Sunday, August 15, 2010

Why governments aren't as efficient as Fortune 500 companies (Part 1 of 4)

I try to get to my computer early but it makes that cute Microsoft turn-on sound and Butler and Bagman come tumbling into the office to see what I'm up to.

BUTLER:  "Mark!  What are you doing?!!  Remember your rule to never write about your job!  What if this gets back to your boss?!!"

BAGMAN: "Great!  Then he'll have more time for blogging!"

I try to calm them down.  I am NOT am not going to write about my job!   Yes, I work for a government agency but I'm only going to write some general observations about things that screw up every democratic government agency from Congress to the local PTA.  

BUTLER:  "Well, I'm watching you!"

The real problem will be keeping it short and light-hearted.  Although finding humor in how agencies trip over themselves may not be as difficult as finding humor in the stock market. 

BAGMAN: "I can help here!"

I somehow doubt it.  I feel myself slipping from stand-up comic mode into economics professor mode.  In fact, Bagman has already gone to sleep and is snoring in the corner. 

Ahem.  Cough Cough.  Tapping my pointer on the blackboard.   Over the next few blogs we will cover the three primary groups that try to get things done with your tax dollars.   (A.)The bureaucrats who actually do things.  (B.) The elected politicians who tell the bureaucrats what to do.  And (C.) The voters who control who gets to stand on stage.

Today's lesson is a simple one -- understanding the difference between the private and public sector.

BAGMAN (waking up and waving his hand):  "I know!  I know!  The private sector is private so you can do stuff and people won't see it!"

Well, sort of...although most private companies have stockholders and everybody has a lawyer these days.  But public agencies and governments are certainly under more scrutiny.

BUTLER:  "It's about the money."

Yes, that too.   Although there is some difference.  Stockholders demand that companies to use their money to make more money and give it back to them as profit.   Taxpayers reluctantly give money to governments and just hope desperately that governments don't waste it all.  

BUTLER:  "Private companies care more about quality of good and services."

Yes.  Quality performance is critical.  So people come to them instead of their competitors and they can be profitable.  Quality is imporant to governments too...well, at least they give it lip service.  The big difference is somewhat subtle...not too subtle actually...and that the bottom line in decision making for Private Companies is economics. 

BAGMAN (trying to chime in although he's clearly over his head): "But governments have budgets!  They care about economics!  (pause while he looks confused)  What are economics anyway?"

However, while you can take the private sector decision making process and graph it in two dimensions -- revenue and expenses -- governments have to overlay every decision with a second set of unrelated decision making criteria.   Popularity.  Ford can close down a plant and put an entire city out of work but if this makes it more profitable, its stock will go up.   But governments have more trouble with this kind of thing because if a bureaucrat puts enough of a politician's voters out of work, the politician won't be re-elected.   Consequently it is impossible for any government agency to make the most efficient decisions because it also has to keep everybody happy.

BAGMAN:  "But nobody is happy with government!!!"

Yep.  That makes it harder!   And in fact, as we'll find out in the next, I mean blog...most of the people who actually vote are the people who are unhappy with everything anyhow!  So you have to spend more and more time pleasing people and less and less time actually doing anything. 

BAGMAN:  "'m not sure I like this blog much."   He falls asleep. 

BUTLER: (Shaking his head and wagging his finger at me).  "I was worried you were going to get yourself in trouble.  Not I'm worried you are just going to bore everyone to death."

I think about posting a photograph just because it might make things look more interesting.  But then I fall asleep out of boredom as well.


  1. Mark, it isn't boring and I look forward to your subsequent posts on this topic. I am one of those who is (and has been for a number of years now) unhappy with government -- but also unhappy with the greed in corporate board rooms and the over consumption and slipping morals of our society.

    As my mother used to say, I feel as though we're "being carried to Hell in a hand basket."

    Thanks for taking on this topic.

  2. Thanks, Sherri. I was just about to remove this post and quit on it...but, maybe I push on. At least get it out of my head so I can move on to more creative things.

  3. Looking forward to the rest of it!
    And of course, the government has many things to do that aren't directly linked to making money, like caring for the helpless, holding people in prison, defining and enforcing lawfulness... I wouldn't want the government to act just like a corporation (which can close parts of itself, jettison underperforming employees, etc, etc)

  4. even if boring I will come back to read the rest just to see if you make it to the end.... 1 of 4?
    I not in agreement that the private sector and publich are that different when talking about really large companies.... ones like Haliburton - the VP don't even have a clue about bottom line and how it works or should work.