Should government be run like a business? | Opinion

A common belief in the U.S. is that government should operate like a business. Businesses are associated with efficiency, streamlined workflows and a sense of urgency, while government is frequently criticized for being slow, bureaucratic and inefficient. This perspective has driven political leaders to push the government toward privatization, outsourcing and business-minded management reforms.

However, while the goal of improving government efficiency is laudable, applying business principles to government unthinkingly can create significant problems.

The dangers of this approach are especially important to consider in the current political climate, where the Trump administration, in collaboration with figures such as Elon Musk, has aggressively pursued the notion of a government run like a business.

One influential idea in modern business is the principle that maximizing shareholder (owner) value is the primary goal. This philosophy, championed by world-renowned economist Milton Friedman, suggests that the primary responsibility of a business is to generate profit for its owners. According to this view, considerations such as employee well-being, corporate social responsibility (CSR), and broader societal challenges — including climate change, social justice and income inequality — are secondary, if not entirely irrelevant, to a company’s mission. The focus should be on profitability and delivering financial returns to investors.

But government operates under a different mandate. The purpose of government is to serve the needs of all citizens — not just a select group of stakeholders. Government functions in areas where profit motives are either impractical or unethical, addressing issues that the private sector cannot or should not monetize. For instance, responsibilities such as running prisons, enforcing laws, investigating child abuse, providing agricultural support to farmers, maintaining infrastructure, overseeing immigration, licensing professionals, funding eldercare services, and managing veteran affairs are (among others) crucial governmental roles. These functions exist to uphold the public good, not generate revenue. When profit becomes a driving force in these areas, the consequences can be troubling.

There has been a growing trend of outsourcing government services to private businesses under the assumption that companies can provide services more efficiently and cost effectively. However, this shift has often led to two major problems. First, businesses exist to make a profit, which means that outsourced services frequently end up costing more than when they are managed directly by the government. Since private firms must generate profits for their owners, they often cut corners, reduce service quality, or charge higher fees to ensure profitability. Second, private businesses operate with significantly more flexibility than government entities, as their actions are not as tightly regulated by law. While the government’s actions are explicitly restricted by legislation, businesses can act freely as long as they do not break the law. This key distinction means that, when government services are privatized, the businesses taking over those services may not adhere to the legal requirements of public administration.

This legal disconnect has led to numerous scandals and failures. Elected officials across the United States have faced legal repercussions, including imprisonment, for failing to comply with the regulations governing their agencies.

Advocates for running government like a business often point to the need for efficiency, cost-cutting and customer service improvements. There is always room for governments to become more effective, transparent and accountable. However, any attempt to reform the government must be guided by the laws that define the public sector. Unlike businesses, which can pivot strategies at will to maximize profits, governments are bound by legal, constitutional and democratic principles that ensure fair and equitable service to all citizens.

It is also crucial to recognize that businesses are primarily designed to serve consumers, while governments serve constituents. In a business, consumers have choices — they can take their money elsewhere if they are dissatisfied. Government services are often irreplaceable; citizens cannot simply opt out of law enforcement or national defense and choose an alternative provider. The public sector exists to ensure that essential services are available to all. Running a government purely with a profit-driven mindset risks leaving the most vulnerable populations without critical support.

In the long run, the most effective approach is to strike a balance. Government can — and should — adopt best practices from the business world, such as streamlining processes, leveraging technology, and improving customer service. However, these changes must be implemented with a deep understanding of the unique role of government. The next time someone claims that government should be run like a business, you should ask: exactly whose interests would that serve?