The city is not–nor should it be–a business

There’s a lot of chatter this election–as there is with every election–about running the government as a business. Perhaps it’s more prevalent in municipal politics (perhaps not), and perhaps that is because we have proportionately fewer established politicians running and more private citizens, some of whom will be from business.

The call to run the city like a business is generally rhetoric coming from candidates preaching fiscal responsibility, or, more precisely, “fiscal responsibility”. The idea is that businesses can’t lose money and we shouldn’t want the city to lose money (ie run deficits and take on debt). This is an inherently flawed analogy and voters should flee from any candidate spouting this nonsense.

It should be easy to spot the biggest flaw in the plan to “run the city like a business”. A businesses aim is not to avoid losses; it is to make profit. The fiscally responsible tend to espouse a vision of a smaller government. Any government consistently eliminating debt and “running profits” will be a government that is slowly gaining more and more power, more capital. If revenues exceed expenditures, that means the government is sitting on money. That’s not ideal [I wanted to throw in a link to a Worthwhile Canadian Initiative blog post explaining how consistent surpluses lead to government controlling too much of the economy, but I can’t find it.].

Further, and perhaps most importantly to the “fiscally responsible”, if you view taxation as a necessary evil, you probably don’t want the government taking more than they absolutely have to. A surplus is, pretty much by definition, more than they absolutely have to.

(And, it’s interesting to note, the “fiscally responsible” seem to want to spend more money on garbage pick-up and throw away the hydro dividend. That’s not good business.)

Fine, fine, it’s just rhetoric, some might say. They don’t mean it literally. But even as we get deeper into the issue, the problems with the analogy persist.

There’s a big debate these days about the debt that businesses (corporations) owe society. Should businesses “give back” to society? Should they be forced to? Is the sole purpose of a business to make money?

An observation: politicians who identify as fiscally responsible (or, worse, “fiscally conservative”) tend to be more amenable to the notion that businesses are amoral institutions that owe nothing except to the owners or shareholders, to whom a business only owes profits. It is not the role of businesses, this philosophy argues, to act as a charitable organizations or work towards social justice*.

I doubt these politicians will be social justice warriors.

A city, however, should work towards charitable ends (issues of welfare) and matters of justice. These services must be provided evenly and fairly; they are not to be bought and sold on an open market. Our civic leaders must busy themselves with matters of the poor and the marginalized. Those who are economically vulnerable must be a top concern of the city.

When it comes to debt and taxes, it is easy to champion a pay-as-you-go philosophy. It’s great when we have the finances to cover all the municipal projects we need to undertake, but debt serves a purpose, too. When we are building new roads or bridges or parks or libraries, we are building infrastructure that will benefit future residents. Spreading the cost to future generations can have an egalitarian streak. It needn’t be considered passing-the-buck.

Any candidate who wants to propose fiscal responsibility is free to do so. There are ways that the city can behave more responsibly, no doubt, but those who get so focused on money that they present a warped view of the city as a business aren’t proper stewards for our community.

*Unless these charitable or social justice** initiatives will lead to greater profits.

*I’ve never been a fan of the term, but you can’t just wish away the underlying issues.

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One thought on “The city is not–nor should it be–a business

  1. Hey Jon – just read your piece about fiscal responsibility. As a candidate who uses that term, I mean it rather literally. We need to be both responsible (getting the best possible value for our dollar when engaging in a given program or project, and we need to be far more judicious about what we spend on. My hallmark example is the Airport Parkway Bridge. The Third Party Audit indicated that there were no performance indicators in the initial contract. This is completely irresponsible. It amounted to giving the contractor a blank cheque to build the bridge. Money being spent without even the basic best practices of project management being done, is not fiscally responsible.
    I’ve been responsible for public funds during my international work. Spending citizen’s money is a public trust. Council both elected and those in the city administration need to take the job more seriously. But yeah, I have to agree with you somewhat, most fiscally responsible candidates use it with a more Ayn Rand flair.

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