Will (and should) governments be run like businesses in the future?

It is a question that has been puzzling me for a while now: how will ‘governments’ evolve in the future. The question might sound bizarre. Haven’t governments always been around? Most probably, but not necessarily in the form we experience them now. Even government can morph into different shapes and functions, and indeed have done so in the past. Furthermore, the current crisis, the impact of climate change if (or: when) the worst scenario’s materialize, and specific trends such as disintermediation, might impact governments as we know them quite fundamentally.

I have recently been sent a video which gave me further food for thought. It’s about why governments should not be run like corporations:

Created by OnlineMBA.com

All solid arguments as far as I’m concerned, even if you omit the ideological beliefs some might have about the subject. But my question is whether these arguments still stand in current circumstances.

Let’s look at the first argument: governments do not exist to make profit, but have to spend each Dollar of income to improve the common good. Sounds great. However, if like me you live in a (democratic) country that sits on a burden of over 100% of debt vs GDP, and a yearly budget deficit of 3% (and, no, I’m not Greek or Italian), you might wonder if governments shouldn’t be forced to make profits for the years to come, if you want to avoid jeopardizing the future of our children and grandchildren (after all, someone will have to pay the bill). Sure, the money governments collects should (and mostly does) serve the common good. But the sad fact is that they have ever fewer money available to serve this purpose. Some even start divesting in certain public responsibilities, at least in states where public finance have come under strain. In case you wonder: no, this trend is not limited to the ‘failed states’.

The second argument is that citizens are not shareholders. Small shareholders have no means to weigh on corporate decisions, but in a perfectly working democratic process, citizens should weigh on decisions that affect them. But how big is my vote as a citizen, really? My vote only counts when it is shared by a majority of voters, just like it would if I was a shareholder of a company, no?  At any rate, even if it is shared by a majority, I would have no guarantee my ideas would be effectively implemented, probably much less so in a democratic government election compared to a shareholder meeting (where the CEO mostly has to act upon decisions taken by shareholders).  In a way, I know of no democracy that genuinely implements the opinions and choices of the majority of its citizens.

The third argument is about customers vs constituents. Surely, governments should not treat us as mere customers, choosing to opt out on us when we’re too hard to handle or to serve? Makes sense, even if I hear lots of my fellow citizens wishing their government would look at them as clients rather than voting cattle. But there’s something else going on, made inevitable by the crisis we are in and the poor public finances in most Western countries: the rise of public-private partnerships. For an increasing number of tasks, the help of private companies is the only way to ensure things ‘get done’. And have no doubt that the ‘private’ piece of the equation is aiming at maximize profit, closing down any activity that is not profitable, even if it serves the common good.

The ideas in the video are certainly valid, and I have no hesitation in underwriting them. My fear, however, is that we are already in a maelstrom that will turn governments into businesses, whether we like it or not. With Naomie Klein’s ‘The shock doctrine’ in mind: we’re in a perfect storm to make this happen. Just read the ‘recommendations’ of the IMF or the European Commission to have clearer sight on the hidden agenda. While their arguments are valid, their solutions are not necessarily.

On the other hand, one has to wonder whether this will not lead to a situation where the government simply becomes irrelevant. If crises (both financial and climatic) worsen in decades to come, and governments increasingly fail at fulfilling their basic mission, will private initiatives not simply take over? Is the outbreak of young social entrepreneurs (and even social innovation within existing corporations) not an early sign of this?

Guesswork, of course… but not that idle I believe…