Government Does Not Respond Like Private Business

A comment, below, I posted on Capital Gains and Games blog, "Why We Still Have A Deficit" by Stan Collender.

The two questions (reduce overall government and reduce specific services) expose the problem with reducing government deficits, but not in the way you described.

Governments and government workers lack motivation to become efficient. When faced with cutting a government budget, the government's response is always reducing services. There is rarely (more likely never) any discussion of cutting the costs of government employees, such as their extensive benefits, retirement packages, or union multi-year wage increases.

In this downturn, many private workers saw wage decreases, bonus decreases, benefits decreases, increased work responsibility at the same or lower wage, layoffs, etc. and the businesses continued to provide their product and services. Plus businesses sought ways to become more efficient and less costly.

Where in government has there been anything equivalent to the way private business reacts?

As soon as the public complains about taxes, politicians threaten cuts in services. Service cuts should be the last response. The politicians' first response should be to look for cost savings in the way the service is delivered, and then they should tell workers that some of their benefits and wages will be cut, then layoffs and only then as a last resort tax increases.

Look at the government takeover of the auto companies. It makes great business and economic sense to close some of the dealerships. The auto companies announced that they would close some dealerships to save money. After government involvement in the companies, the government stepped in to keep money losing dealerships open.

We have a deficit because government does not respond to economic choices the way private businesses do. It is not the taxpayers fault that government does not ask the right questions, such as do you want to have service A, if we find a way to reduce cost by doing X, or if we have to stop paying all or most of the cost of employee benefits and pensions, etc.

Ask different questions, like those that private businesses ask themselves everyday, and I think you will reach a different conclusion.