Tuesday, March 21, 2017

There it is again

In a report from NPR this morning, a Trump supporter says, "I think this country really needs to be run more like a business at this point."  Yikes. So what does this mean to run the country more like a business?  This particular Trump supporter is particularly worrying about the growing federal deficit but sees other serious problems.  So let's see if we can take a casual definition of a business and tease out what people might mean by this notion of running government like a business.

Let's define a business as an entity that provides goods and services in return for money or other considerations.  The usual goal of a business is to obtain more money for its good and services - a profit - than it puts out to provide those goods and services.  So the business owner makes a budget, forecasting what it will cost to provision itself and advertise, etc and forecasting what units of service and goods it can reasonably expect to sell/barter, and thus sets a price for the individual goods and services that should return a profit.

Notice the verb "forecasting".  This means the owner guesses.  The forecasts are for a specific length of time and are usually updated periodically, since costs and actual sales rarely meet their forecasts exactly.  A business may "run in the red" (run a deficit)  over a course of a year but the business will fail if it never makes a profit.  So, in a business sense, running a deficit for a long period of time is the road to failure.

Governments are not out to make a profit from the goods and services they provide.  A well-run government breaks even.  Still, a deficit is red flag that there is something wrong and should be addressed.  For the years 2007 up till now, the government purposely ran in the red because if it didn't the people it serves would not have been able to buy from the businesses existing in the US.  The deficit avoided plunging the US into another Great Depression.

The US seems to have climbed out of its steep recession, at least as far as the Fed believes, since it raised rates recently.  So, may be it is time to reduce the deficit.  A business would seek to raise profits in several ways:

  1. Lower costs:
    • Find cheaper sources.
    • Lower quality of what is offered.
    • Lower amount of goods in a unit offered.
    • Cut out unprofitable goods and services.
  2. Increase revenues/make more sales by:
    • Add additional goods and services.
    • Revise goods and services to be more responsive to buyers' needs and wants.
    • Expand geographic range of where business finds buyers.
A business that just lowers costs in order to up its profits will eventually find itself back in the red unless it increases revenues because costs beyond the business's control will go up.  Likewise, a government will find itself back in the red if all it does is lower costs.  A government has only one way to raise revenues - raise the taxes it imposes on its citizens.  The Trump campaign wanted to lower taxes.  So does that Trump supporter want his taxes to do the opposite and go up so the government can reduce its deficit?  Is that what is meant by running the government more like a business?

The real question is how to raise taxes so the raises don't hurt the people the services are meant for.  The American Health Care Act strives to "lower costs" and it cuts taxes yet its effect is to raise costs on the persons it is meant to serve. A bad bargain so don't buy it.  

And, please stop thinking that if the government was run as a business we would be better off.  Some people might but I bet those would be the people who need government services the least.

Monday, March 20, 2017

Two of the notions really bothering me today

The first notion really bothering me today as I follow the news is that if we just run the government as if it is a business,  there will be a better outcome.  Pick your favorite - less taxes, less corruption, better national security, or whatever.  This notion has been around for years yet every time I encounter it, I shudder.  Now, with the Trump Administration have installed successful CEOs in positions of great power and responsibility, that notion is being tested in real time with big stakes. 

Failures are happening big and small, but especially on the global stage.  A small one was the media flap about Rex Tillerson being too fatigued to dine with South Korean officials, which was false.  It was reported widely in Asian countries before the US State Department corrected it.  Why it became a flap is because Tillerson made a judgment as if he was a CEO that he did not need a press contingent to accompany him on his diplomatic journey to Asia.  Well, Tillerson is not a CEO but a diplomat.  In fact, he is the top US diplomat.  He needs the press to accompany him so that the facts are reported, not speculation by observing media who have their own biases to push.  

Companies and corporations, whether they are domestic or global in scale, can put out press releases that carefully detail and/or limit what news they want released that fits their image.  Media can, in turn, put out reports that may distort or paint of very different picture of that company or corporation. But, if those reports do not report facts but are fabrications, the company or corporation can sue.  Governments can not do this; all they can do is counter with press reports of their own. 

Governments are not businesses nor should they be run as such. 

The second notion really bothering me is that government assistance whether in healthcare or education or foreign aid or whatever is a zero sum game.  I have read many articles about the "forgotten", who voted for Trump.  Too many of them seem to have chosen Trump because "someone else" was getting government assistance and they weren't and the best solution was to take that help away from the "someone else,", whether by deporting them or repealing the programs giving that government assistance, or building a wall or whatever stops the "offending" help.

Yes, the Democratic campaign waged by Hillary Clinton made many US citizens feel neglected and ignored.  Yes, there a vast portions of the US economy that have not recovered from the 2008 recession nor are they on a path towards recovery.  These are valid reasons for wanting change and recognition of the need for change.  But change doesn't mean you take something away from those who have the least.  Change can mean something like a universal health care system (not universal health care insurance) that might have spotted the opioid abuse trend before it because a US health problem.  Or, as some European countries have implemented, an education system that puts individuals preferences and aptitudes towards either helping them choose an appropriate secondary level of education and helping them afford it, without crushing debt.

If you believe government assistance is a zero sum game, let's figure out a different set of rules where we are all winners in that game.  However, I can't make life fair.

Further, I really believe that the reason the majority of job descriptions out there ask for a college degree is that they really want someone familiar with computer applications.  If our high schools are not teaching basic notions of computer science on an equal footing with math, that is a crime easily fixed.   Even a plumber or a mechanic or a salesman should be able to write a letter, do a simple Google search,  or enter and understand simplified checking account software.  With the advent of smart phones, many of the current generation have already mastered these skills long before they encounter such teaching in high school.  

Yes, these are "socialistic" notions.  Yes, I am "privileged."  Yes, I am an ardent "feminist."  Do I think universal health care and universal public education are rights of every individual?  Yes, I do.    Am I a member of some elite?  Yes, everyone has some skill or quality or ability that very few (relatively) share.  Am I an "elitist?"  Gosh, I hope not.