Mayor Huether Still Wrong: We Should Not Run Government Like a Business

Mayor Mike Huether, press conference, Sioux Falls, SD, 2016.12.19. Screen cap from South Dacola.
Mayor Mike Huether, press conference, Sioux Falls, SD, 2016.12.19. Screen cap from South Dacola.

In his odd little press conference yesterday, Mayor Mike Huether repeated his assertion that government at all levels should be run like a business. As South Dacola points out, Mayor Huether couldn’t give specific examples of what running Sioux Falls like a business rather than as government looks like.

Of course, “We should run government like a business” is wrong when Donald Trump says it, and it’s wrong when Mike Huether says it:

Some consensus has developed among scholars about the fundamental ways that running a government is different from running a business. Here are a few:

  • Government is about this thing called the “public interest.” There is no such animal in the private sector. Private firms care about their stakeholders and customers; they do not generally care about people who do not invest in their businesses or buy things from them. Thus, accountability is by necessity much broader in government; it is much more difficult to ignore particular groups or people.
  • Private-sector performance is measured by profitability, while performance measurement in government needs to focus on the achievement of outcomes.
  • Compromise is fundamental to success in the public sector. No one owns a controlling share of the government. When Gov. Rauner and the state legislature refused to negotiate, it resulted in Illinois operating without a budget for a full year. The notion of a separation of powers can be anathema to effective private management. It is central to the design of government, at least in the United States.
  • Government must constantly confront competing values. The most efficient solution may disadvantage certain groups or trample on individual or constitutional rights. In the private sector, efficiency is value number one; in government, it is just one of many values.
  • Government has a shorter time horizon. In government, the long term may describe the period between now and the next election. Thus there is a strong incentive to show relatively immediate impact.
  • Government actions take place in public, with much scrutiny from the press and the public. There is no equivalent of C-SPAN showing how decisions are made in the corporate boardroom. Corporate leaders do not find it necessary to explain their every decision to reporters [Philip Joyce, “The Enduring Myth That Government Should Be Run Like a Business,” Governing, 2016.12.14].

Mayor Huether refused to say whether he is running for Governor in 2018, but come on—the only reason the mayor’s party switch from Democrat to independent is press-conference-worthy only if it is part of a larger gambit to run for higher, partisan office. So saddle up, Democrats: our gubernatorial nominee will have to tackle two pro-business Republicans for Governor on the November 2018 ballot… and it will be up to us to explain to the voters that we love business, too, but we recognize the difference between running a business and serving the people.

42 Responses to Mayor Huether Still Wrong: We Should Not Run Government Like a Business

  1. Darin Larson

    Certainly the proposition that government should be run like a business is often overstated. However, there are many aspects of the comparison that do hold true and would be helpful to effective and responsive government.

    The examples of government waste and inefficiency are legion and so a business model that strives for efficiency can be instructive. As your article points out, efficiency cannot be the be-all and end-all above such things as constitutional rights and proper procedures. But we should always strive to make government more efficient so that the people respect and value it.

    The business model also focuses on the needs of the consumer or customer. The key to the long term success of a business is this focus. Likewise, government should always strive to meet the needs of its citizens. It should be the focus of government and government workers should start each day with the thought of what can I do to better serve our citizens today.

    Successful businesses also have to have strong financial controls, purchasing mechanisms and accounting structures for budgeting and living within their means. Most people would agree that government must do the same.

    In all of these areas and in many more, an effective business can be a model for aspects of our government. In order for this “Great American Experiment” to continue successfully, government must continually earn the respect of the governed. Obviously, that is going to be a challenge in the current political climate. We need to retain certain aspects of the business model for government while being mindful of the limits of the example.

  2. Two words: FLINT MICHIGAN

  3. Darin Larson

    Leo, Flint Michigan was a failure of government in the largest way possible: a compromise of public safety and trust in government. You are going to have to explain how it relates to the topic of this thread.

  4. David Newquist

    The fact is that throughout history organizations have always had to operate within budgetary restraints. The “business model” is not the originator or the developer of efficiency and integrity, And history records the fallacies of the business model, such as the agricultural crisis of the 1980s when “capitalistic farming” as advanced by banks and equipment manufacturers dispossessed many people from their land. Or the current disparity between the wages of CEOs and people who do the actual, productive work.

