There’s a good reason governments aren’t startups

Jeb Bush wearing a hoodie in a video message to Mark Zuckerberg.
Image: shutterstock/jeb!/mashable composite

The hot new name in tech is France, a centuries-old startup that provides security, healthcare, and education in exchange for taxes.

Newly elected French president Emmanuel Macron said on Thursday that the country needs to “think and move more like a startup” and, presumably, less like a stodgy social democracy.

“When an entrepreneur has too much success, he gets stigmatized and, in general, he gets taxed. This is over!” Macron told a crowd of techies in Paris, according to Reuters. “We will drive through these [sic] transformation without delay.”

That transformation involves cutting corporate taxes, peeling back France’s stringent labor laws, and deregulating small businesses.

“To put it in one word: Entrepreneur is the new France,” the ex-investment banker said.

Macron isn’t the first world leader to try to spin public service as ripe for Silicon Valley-style disruption the notion that sprawling bureaucracy might be molded into a nimble, high-tech enterprise seems to allure politicians on both sides of the aisle, particularly in America.

The Obama administration imitated tech-business culture with chief technology and performance officers, hackathons, and a core group of technologists referred to as a “startup within the White House” (Obama has been clear about the fundamental differences between leading a government and a private business, though.)

Hillary Clinton promised to entrench and expand Obama’s Silicon Valley partnership programs that enlisted tech professionals to streamline services and boost “customer service metrics” with a “Yelp for government”

Then there’s the business fetishist who currently occupies the Oval Office. One of Donald Trump’s first moves as president was to tap his son-in-law, Jared Kushner, as head of a newly created innovation office with the vague goal of reshaping Washington’s red tape in the image of the private sector.

Trump caught flak for the overblown tone of the rollout, but Obama, Hillary Clinton, George H.W. Bush, and George W. Bush have all proposed similar management teams at one point or another.

“The government should be run like a great American company,” Kushner told the Washington Post. “Our hope is that we can achieve successes and efficiencies for our customers, who are the citizens.”

The government-as-a-business clich has existed since at least the 1930s, and it’s easy to see its durable appeal. Why wouldn’t we want to whittle away institutional glut to make the government more responsive to public demand?

Silicon Valley’s innovation worship and “making the world a better place” PR mantra add a new sheen to the idea. And there’s no question government services are in dire need of a tech overhaul.

But doing so with a startup mindset misses the whole point of a government.

Businesses are efficient and responsive for one reason. Like trees that bend towards the sunlight, they’re organized entirely in service of maximizing profit. Absent market forces, C-suite titles, motivational acronyms, and MBAs don’t necessarily count for much on their own.

Markets aren’t perfect, and profit doesn’t necessarily equal public good. The government does many of the things it does because they don’t make business sense food stamps, public transit, senior healthcare. It’s able to borrow heavily and fund projects at a scale that businesses can’t or won’t match. No one would be incentivized to offer many of these services if the state didn’t. We know this because there are places where it doesn’t, and no one does.

Obama alluded to some of the added difficulties of government projects in a mocking second-hand rebuke to some tech CEOs who had apparently tried to lecture him about leadership.

“If all I was doing was making a widget or producing an app, and I didnt have to worry about whether poor people could afford the widget, or I didnt have to worry about whether the app had some unintended consequences setting aside my Syria and Yemen portfolio then I think those suggestions are terrific,” Obama said at a conference in Pittsburgh last year.

Unchecked capitalism also doesn’t have a great track record at, say, preventing climate change, keeping machinery from killing workers, or not causing cataclysmic global financial shocks. One major role of government has been to blunt these sharp edges, and that’s not especially efficient in a strict profit sense.

The government even absorbs some of the negative impact caused by corporations themselves. When McDonald’s or Walmart won’t pay a living wage or provide benefits, for instance, workers often have turn to food stamps or Medicaid. There’s an argument to be made that taxpayers are effectively subsidizing these massive companies.

Tech companies, in particular, challenge this notion. To many of the industry’s true believers, market failures exist because some bold innovator hasn’t yet invented or assembled technology that would enable a solution.

Society mostly views innovation as an unqualified good, and Silicon Valley giants use this fact to play down their bald corporate side. Their offices are “campuses,” their moguls are “visionaries,” their emerging market business plays are about “changing the world.”

New technology has helped open markets and serve needs that weren’t being met. But it has plenty of blindspots of its own. Just look at the glaring lack of broadband in rural areas (where are Mark Zuckerberg’s drones?) or skyrocketing healthcare costs that startups like Theranos were supposed to help alleviate.

The view also ignores that the world’s most prolific and least efficient incubator isn’t in Palo Alto or San Francisco. It’s our massive defense complex. Most of the technology that powers an iPhone the internet, GPS, touch screen came from public research labs, according to economist Mariana Mazzucato, author of The Entrepreneurial State: Debunking Private vs. Public Sector Myths.

In fact, R&D Magazine claims that 90 of the 100 most important innovations between 1971 and 2006 depended heavily on public funding.

That’s not to detract from Steve Jobs’ legacy, but it does beg the question of whether these technologies would exist if researchers weren’t afforded the federal government’s patience and resources to make things that weren’t intuitively marketable. Could a startup government have invented the internet? For all of Silicon Valley’s fast-moving things-breaking and willingness to burn ungodly amounts of cash, probably not.

One would hope a government without a bloated military industrial complex, byzantine institutions, and crumbling infrastructure could as well, though. But Uber-for-governing won’t necessarily fix that.

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