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Should the Government Be Run Like a Business?

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Dr. Angel Pool-Funai







Should the Government Be Run Like a Business?

Defense Secretary Robert S. McNamara, who served under Presidents Kennedy and Johnson during the Vietnam War, attempted to manage the DOD through data. One of the vestiges of this type of return-on-investment management system is what Harry Summers Jr. in his 1991 LA Times article, Body Count Proved to Be a False Prophet, called “the body-count syndrome.” McNamara tried to quantify what was needed to win the war in terms of the opposition’s body count. In the article, Summers related a story that circulated the Pentagon after Nixon took office in 1969:

“Supposedly a computer was fed all the quantifiable data on the United States and North Vietnam–population size, gross national product, steel production, size of the armed forces, numbers of tanks, guns, ships, planes and the like. The computer was then asked, “When will we win?” Instantaneously it spit out the answer: “You won in 1964!””

Defense Secretary McNamara had created a simplistic ROI model—a private-sector business practice—that proved that “there is much more to war that those things which can be counted”. Another philosopher of war, Von Clausewitz totally rejected the quantifiers McNamara tried to put in place. In the summers article Clausewitz stated:

“[In] war everything is uncertain, and calculations have to be made with variable quantities. [McNamara and his team] direct the inquiry exclusively toward physical qualities, whereas all military action is intertwined with psychological forces and effects…[and] continuous interaction of opposites… It is always aimed simultaneously at the moral forces which give it life.”

Clausewitz points out an important distinction between public administration and business administration—that they are, by nature, fundamentally distinct types of administration.

The question, “Should the government be run like a business?” is fundamentally flawed.[footnoteRef:2] It is the wrong question to ask. What does it mean to run anything like a business? Proponents argue that running something like a business means revenue should exceed expenses, initiatives should be revenue driven, and constituents should be treated like customers. Though well-intentioned, these viewpoints have pitfalls as illustrated in the DOD’s efforts to win the Vietnam War with numbers. A government that takes in more revenue than expenses is an inefficient government that overtaxes its constituents. [2: This question is intensely political. Phrasing the question like this gives a rhetorical advantage to libertarian leaning politicians. The question often comes with an implied premise that unlike business, government suffers from bureaucracy, debt, and constant political campaigning. This claim needs to be verified, and usually never is. Understanding that government and business are distinct can lead to more constructive questions like: How do we make government more efficient? Are austerity and increasing taxes to eliminate debt worth it? What can we do to increase the effectiveness of elected public servants and public administrators?]

Those who argue that government should be run like a business often fight for policies and regulations that make government more efficient; however, those that argue a distinction should be made between the two do not want government to be less efficient, accountable, or transparent. In fact, many business practices can be applied to government organizations and non-profits to streamline their processes and procedures and provide more for the greater good of that organization’s or government’s constituency. A good public servant should look to multiple avenues of organizational leadership and best practices to improve their stewardship. It is in the careful balance of public and private sector interests that a government must operate to provide for the greater good of its people.

Governments and Businesses are fundamentally two different types of organizations. They differ in their goals, their organizations, and they are held accountable by different institutions. For a business those institutions are primarily stakeholders and secondarily customers; however, the government should answer to all members of its constituency equally—regardless of the stake they hold in society. Both organizations can learn from one another to improve their efficiency, transparency, and accountability. It is important to understand these distinctions as a public servant or administrator.


Marohn, C. (2018, June 18). Running Government Like a Business. Retrieved May 30, 2019, from https://www.strongtowns.org/journal/2018/6/18/running-government-as-a-business

Marohn explained that a city should be run like a business. He defines what that means simply by making sure that revenues exceed expenses. He also pointed out pitfalls in a private-sector minded city planner.

Mintzberg, H. (2017, March 31). The U.S. Cannot Be Run Like a Business. Retrieved May 28, 2019, from https://hbr.org/2017/03/the-u-s-cannot-be-run-like-a-business

The United States is not suffering from too much government so much as from too much business all over the government.

Summers, H. G., Jr. (1991, February 09). Body Count Proved to Be a False Prophet : Tactics: It was discarded after Vietnam War. Military people now realize that quantifying victory is far more complex. Retrieved May 30, 2019, from https://www.latimes.com/archives/la-xpm-1991-02-09-mn-675-story.html

Summers explained why the US tried to move itself away from body-count in the First Gulf War. He showed how the management of Vietnam under Johnson lead to a misunderstanding of how data can influence policy to its detriment.

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