Within the first few minutes of his appearance with David Letterman, Herman Cain told the host and audience two things that disqualify him for public office. First, candidate Cain proclaimed that he is “not a politician.” Second, he stated that the “country should be run like a business.” It does not work that way. If a person is not a politician, they do not qualify for an elected government position – appointed, maybe, but not elected, where being a politician is requisite. As to running government like a business, that is a false analogy.
“Government is like business” is a text book example of the false analogy. In such an analogy, two objects, A and B, are shown to be similar. Then the argument is that since A has property P, B must also have property P. The analogy fails when the two objects, A and B, are different in a way which affects whether they both have property P. You have heard this populist argument that just as business must be sensitive primarily to its bottom line, so also must government.
The problem is that the objectives of business and government are completely different. Business is all about profit and governments are all about people.
Both business and the government have budgets. Budgets are based upon revenue and expenses. However, business revenue is based upon sales and government revenue is based upon taxes. The revenue mechanisms are entirely different, hence the false analogy. Governments can only increase revenue by passing laws to raise taxes, which may have irksome political implications beyond the grasp of the finest CEO. Businesses can only increase revenue by increasing sales.
In either case, reductions in spending do not increase revenue. Less spending only impacts margin, which is not a government consideration at all. The government does not have a Profit and Loss Statement or a Balance Sheet, where there is such a thing a negative equity. The concept of equity is not governmental.
The whole idea of a federal budget is relatively new anyway. The Constitution does not even mention such a thing. The Budget and Accounting Act of 1921 created the U.S. General Accounting Office as part of the Legislative Branch. Its purpose is to audit the federal books and prevent fraud. That 20s legislation created the Bureau of Budget in the Executive Branch to coordinate budget submissions by various departments and agencies. By the 40s, the idea of a balanced budget existed but was considered just so much old political rhetoric.