Corporations and governments have very different goals and motivations. Over the past few decades, these natural differences have become increasingly blurred in the eyes of politicians and the public…and some very disturbing consequences of this trend can now be seen. It’s time to drop the illusion that business strategies will work in effective public governance. In addition, I believe it’s time to drop the illusion that corporate skill is the panacea for our public policy dilemmas. Corporations do what they do very well…but we don’t have to believe they can do everything well to appreciate them as an integral part of our national and global society. Our public discussions need to address this hard truth: corporations cannot govern…and governments that act like corporations will fail.
- Corporations serve a specific group of shareholders exclusively…governments serve all their residents equally
- Corporations measure success in numbers…governments measure success in the quality of life in their communities
- Corporations succeed through competition…governments succeed by balancing the needs of their diverse stakeholders
- Corporations seek to defer or minimize risk…governments assume risk for their most vulnerable people
- Corporations have CEOs and management staff with authority to make autonomous policy decisions…governments have checks and balances for policy decisions
- Corporations can shift their multi-national operations to maximize profits…governments focus on a specific place and population in good times and in bad times
A business model does not translate well into public policy. And…CEOs rarely have the skill set for public office. Business strategies look at the world through a completely different lens than do public policy strategies. They aren’t inferior or evil…they just see the world in a unique and different way. So…why we can’t let business be business…and let public policy be public policy? When we confuse these roles in society, some very dangerous errors can happen…not because people intend to make mistakes, but because they are not prepared to make the best decisions for the common good.
When our mega-banks pushed our economy over the cliff, their CEOs and management staff didn’t intend the harm they caused…they were just oblivious to the public consequences of their highly risky and clearly greedy policies. They were doing what corporations will naturally do…when they aren’t regulated or supervised by those who see the world through a public policy lens. In criminal terms…they weren’t guilty of murder…but they could easily be convicted of economic manslaughter. They were allowed to make critical decisions in areas that were completely beyond their comprehension or skills…and we’re all paying dearly now for that lack of oversight by government regulators. Our mega-banks let things get out-of-control…and then downplayed the severity of the crisis. Corporations cannot govern.
When BP and their contractors recklessly pushed against prudent safety measures for the completion of drilling at the Deepwater Horizon oil rig in the Gulf of Mexico, their CEO and staff didn’t intend to foul the Gulf with millions of gallons of crude oil…nor did they intend to devastate the economies of the Gulf states directly and the whole United States indirectly. They were making normal corporate decisions…when those decisions are allowed to be made without public policy oversight. Without appropriate government regulatory supervision, BP was the only source of information when thousands of gallons of oil poured into the Gulf each day…and we know now that they seriously under-reported the true spill totals. BP and their contractors let things get out-of-control…and then downplayed the severity of the crisis. Corporations cannot govern.
When Tepco, the private utility corporation in Japan, realized their Fukushima Daiichi nuclear reactors were dangerously compromised by the recent massive tsunami, they didn’t directly intend to harm neighboring communities…but their failure to share timely and accurate damage assessments apparently did exactly that. Rather than making an error on the side of caution, they made a self-serving decision to limit the appearance of urgency or danger. Of course, these can be seen as normal corporate decisions…when those decisions are allowed to be made without prudent oversight. For decades, corporations have dominated government policies in Japan. Even in the 1970s, the Japanese business community was known as the driving force in public policy decisions…being known as ‘Japan, Inc.’ in the process. Now…when strong and decisive public leadership is desperately needed, the Japanese bureaucracy is dangerously ineffectual. Here too…Tepco let things get out-of-control…and then downplayed the severity of the crisis. Again and again, we see…corporations cannot govern.
Corporations aren’t bad because they cannot govern…they were never intended to be able to govern. Our job now as members of the public is to re-balance our U.S. and global societies…so corporations can do best what they were intended to do…and governments can do best what they were intended to do. I’m all in favor of governments learning to do their jobs better…but that doesn’t mean they can or should be replaced by any version of the corporate model. How do we discern and discuss these critical differences in ways that make sense to the general public? There are some critical roles in society where governments must take effective leadership again. And…I believe we need to reverse the accelerating trend in the United States to have corporate agendas dominate public policy. Let’s talk now about what the business community can do well, and about what the various levels of government can do well to create dynamic partnerships that meet economic and social needs…for everyone in short-term and long-term public decisions.