What business enjoys recurring/passive income, no competition and a market that extends to 100% of the population? What business is self-perpetuating with no threat of failure as it enforces collection of receipts via the force of law? What business can endlessly borrow and print money?  And because there is no competition, what business has the enormous advantage of being able to sell a product or service that is often of marginal quality?

Yup. It's the government.

Every government is a business and like other businesses, government-businesses come in a variety of shapes and sizes. And like other businesses, they range in quality from excellent to horrible. What is the service provided? Originally, in the birth of America's federal government,  the primary service was to protect the freedom of the individual from internal and external threat. Now, although still providing that service, expanded federal government has inserted itself into virtually all areas of personal life as it regulates, taxes and absorbs.  

Don't argue with me. You know it's true.

Think about it a little bit and then understand why, in the United States or in any other country, government is by far the largest business. The conditions for operation are optimal, expansion into new markets unlimited and the possibility of failure slight. What a perfect storm of self-perpetuation and market domination!

And note the quirky nature of the business of government: It isn't in business to show a profit. The business of government is to spend money, and in spending money, to gain the favor of enough constituencies to insure its leaders their own continued leadership. Yet here is where a government system is no different from any other organic system: It is inherently interested in its own self-perpetuation, additional control over its environment, and growth.

In America, the government-business is not the limited entity that our founders envisioned, and despite the current on-steroids expansion, it remains among the best when it comes to economic and business freedoms,  property rights, etc. See the Heritage Foundation's 2010 Index of Economic Freedom. In 2010, America ranks 8th in the world in economic freedom.

Planet earth has close to 200 of these government-business entities -- countries -- and they continually interact, sometimes cooperatively and sometimes uncooperatively. There are trade agreements, turf wars, stand-offs, etc.

And within any country there are government entities subservient to the national government. These sub-governments have their own arrangements for exacting funds from citizens in order to provide promised services and, like the national government, to sustain and enhance their office-holder's own existences.

Lately, in America, the trend is toward a more powerful federal government that stands by as sub-governments and individuals descend into economic malaise. Of course, the more economic malaise its subjects endure, the more the federal government has opportunity to incrementally gain additional control. Call these self-serving actions bail-outs, enforced social justice, wealth redistribution, social engineering, nationalization  and so on.

Interesting to note that a national government's massively inefficient regulatory and taxing intrusions are often the root cause of the economic malaise upon which it ultimately benefits.

Do we need governments, with their regulation and taxation? Yes, of course we do. Life without government services and regulatory oversight would be tribal and chaotic. The question is, how much government is necessary? In America, the founding documentation assertively insisted on government-minimization.  It's my personal contention that the self-limiting thread that weaves its way through America's original documentation is the reason the country developed into the super-power that it is. Americans were allowed to prosper without having to contend with an imposing government's overbearing drain on resources. So, with government's encouragement, our economic system stayed lean and systematic as it built upon itself from within. Lately, not so much.

In a twisted kind of a way it's intriguing to watch a government system in action as it userps energy from the private sector system it supposedly serves.

If you own a private business, or work for one, you'll relate to this: My partner and I own and manage a small concern, Centratel, in which the wages we pay our employees are reduced by a payroll tax that is 7.65% of each employee's total pay. Then, my partner and I pay an additional 7.65% per wage-dollar out of our profits. Whatever profits are left over are income-taxed heavily by the federal and state governments. And of course, our employees pay income tax too. (Well most of them do. Some of them get tax credits for one reason or another and are part of the 47% of the population that pays no income tax whatsoever.) Alas, no one escapes the payroll tax except those involved in the ever-burgeoning underground economy.

State and local governments get their share in income tax, property tax and/or sales taxes along with a broad variety of other additional assessments. I mentioned this before: In the United States, almost everything in daily life is taxed and/or controlled by some government entity or another. A few weeks ago the federal government decided that it would regulate personal health care choices. Soon, if cap and trade legislation passes, even the environment will be taxed and overseen. And this is in America where, even with the increasing encroachments on individual freedom, things aren't yet as stifling as most other government-businesses that range from European social-democracies to African dictatorships to middle east religious theocracies.

Of course, like everything else, it all boils down to control. As individuals, we spend our lives seeking more control because it is the singular antidote to the terrible opposite that is being out of control. It's only natural that the human-born business of government should also crave more and more control too. For government leaders this control-quest is about insuring their own survival and the growth of the government itself.  And  nowadays, survival and growth are sought through vote-pandering to a host of constituencies. Government in America has shifted emphasis from the Constitution's original intent of protecting individual freedom, to an entity that endows vote-getting entitlements. Mechanically speaking, this emphasis favors non-productive people over productive people and so a downward economic spiral naturally ensues. Even a perfect business can be mis-managed. Trouble lies ahead for this inefficient government-business so there will have to be adjustments in order to make a management change and to shift back to a culture of efficiency. Here in America, we do that management-adjusting at the voting booth.

And so, as always, we arrive at the subject of efficiency. If a primary system's  resources are wasted on efforts that have nothing to do with the continued well-being of that system, or are simply drained away into an unrelated system, the primary system will degrade, tending toward chaos. However, if the resources of a primary system are thoughtfully reinvested back into that same system, the system will thrive.

In any case, and despite the ebbs and flows, by getting outside and looking down on the system of government, a profound teaching moment arrives: When you think of starting or operating a business for yourself, think dispassionately of this perfect business and try to duplicate its strategy. You want money to come in a steady stream. You want that cash flow to happen automatically. You don't want any problems collecting the money owed. You want minimum competition. You want to have the back-up resources to survive the occasional inefficiencies. You want to name the price.

Most of all, and in order to obtain the above perfect-business outcomes, you want to become as efficient as possible. Of course, you will create that efficiency in a regulated and controlled way. Government will see to it.