Government is not a Business

Be wary of the statement “Government needs to be run like a business.” It should not. It's meant to sound unobjectionable, but is a radical shift away from anything familiar.

Centralized Control

The Constitution is designed around the notion of decentralizing control. It's inefficient, as people often notice, but that's by design. Inefficiency is protection from tyrants. It makes things happen slowly, allowing time for deliberation. Every time you make something efficient, you enable change to happen faster than government can respond, as is happening now with DOGE.

Tyrants want central control. Be wary of the statement “The President is the CEO of the US.” They want you to think a President is a King, a central voice to tell us everything. That neglects the checks & balances of three co-equal branches of government, intended to distribute control, to have the various branches fighting with one another, to make sure there's lots of consensus before anything happens.

Checks on Power

When a Congressperson salutes POTUS and says “yes, sir, you're in charge,” they breach their oath of office. The whole point of distributed power is distributed thought, which isn't happening.

It's pointless and dangerous, to have all the thought be centralized in one person and then to have everyone just say “yes” because then you just have a zillion photocopies of one person's thought. If that person is even thinking. Democracy at all levels intends many people thinking in different ways and making sure many paths of thought lead to convergent policy. That's how consensus is built.

In Service of All

But even beyond that, government differs from business in another very important way. Business is founded centrally on the notion of profit made by determining who not to serve. It's rarely profitable to serve everyone, so the assumption is that it's fine to leave some unserved. Maybe someone else will serve them. Maybe not.

Business figures out its profitable customer base and just focuses on them. That's not what democratic government promises. Democracy, even beyond all the voting stuff, is about believing each person matters just because they exist, that dignity arises not from wealth but from being alive, that we are all equals. Government must serve each of us in a way that does not prioritize rich over poor.

Oh, You Poor Unheard Rich People!

Money already speaks. It needs no representation in government. There are people, usually rich people, who sometimes say that Big Business needs special attention in government. It does not. Business is not going to be forgotten, no matter what government does, so stop feeling sorry for it. Big Business has the shameless means to be regularly petulant, but in spite of its many pity parties, it is not suffering.

Undo the Citizens United ruling. Corporations are not people. Profit-making entities don't need to be voting. Their stakeholders can already vote in public elections. Businesses need no additional, redundant, amplified freedom of speech, no megaphone.

Business isn't going to suddenly stop happening if we change laws in some way that is unfavorable to particular rich folk. If the people who are in business now don't like it, they can drop out. Others will happily take their place.

Fairly Represented

What needs representation in government are regular people. Government sets the rules that all businesses must follow.

Adam Smith, called the father of economics and/or capitalism, expressed concern about morality in business. He very clearly understood that the optimization engine that is the marketplace will not find morality on its own, that business will tend toward tyranny if not forced to do otherwise. He suggested that if you want morality in business, it must be encoded in law.

It's government's job to make good rules that hold tyranny at bay. Some people and businesses will tell you they'd profit better if there were no rules. In my view, where there are no rules, bullies rule. That's no world to be seeking.

What Privatization Dodges

Nor should government be privatized. An important thing that government offers is accountability and auditability by the public, and redress of injustice. Many pushes for privatization are attempts to get around such scrutiny and accountability.

Business is a dictatorship in structure, where the US government distributes control to avoid dictatorial control. We're lulled by business success to thinking such dictatorships nonthreatening, but you can go home from them at the end of the day, they cannot keep you from leaving, and they can't threaten your family or property, as government dictatorships might.

Employees have a duty to business leaders, who have a fiduciary duty to shareholders, whereas our elected representatives have a duty to the public, those who elected them. Elected leaders must be working for The People, not vice versa.

DOGE Debunked

Business profits by efficiency, where democracy finds strength in inefficiency because it distributes power. Too-concentrated power is historically understood to be a great danger. A DOGE-like effort to focus on efficiency might be defensible in some businesses, where efficiency is the central concern, In government, however, DOGE undermines both the safeguards underlying and the stated goals of the US government.

Government must not be run like a business. Elimination of inefficiency is not an automatic positive. Privatization loses control of and accountability for things that affect citizens' lives. Such suggestions are active dangers to democracy to be discussed with great wariness.

 

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Other Posts by Kent Pitman on related topics:

• Speed Kills
• Retirement Savings
• Political Terraforming
• Fiduciary Duty vs. The Three Laws of Robotics

Author's Notes:

If you got value from this post, please “Share” it.

This post was cobbled together from other writings of mine, so if you feel like you've read some or all of this before, you're probably right. But I wanted to put it all in one place.

The graphic was produced using abacus.ai using Claude-Sonnet 3.7 and FLUX 1.1 [pro] Ultra, then post-processing in Gimp.

Rethinking Mega-Corporations

When the Microsoft antitrust case came along, the issue seemed to be that Microsoft controlled too much of a market that needed to be substantially more free. But the problem was that people didn't like the government deciding how to partition up the space. The problem is that government intervention in how to divide up market spaces is too subjective, leaving open options for corruption, bad understanding of a market, etc. The sense was in some that this is something best decided by vendors, and yet the problem was that if you left it to Microsoft, it didn't seem to be deciding the issue well.

