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Obama Dismantles The Myth of Running Government Like a Business

Speaking to an audience of start up entrepreneurs and tech people at the White House's Frontiers Conference in Pittsburgh last week, Obama took aim at this myth and smacked down the concept that Silicon Valley could do a better job running government than the people, who, you know, actually work in government.
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One of the major reasons Donald Trump has parlayed his success as a real estate mogul into politics is the pervasive myth in America that being a good business person makes one qualified to run a government. This myth is particularly prevalent in America -- a country that reveres entrepreneurialism and places financial success above almost every other virtue.

Speaking to an audience of start up entrepreneurs and tech people at the White House's Frontiers Conference in Pittsburgh last week, Obama took aim at this myth and smacked down the concept that Silicon Valley (and business leaders in general) could do a better job running government than the people, who, you know, actually work in government. He told them (emphasis ours): 

The final thing I’ll say is that government will never run the way Silicon Valley run because, by definition, democracy is messy. This is a big, diverse country with a lot of interests and a lot of disparate points of view. And part of government’s job, by the way, is dealing with problems that nobody else wants to deal with.

So sometimes I talk to CEOs, they come in and they start telling me about leadership, and here’s how we do things. And I say, well, if all I was doing was making a widget or producing an app, and I didn’t have to worry about whether poor people could afford the widget, or I didn’t have to worry about whether the app had some unintended consequences – setting aside my Syria and Yemen portfolio – then I think those suggestions are terrific. (Laughter and applause.) That’s not, by the way, to say that there aren’t huge efficiencies and improvements that have to be made.

But the reason I say this is sometimes we get, I think, in the scientific community, the tech community, the entrepreneurial community, the sense of we just have to blow up the system, or create this parallel society and culture because government is inherently wrecked. No, it’s not inherently wrecked; it’s just government has to care for, for example, veterans who come home. That’s not on your balance sheet, that’s on our collective balance sheet, because we have a sacred duty to take care of those veterans. And that’s hard and it’s messy, and we’re building up legacy systems that we can’t just blow up.

This is an incredibly important point that needs to be better articulated by our political leaders, particularly in the face of the nihilists in the Republican Party who think that government is the source of all evil. Republicans have been primarily responsible for the farcical notion that government can be run like a business, and as a result have participated in the wholesale destruction and privatization of the government and the nation's infrastructure. It should also be noted that the benefits of privatization have been wildly overstated by rightwing politicians, who invariably benefit from doing the bidding of big business (just look at the corruption in the for profit prison industry). 

The problem with running a country like a for profit corporation, as Obama states, is that businesses don't have to worry about what economists calls 'externalities'. The ability to hire and fire people at will, impose new rules, shift strategy rapidly and change business model on the fly might be good for a business solely interested in delivering profit to shareholders, but a government has to think about what the social cost of all those decisions would mean. For example, firing lots of people might streamline government in the short term during a recession, but what happens to those people when they can't get work elsewhere? They may well end up costing the government more money in the long term when it comes to unemployment benefit, a collapsing mortgage industry when they lose their homes, or paying for their medical care. 

It isn't sexy to talk about these 'externalities' and Americans are generally seduced by big, brash claims made by successful business men and women who claim they can 'fix government' by imposing their profit minded philosophy. But the truth is, the last person you want running a government is someone who doesn't understand the difference. 

In this election we have the choice between one politician who has worked in government for almost her entire professional life, and another who knows as much about how government works as a plumber would neurosurgery. Trump might be able to flip hotel buildings for profit, but there's no indication he can run the most powerful government on earth. Why? Because leading a government is infinitely more difficult, and it is high time Americans started respecting just how hard the job really is.