6) Successful corporations are run by benevolent despots. The CEO of a corporation has the power to manage effectively. He decides company policy, organizes the corporate structure, and allocates resources pretty much as he thinks best. The board of directors ordinarily does nothing more than ratify his moves (or, of course, fire him). This allows a company to act quickly when needed.Read the rest. This is an excellent essay and one whose ideas I wish that our politicians in Washington understood better. But few politicians likes to admit that there is something that they can't do.
But American government was designed by the Founding Fathers to be inefficient, and inefficient it most certainly is. The president is the government's CEO, but except for trivial matters he can't do anything without the permission of two separate, very large committees (the House and Senate) whose members have their own political agendas. Government always has many cooks, which is why the government's broth is so often spoiled.
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Wednesday, May 20, 2009
Why government shouldn't run businesses
Economic historian, John Steel Gordon lays out why it is a bad idea to have the government run businesses. Polticians make decisions based on politics - which group will benefit, not which decision will be best for a firm. Government is, as Gordon quotes, an "unregulated monopoly." When the government is making plans, it's doing it with other people's money - the taxpayers, not their own. And the results are clear. Our government was purposely designed to be inefficient and slow so as to prevent it from being too despotic. But inefficient decision making is not exactly what we're looking for in a well-run business.
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18 comments:
"Our government was purposely designed to be inefficient and slow so as to prevent it from being too despotic."What a strange and funny idea! Where did that fiction come from?
Some ventures are so large, important, or difficult, they can *only* be run by the central government. Example: private enterprise has not yet landed a man on the moon. Another example: successful national health care. Another example: the successful prosecution of WWII.
And this is not the devastating point that you think it is: "When the government is making plans, it's doing it with other people's money - the taxpayers, not their own."Anyone familiar with the stock exchange or capitalism in general will know that "when a company is making plans, it's doing it with Other People's Money - that of the stockholders, not that of the company officers or employees".
The difference between business and government comes down to one of motivation and accountability, not finance, and certainly not competence.
Why This Essay Is Full Of Errors
The CEO of a corporation has the power to manage effectively.
uh, if the ceo of a corporation has run the company into billions in debt and come hat in hand to the government for help, they did not 'manage effectively'
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why it is a bad idea to have the government run businesses.
if they did, it probably wouldn't be a good idea. but they aren't
the management by a typical bankruptcy court is way more intrusive that the influence the administration has on the businesses that asked us to help them
false predicates make for irrelvant arguments
Bill, if you want to know where the idea came from that our government was designed to be slow in order to prevent it from being too despotic, read the Federalist Papers.
Private enterprise saw no need to place a man on the moon but had no problem getting the government to foot the bill. That is actually a good example of the failure of a central government in taking on something that, aside from some pretty cool pictures, others saw no utility in whatsoever. If the CEO of Northrop had come to his board or a stockholders meeting and said something to the effect of placing a man on the moon he would have been replaced at the first opportunity.
Considering the miniscule differences between public and private systems throughout most of the industrialized world the results are not that great.
Wars were essentially fought as private enterprises until the middle and late Renaissance formation of nation-states. The advent of efficient tax collection and mass conscription meant only that what originally took regiments now takes divisions to accomplish.
Actually Bill B's examples show that government is good at big and stupid things that take simply brute strength and a large enough tax base to accomplish. And a large difference in spending money by either a corporation or the government is accountability. The boards and stockholders, even if the CEO makes a bundle in contracted compensation, can remove him at will. But if a politician screws up the only people he is answerable to are confined to one geographic area even though his mistakes are national in effect.
others saw no utility in whatsoever. If the CEO of Northrop had come to his board or a stockholders meeting and said something to the effect of placing a man on the moon he would have been replaced at the first opportunity.
dream big, pat!
:-)
Wars were essentially fought as private enterprises until the middle and late Renaissance formation of nation-states.
ummmmm, except for the wars fought by the babylonian, persian, egyptian, and roman empires. as a matter of fact, i know of very few wars fought by actual private armies, although pompey had one during the civil wars of the roman republic. this was considered outrageous by other romans, though
The boards and stockholders, even if the CEO makes a bundle in contracted compensation, can remove him at will.
oh sure. try going to a stockholders meeting and demanding that the CEO be fired.
