Daniel Howes, Detroit News columnist recently published a rambling column discussing the parallels of the Detroit Automakers comeback (as illustrated by their Super Bowl ads) and the city of Detroit and its potential comeback. The column was fairly innocuous stuff until these two paragraphs:
Yes, I know the convenient dodge from those who would prefer to avoid the obvious parallels between running an automaker into the ground and running a municipal government into the ground: government is not a business.
Wrong. Both succeed and fail on the strength (or weakness) of managing reality, dollars and cents, not some mythical ideal that exists only in gauzy memory or an eighth-grade civics class. Neither business nor government can allow expenses to consistently outstrip revenue for too long, cannot charge customers or taxpayers more and deliver less, without inviting serious existential consequences.
So many things wrong with the above paragraphs.
Starting with the most fundamental flaw: business adds value by producing something (a product or service) and creates wealth, government can only take wealth (through the force of law) from one group of people and give it to another, adding no value and creating no wealth.
A car company will invest staggering amounts of money to design, engineer, tool and assemble an automobile. Then the company will spend even more money to market and sell the automobile. This process creates something of value to consumers who purchase the automobile (hopefully) at a profit for the car company, creating wealth throughout the manufacturing process. Government on the other hand, taxes money from companies and individuals and give it to another group of people who do things such as building roads (North Korea has fantastic roads and little wealth), use the tax money to pay government workers or give the money to other individuals in the form of direct payments with no value added or wealth created in the economy.
When Mr. Howes says “Neither business nor government can allow expenses to consistently outstrip revenue for too long” he is obviously forgetting the eight years of economic mismanagement of one Jennifer Granholm and her billion dollar deficits. I won’t even bring up the multi trillion-dollar debt our humble civil servants in Washington D.C. keep adding to at a furious rate.
Economic mismanagement brings up another important point. When business spends more than it takes in, or delivers substandard service the quickly business folds, shareholders lose money and in extreme cases the people responsible for the mismanagement go to jail.
Politician’s responsible for mismanagement are rarely held responsible for their actions. The normal track for politicians, particularly liberal Democrats, they are promoted a higher office.
Government is nothing like a business.