What If Government Really Ran as a Business?

John Ostenburg

By John A. Ostenburg
The Outpost Observer

A few weeks ago, a resident in my community volunteered that — although local property taxes are high — she thinks residents get a good bang for their buck.

It was an unsolicited remark and therefore one that carried extra meaning for me. As a local elected official, I most often hear comments to the contrary. Residents are much more inclined to protest that taxes are too high and that they’re not getting enough back for their investment. 

The complaining types often echo the philosophy of the current "Tea Baggers," in that they claim government runs very inefficiently and should be more modeled on how business operates. As a former small-business person myself, that concept gives me pause. I know first-hand how business operates, and it’s not always as efficient as some on the outside might think.

During 14 years of running a small coffeehouse/bookstore, my wife and I often dealt with suppliers who couldn’t get our orders straight, with companies that went out of business often within only a few weeks of when we received their promotional marketing materials, and with firms that could care less about the small merchant and instead catered only to those who purchased wholesale items in great quanities.

Imagine if the local police department couldn’t get directions straight in responding to a criminal activity in process. Or if municipal parks, swimming pools, baseball fields, etc., all of a sudden were closed down. Or if the local fire department only responded to fires of a certain magnitude or larger.

U.S. government figures show that 25 percent of all new businesses don’t survive beyond the first year, that 50 percent don’t survive beyond four years, and that 60 percent fail within six years. Imagine if local governments had such a record.

It’s not my intent here to bash business, but rather simply to point out that a business model is not necessarily the best one when it comes to the functions of local government. They are two distinctly different types of operation, and therefore cannot be judged based on a comparison of one with the other. Business has problems unique to it, and government likewise has its unique problems. The solution for both is not to try and imitate one another; rather it is for each to develop the very best method for dealing with its own uniqueness.

One very fundamental way in which government is different from business is that government must deal with ALL of the public, and not with selective segments. Government cannot say, "We’re just going to focus on the senior segment (or youth segment, or middle-income segment, or high-market segment) of consumers, because that’s where our greatest return is likely to be." Business, of course, can do that.

A very good example in this regard can be found within public education, which often is criticized as being less efficient and effective than is private education. But public schools are obligated to take all students, whereas private schools can be selective. Private schools are at liberty to locate themselves in whatever neighborhood they might choose, whereas many public schools must be located in neighborhoods with both high-poverty and high-crime rates. The two systems — public and private — are vastly different as regards their flexibility in curriculum, mandates, etc.

Government health care likewise often is criticized as more expensive than is private health care. But again, some of the patients that MUST be treated by the public health care systems are those that the private systems choose not to treat because their conditions are too costly, because the potential rate of success in dealing with those patients and conditions is extremely low, or because the patients cannot pay the cost the treatments would require.

So, the question is, should government continue to provide services to those who have nowhere else to go? Or should government become more selective, just as is business. Doing so probably would increase the overall efficiency of government, and make services much more cost-effective. On the other hand, doing so also would mean that lots of people would not have their basic needs met.

But, to return to the gist of the comment I referenced in my opening, many things provided by local cities and towns are a good deal for the average citizen. Local governments often choose to provide their residents with benefits and opportunities that no one in business ever would offer, simply because there wouldn’t be enough profit in it for them. Outdoor concerts are not necessarily money-makers, but they satisfy the internal needs of individuals. Libraries are not money-makers, but they provide enrichment for residents. Parades and festivals are not money-makers, but they create a sense of belonging. All are highly valuable assets, paid for by tax dollars, that no profited-oriented business ever would undertake.

And the costs associated with these services are relatively low when compared to what one would have to pay in a commercial setting. Compare the cost of going to a two-hour municipally sponsored outdoor concert with that of a two-hour movie at a commercial theatre. Or compare the cost of a library card with the purchase of just one book at a local retailer. Or compare the cost of 24-7 police, fire, and paramedic coverage with the costs of any privately operated security system. In every case, the value for the expended tax dollar far exceeds the value of the dollar spent for the commercially obtained products or services.

So why do Americans complain so much about paying taxes but don’t scream as loudly about the costs of retail items that they purchase? I think it has to do with our intrinsic desire to be a free people. Simply stated, we don’t like having someone tell us what to do. So, we don’t like it when government tells us we have to pay taxes. It doesn’t make any difference what we may be receiving for those tax dollars. What matters is that we’re forced to pay taxes, but we can choose how we spend our money on other things.

Drinking beer? It’s a choice. Smoking cigarettes? It’s a choice. Going on extravagant vacations? It’s a choice. Buying an expensive automobile? It’s a choice. Paying taxes? It’s a requirement and we don’t like it.

Every once in a while, though, some folks stop to think about things the way that resident mentioned above did. When they do, they realize all that they get in exchange for what they pay in taxes. When that satori moment finally arrives, they say what that resident said: "We get a lot for the taxes we pay."

John A. Ostenburg is mayor of Park Forest, Illinois, and formerly served in the Illinois House of Representatives. He recently retired as the chief of staff for the Chicago Teachers Union. E-mail him at [email protected].