Question

One of the common debates in public budgeting in whether or not the government should be " run like a business". One side believes that running government like a business will improve efficiency and lead to more fiscal responsibility. The other side believes the programs offered by government outweigh and are unlike the mission statements of the public sector.

Taking what you have learned in this course, compare and contrast the two sides of the debate. Take a position and support your viewpoint. Discuss whether your viewpoint would change depending on the level of government in question.

Answer 1

Those who believe govt should be run like a business think that govt should raise sufficient resources for financing the govt works. It should give benefits not on the quid Pro non basis. In other words only those should get benefits from govt who contribute to govt expenditure. The other side believes that govt should believe in quid Pro non. It is not like a business venture. Its resources are not limited like an individual. I agree with second view. The reason is govt has to take care of poor, destitute, unemployed. Such people can't be left to market mechanism. It is immoral to do so. Further govt can't not expect people to contribute in case of public goods because they are non rival and non excludable. Also roads, bridges etc require huge investment initially which only govt can finance. These projects also help in Directly productive activities and there social benefit is greater than reflected by market price. Also govt can issue new loans to pay old loans. So it is not as much limited by budget as private individuals or business. It can also print currency. Because of all these reasons we agree with second view.

Yes it will change. Too much govt intervention is also not needed. It is harmful