“Customers” and the Government Business Model

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Somehow, it always seems erroneous for articles discussing government services to use the term “customers” for the recipients.  Granted, the line has blurred, so as a purely semantic matter, it’s probably correct when it comes to HealthSource RI, as in Katherine Gregg’s article in today’s Providence Journal.  Subsidized or not, Rhode Islanders use to Web site to exchange money for a product.  Still, if we’re going to talk about government as if it were a business, we have to be very particular in acknowledging its business model.

That need came to mind the other day, when Mark Reynolds wrote in the same paper about the “success” of the Rhode Island Department of Transportation’s (RIDOT’s) Newport-Providence ferry service.  Consider:

The service’s operating costs were 100-percent federally funded. The service spent $500,000 in transit funds that are earmarked for specific types of projects such as the ferry service.

Thanks to this subsidization, a one-way ticket on the ferry was $10, or $5 for children, seniors, and the disabled.  Contrast that with a $25.50 fee for ferrying from Newport to Block Island, or $13.00 for children.  Granted, the rides are a bit different, but divided up evenly among the 33,221 passenger trips that RIDOT’s ferry made, the federal subsidy of $500,000 counts as $15 per ticket — more than doubling the adult price and quadrupling the lower-priced tickets.

How can we possibly characterize the ferry’s experience as a “success” without noting this fact?  Any given business might have a successful season if it offered every customer a 60-75% discount on every purchase, but it would only be a success to the extent the objective is to give stuff away.  In government’s case, of course, what it’s giving away is other people’s money.



  • Rhett Hardwick

    Subsidies must have gone down, or costs are up. I seem to recall that when they first started a Newport/Providence ferry in the late 90’s, fares were even lower. I recall $2, or $3.00. When we took our bikes down to Newport, I remember feeling badly for the taxpayers in Minnesota who were paying for it.

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