Gongol.com Archives: June 2022

June 12, 2022

Incorporating good ideas

It is often said that government ought to be run like a business. While that premise has certain aspects of truth at the state or national scale, it is probably most true at the municipal level. At the legal level, it is closest to being true: American municipalities are usually incorporated by the consent of the state government (generally having to meet more stringent requirements than those required in the case of a for-profit business incorporation), while states and nations follow far different (and often far more ambiguous) routes to recognition. ■ But the similarity holds true at the functional level, as well. Any national government with its own currency has literally unlimited borrowing authority. The states of the Union have less freedom to over-spend, though individual states may be conditioned to dip perilously far into the red. But cities tend to have the least wiggle room: Either the revenues come in, or the bills don't get paid. ■ Perhaps that acute sensitivity to the local business climate explains why it's so easy to find communities where city hall and the chamber of commerce are effectively two sides to the same coin. They're even physically co-located in plenty of small communities, and for a non-trivial number of places, the city relies on the chamber to develop the official community website. ■ Smart community leaders have the challenging task of ensuring that they don't become beholden to just a single 800-lb. gorilla in the economic sphere -- being a one-company town usually comes with much greater risks than it's worth -- but most communities do best when they can get the benefits of agglomeration economies, where lots of interrelated firms create a sort of self-sustaining business ecosystem. And it's hard to know how to do that best without some business familiarity. Running government like a business might be a hazardous endeavor when the government is charged with tasks like running a military, but it's likely sage advice when it drops down to the level of Main Street.