<p>This is an extremely implausible scenario.  The conditions for it to work would be extremely demanding:</p>

<ol>
<li><p>The government would need to run businesses in which it has the
potential for a sustainable competitive advantage, giving it the
opportunity of earning profits on an ongoing basis. That might be
based on a natural resource endowment (cf Saudi Arabia and oil) or
on a technology which others are, for whatever reason, unable to
copy. For most countries, such opportunities are limited.</p></li>
<li><p>The government would need to run the businesses efficiently, so as
    to realise those profits. This would be challenging due to:
    a) political necessities conflicting with efficiency; b)
    rent-seeking behaviour by managers and workers in the businesses.</p></li>
<li><p>The profits realised would need to be sufficient to fund the
        government's expenditure.  For a typical developed country with high
        government expenditure on education, health, welfare, defence, etc.,
        this would require improbably large profits.  To give an idea of scale, <a href="https://en.wikipedia.org/wiki/Government_spending_in_the_United_Kingdom" rel="nofollow noreferrer">UK government spending in 2015/16</a> was £772 billion. By contrast, the world all-time largest corporate earnings (<a href="https://en.wikipedia.org/wiki/List_of_largest_corporate_profits_and_losses" rel="nofollow noreferrer">Vodafone in 2014</a>) were less than 10% of that at £59 billion.</p></li>
</ol>

CC BY-SA 3.0
2017-03-24T09:59:44.780Z
2017-03-24T14:58:52.100Z
2017-03-24T14:58:52.100Z
Adam Bailey
<p>Large Buisnesses tend to be run by a CEO who serves to make $ for shareholders. This means maximising profits, and generally struggles to make long term investments rather than short term profits. They only care for their employees as needed, I.e. if there was no minimum wage law they would be paid less. No incentive to act ethically other than the law and potential fines and lawsuits which is also arguably weak, as sometimes companies make a calculated decision to break the law because the penalty isnt as large as the amount they would benefit. These and other restrictions that the government imposes on companies would all go away if the government was a business, I.e. it would be above its own laws.</p>

<p>What about \$? Why would this company need to make anything if they can just print \$ when they need to?</p>

<p>The other question is who would own this company - shareholders? Does each citizen get an equal share? That may be similar to a pure democracy - or would it be only the rich? I.e. who would "own" this company and set its direction? </p>

<p>I also found a relevant video that sums these up nicely:</p>

<p><a href="https://www.youtube.com/watch?v=TqN4UYeJwiA" rel="nofollow noreferrer">https://www.youtube.com/watch?v=TqN4UYeJwiA</a></p>

CC BY-SA 3.0
2017-03-24T13:43:09.070Z
2017-04-02T14:35:27.403Z
2017-04-02T14:35:27.403Z
user2813274
<p>Hopefully this doesn't get partisan, but I wanted to see where a thought experiment would go where a government stopped collecting taxes and instead fund itself by running businesses (selling products and services) alongside other private businesses out in the free market.</p>

CC BY-SA 3.0
2017-03-23T19:40:26.070Z
In a way, taxes are just like fees paid for government services. Just like you pay a private company for junk removal, you pay the government for garbage collection. The difference is only in names.
Herr K.
CC BY-SA 3.0
2017-03-23T20:07:03.307Z
Not feasible. Governments cannot participate in markets that it has the authority to regulate. They cease to be free markets. Further, we've already allowed the central-planner thing to play out and know definitively that governments are not good at operating a business. Another dagger to the heart is the fact that public goods are allocated inefficiently via public market mechanisms.
123
CC BY-SA 3.0
2017-03-23T21:16:17.533Z
@123 What about Saudi Arabia...? "Saudi Arabia's command economy is petroleum-based; roughly 75% of budget revenues and 90% of export earnings come from the oil industry." https://en.wikipedia.org/wiki/Saudi_Arabia#Economy
Giskard
CC BY-SA 3.0
2017-03-24T00:07:06.287Z
SA is a country ravaged by poverty. SA is also trying to step away from the circumstance you describe precisely because it is a terrible idea. SA is also a completely backward theocratic nation with a digressed understanding of and approach to human rights. I am not sure how SA is meant to serve as an example of the viability of anything.
123
CC BY-SA 3.0
2017-03-24T14:13:59.670Z
@123 If you do not add my nick at the beginning I am not notified of your answer. I never claimed central planning economies are good things. They are certainly viable, SA's current setup is about 60 years old. I do not want to make any comments on the non-economic aspect of SA so I will ignore those parts of your comment.
Giskard
CC BY-SA 3.0
2017-03-24T22:27:36.473Z
It sounds like you're more interested in creating a fictitious world, than in real-world economics. Did you know that Stack Exchange has a site dedicated to such questions: [worldbuilding.se]?
410 gone
CC BY-SA 3.0
2017-03-27T12:52:30.890Z
@EnergyNumbers I'm aware of Worldbuilding and love it, but I wasn't asking this to incorporate into a story.
Jered Blake
<macroeconomics>
A government running like a literal business
Jered Blake
# A government running like a literal business

