No Way to Run a Business

Our monthly letter from the editor.

It has become a commonplace of American political life: Government should be run like a business. The idea has clear appeal. To survive, businesses must be efficient and effective. They can’t waste money–at least not for long–and they have to deliver on their promises. Wouldn’t it be great if we could say the same things about government?


Lots of businesspeople have ridden that notion into public office in recent years: Michael Bloomberg, the founder of the market-data provider Bloomberg LP and now mayor of New York; Jon Corzine, former co-CEO of Goldman Sachs and now a U.S. senator and candidate for governor of New Jersey; Mitt Romney, a former CEO of Bain Capital, now governor of Massachusetts; and Kansas City mayor Kay Barnes, who ran a human-resources firm, to name just a few. Then there is George W. Bush, who as the first commander-in-chief with an MBA has been called the “CEO president.”

This government-as-business trope has ironic resonance in the wake of the catastrophic fumble that was the government’s response to Hurricane Katrina. Never mind the politicized parsing of blame among federal, state, and local authorities. When American bodies go floating by facedown on the nightly news; when American sick and elderly are dumped on airport baggage carousels like so many sprung suitcases; when American citizens are reduced, on their own soil, to such debased and desperate circumstances that we actually debate whether it is appropriate to call them “refugees,” it is clear that American government has failed, and failed appallingly. Or, as President Bush admitted in his speech in the French Quarter on September 15, “The system, at every level of government, was not well coordinated and was overwhelmed in the first few days.”

If this is government-as-business, it’s an antiquated and discredited business. In its refusal to make adequate preparations to cope with–let alone forestall–a cataclysm anyone who thought about New Orleans knew would happen someday, it is Detroit in the 1980s, wishing away the energy crisis, and the Japanese with their more fuel-efficient, higher-quality cars. In its lethally sluggish response once the disaster hit, in its communications breakdowns, and in its obsession with bureaucratic roles and procedures, it is the sclerotic, siloed IBM of the 1990s. And in its burying of the Federal Emergency Management Agency in the Department of Homeland Security, it is ITT in the 1960s and 1970s, assembling a vast, lumbering conglomerate destined to trip over its own feet.

Surely, these are not the corporate models we want government-as-business to emulate. Contrast the government’s response with that of companies such as Wal-Mart. The giant retailer ran rings around FEMA and other public authorities: It ramped up its emergency command center days before Katrina even hit Florida. It bulked up on critical supplies like bleach, mops, and bottled water, and sped things like batteries and protective gear to rescue workers. Of the 126 Wal-Mart stores that were shut down by the storm, all but 13 were reopened within about two weeks. Wal-Mart even knew, based on experience with previous hurricanes, that there would be a surge in demand for strawberry Pop-Tarts. Go figure.

Consider, too, the extraordinary response of the people at Epic Diving and Marine, whose story begins on page 72. With their lives in disarray and much of their business in ruins, they are nonetheless innovating on the fly to help get the nation’s energy supply back on line.

Wal-Mart has come in for its share of criticism in this magazine. And I doubt that most Americans would be very happy with a government that took its cues from the company on matters such as labor, health care, or the First Amendment. But when it comes to planning for trouble and responding nimbly when that trouble hits, government-as-business could learn a thing or two from the business in Bentonville.