Government for Profit: Why Not Think Outside the Box?

By: Frank Worley-Lopez - Feb 17, 2015, 7:17 pm

Who says government can’t operate as a for-profit enterprise? Unfortunately, a lot of people do. But I’d like to challenge this notion, as I have previously, by examining government’s ability to provide services that people both need and want, while earning enough to cover the cost of those activities — all without having to raise taxes.

In order to do this, we have to remove the pseudo-altruistic blinders that progressives attempt to place over every government action. We must understand that government cannot solve every problem, and it cannot be responsible for every individual person, action, or choice.

El Yunque National Forest: Puerto Rico's ticket to riches? (Wikimedia)
El Yunque National Forest: Puerto Rico’s ticket to riches? (Wikimedia)

Once you step back from the idea of government as a paternal figure, and instead view it as a for-profit entity, a thousand different possibilities open up.

Take the example of national parks. They’re a valuable asset to any nation, but how can you develop a national park in such a way that it pays for itself, and even makes a profit? And what do you do with that profit once you’ve earned it? This is perhaps the most important question.

In the article linked above, I propose a profit-sharing program with individual citizens as a way of replacing all social welfare programs. While progressives in the United States makes pains to point out that defense is the biggest single budget item, the truth is that social welfare programs — including Social Security and Medicare — make up roughly half of the US$3 trillion budget.

This begs the question: how much is enough when it comes to helping the poor? On the table are free housing, free food, free medical care, free schools, and all while the rich pay most of the taxes and are simultaneously accused of being greedy and not “paying their fair share.” How can we get beyond this politics of envy and redistribution?

Highways, water systems, and electric power are also great things to have, but there are many companies that profit from providing those services. Why shouldn’t the Puerto Rico Electric Power Authority make a profit? Why is the Puerto Rico Highway Authority always short of cash? The Puerto Rican government is seemingly disqualified from making a profit, but that doesn’t prevent it from nearly going bankrupt.

So now comes the difficult question: what would happen if the governments of Puerto Rico, Cuba, Venezuela, Panama, or Ecuador began making a profit? How would they do it, and how would it impact their people?

Everybody Profits

An easy place to start is in the area of natural resources. Cuba and Venezuela have oil, and plenty of it. Why not contract out the operation of oil companies to a private entity on a profit-sharing basis? Suddenly, state-owned oil operations become directly profitable to the nation. I’m willing to bet that such an arrangement would result in greater revenue than the current set-up.

All of these nations enjoy some level of tourism. Why not work with companies and invest as a partner in new hotels and ventures, assuming the risks and rewards that result? If managed correctly, such ventures would again bring in far more money than tax contributions.

And who says that such investments have to be limited to the same country? Would it be so wrong for Puerto Rico, without any oil reserves, to invest in offshore drilling in the South China Sea, or near the Falkland Islands?

Drivers already pay a fee for road use by paying for their licenses and that of their vehicles. Why not look at ways of making this system profitable? Drivers would receive good roads for a fair price, and a management accountable for income and expenditure.

Obviously, the first thing required is a little fiscal responsibility. Keeping a reasonable grip on unions and labor benefits, and being firm against waste, mismanagement, graft and corruption. So far, none of the above territories have shown significant capacity or willingness to do this.

But provided the state could be trusted to step back and manage revenues efficiently, how would moves towards profit-making affect their people?

For starters, the profit motive changes the mindset of service. Right now, government service is a monopoly protected by a myriad of bureaucratic regulations.  You have to use their services, and they have no motive to take good care of you. That would change the minute their jobs and future depend on your satisfaction. So too would the current tolerance of graft and corruption. You would no longer be stealing from government; you would be stealing from your neighbors, fellow citizens, and yourself.

Second, were you to establish a profit-sharing program as in my “Distributive Capitalism” proposal, citizens would get direct cash benefits from the profit-making activities of the state. This would also reduce long term government liability for retirement programs, health care and disability provision. In the long run, it would both earn money and save money.

The old saying “it all depends on how we look at things” holds true here. Why not view government beyond narrow, traditional confines, and look at it through the eyes of an entrepreneur? You might be surprised at what you find.

Edited by Laurie Blair.