The Public Sector and the Market Model -- A Risk to Trust and Citizenship

04/15/2015 06:45 am ET | Updated Jun 15, 2015

When you take a date to a restaurant, you don't talk about the price of everything on the menu. That, as behavioral economist Dan Ariely reminds us in Predictably Irrational, turns a social relationship into a market exchange. You may save money but don't expect to win her heart (or even a second date).

Government is based, ultimately, on fostering relationships of trust aimed at joint efforts to create social good. Ariely's reminder is thus worth keeping in mind. Yet we may be overly focused on seeing the connections within government and between government and citizens in market terms.

To accomplish mutually agreed public purposes, we need healthy, trusting relationships between citizens and their government, between the government and its many contractors, and between government managers and their own workers. Yet in each case, the push to apply market thinking and mechanisms can sour these relationships, fostering self-serving rather than collaborative behavior.

Citizens have been turned into consumers of government. Their currency is tax dollars, for which they expect goods and services. They are increasingly urged to compare government agencies and workers to private sector firms and employees and to do "customer ratings" of what they receive. Their civic obligations beyond voting (which large segments ignore) are reduced to a monetary exchange -- paying taxes. Appeals to civic duty and sacrifice, hallmarks of every great advance in the history of the republic, are seen as nostalgic memories at best and no longer even required in wartime. Nor is there a military draft, so wars are fought by the very few (heavily incentivized) for the very many. Government as a business is the predominant mental model and aspiration of government's critics and many of its supporters.

Government contractors are, by definition, providers of goods and services for a fee. Whether they serve the public directly (as in staffing parks, running prisons, maintaining roads, etc) or serve government agencies, they are paid for production, with all the incentives that the profit motive supplies. Indeed, that motive is a strong rationale for contracting out in the first place, the assumption being that the private sector can do things faster, better, and cheaper. Yet contractors swear no oath of allegiance to the Constitution, are rarely asked to think of fostering citizenship, and feel no obligation to strengthen republican government as an important or even necessary task.

Within government agencies, a predominant market mechanism is pay for performance. Workers are told that reaching quantifiable goals is the necessary condition for cash incentives and promotions (which mean more cash). Since annual surveys of federal employees demonstrate large percentages that believe their pay does not reward their performance -- and large percentages who think the pay and promotion systems are unfair -- that system's chief accomplishment seems to be souring social relationships in service to market thinking. Employee engagement - the aim of which is to foster passionate commitment to the public purpose of the agency -- suffers as a result. More importantly the government worker is encouraged to please his boss -- to make his numbers -- rather than to orient his loyalty toward citizens and a better society. The Department of Veterans Affairs scandal in which workers falsified patient wait times to please their immediate supervisors, at great cost to the veterans they serve, is an understandable outcome of market thinking in government, as is the recent conviction of Atlanta school employees for falsifying student test scores.

Admittedly, there is a place for market thinking in government, but that thinking should stay in its place. It should not, as it does now, dominate the way we govern. To the extent it does, we will get what the couple in the restaurant got -- a decent meal but a relationship aborted due to a lack of trust. We will get consumers with demands not citizens with dedication to their role in making government work. Like that decent meal, government may satisfy, but it will struggle to foster excellence or loyalty.