But if a politician screws up the only people he is answerable to are confined to one geographic area .
ummm, except of course for the president. who would be the equivalent of a CEO. you see.
Xenophon immediately springs to mind as a private army fighting in a war. In fact the bulk of Persian army that invaded first Anatolia and then Greece were mostly Greek mercenaries who fought until the money ran out. Caesar's army in Gaul was paid for by the Julii and the tax collectors in Gaul, Sulla raised his own army, as did Crassus, Octavian and most of the emperor's in the 1st BCE.
The Senate would, on the advice of the tribunes, give permission to a consul or even in some cases the equal of a modern day general, to raise an army but he was then obligated to feed and clothe them out of his own pocket, the taxes he collected in his assigned province and booty seized. And then often with his army loyal he would take power because there simply was no concept of a national army.
As to the demand that a CEO be fired I can only assume that you have never been to a stockholder meeting because that demand is usually loud and insistent. And if backed by enough proxies fatal to the CEO and the board. Try that in Congress and see what happens.
As to the glibness of your dismissal of the moon landings I can only ask what private company at that time complained that the government should leave that to private enterprise. Simply because they had no interest in the endeavor.
"our government was designed to be slow in order to prevent it from being too despotic"Which specifically of the 85 Federalist papers supporting and advocating the Constitution, contains the claim that the US government was purposefully designed to be slow and inefficient?
I will be happy to read it, if you can narrow it down a bit.
Caesar's army in Gaul was paid for by the Julii and the tax collectors in Gaul, Sulla raised his own army, as did Crassus, Octavian and most of the emperor's .
i don't have the time to relate to you the history of the organization or financing of the roman army; it suffices to say that to assert that the army of the roman and persian empires were private armies is such an obvious contradiction in terms that it refutes itself. even as late as in the american civil war, private citizens raised military units which were then incorporated into the regular army, like legions raised by the fighting emperors.
The unpaid, volunteer, citizen army of the roman republic, the reorganization of the roman army into a professional, permanant force with a fixed term of service and salaries (the origin of the word 'salary' is in the allotment of salt that was part of a roman soldier's pay) under Marius, the long history and continuity of the legions from the first century b.c. to it's emperor-making role in the empire that so many have written about, speak loudly against your peculiar fantasy of war in ancient times as "mostly a private enterprise". add to that the fact that the persian empire was run under what we would consider, in modern terms, a fascist organization.
As for the vote that an individual stockholder might have in whether a CEO is fired or not, i personally have never heard of such a thing. as far as i know, most CEOs serve at the pleasure of the board. perhaps you have some evidence to the contrary to show that a stockholder in a typical company has the same equal vote with the board members in the the same way that every american citizen clearly has an equal vote for the president. until then, i remain skeptical of your assertion.
I would suggest then reading Adrian Goldsworthy's the Complete Roman Army as it is a fairly reliable description of how the army began and was structured from the Etruscan kings to the late Empire. Also I would suggest Badian's Foreign Clientelae though not specifically about the army but discusses at length the familial connections between the Senatorial and the provincial equestrian families. The former providing contacts and sponsorship in Rome and the latter providing soldiers when needed.
Government(Obama) running business---
Pronunciation [soh-shuh-liz-uhm]
–noun 1. a theory or system of social organization that advocates the vesting of the ownership and control of the means of production and distribution, of capital, land, etc., in the community as a whole.
2. procedure or practice in accordance with this theory.
3. (in Marxist theory) the stage following capitalism in the transition of a society to communism, characterized by the imperfect implementation of collectivist principles.
Biddle,
With regard to Betsy's attempt to help you learn, you said:
"I will be happy to read it, if you can narrow it down a bit".
Thanks for giving me a good laugh [at you] today, but it was kind of sad to see you refuse to learn that the answer to your question was waiting to be had if only you could be bothered to make the effort. It must be frustrating for teachers to have to face that kind of attitude. My hat is off to all those dedicated educators that continue to make the effort to help people like you.