    Waste, greed, and power-lust are as much a part of the business model as of out-of-control government agencies. Other academic disciplines in the arts and sciences provide models of integrity and efficiency that are as relevant, if not more so, to running government and education as well as disciplined business practices. When people advocate running government like businesses, they overlook those many agencies and people who do their jobs well and effectively.

  5. Darin, Emergency Manager – non-democratically appointed dictator who was trying to shave off a few bucks to save money (like a business) and poisoned the people with lead. Flint residents knew that Flint River water should not be used, but they no longer had control of their government. Felony charges have just been announced today against both Emergency Managers. Water problem still not fixed.

  6. I agree with Darin. Government must always be mindful that the public is the customer, and the public demands good service at a reasonable cost. This is particularly the case for government closest to the people, like city government. Of course government provides and maintains things that the private sector does not – schools, roads, parks, police, jails, public facilities and accommodations of all sorts.

    Huether has done a good job of moving Sioux Falls forward and making it an ever more attractive place to live, work and visit. We could have had people who like to say “no” to everything like Kermit Staggers and to a lesser extent Greg Jamison. But we got a guy who knows how to work with the business community and also has reached out in unprecedented ways with minority and immigrant communities. Does he have critics? Sure. Show me a guy with no critics, and I’ll show you a guy who gets nothing done.

  7. What Darin said.

  8. mike from iowa

    But running government like a business works swell as long as all the rewards flood to the top and the blame goes to Democrats. Then when the next Dem has to come in and clean up the failed business model government, again, RAC will blame the entire mess on tax and spend libs-just like always and they will get away with it-just like always.

  9. Donald Pay

    Who is the customer? Who is the owner? Who is the CEO?

    I’m always floored by by these discussions because they never consider structure. No business would ever have separation of powers. Most businesses don’t have election of leadership. Those that do do not have it based on one person one vote.

    Businesses don’t make laws. At most they have imposed decrees that you have no say in, have to follow, and only limited ability to change. Make too much of a fuss, you’re fired. In a functioning democracy, you can fight city hall, and win, and THEY are fired.

    When government acts like a business, you are under tyrrany.

    Government should never be run like a business,. Government should never strive for that kind of undemocratic efficiency. It should strive to be just, to provide good service to the broad community, to be open and honest in all its activities and to be frugal with resources do it can provide more and better services.

  10. Douglas Wiken

    Corporate waste and inefficiency don’t show up until a corporation goes bankrupt or is sold to some other corp for pennies on the dollar. Government has a 1000 eyes on it even in the daytime.

    Corporations have a simple standard– Profit. There is no similar measure for government. The business model is relatively late compared to government models.

    Corporations pay executives far too much and then those executives try to make it look like they are doing something by cutting product quality and increasing prices. Cars and clothes are excellent examples of this kind of crap. Then sales fall and the executive leaves with a golden parachute.

    Nothing quite like it in government and that makes government better than business.

  11. Porter Lansing

    Mitt Romney made his fortune buying businesses with assets, leveraging those assets into tremendous borrowed monetary debt, removing all long term employees, taking his profit when business was expanding and then bankruptcy, when borrowed debt couldn’t be repaid. It’s the venture capitalist business model and it’s valid … but only in business. Running our government like a business? A business has many tools and few of them benefit the citizens of our country. If you’ve paid into Social Security, Medicare and Medicaid from every paycheck, you’re entitled to what you’ve been promised. You can’t be “dismissed” when you’re approaching retirement, as Romney did.
    A business lives and dies with it’s quarterly reports to stock holders and must think mostly in the short term. Our government must look down the road 20-50 years and plan for long term growth and stability. e.g. Burning coal kills fish and pheasants and is harmful to our long term goals even though it’s still the cheapest fuel, for a short while.

