Musk urges federal efficiency, but privatization brings problems

“We have a unique opportunity to deregulate and reduce the size of government,” Musk said during the summit about a possible Trump victory.

But two political scientists told Business Insider that Musk’s desire to run the U.S. government like a private company — an approach that many private-sector professionals have supported for decades — isn’t as airtight as the CEO might think.

Musk did not respond to a request for comment.

Musk has done a 180-degree turn in his support for Trump. The billionaire backed Hillary Clinton in 2016, but after Trump’s victory accepted roles on two of the then-president’s economic advisory councils. He later left the administration, citing Trump’s environmental policies.

But since Musk officially endorsed Trump in July, he has posted repeatedly on X about the need for efficient government.

“The idea that you can run all of government like a business is just not designed that way,” said Patricia Crouse, an assistant professor of political science and public administration at the University of New Haven. “You have to deal with our federalist system.”

Trump, a businessman turned politician, based much of his first presidential campaign on the idea that his private-sector experience would inform his approach to politics.

While it may be misguided, both experts said it’s not an entirely unfounded line of thinking. According to the academics, the government is is inefficient in many ways, and accusations that federal agencies are wasting time and money are not always unfounded.

But the push to make government more like a business ignores a fundamental element of American federalism: Profit isn’t everything, political science experts say.

“Government is almost always more inefficient than the private sector because their motives are simply different,” said Christian Grose, a political science professor at the University of Southern California.

Profit vs. Protection

Efforts to privatize parts of the U.S. government date back decades. The modern push for a corporate government has its roots in Reaganomics, the economic policies introduced by President Ronald Reagan in 1981 that cut regulations, reduced government spending and shrunk the federal workforce.

The other side of the political spectrum took a similar approach in 1993 when then-Vice President Al Gore launched the Reinventing Government initiative, which sought to streamline government processes and minimize bureaucracy.

Former President George W. Bush also had a business background, having made his money in the Texas oil industry before his presidency. Once in power, Bush loosened regulations with his Faith-Based and Community Initiative, which sought to outsource some social services to religious groups.

Grose said the pro-business mentality is also present in local and regional governments, adding that private sector professionals often use such platforms to organize gubernatorial elections.

Political experts say it makes sense that business leaders like Musk see only inefficiency and waste in government operations.

“In the private sector, the motive is profit. The less efficient you are, the less profitable you are,” Grose said. “But inefficiency in the private sector is not the same.”

The government’s job is not to make money, but to set rules and ensure people’s safety.

“Sometimes that’s not economically efficient,” Grose adds.

Also remember that government and business serve very different stakeholders, Grose said. CEOs are accountable to shareholders and a board of directors of directors — the president must be accountable to every American in the country.

The pitfalls of a privatized government

Crouse said the consequences could be severe if Trump and Musk make massive cuts to federal government agencies.

“If you decide to run government completely like a business, you’re going to see things like poverty and unemployment increase because it becomes every man for himself,” Crouse said.

For all its faults, the federal government has a fail-safe of sorts, thanks in part to its sheer size, Crouse said. She added that outsourcing critical government services to private companies carries the risk that those services could disappear if the company goes bankrupt.

“A company isn’t really able to self-correct, at least not as easily as a government,” Crouse said.

Crouse said privatizing the federal government could also lead to more corruption, pointing to the for-profit prison industry as an example. In 2008, two Pennsylvania judges were convicted of accepting money in exchange for sending children to private detention centers to increase staffing.

“Companies want to make a profit, so they do whatever they can to increase profits. And if the consumer suffers in the process, that’s just part of doing business,” Crouse said.

In addition to the logistical challenges of a corporate government, Grose said he is skeptical of the sentiment at the heart of Musk’s comments earlier this week. He doubted that a second Trump presidency would lead to “once-in-a-lifetime” deregulation.

While Trump did pursue some deregulation during his first term, Grose said he did not act like a traditional business Republican, citing his tariffs and tax cuts, which actually increased the national debt.

“It’s not clear to me that he’s a massive cost-cutter, given my past experience,” Grose added.

Both Crouse and Grose said they were wary of taking business advice from Musk, citing the collapse of Twitter, now X, after the billionaire bought the site in 2022.

Ultimately, however, they both agreed that the 235-year-old federalism that governs America is simply not equipped to handle the pressures facing private companies.

“I’m afraid it’s going to collapse,” Crouse said.