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What Makes a President: Fallacies about Business, Markets

February 28, 2012 by White House Chronicle Leave a Comment

 

Come walk in the garden where the fallacies grow. Today, we’ll examine two varieties that are enjoying strong growth: the businessus presidentus and themarketus perfectus.

The first fallacy (businessus presidentus) is that a business person, presumably Mitt Romney, is better equipped to run the government than a professional politician. This is an idea as old as anything in the garden. The supposition is that business people are organized, understand the economy and are less prone make decisions based on politics. It also suggests that as a species they are innovative, strategic thinkers and have an acquired understanding people.

Well let's see: The purpose of business is business; in short, to make money. Romantics of the right like to credit it with virtues it doesn't have and doesn't want.

Business is about the numbers, and making the numbers. It’s not intrinsically wise, nor is it necessarily more inventive than government.

It’s true that business innovates; but only when it’s forced to by competition and disruptive technologies. Coca-Cola was supposed to be the smartest company on the planet until it introduced New Coke and had to beat an ignominious retreat. Many old and new businesses simply can't change fast enough. We’ve seen the demise of Kodak, Polaroid and Borders and the emasculation of Western Union. The American car companies had to be rescued — especially General Motors which was a model of management structure, celebrated by Peter Drucker, until its management choked the life out of it.

If Romney has the skills to be a good president, he didn't learn them in the wheeler-dealer world of investment banking – Remember Lehman? – but rather in the statehouse in Boston. By and large, business success prepares a man or a woman for retirement and maybe volunteer work, not political office.

The Washington trade associations periodically decide what they need is “kick-ass” business person. In time, they find someone who knows the ways of Congress to be a lot more effective than someone who can read a balance sheet.

Then there’s the workforce difference. Management controls the workforce in private industry, but the workforce often controls the management in government. Only the military is exempt from this rule. Presidents down to junior political operatives chafe under this reality.

The second fallacy (marketus perfectus) is about markets being next to godliness. Markets are an efficient way to distribute goods and services at affordable prices. But they are as cruel as they are efficient. They exterminate and reward.

It’s a heresy in conservative circles to point out that national interest and market interest do not always coincide. But among treasured companies that have been saved by government intervention in the market are Harley-Davidson (price barriers), Lockheed (loans), Chrysler (twice with loans, and later part of the great Detroit bailout).

It can be argued that some of our current economic woes are the market doing what it does best: seeking the lowest-cost, competent production. It was that which lead to the export of our manufacturing. Companies flooded China because they got the three things they sought and which they sought to satisfy the marketplace: low wages, talent and reliability. They didn’t flood to other cheap-labor places like sub-Saharan Africa, but to China which knew how to please.

People who have really changed the political landscape in Washington have been professional politicians, or those who have embraced politics as a second career, like Ronald Reagan. Richard Nixon changed it not by his misdeeds, but by creating the Office of Management and Budget from its predecessor the Bureau of the Budget. In so doing, he increased the power of the presidency and downgraded the Cabinet. And the consummate Washington insider, Lyndon Johnson, enhanced the president's war-making prerogatives — even though it would’ve been better for him and the nation if he hadn't.

If Romney makes it to the Oval Office, he'll have Massachusetts on his mind not Bain & Co. You won't get the garden to bloom with the wrong seed. –For the Hearst-New York Times syndicate.

Filed Under: King's Commentaries Tagged With: business, Mitt romney, presidential candidates, presidential politic

What Makes a President: Fallacies about Business, Markets

February 16, 2012 by White House Chronicle Leave a Comment

 

Come walk in the garden where the fallacies grow. Today, we’ll examine two varieties that are enjoying strong growth: the businessus presidentus and the marketus perfectus.

The first fallacy (businessus presidentus) is that a business person, presumably Mitt Romney, is better equipped to run the government than a professional politician. This is an idea as old as anything in the garden. The supposition is that business people are organized, understand the economy and are less prone make decisions based on politics. It also suggests that as a species they are innovative, strategic thinkers and have an acquired understanding people.

Well let's see: The purpose of business is business; in short, to make money. Romantics of the right like to credit it with virtues it doesn't have and doesn't want.

Business is about the numbers, and making the numbers. It’s not intrinsically wise, nor is it necessarily more inventive than government.

It’s true that business innovates; but only when it’s forced to by competition and disruptive technologies. Coca-Cola was supposed to be the smartest company on the planet until it introduced New Coke and had to beat an ignominious retreat. Many old and new businesses simply can't change fast enough. We’ve seen the demise of Kodak, Polaroid and Borders and the emasculation of Western Union. The American car companies had to be rescued — especially General Motors which was a model of management structure, celebrated by Peter Drucker, until its management choked the life out of it.

If Romney has the skills to be a good president, he didn't learn them in the wheeler-dealer world of investment banking – Remember Lehman? – but rather in the statehouse in Boston. By and large, business success prepares a man or a woman for retirement and maybe volunteer work, not political office.

The Washington trade associations periodically decide what they need is “kick-ass” business person. In time, they find someone who knows the ways of Congress to be a lot more effective than someone who can read a balance sheet.

Then there’s the workforce difference. Management controls the workforce in private industry, but the workforce often controls the management in government. Only the military is exempt from this rule. Presidents down to junior political operatives chafe under this reality.

The second fallacy (marketus perfectus) is about markets being next to godliness. Markets are an efficient way to distribute goods and services at affordable prices. But they are as cruel as they are efficient. They exterminate and reward.

It’s a heresy in conservative circles to point out that national interest and market interest do not always coincide. But among treasured companies that have been saved by government intervention in the market are Harley-Davidson (price barriers), Lockheed (loans), Chrysler (twice with loans, and later part of the great Detroit bailout).

It can be argued that some of our current economic woes are the market doing what it does best: seeking the lowest-cost, competent production. It was that which lead to the export of our manufacturing. Companies flooded China because they got the three things they sought and which they sought to satisfy the marketplace: low wages, talent and reliability. They didn’t flood to other cheap-labor places like sub-Saharan Africa, but to China which knew how to please.

People who have really changed the political landscape in Washington have been professional politicians, or those who have embraced politics as a second career, like Ronald Reagan. Richard Nixon changed it not by his misdeeds, but by creating the Office of Management and Budget from its predecessor the Bureau of the Budget. In so doing, he increased the power of the presidency and downgraded the Cabinet. And the consummate Washington insider, Lyndon Johnson, enhanced the president's war-making prerogatives — even though it would’ve been better for him and the nation if he hadn't.

If Romney makes it to the Oval Office, he'll have Massachusetts on his mind not Bain & Co. You won't get the garden to bloom with the wrong seed. –For the Hearst-New York Times syndicate.

Filed Under: King's Commentaries Tagged With: business, Mitt romney, presidential candidates, presidential politics

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