  12. Porter Lansing

    PS … Don Trump wasn’t nearly as ambitious or clever. He made his fortune by using USA government programs to provide him the seed money to build Section 8 housing projects, again under a government program. He used eminent domain to clear land of it’s resident owners to facilitate the process. Only later, when he diversified into casinos and golf courses did he fail and bankrupt himself with poor decisions. That’s who was elected and his “run government like a business” paradigm looks highly risky judging by his past performance.

  13. A not for profit business model could be approached. The first order of any business is to make sure your workers are covered by health insurance, all of them.

  14. By its very nature, a business is a non-democratic institution. As such, it ought NEVER be the model for government.

  15. Darin Larson

    The day to day operations of our government are not run like a direct democracy. We don’t have an app where all citizens can vote on every issue that comes up. We don’t all decide whether a street should be paved or whether we need to buy another snowplow or whether we are going to enact the potty bill. We have a representative democratic republic where democratically elected officials make day to day decisions for our country.

    The day to day operations of government are much like a business structure with a CEO and Board of Directors. The governor is the CEO and the legislature is akin to the Board of Directors. The citizens are akin to shareholders. There are many parallels. Likewise on the city level with the Mayor as CEO and the city council as the Board of Directors. The citizens of the city are the shareholders in this example.

    Our various levels of government in the US are not inherently good or bad and most forms of business in the US are not inherently good or bad. It all depends upon the people and policies that make up these organizations. If one doesn’t think that some of the principles of good business are applicable to good government, I think you are letting your bias against business cloud your judgment with regard to good government.

  16. Darin, you are describing a bureaucracy – not necessarily a business (which also can have bureaucracy). Business by its nature is sociopathic: it has the directive to make profit for the elite few who own it; it is prohibited from working toward a greater good or in ways that are in any way detrimental to those owners.

    Obviously there are organizational goals (some level of efficiency for example) that apply to both bureaucracies, but each’s fundamental reason for being is so polar opposite, that analogy breaks down. Business sees people as resources to be mined and exploited; government sees people who must have their life, liberty, and pursuit of happiness protected.

  17. Donald Pay

    In the past a corporation could only organize and be chartered if it served the public interest, not its own interests. Corporations ran more like a government. We should actually make corporations run more like a government, ad they did in the past, rather than make government run like a business.

  18. Darin, we can generalize certain principles of management (personnel, knowledge, finances) across the private and the public sector. But those are means, not ends, of public service. Or, as O smartly suggests, those are techniques, not values. Overemphasizing the supremacy of the business mindset, as Huether does, lures us into voting for people like Trump, who don’t have the necessary skills in and commitment to public service.

  19. Roger Elgersma

    Some of those business decisions were not so good. Spending thirty some million of taxpayer money to buy railroad land that did not move the railroad as was initially intended for that money was not good. They had no plan other than some vague idea that we could develop that land then had a meeting about ideas to develop and no good ideas so they decided to wait. This was money for South Dakota transportation and all of it left the state as they gave it all to the railroad.
    Next bad business move. Spend three times as much per square foot for a new city administration building than it would cost to buy and remodel the 300 building and still not have the mayors office in the new building. Not handy to go talk to people which was the original goal. Accomplishing projects spending money is not a good business plan. Those projects need to be efficient and worthwhile.

  20. Fascinating discussion of the difference in structure and democratic participation between government and business. We have all these islands (continents?) of non-democracy in our society. I don’t expect bosses to take a vote on every business decision. I rule my classroom like a mostly benevolent dictator (students may offer other opinions). My wife and I are co-dictators in our house. Even within the public sector, we depend on a military that operates under a strict hierarchy and obedience to orders. As Governor, I would take advice but not votes from my Cabinet. In each of those institutions—business, school, family, army, executive branch—we need someone to be the boss and make daily decisions, for the sake of, as Donald notes, efficiency. But we also need varying degrees of democratic check on each of those institutions (even family life is subject to certain laws limiting parents’ actions) to protect individual dignity and the general welfare. For business leaders, striking that balance is optional. For public servants, striking that balance is their entire reason for being.

  21. CH,

    I don’t think Huether is “overemphasizing the supremacy of the business mindset” but is contextually referring to the “principles of management” as you are.

    I also don’t think a business owner who ignores “individual dignity and the general welfare” is a good business owner and won’t be around long.

