Country should not be run like a company

LAHORE: Despite the fact the most successful business leaders would agree to the notion that all of the things they do are necessarily transferable to the government sector, a debate is going on globally whether a government can be run like a business.

There are reasons to show that in order to run a government precisely like a business is always going to be frustrating. Businesses operate under a regulatory regime that is well defined; however, governments have to work with the parliament that may take unpredictable decisions. They also have to deal with public, foreign countries, and also budgetary dynamics that widely differ from those of the private sector.

It is quite easy for businessmen to boast that if they operated certain institution the results would be very different. For instance, they claim the privately-run hospitals are more efficient and effective. They, however, do not reveal that private hospitals don't treat poor for free. They also ignore the fact the state has established basic healthcare units in every part of the country. Economically speaking, these BHUs are not viable, but the government allocates resources for social causes. Unfortunately, the governments lack good governance and accountability. Establishing schools and healthcare facilities in public sector is always a resource consuming job but a government cannot abdicate from its duty.

There are many other things the governments would do, but the private firms would not because they are not profitable for them. A case in point could the state-run postal service, which can never become a self-financing entity from what it earns. Another example is the national carrier, which operates on domestic routes that are not commercially viable, while the private airlines only prefer profitable routes. Businesses operate in the interest of the people, who buy and sell things with them and the interests of their shareholders, but the government’s shareholders are all the citizens, and we can’t simply decide that we want to ignore some of them.

We often see that when businessmen join the government they are unable to speed up the things. First off, when a person form a private sector gets inducted in the government, he finds that its systems are fragmented and he has no control over the budgetary resources. Secondly, he might even not know what the budgetary resources are. Before joining as finance minister of Pakistan, Shaukat Aziz had successfully worked in the private sector for 30 years. On failures and delays in the implementation of policies, he used to say that anything that can be implemented in private sector in three days, takes three months to get going in the government sector.

This system-induced bureaucratic hurdle is the reason economists say the government has no business in doing business. The decisions that are to be taken instantly are inordinately delayed in public sector companies because they have to be whetted by the entire bureaucratic chain. One missing link and the delays become eternal.

It is also a reason the government cannot be run like a business organization. As long as the current system exists in government, as they are even in developed economies, the processes will remain mired in red tape.

In the corporate entities, the basic decisions are taken by the board and the branches or offices in different countries or cities. There are different tiers in the government that include federal, provincial and local government.

The alignment of policies of the government is far more cumbersome than that of a corporate entity.