Presidents are not uber-CEOs
The jobs are entirely different.
As I watch the country being dismantled, I am not much interested in Donald Trump himself; he is what he is. Rather, I’m interested in beliefs that brought him to the presidency; mistaken beliefs, about the way the world works. I’d like to debunk them, hoping that they play no further role in elections.
As I wrote earlier, one factor was faith in “shock therapy,” which Trump promised (and has delivered). Occasionally quick brutal change is useful, more often it’s simply destructive.
My target this time is another appealing belief: that success in business is good preparation for success in governing. As plausible as that seems, the assumption is false. Success in the corner office is irrelevant to success in the oval office.
Countries are not businesses
Running a business well is a major accomplishment. Governing well is, too. But the two kinds of success are quite different, each requiring specific skills and mindsets.
On the surface, the two jobs look similar. Both involve making complex organizations work well. To begin with, though, the degree of complexity is vastly different. Mathematicians tell us that the nation’s economy is “not hundreds, but tens of thousands of times more complex than the biggest corporation.”
Which is to say, the United States economy cannot be “managed” in the way that a corporation can be.
Still, although corporations are managed by their CEOs, they are governed by boards of directors. The role of the board is a closer analogue to that of elected officials. Governance means setting goals and policies, establishing limits, providing oversight. The board provides an outline, and the CEO fills it in, makes specific things happen.
Can a country be governed in the way that corporate boards govern? No. The two forms of governance are different in every way. Let’s start with the bottom line.
Bottom Lines
Companies have bottom lines. States and nations do not. Better put, they have many, for many domains, but none work the way numbers do in business.
A company’s bottom line is its net income, its revenue minus the costs of doing business. Investors look at the company’s current net income and speculate about future earnings. Investors look for profit and the promise of more profit.
There’s no such bottom line for a political administration. Many numbers are relevant: inflation, unemployment, crime rate, population growth. Health statistics matter, too: maternal and child mortality rates, preventable deaths, and so on.
None of these, though, is the bottom line. Governors and presidents are held responsible for the overall well-being of their constituents. Well-being cannot be captured in a single metric, and even defining it is open to disagreement.
Scope of knowledge
Successful CEOs know particular sectors deeply. Presidents’ responsibilities are far wider. CEOs understand what tariffs mean for their own businesses. But understanding the effects of tariff regimes effects on the economy as a whole is an entirely different matter. What helps CEOs run a business won’t help them formulate national economic policy.
Scope of responsibility
The scope of responsibility in political office is vastly larger than that of CEOs.
In the United States, most corporate officers believe they have only one responsibility, legally and morally: to maximize profits for stockholders. The premise is that they operate with other people’s money, people who have invested solely for the sake of returns.
The argument is relevant only to publicly held, for-profit businesses. Whether or not it’s persuasive, the argument is plausible, and in this country it’s rarely questioned. And its logic requires making everything else secondary to profit.
For example, protecting the environment matters only if it helps the bottom line. Hence ‘greenwashing,’ done only to boost sales. Similarly, employee welfare matters only if it’s necessary to attract workers, or is good PR, or increases efficiency, or in some other way increases profit. Cities rise and fall by the businesses within them, but those businesses are – must be, the logic says -- indifferent to the fate of the cities. GM left Flint, for the sake of GM. Flint died. GM, many believe, is not allowed to care.
In contrast, a governor or president has responsibilities for everyone. Often that means protecting common goods: benefits that by their very nature can’t be individually owned, like clean air and safe streets, and therefore can’t be monetized. Other times governments protect groups of individuals who are relatively powerless. Labor and occupational safety laws protect workers; Social Security protects the elderly, the disabled, and families without a breadwinner.
The achievements that make us revere our greatest presidents protect us in ways that private enterprise cannot. Much of them, in fact, make business as we know it possible. These presidents broke trusts, created systems to keep food and drugs safe, maintained a stable currency and made banking safe. They protected judicial independence. They created interstate highways. Such accomplishments undergird private, civil, and commercial life. They benefit everyone.
Scope of Power
And finally, the factor that defeats so many CEOs who venture into public service: The power of any public office is limited, far more so than that of a CEO. Our constitution establishes three co-equal branches of government. Two of the three branches are elected bodies. These constitutional facts translate into politics, into bargaining, listening, revising. Many different constituencies must be pleased; compromise is always necessary.
Herbert Hoover made a fortune in mining, but failed in the presidency. Rick Snyder was a successful investor, but failed as governor of Michigan. Other successful CEOs have done well in public service: Michael Bloomberg as mayor of New York City, Mitt Romney as governor of Massachusetts. Success in either sector, however, is independent of success in the other.
It would be interesting to know if failure in business predicts failure in office. Not a question, however, that I’ll take up.
This post is only incidentally about Trump. In Notes we might discuss the way his business background is shaping his presidency.
Of course, there are temporal elements to firm objectives: are they trying to maximize this quarter’s profits, the years, the quadrennium, the decade…? Unfortunately, and during our lifetimes increasingly, the way the stock market operates emphasizes the very short term. No wonder Keynes decried “animal spirits.”
It’s a curiosity of propaganda and hysteresis that anyone is comparing national government with firm government, really. You nicely point out the absurdities.
If we really want a metaphor for government we’d be better off considering a family. An absolutely gigantic, incredibly diverse infinity-lived family. Ideally a functional family, because families are strange lumbering things often prone to cruelties or dysfunction.
Of course there’s the classic and very old trope of the polity as a beehive. Which perhaps, as people considering it say “…but…,” may lead us to think about what government is and should be.