“Running government like a corporation/business” is a comparatively frequently encountered expression especially within the American society before elections take place. Some may buy on the idea, others never have and will probably never do so. I sincerely hope that the notion of being able to run government like a business – big or small – never takes roots and here are the reasons why:
A corporation consists of shareholders, Board of Directors and corporate officers. The shareholders are the owners of the corporation, and they appoint the Board of Directors, while the Board of Directors appoints the corporate officers (President, Vice-President, CEO, CFO, etc.). A government consists of three branches: executive, legislative and judicial.
If the government is a corporation – for the notion of running government like a corporation implies it – then its voters are its shareholders. These shareholders elect their legislature (members of the Parliament or Representatives and Senators according to the American model) and their President, and the two, according to this model, appear as the government’s Board of Directors but with different functions (legislative and executive respectively), while the Ministers (Secretaries according to the American model), Vice-Ministers (Deputy Secretaries) and heads of the respective agencies appear as the corporate officers since they are appointed by either the President or the Prime Minister (the Chief of Staff according to the American model).
In fact, the picture becomes even more complicated because the Prime Minister is not in the Board of Directors per se, for he or she is appointed by the Board of Directors (the legislature or the President) and turns out to be corporate officer who appoints and supervises the other corporate officers – the Ministers and their Vice-Ministers – who (the Ministers) then appoint and supervise the heads of their ministries’ respective agencies.
Conclusion: Governments slightly differ from corporations.
The Board of Directors and the corporate officers within a corporation have to act honestly and in good faith (also known as “bona fide”) representing and defending its interests while following and respecting its bylaws, much like the politicians have to act in the best interests of their citizens – be it at local, regional, national or international level depending on the office that they are currently occupying – while following and respecting the Constitution and the law.
A fantastic example is BP CEO Tony Hayward’s conduct during an investigation done by the U.S. House’s Energy and Commerce committee. He was rather evasive on the questions, especially if the questions demanded a response that would expose someone within the BP. And prior to his election, he promised – much like politicians promise – that “safety will be his top priority.” Regardless of his sincerity in his answers to the committee’s members, he was defending the company’s interests.
Conclusion: Governments resemble corporations.
A corporations’ bylaws are technically the same for a corporation as a country’s Constitution for itself or a municipality’s Charter for itself. The bylaws are drafted by the company’s founders or Directors, and these bylaws can be amended by a two-thirds or more of a majority of all of its members. It’s a common practice that constitutional amendments can be enacted by a similar majority only.
This is a striking resemblance to the United States’ founding fathers who drafted the U.S. Constitution, and to democratic countries’ (not dictatorships) enacting their own Constitutions.
Conclusion: Governments resemble corporations depending on the decision making processes.
The Shareholders and the Voters
I pointed out above that shareholders for a corporation are much like voters for a government. They own them by their shares, votes and form of expression, and their votes and form of expression respectively. However, unlike in a corporation where two different shareholders have two different voting powers, every voter has one vote when electing their government regardless of their educational, racial, ethnic, gender or any kind of background.
In other words, a government politician is comparatively equally accountable to their constituents (comparatively because it depends on their constituents’ philosophies on the role of the government), while a corporate politician will feel more accountable to shareholder A who, for the sake of argument, owns more shares in the corporation than shareholder B.
Conclusion: Governments differ from corporations.
My experience so far has taught me one thing – that most of what’s going on around us is about money, and money gives us power but we have to make sure we don’t inflate, or in some cases deflate, that power if we represent a corporation or a government. It’s a similar story with individuals’ happiness relative to the money and the success that they have earned which I discussed in my previous article.
So what about the money? A corporation’s money is its profits, its assets, its shares, while a government’s money is its taxes and its assets.
If a corporation decides that it needs more revenues right now, the corporate politicians usually issue more shares or look for possible creditors (mostly banks). Issuing more shares depends on the by-laws – most by-laws usually require that the shareholders are the first to have the opportunity to buy the new shares – but they inflate the value of a share. Meanwhile creditors don’t grant money, they lend money to the corporation.
If a government decides that it needs more revenues right now, the government politicians usually look for grants by a higher government, if any, or issue bonds (from banks or individuals) but these bonds are like loans – they have to be returned with certain interest rates, so it is not an easy decision to make… at least for a fiscally responsible government politician. A third tool is to print money at national level as long as it doesn’t violate international treaties.
How can it violate international treaties? The catch with printing money is that – similar to issuing shares and this policy’s impact on the value of a share – it devalues the currency. Especially if a currency is attached to another currency, it’s conventional that there is a clause in the specific monetary agreement that the government of a country whose specific currency is attached to another currency is restricted from printing money out of control since it could inflate the other currency too.
However, regardless of how much money is printed, if any, and how much the act of printing money devalues it, one adult always means one vote.
Conclusion: Governments differ from corporations.
In my BP article, I talked about the corporate politician – the corporate officer – but the corporate officer’s function as, in fact, a corporate politician does not necessarily make a corporation a government, neither does it make a government a corporation. I think I just proved to you why, and namely when it comes to the fiscal and electoral processes which are by far the most important parts within an entity.