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Why Government Should Get Out of the Business of Being in Business

In business you must be creative and adjust to changes in technology and improvements or you will not survive.

A good example of this is the vinyl record industry. A client of mine in Pennsylvania worked in this industry from 1974 until 1983.  He denied the fact that cassette tapes were becoming more popular and that eventually his job would end.  But sure enough, it did.  He was so angry when he lost his job and income that it took him one full year to accept this event and move on to different employment. 

Here’s how the vinyl record industry declined as new audio technology and innovation pushed its way into the market:


As you can see, businesses must be creative, adaptive, and competitive if they want to survive.

Not so for government.

Take the Civil Service as an example.  For 133 years the Civil Service has grown and taken on a life of its own.  It has unions and lobbyists and no one is able to fire someone in the Civil service if they are poor performers. 

Here’s what Wikipedia says about the Civil Service an how it came to be and why its very structure promotes stagnation and inflexibility within government operations and employment:

1.  The Pendleton Civil Service Reform Act (ch. 27, 22 Stat. 403) is a United States federal law, enacted in 1883, which established that positions within the federal government should be awarded on the basis of merit instead of political affiliation. The act provided selection of government employees by competitive exams, rather than ties to politicians or political affiliation. It also made it illegal to fire or demote government officials for political reasons and prohibited soliciting campaign donations on Federal government property. To enforce the merit system and the judicial system, the law also created the United States Civil Service Commission. This board would be in charge of determining the rules and regulations of the act. The Act also allowed for the president, by executive order to decide which positions could be subject to the act and which would not. A crucial result was the shift of the parties to reliance on funding from business, since they could no longer depend on patronage hopefuls.

2.  In 1877, there was growing interest in the United States concerning the effects of the spoils system on the American political system. New York Cityestablished the Civil Service Reform Association to help address the issues, which would lead to several other organizations like it showing up in other cities. The presence of these organizations was one of the first steps in trying to up end the spoils system in America.

3.  The assassination of President James A. Garfield moved the Civil Service Reform from city organizations to a leading topic in the political realm. President Garfield was shot in July 1881 by Charles Guiteau, because Guiteau believed the president owed him a patronage position for his “vital assistance” in securing Garfield’s election the previous year.[4] Garfield died two months later, and Vice President Chester A. Arthur acceded to the presidency. Once in office, President Arthur pushed through legislation for civil reform.

4.  On January 16, 1883 Congress passed the Civil Service Act, which is sometimes referred to as the Pendleton Act after Senator George H. Pendleton of Ohio, one of the primary sponsors. The Act was written by Dorman Bridgman Eaton, a staunch opponent of the patronage system who was later first chairman of the United States Civil Service Commission. However, the law would also prove to be a major political liability for Arthur. The law offended machine politicians, or politicians who belong to a small clique that controls a political party. These politicians realized that with the Pendleton Act in place they would have to find a new means of income, since they could no longer count on donations from the wealthy hoping to receive jobs.

5.  The Act initially covered only about 10% of the U.S. government’s civilian employees. However, there was a provision that allowed outgoing presidents to lock in their own appointees by converting jobs to civil service. After a series of party reversals at the presidential level (1884, 1888, 1892, 1896), the result was that most federal jobs were under civil service.

In 1952, 1 in 22 workers were employed in the government but today it’s 1 in 3.8. This means that government hiring  is out of control.  If a business needs to make a profit to survive and thrive, how can it possibly do so if it must pay for so many government workers with a ratio of 1 to 3.8? 

It is time that government turned a profit and was in constant risk of going broke so that it would be forced to move with the times, cultivate creativity and ingenuity, and thrust from its midst poor performers — until then, we risk running the true grit of this country, private enterprise, into the ground.

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