Why Governments Can Never Be Run “Like a Business”

The government, federal or otherwise, has no business model because it is not a business. We know this at the outset because government does not compete in the market for people’s money, as every other business must do. With a monopoly of violence, it seizes the money it wants through taxes and monetary inflation. As long as the government doesn’t get carried away by taxing and inflating too much, most people—many of whom call themselves libertarians—regard this setup as necessary.

In “America Loves Paying Taxes,” Vanessa Williamson writes for The Atlantic:

In national surveys, over 95 percent of Americans agree with the statement, It is every Americans’ civic duty to pay their fair share of taxes,” and more than half see taxpaying as very patriotic.” One man from Ohio called it a responsibility to the Founding Fathers.” A former Marine said taxpaying is the cost of being an American,” while a man from California said tax avoidance is the equivalent of shorting the country.”

Comforting, isn’t it?

Every business, if it is to stay afloat, must produce a profit. It must make more money than it spends. Competition will force companies to keep their prices as low as possible while still bring in enough revenue to make a profit. Without a sound business plan that adjusts to challenges from competition and changing consumer preferences, a firm’s existence will be short-lived.

Consider the once-strong demand for Microsoft Disk Operating System (MS-DOS) personal computer applications in the early 1980s (I had a side business writing them). When the Macintosh came along in 1984 with its graphical user interface, Microsoft was caught flat-footed. Users no longer had to type cryptic commands they couldn’t remember at a blinking cursor; they could do everything they wanted from pull-down menus and a mouse. The Mac was the computer “for the rest of us.” Bill Gates immediately ordered the creation of a DOS shell that he called Interface Manager, later changed to Windows. It lacked the elegance of the Mac, but it sustained the company’s leadership until they created a Windows operating system from scratch.

Apple helped Gates by failing to include a killer business app with their radical offering. Critics said the little Mac couldn’t do anything except paint pretty pictures. At a price of $2,495.00 ($7,604.88 in 2024), it sold poorly. Later, after Steve Jobs returned to Apple after being dismissed by the board, he decided to empower individual users instead of hidebound organizations and developed a successful marketing strategy with the lowercase “i” and colorful, more powerful home computers.

Assuming he’s allowed to vote freely with his money, the consumer always benefits from innovation and competition. Companies gathering the most votes stay around and possibly grow but are always subject to the changing preferences of the ones putting their money down.

One Is Not like the Others

One could argue that government does indeed have a business plan, and it can be found in small print somewhere. Having far more guns than other organizations and virtually limitless latitude to use them, the government gravitates naturally toward coercion rather than persuasion. When it needs more money, it doesn’t innovate or economize, it plunders the public. Resist and you could end up dead, and everyone understands this. Judging it as we would a business organization, it stands out starkly as criminal.

Apple, Microsoft, and all the other companies would never get away with forcing people to deal with them at prices they dictate. Don’t like iPhone’s price? You don’t have to buy it. Don’t like any pocket phones (as with my antiquated friend in the Ozarks)? You’re free not to buy any. However, with government, that relationship changes.

Should we wonder why the economy has become a house of cards when there is a government-provided counterfeiter directing money matters? However, fiat money inflation is part of the government’s business plan. In conjunction with the Federal Reserve, it creates gargantuan mountains of debt that it never worries about because it’s powerful enough to force taxpayers to pay the interest on it.

The argument that the kind of government we have is necessary lacks noncontradictory support. No other entity can legitimately initiate force except this one we call government. Where did it originally get that authority? Did you vote for it?

Ludwig von Mises in Omnipotent Government writes:

With human nature as it is, the state is a necessary and indispensable institution. The state is, if properly administered, the foundation of society, of human cooperation and civilization. It is the most beneficial and most useful instrument in the endeavors of man to promote human happiness and welfare. But it is a tool and a means only, not the ultimate goal. It is not God. It is simply compulsion and coercion; it is the police power.

Since we can’t recruit angels, “human nature as it is” applies to those conducting state affairs too, which is why we’ve seen so few Ron Pauls and an onslaught of Joe Bidens. Since no other entity in society possesses this power, are we not granting validity to contradictions? By what definition has any state in history been “properly administered”?

Later in the same book, Mises writes: “When the men in office and their methods no longer please the majority of the nation, they will—in the next election—be eliminated and replaced by other men and another system.”

Does that sound like what has happened in the United States? Each administration seems to outdo the previous one in the loss of rights and economic destruction. If the majority love big government—and the country’s schools are promoting it—voting won’t fix anything. As we’ve seen recently, voting has been about as reliable as the fiat dollar.

The free market is a problem solver if nothing else. In A Critique of Interventionism, Mises wrote: “Measures that are taken for the purpose of preserving and securing the private property order are not interventions in this sense.” Because of the criminal nature of the state, I would rather trust market forces “for preserving and securing the private property order.”

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