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Business & Government: A False Dichotomy?


We'll get nowhere believing that the private sector is always better than the public.

With the bankruptcy of General Motors (GM) and the government's majority position, we're reading more than we ever wanted to about the ills of getting government involved in business.

Fair enough. But let's be a bit more honest about something.

The way GM, American International Group (AIG), and other failed governmental adoptees grew and evolved, they'd become more like the government than the government itself. In the worst ways, they lost accountability and developed self-protecting pockets of destruction.
The truth is, when organizations are small, members can't hide and build fiefdoms designed to protect themselves without enhancing productivity and effectiveness. As they grow, they become feeding grounds for the worst forms of human parasites. It matters not whether you call it a government or a business.

We're kidding ourselves if we argue that General Motors has been anything like a traditional capitalist business for a long time. Sure - there have been plenty of good people there, but not enough to clear out the debris.

Some will want to blame everything on the unions. But we know there's more to it. As the New York Times recently pointed out, a senior GM executive sent a memo more than 20 years ago stating that the firm's culture had become irreparably stagnant.

Rahm Emanuel has been mocked for his comment that one should never let a crisis go to waste, but his point is well taken. Only when it becomes indisputable that something is broken can long-overdue changes be attempted.

It would be ironic if government control ends up fixing an organization that had become too much like a weed-infested governmental swamp. On the other hand, they do say that it takes a thief to catch a thief. Perhaps there's hope.

The only certainty is that we'll get nowhere believing shibboleths about business always being better than government, regardless of how rotten the business itself might be.
No positions in stocks mentioned.

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