For some time, I’ve heard many policymakers, business people, and some citizens promote applying a for-profit business model to governmental agencies that provide services to improve human outcomes. They think these agencies would be more efficient if run like a business.
I get it.
A number of these business practices have resulted in huge monetary gains and streamlined processes. Because these practices have proven successful in a for-profit business setting, it does seem practical to apply these same concepts in the public sector. Yet, the goal of these programs should be changing lives and improving outcomes rather than focusing on profit margins. When we focus solely on cost savings, we reduce lives to costs per unit.
Every time I hear the suggestion to apply business practices to the public sector, I think of widgets.
Generally, a widget is a small gadget or mechanical device, especially one whose name is unknown or unspecified. We often use widgets in hypothetical scenarios in law and economics. They are fillers for any number of situations where the product isn’t the important part of the discussion. Here, it wouldn’t matter if we’re talking about pizzas, cars, or shoes; the theory depends only on the quantity.
These types of theories fall apart when what you’re talking about is no longer uniform, like with people. People are the farthest thing from widgets. You can’t take a widget theory and expect it to make sense if you apply it to humans – we are too different. The poor widgets don’t have an identity. They are just things.
When one is dealing with an unknown or unspecified device, it’s easy to make blanket decisions about its future. There’s no background to consider. Compassion doesn’t even apply. If it falls off the conveyor belt, the operator can discard it or inspect it to see if it can still be used. The widget doesn’t have feelings, so it can quickly recover, or not at all. It’s just a thing that contributes to the bottom line; so, decisions focused only on money are seemingly okay because it’s what the business demands. If the widget isn’t good for business, then a business owner can redesign it with less expensive materials to cut costs and generate more profit. In a for-profit business model, the thing that matters most is an optimal profit margin.
Bottom line: it’s about what’s best for the business – not the widget.
While in a for-profit business, making universal decisions for an unknown or unspecified device works, but this is not so in the public sector. People are not widgets. The funny thing about human beings is that we are unique; our life experiences and environments vary. In every situation, we bring those experiences with us. We have an innate value. If we fall off the “conveyor belt of life,” that disruption is not confined to an assembly line operator. The disruption impacts the lives connected to us.
The presumption is that, like widgets, we have the same start in life and are made of the same materials in the same plant. Those common starts would enable us to arrive at the same set of conclusions and decisions.
But our starts are not common. And even when they are, the results are not always the same.
For example, if a child has a supportive and stable family as well as access to health care, proper nutrition, high quality pre-K, after-school and summer programs and K-12 education, that child has a better chance of graduating from college and earning higher wages. Yet, we know the opposite is true for our children who don’t have that kind of access or start in life. Even if you remove one of those factors, the outcome may change.
Businesses can control certain conditions for widgets no matter where they are, but a pure business model cannot put definite quality controls in place for people.
When we do not start at the same place, it is impossible to apply a one-size-fits all approach. Turning to business models that are focused on profits and widgets to solve the complex needs of the public sector will not work because people are not inanimate objects. Take health care reform for example. Just cutting costs does not solve the problem. People will still lack access to coverage, which spills over to other issues in the economy like having a healthy workforce.
These problems are not simple, so the solutions must be comprehensive. There are ways to adapt some lessons from for-profit business models to the public sector. However, policymakers should be careful about which elements they use to achieve their goals. Ultimately, the end goal should always be improving the lives of all citizens.
Editor’s note: Tamika Edwards is the Director of Governmental Affairs for Arkansas Advocates for Children and Families (AACF). Opinions, commentary and other essays posted in this space are wholly the view of the author(s). They may not represent the opinion of the owners of Talk Business & Politics.