Lifestyle Thoughts

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

5 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

strong, some level of government debt is generally good for economic growth. What’s more, the fetishization of a surplus budget by both parties seems to have overshadowed by the actual need to supply the public services they need to. Combined with the desire for a quick fix to a long-term economic pattern, it’s a recipe for unnecessary austerity and a disintegration of the social safety nets that make Australia great.

It Invites Conflicts Of Interest

Now I’m not saying that business people are bad people, but generally speaking, an ability to grow your own fortune generally comes hand in hand with some degree of self-interest. No matter how altruistic someone might seem, it’s always a clear-and-present possibility that they’ll bring that same self-interest with them into office.

Source
Donald Trump. Source.

Maybe an absolute rule against the involvement of the private sector with the public one is a step too far, but it’s not unreasonable to ask that anyone crossing that threshold should absolutely be held to account at a higher level of scrutiny. We can’t allow the idea of wealth as a synonym for success to be used as a blunt shield for the power-hungry. How someone acquired that wealth (and what that says about their suitability for public office) can’t and shouldn’t be ignored. Anyone who’s ever conducted a job interview knows that character matters almost as much as qualifications?

Good government requires a measured understanding of far more than just finance. It’s time we got wise to that. Knowing how to balance your books or skirt tax laws might help you individually prosper but bringing that same winners-and-losers approach to government is only going to set us back as we try to move forward – and given the unprecedented threats facing the globalized world in the coming decades, it’s safe to say every step counts.