A deficiency in your education has been identified, so do something about it!
- or -
You can lead a horse to water but you can't tell which end of Biddle of should be held under.
Let's give Bill a chance, seeing as how he seems like one of those blind Moghul philosophers trying to describe an elephant from the rear but the best version of the Federalist Papers is by Mentor. Any edition with Rossiter as the editor is more than adequate. I've still got my copy of the 1961 edition from Honors History in high school. Though it is dog-eared and well marked upon in the margins.
Then go to No. 51 and read that Madison was concerned that Congress or any of the other branches would, in the name of efficiency, acquire dictatorial powers. His recommendation then was to create the possibility of gridlock to thwart those desiring to become tyrants until suitable compromises could be arranged. Madison saw that efficiency was simply another word for the justification of tyranny and considering the feelings of the anti-Federalists a pretty wise compromise with them.
Pat Patterson,
"Madison saw that efficiency was simply another word for the justification of tyranny and considering the feelings of the anti-Federalists a pretty wise compromise with them".
Madison must have surmised that a Mussolini would someday emerge from a punctual train with more solutions from more efficient government. Never thought of Il Duce as being Green before but maybe....
tfhr-O/T! I am writing an article for a German website, at least I have submitted a proposal, concerning some old stories and rumors that the US sent some SOF trainers into Poland, at the invitation of some senior officers of the Polish People's Army, before the communists were kicket out. I've already contacted Betsy and she said she would pass on my e-mail address to you or vice versa.
OK, I have read Federalist paper 51.
Surprise, surprise. There is nothing in there to support the ludicrous claim that "our government was designed to be slow in order to prevent it from being too despotic".
The paper argues three main points points:
- federal departments should be independent of each other, and not appoint each other's members or pay each other's salaries.
- there should be different branches of the legislature, to act as a check on each other.
- the "tyranny of the majority" is overcome by having as many factions as possible, which in turn is achieved by having as large a nation and government as possible.
This is, at best, a very weak wish, and Madison does not support or develop his line of argument.
In actual practice, civil rights in the USA were not secured by having a large population. And religious rights have been widely flouted in recent years by fundamentalists taking control of the GOP, and pushing an unscientific agenda into our schoolchildrens' education.
So, no, I reject the strange notion that the US government was designed to be slow and inefficient.
Pat Patterson,
The topic sounds pretty sensitive and I've never heard mention of it from anyone that I know within the SF community but I can imagine that during the Cold War there would have been considerable interest in working with eastern European elements opposed to Soviet occupation.
I've not seen that email from Betsy yet (I suspect her Quiz Bowl event is keeping her very busy) but I'll keep an eye out.
tfhr-Only if your interested in a few questions I have the idea was for you to get my e-mail address from Betsy or use my Blogger profile. I had assumed that there might be anecdotal information but I can vouch for the honesty of one of the sources who assured me that very little of this had been considered important enough to classify.
Bill-I think you answered your own question "...to act as a check on each other." And your claiming that he called for a large government is specious and not in the text when the call was specifically for a large society of factions and competing interests under the federal principal. In other words so many competing interests that no one group, minority or majority, can combine to oppress another, which means that local politics may be a death sport sometime from the arguments over the simplest of plans say to build a fire house. An efficient system would simply hand off the planning and building to the city government but with factions encouraged then these plans can be delayed indefinitely because of the paint scheme, differing views of the value of the property or simply whether the fire house is needed in spite of what the city and the firemen claim.
And it should be remembered that one of the main reason's that Madison wrote Federalist 51 was to signal to the anti-Federlists that unlike Hamilton, and most of those arguing for the federal system, that he at least saw the justification for a Bill of Rights. Which on first introduction at the Constitutional Convention had failed 10 to 0.
But the citizens of most of the former colonies were vigorously opposed to the kind of efficient central authority Hamilton argued in favor of and many of the delegates feared a new civil war if a Bill of Rights was not created on the promise of passage of the Articles of the Constitution.
Madison argued that, "Ambition must be made to counteract ambition." And if that doesn't mean the intent and acceptance of gridlock on occasion than we truly are speaking different languages.
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