s and 80s.


In part, this view is right. There are benefits to running a government like a business: focusing on market efficiency as the God, with bureaucrats as the angels, serving this deity. Margaret Thatcher, Manmohan Singh, Ronald Reagan are the prophets, who pushed for NPM as an approach to governance and this push has had mixed results, in each of the countries. The market is seen as being all-wise, omnipotent and omniscient.  Especially, if you grew up in India or a developing economy during the 1980s, you could see the rampant nepotism, the corruption that was eating away at the bureaucracy and business sector. NPM did come as a breeze that brought some relief to this desert of non-governance.

I have seen it in work in three countries, where I have lived and interacted (and worked) with the bureaucracies, rather closely – India, U.S.A and the U.A.E.  There is more to NPM than just trains running on time. Passports are issued quickly, business licenses are done more efficiently and life becomes smoother for the ‘consumer.’ A ‘citizen’ is transformed into a ‘consumer’, as many scholars and thinkers have pointed out. This is good, at least, in part. It is good that citizens are taken more seriously, are treated in a dignified manner and their views are considered, beyond just their vote giving potential. Their lives have meaning, beyond just a four year cycle of casting their ballots.

On the other hand, this very philosophy can lead to problems – very severe at times. Consider this: What if efficient decisions come at the expense of a democratic process? What if the department head/ the head of government – President in our case, decides that the most efficient decision is to take all decisions by him/ herself? What about consensus building? What happens to democratic norms and values? These two are often in tension and this is a key reason why some resist this push for ‘business-like’ thinking. Also, what about those consumers who cannot ‘pay’ to be consumers? This philosophy of business also assumes that the cost of doing business is borne by the ‘consumer’. But if the consumer is unable or unwilling to pay, what happens to him? Should he/ she be left out of procuring the goods of governance? Should the government not serve him/her?

These are not theoretical or abstract ideals, but very real ones – and we are witnessing the breakdown of many systems – in education, law enforcement and the like, in many government agencies, where New Public Management has been enforced.  This push for NPM is as much a vision, as its counter-part; Keynesian model of economic development, which has government intervention and spending at the heart of economic management.

The cut in government spending in research, education and healthcare have had disastrous consequences, as the market has not stepped in to correct these differentials.

Want to know the real consequence of this trend? Just look at the drop in funding for basic research. As this article by Eduardo Porter points out foundation ‘points out, the consequences in dropping federal funding for basic research are very real – it could mean lesser innovation in technology and other areas, that have made America great, in the first place. Want to make America great again? It may, ironically, have to start with funding more of federal programs, not by cutting them.

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