  22. I want to make America great again: I want to go back to the better times when Corporations had social consciousness – more like Government (as Donald noted, when they had the requirement for public good to incorporate) and we had the whole Government-Business hierarchy valued the right way.

    Cory is absolutely on point: running government more like a business has the effect of creating the atmosphere to have businesses run the government. Oligarchy not democracy.

  23. Troy, I would hold up Wells Fargo CEO and chairman John Stumpf as only our most recent example of a business owner who went against individual dignity and general welfare and remains CEO (and well compensated). Although his misbehavior was truly a grand scale, would we say he is the exception and not the rule of modern business practice?

  24. Darin Larson

    o, Stumpf stepped down on Oct. 12. I could just as easily point out that 4 out of the last 7 Illinois Governors went to prison and we could agree that there should be some people that were in SD state government that should be in prison. But this is all beside the point that good business practices and good government practices can often mirror each other.

  25. Darin, I stand corrected; he did step down (was not fired, and left with $133.1million for retirement). I hope that taught him a lesson.

  26. The second order of any business would be to complain about the unreasonable cost of healthcare. Then go on record to repeal Obamacare, as they say, by root and branch. As an independent you can do that with plenty of Democratic support as well. Repeal and replace should be your argument. Start that right now before 2018 gets any closer.

  27. Troy, I disagree. Huether never emphasizes the other side of the issue, the ways in which government should not be run like a business. By his one-sided pronouncements, he overemphasizes the applicability of his business mindset… mostly in a way that says nothing more than, “I’m a businessman, so vote for me!” That’s not healthy for the electorate’s understanding of what government should be about.

  28. The “scholars” missed the BIG KAHUNA — business is incentivized to socialize costs and losses, while maximizing personal (executives, board members, shareholders) profits. Try doing that with the fire department, police department, street department, ruble site, sewer department — yea, dump the towns crap downstream or on the property of another and see how long that lasts or dump the local government losses on the county or state and see how long that lasts — but that is too often an accepted business model to socialize costs.

    We had governments that ‘acted like businesses’ – cutting the infirm, idiots, cutting the non-contributors to society, taking the living space they thought they needed – though they took it to an extreme – that was the model for the practicing national socialists for 12 years. If you weren’t contributing or they didn’t like your brand – you were off to the showers. No, we do not need government to act like a business. Efficient and effective government yes; but never a government socializing costs, disparaging the unprofitable or the cost accumulators through no fault of their own. The parable reads that Jesus threw the banksters out of the temple; not the lepers, not the poor. Government is for all of us, not just the profitable.

  29. As an independent, Huether can also argue the point that he is not behooving to any political party. It worked for Trump because voters saw him as an outsider that was not involved with how they see Congress and its disdain for their plight. It will not be hard to paint NOem into a corner on her failed watch in Washington and to also paint Jackley into a corner on how corrupt the state became under his watch. In addition to the EB5, I would also go after Jackley for wire taps on cell phones and how those could be used unjustly as a breach of privacy by big brother to spy on a former girl friend of wife. In short, Huether has a good track record in the states biggest village so he is capable of running the show in Pierre and could also force change in how the state conducts its business. South Dakota has been run like a fiefdom for the last 40 some years, maybe a good shock of business ethics in his platform would do no harm.

  30. Darin Larson

    Nah, jerry. It’s so much more fun to hold out for another perfect progressive candidate who either doesn’t exist or doesn’t have a chance in heck rather than settle for a moderate like Huether. Instead of a moderate, let’s bring on the potty bill, 1% raises for education, shut down the initiative and referendum, restrict abortion rights and keep the swamp in Pierre well stocked. We better shut down the B school down at the U while we are at it as they are turning out capitalist business types by the hundreds each year.

  31. Richard Schriever

    Darin, business only focuses on customer or client needs to the extent of looking for opportunities to EXPLOIT those needs for its own organizational benefit. Business sees customers as EXTERNAL to the structure of the organization itself, and not integral to it and OWNERS or shareholders of it as are citizens to government. Customer needs that require some degree of non-recompenseable benevolence on the part of the business are not the core of the operational imperative of a business – whereas they are – or SHOULD BE the core value of government. Two entirely different creatures. Can some technical process principles from business be applied to government? Sure. But the core values and goals are very different.

