Instead of politicians, why don’t we let the managers of IKEA run the country? (Social and Political Sciences, Cambridge)

Over the last 30 years or so, there has been an increasing move towards privatisation of government and public services in many Western democracies. In the UK, for instance, major nationalised industries, such as the railways, telecommunications and power were sold off by the government to private, profit-making businesses in the 1980s, and more recently the Post Office has been sold, while more and more elements of the National Health Service and education have been contracted out. So why indeed don’t we take the logical next step and privatise the whole business of government?

I have a feeling that if you conducted a poll using this question, a large proportion would consider it a good idea. The choice of private institution in the question is clever. It doesn’t ask why don’t we let government be taken over by the managers of BP, or Lloyds Bank or Rio Tinto – vast corporations whose reputations have all come under fire. Instead, the question talks about IKEA, a company who deal directly with the public, and make what seems cheap, neatly designed furniture with an image of Scandinavian style and neatness.

IKEA’s image seems clean, efficient and essentially benign rather than possibly rapacious or dirty. There is no connection at all between the running of a country and trim Scandinavian furniture, but the association creates the appealing idea of a country run along the same clean, efficient and benign lines. As influential American psychologist Edward Bernays showed in the 1930s, the power of association is huge. People might be much more hesitant to put power in the hands of a BP or Rio Tinto, even though their managers might be equally efficient.

The sleight of hand involved in this question is part of a pattern of media representation that has encouraged people to look favourably on privatisation – and distrust politicians as incompetent, out-of-touch and venal, and public administration as overbearing, obsessed with red tape and utterly inefficient.¹

The argument might run that IKEA managers are experts in management – and that they are forced to be experts because they need to achieve bottom lines. Politicians are not expert managers at all; they are simply good at talking and negotiating. So politicians (and public servants) are good at creating red tape, but if you want something actually done, go to the experts. Moreover, the IKEA managers will always be kept efficient by the profit incentive. If politicians get things wrong, they may not even get voted out if they contrive to pull the wool over the public’s eyes.

But there are two huge problems with this argument. The first is the idea that the only way to get things run well is to give people a selfish incentive such as profit. It’s led to the deeply flawed assumption that by definition private profit-making companies do things better than publicly run institutions. Proper evidence and research tends to disprove this assumption and show that nationalised industries can often be actually be more successful than private businesses – as the nationalisation that turned South Korea into one of the world’s rising economic powerhouses shows. Indeed, many public institutions are very well run by administrators who are able to see the bigger picture and not become blinkered by a drive for profit.

The emphasis on incentives in private business has often led to a damaging short-termism. Most business theorists, for instance, espouse the idea of shareholder value maximisation (SVM) – the idea that managers are rewarded with bonuses and share options according to how much they give to shareholders each year. But because shareholders can simply move on if dividends are low, SVM has led managers to prioritise immediate profits in order to hang on to shareholders. That means the long-term future is often sacrificed for short-term gains – leading to job insecurity, underinvestment and the increasing dominance of mergers, acquisitions and sell-offs. This is a fairly unsatisfactory way to run businesses; it would seem a disastrous model for running the country.

The second problem with the IKEA argument is that it is would be a massive – indeed possibly fatal – blow to the democratic ideal. If we were to let IKEA managers ‘run the country’ what would we be essentially saying? That they take over all the functions of public administrators? Or that they take over the functions of parliament or the president altogether? If so, to whom would they be accountable? For whom would they be running the country? Who would set their agenda? Indeed, what on earth would they running?

If they are to remain IKEA managers in nature (highly unlikely), then they’d be running the country simply as a business to maximise profits for shareholders. That could simply mean milking the country and all its people dry to bring dividends to outside shareholders. Naturally, they’d want to cut dead wood from the business: children, old people, pregnant mothers, the sick and poorly trained, the slow, the unnecessary, those who might want to rock the boat, the wild birds and animals, the unproductive woodlands and riverbanks – indeed anyone or anything that doesn’t directly contribute to the labour force or productivity. A country is a community, and cannot be run as a profit-making business. But the problem is if we gave the country over to IKEA managers, we’d have no way to stop them doing this. They become utterly unaccountable, and the country is in effect a tyranny. Mussolini and Hitler both justified their actions by saying they were running the country well. Who’s to say IKEA managers wouldn’t claim the same?

Running a country is about so much more than making a profit. It’s about looking after its people. It’s about making sure we all have the chance of a decent life, a decent home, food, care in sickness, proper education, justice and security, freedom of speech, protection of the fabric and heritage of the country for the benefit of all, and so much more. None of these come into making a profit at all – and for all these we need politicians not retail managers.

For all its flaws, true democracy is by far the best way of government anyone has yet thought of. But democracy requires democratic representatives and our participation in the process. We cannot simply hand over the functions of government, without handing over our democratic system and our control over the way the country is. Democracy requires either direct participation or elected representatives, that is, politicians. If we cannot trust the incumbent politicians to run the country, we cannot simply abandon the idea of representation – we need to find politicians who we can trust. And then of course, there will be those tiresome weekends struggling to assemble your statutory government quota of flat-pack furniture …

Footnote

1 Behind this lies, at least in part, the rise of rational choice economic theories, which have driven a wave of deregulation, privatisation and tax reduction to lift the so-called deadening hand of government, while the idea that politicians and public servants are not to be trusted, encapsulated in the related public choice theory, has become so ingrained in our cynical modern age that we assume it’s true. There has been a massive shift away from the idea that people enter politics or the civil service to serve the public good. Interestingly, the description ‘public servant’ has all but disappeared, in favour of ‘bureaucrats’; they are thought of as not only self-interested but as easily dispensable dead wood.