The Government's Job Isn't Profit, It's Stability
Running government like a business does not make it lean. It makes it fragile. A systems view of why stability, not profit, is the point.
The government is not a business. It never has been, and it never should be.
When tens of thousands of federal workers are pushed toward buyouts the government has not even been authorized to pay, that is not cost-cutting. It is chaos. These workers ensure aviation safety, food inspections, and other essential services. Stripping agencies under the guise of "efficiency" weakens the very foundation society and businesses rely on.
The purpose of government isn't profit, it's function. Government exists to maintain stability, uphold infrastructure, and provide essential services that make modern society (and business) possible. The private sector operates within the system government maintains: roads, courts, currency, national defense, regulatory frameworks. Cut government too far, and business suffers. A government that prioritizes "efficiency" like a business doesn't get lean, it gets fragile. Weakening agencies today leads to expensive disasters tomorrow.
As an accountant working with both bootstrapped and VC-funded businesses, I focus on financial sustainability. Businesses balance short-term realities with long-term stability. Yet people apply business logic to government, ignoring that they operate on fundamentally different principles. That confusion leads to decisions that hurt both the economy and society.
This thinking has roots. Milton Friedman's doctrine that businesses exist only to maximize shareholder value has seeped into government, turning public service into a cost-cutting exercise rather than an investment in stability. But governments aren't startups, and slashing budgets like a ruthless CEO doesn't create efficiency, it creates instability.
From a broader systems perspective, Friedman's approach is incomplete because it ignores externalities, costs that aren't reflected on a financial statement but impact society long-term. Governments exist to balance those externalities, ensuring businesses don't prioritize short-term gains at the expense of broader societal health. Without that balance, we get boom-and-bust cycles, extreme wealth concentration, and weakened public trust, all of which destabilize economies and, ultimately, democracies.
For the U.S., the challenge is that capitalism is deeply embedded in national identity, making it hard to separate market principles from governance principles. The Friedman doctrine is particularly harmful in public policy because it assumes efficiency is always good, but in government, some degree of redundancy and resilience is necessary for stability. A purely profit-driven mindset leads to fragile institutions: hollowed-out agencies, underfunded infrastructure, and reactive crisis management instead of strategic long-term investment.
Citizens aren't customers. Unlike businesses, where customers can opt out, citizens rely on government for stability and fairness. Government's role is to create conditions where responsible businesses can thrive. Businesses belong in the marketplace. Government, beyond protecting against threats, ensures that marketplace stays competitive and accountable.
Public trust erosion is a slow-moving disaster. Businesses can pivot when they lose customers. Governments that lose trust risk democratic stability.
"Business-style efficiency" in government is a myth. In business, cutting "inefficiencies" can boost profits. In government, it often hollows out agencies, leading to costlier failures down the road: disaster response, regulatory failures, infrastructure neglect.
A well-functioning government isn't a competitor to business. It's the foundation that enables business to operate responsibly in the first place. When leadership forgets that, things break.
Sources
Harvard Business Review. (2017). The U.S. Cannot Be Run Like a Business. https://hbr.org/2017/03/the-u-s-cannot-be-run-like-a-business
PBS NewsHour. (2024). Federal Workers Worry Buyout Offer Is a Trick as Deadline Looms to Accept Elon Musk Deal. https://www.pbs.org/newshour/politics/federal-workers-worry-buyout-offer-is-a-trick-as-deadline-looms-to-accept-elon-musk-deal