  32. Richard Schriever

    PS – please don’t confuse politics with governance. Also two very different creatures.

  33. Mr. Larson, the ideal candidate is gonna have to be Independent and aligned with the center right to make it. There are 36% of the rabid Republicans out there who would could really care about who or what they will vote for as long as there is an R in front of the name. The remainder of the Republicans are well centered to a point that when they make a point, you can find common ground, that is a big deal. I think that even the most progressive of the Democrats would support a candidate that they thought would offer honest government. The ideal candidate is gonna have to kick the idea of the nonsensical lack of logic from attacking the 2nd Amendment to a platform that leans heavily on the existing South Dakota Democratic Platform. The candidate will then have to move support initiatives and referendums as a way to balance the business aspect of his administration. You cannot have a business oriented outlook on government without a good CFO and team, which would be the people and their ability to invoke initiatives and referendums. Abortion rights are already established by the federal government, why waste business resources on something that has or will be decided by the courts without South Dakota taxpayer money involved in it.

    Can an Independent like the new Huether be that candidate? I dunno, lets see if he has the fire in the belly to go for it. I would sure like to see him or someone like him, start tossing spitballs at the two losers the Republicans are stuck with. Hard for me to tell who is who in that regard.

  34. Richard Schriever

    Donald Pay – there is an English business model – and it is one that is fully recognized by the English government under law – that does operate on a one person one vote basis, with elected leadership and a balance of powers structure. It is called the Commonwealth Ownership Model – and it works quite well.

  35. Concerned SD Citizen

    I am concerned no one is saying what should be said – he’s a lapdog for Denny Sanford and the corporate elite in Sioux Falls. He’s no Democrat – he is the very embodiment of the reason why Democrats lost this election. They’ve left the working-class behind and have fully embraced the greedy robber barons of Wall Street who have consistently screwed over good and decent working-class folks all over the country. To Mike Huether, I’m glad you left the party. Don’t let the door hit ya where the good lord split ya!

  36. “Democrat” is Scarlet Letter in South Dakota. If any Democratic Party candidate ever comes close enough to winning Gov. that SDGOP naturally calls him/her a crook, then it will naturally conform to the majority of SD voters bias and ruin a fine run.

    Huether doesn’t have what it takes to re-invent the statewide perception of “Democrat” by election day 2018. He knows it, but most importantly, I never really thought the dude was all that hard core of a Dem to start with – of course, I don’t live in Sioux Falls either.

  37. Darin Larson

    Concerned SD Citizen– I hope your principles keep you warm during the winter of Noem. It will last for 8 years and it is going to be brutal.

    And your idea of making the Democratic tent smaller is brilliant given the shrinking Democratic portion of the electorate in SD. We might never win a statewide election again, but by all means we should skewer anyone that doesn’t check all the boxes for the perfect candidate for the Democrats. With friends like you, who needs Republicans?

    One thing is for sure. There will be plenty to complain about on this blog.

  38. Maybe Huether has the right idea but didn’t take it far enough: join the Republican Party. In fact maybe the Democrat moniker is so devalued here, EVERY Democrat needs to join the Republican party. If there were truly only one party, then there would be no party in SD – everyone would be under the same label so everyone would have to run on their merits. There would be no Democrat boogie man for the far right to beat a drum against. Could far-right rhetoric stand up in a “SD Party?” We cold skip one step in the election process: the primary would be the general election (isn’t it now in most cases?).

    If you can’t beat them . . .

  39. Porter Lansing

    You’re on the right rails, o. South Dakota would emerge from the scandals by electing an UNAFFILIATED Governor. Beholding to no party, behaving for the good of the people … with liberty and justice for all.

  40. On this one topic we can agree, Cory.

    Government is not a business. While they may have similar functions within like accounts payable and security, the end goals are much different.

    Government is not a business, and shouldn’t be ran like one.

  41. Step up and get’r done

  42. I kind of like this one. There are certainly differences between government and business as well as certain similarities as well.