Running Government Like a Business: The History of an Analogy

Nowadays, it is commonplace for politicians and pundits to say that government should be run like a business. Usually, proponents of this idea mean that government should cut costs. However, the business-government analogy has not always been an antigovernment cliché. In the 1910s and 1920s, some prominent policymakers and policy advocates—people like William Howard Taft, Charles Dawes, and Henry Stimson—used the business-government analogy as an argument for strengthening the national government. When they argued for businesslike government, they were clear that they did not mean mere cost-cutting. They were interested in emulating corporate managerial practices in order to make government more effective and to build the capacity to implement national policies to solve national problems. This paper briefly examines that earlier epoch where businesslike government meant increased administrative capacity, and it asks how and why the meaning and purpose of the business-government analogy changed. The paper argues that this change was driven by the interplay of three key factors over the past century: first, the rise of antigovernment politics in the United States; second, the increasing power of “small business” as a symbol in American politics; and, third, the rise of cost-cutting as a business strategy. After analyzing these factors, the paper will conclude with brief suggestions for how the business-government analogy might be usefully salvaged and repurposed for our current political era. For all its faults, the business-government analogy is preferable to common alternatives, such as the family-government analogy. For instance, the business-government analogy at least allows for the possibility of capital investment and for strategic adjustment in response to changing conditions.