13 January 2012


I've insisted for years that those who advocate that the U.S. be run like a business are naive at best, and venal at worst.  Government is an entirely different animal from business.  Why?  Because most businesses exist to make a profit ~ by providing goods or services to paying customers.  The customers in question are separate entities from the businesses in question.

But we, the people, are the government.  Government exists to serve us, the citizens without whom government would have no meaning, no existence.  We (individuals, corporations) pay taxes to provide revenue, and in exchange we obtain the benefits of citizenship ~ roads, schools, national defense, consumer protection, environmental protection, and regulation of business, which exists to make profit.  That's the difference.  That's the reason it is misleading to think rigidly in terms of a balanced budget or operating at profit, the terms of business.  Government is not business.  It takes in revenue, it distributes services.

Nobel Prize-winning economist Paul Krugman agrees.  In his essay American Isn't a Corporation, Krugman explains ~ "Why isn't a national economy like a corporation?  For one thing, there's no simple bottom line.  For another, the economy is vastly more complex than even the largest private company.  Most relevant to our current situation, however, is the point that even giant corporations sell the great bulk of what they produce to other people, not to their own employees ~ whereas even small countries sell most of what they produce to themselves, and big countries like American are overwhelmingly their own main customers.

"Yes, there's a global economy.  But six out of seven American workers are employed in service industries, which are largely insulated from international competition, and even our manufacturers sell much of their production to the domestic market.  And the fact that we sell mostly to ourselves makes an enormous difference when you think about policy. 

"Consider what happens when a business engages in ruthless cost-cutting.  From the point of view of the firm's owners (though not its workers), the more costs that are cut, the better.  Any dollars taken off the cost side of the balance sheet are added to the bottom line.  

"But the story is very different when a government slashes spending in the face of a depressed economy.  Look at Greece, Spain, and Ireland, all of which have adopted harsh austerity policies.  In each case, unemployment soared, because cuts in government spending mainly hit domestic producers.  And in each case, the reduction in budget deficits was much less than expected, because tax receipts fell as output and employment collapsed."

See what I mean?  This is one reason why anyone running for high office, especially for the presidency, should have not only legal training (which would include an understanding of the Constitution and the protections it guarantees to all citizens), but also should have some experience in actual government ~ whether as a state governor or as a U.S. Senator or Representative.  Having a grasp of the larger picture is not only useful, it is essential.  I do not regard experience in business as a desirable quality for a presidential contender.

Every time I read about a business deciding to cut costs by down-sizing, or by out-sourcing, I cringe.  There are creative ways to cut costs without cutting your own throat.  Such myopic measures nearly always mean lost jobs, ruined lives, less income for the company, and less tax revenue for the nation.  There's something unpatriotic about placing personal greed ahead of the welfare of society.  There, I said it, the P word.  Patriotism isn't about waving the flag and thinking "America, right or wrong."  Patriotism is about doing what's best for the country, and all of us are the country ~ not just the top 5 percent.

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