(Asked by: username_0 on 2017-03-23)

Hopefully this doesn't get partisan, but I wanted to see where a thought experiment would go where a government stopped collecting taxes and instead fund itself by running businesses (selling products and services) alongside other private businesses out in the free market.

**Tags:** macroeconomics

> **Comments:**
> **username_1**: In a way, taxes are just like fees paid for government services. Just like you pay a private company for junk removal, you pay the government for garbage collection. The difference is only in names.  
> **username_2**: Not feasible. Governments cannot participate in markets that it has the authority to regulate. They cease to be free markets. Further, we've already allowed the central-planner thing to play out and know definitively that governments are not good at operating a business. Another dagger to the heart is the fact that public goods are allocated inefficiently via public market mechanisms.  
> **username_3**: @username_2 What about Saudi Arabia...? "Saudi Arabia's command economy is petroleum-based; roughly 75% of budget revenues and 90% of export earnings come from the oil industry." https://en.wikipedia.org/wiki/Saudi_Arabia#Economy  
> **username_2**: SA is a country ravaged by poverty. SA is also trying to step away from the circumstance you describe precisely because it is a terrible idea. SA is also a completely backward theocratic nation with a digressed understanding of and approach to human rights. I am not sure how SA is meant to serve as an example of the viability of anything.  
> **username_3**: @username_2 If you do not add my nick at the beginning I am not notified of your answer. I never claimed central planning economies are good things. They are certainly viable, SA's current setup is about 60 years old. I do not want to make any comments on the non-economic aspect of SA so I will ignore those parts of your comment.  
> **username_4**: It sounds like you're more interested in creating a fictitious world, than in real-world economics. Did you know that Stack Exchange has a site dedicated to such questions: [worldbuilding.se]?  
> **username_0**: @EnergyNumbers I'm aware of Worldbuilding and love it, but I wasn't asking this to incorporate into a story.  

---

## 2 answers

### Answer by username_5 on 2017-03-24. Score: 2

This is an extremely implausible scenario. The conditions for it to work would be extremely demanding:

1. The government would need to run businesses in which it has the
   potential for a sustainable competitive advantage, giving it the
   opportunity of earning profits on an ongoing basis. That might be
   based on a natural resource endowment (cf Saudi Arabia and oil) or
   on a technology which others are, for whatever reason, unable to
   copy. For most countries, such opportunities are limited.
2. The government would need to run the businesses efficiently, so as
   to realise those profits. This would be challenging due to:
   a) political necessities conflicting with efficiency; b)
   rent-seeking behaviour by managers and workers in the businesses.
3. The profits realised would need to be sufficient to fund the
   government's expenditure. For a typical developed country with high
   government expenditure on education, health, welfare, defence, etc.,
   this would require improbably large profits. To give an idea of scale, [UK government spending in 2015/16](https://en.wikipedia.org/wiki/Government_spending_in_the_United_Kingdom) was £772 billion. By contrast, the world all-time largest corporate earnings ([Vodafone in 2014](https://en.wikipedia.org/wiki/List_of_largest_corporate_profits_and_losses)) were less than 10% of that at £59 billion.


---

### Answer by username_6 on 2017-03-24. Score: 1

Large Buisnesses tend to be run by a CEO who serves to make $ for shareholders. This means maximising profits, and generally struggles to make long term investments rather than short term profits. They only care for their employees as needed, I.e. if there was no minimum wage law they would be paid less. No incentive to act ethically other than the law and potential fines and lawsuits which is also arguably weak, as sometimes companies make a calculated decision to break the law because the penalty isnt as large as the amount they would benefit. These and other restrictions that the government imposes on companies would all go away if the government was a business, I.e. it would be above its own laws.

What about \$? Why would this company need to make anything if they can just print \$ when they need to?

The other question is who would own this company - shareholders? Does each citizen get an equal share? That may be similar to a pure democracy - or would it be only the rich? I.e. who would "own" this company and set its direction?

I also found a relevant video that sums these up nicely:

<https://www.youtube.com/watch?v=TqN4UYeJwiA>


---