“EU Competition Commissioner Mario Monti could never build Microsoft Windows or successfully sell it, yet he and his antitrust regulators get to decide if a great American corporation may or may not improve its products,” said Nicholas Provenzo, chairman of The Center for the Advancement of Capitalism.

I thought about this a lot at that time and have continued to ponder it since. I always come back to the same conclusion—that there probably needs to be something like a maximum size company or at least an incentive for not creating ever larger companies. I don't quite have the entire idea fully fleshed out in my head, but I'm confident enough that there's a good idea in there that I think it's time to at least throw it out for discussion, even knowing it will be controversial. But the point is to have some objective measure or incentive that leads to the desire of a company to stop growing.

No matter how smart the leader of a company is, we should be encouraging that person to teach others his or her skill, not to acquire ever-more power for himself alone after the company is above a certain size.

As companies grow super-large, the number of them necessarily grows super-small. This implies reduced competition, which eliminates the exact reason we allow markets and competition in the first place. We need to incentivize companies to seek an intermediate size for many reasons; in light of recent events, one way to express this is as a need to avoid the “too big to fail” phenomenon.

It's my understanding that increasingly in recent years antitrust legislation is not pursued in cases where consumers seemed to be seeing lower prices, on the theory that no matter what the structure of the industry, lower prices for consumers is always unconditionally good. That sounds wrong, and the recent fiasco in the marketplace seems an illustration of why that might be.

The problem seems not just to be the inappropriate manipulation of markets, but merely the reliance on a single company at all; because this implies that really only one human mind—or a small number of human minds—is making decisions for too many people at once. In effect, it implements a kind of corporate dictatorship, or at best rule by a very few people.

In the best case, that leads to a single person having the power to make something extraordinary that others might not think to make. But the problem with that is that if any such individual fails, they bring their company and everyone in that company down with them. There is, of course, a risk that these super-leaders are truly unique souls and that no other person could possibly cause what they did to come to pass; but, if so, there will be huge confusion once they're gone. Worse, our structure also allows them to pass on the power they have amassed to someone who did not earn it. The company does not go back to being disorganized after they leave, the power they perhaps rightly assembled is now a simple commodity to be passed along to someone who didn't earn it by being truly unique. And yet there may be many people, not just one, who are at the next tier waiting to shine.

To see the problem, suppose a person could reliably be said to have ten times the combined intelligence and insight of five people who report to him. And so we allow him to be their leader for a time. Now it becomes time to step down. By definition, this same is not true of the five who stand to rise to his position. It may be that they are capable of stepping into the mechanics of the original leader's position, but the original justification of giving them this position based on the extraordinary thing that only they could do is no longer there. And certainly if it's the case that any one of them was close to the insight and intelligence of the person who dominated, the world would be better off with both of those people at the helm of a company rather than with only one.

Of course, you could iterate this truth all the way down and find that there was no justification that was ever a reason to make a company. And that would be wrong, too, but mainly because it isn't really objectively knowable who is the right person to lead. It's a gamble. And so having many companies of intermediate size allows a compromise between gambling on no corporate organization and on total corporate organization.

Perhaps individuals should be limited to having a majority share in only one company, and minority shares in other companies, again encouraging many human minds to have a serious say in the market. Underlying this thought is something I call my “many minds hypothesis,” that the world will work better if there are a lot of smart people competing rather than just a few. In effect, the current practice in the market involves big fish eating little fish until there is really only one fish and no remaining competition.

A company that has no competition is stifling the creative power of the people within it, who are asked to be conformists to a particular way of thinking. I don't think it's healthy for the individuals, for the company that has come to dominate, or for society.

Since establishing a maximum bound on a company size is hard to do, it seems to me that a possible alternative might be to allow tax rates on a company to increase as the company size increases, creating the possibility of companies consolidating to improve efficiency, but only if the efficiencies are really important.

People sometimes claim that we must have market efficiency, but I think the ultimate efficiency will come when we're all replaced by robots. I don't think that's going to do a lot of good for us or for the environment. And at some point, we may even find the robots think humans are superfluous. But, for now, we have a lot of people who need jobs, and it seems to me that a bit of inefficiency in the market, especially in the form of redundancy and competition, would help a lot.

We've been hurt very badly by the present super-banks losing. If they had been kept from ever getting this large, we'd be in much better shape because there would have been more brains involved and more chances that at least some of those banks would have protected themselves.

Author's Note: If you got value from this post, please “Share” it.

Originally published March 15, 2009 at Open Salon, where I wrote under my own name, Kent Pitman.

See also my related post Fiduciary Duty vs. The Three Laws of Robotics.

Tags (from Open Salon): inefficiency, market efficiency, singularity, ai, robots, free market, market, robustness, diversity, many minds, many minds hypothesis, competition, maximum size corporation, maximum size company, megacorporations, politics, economics, business