The Republican nominee for president of the United States in 2012, if anything, is a very successful businessman. And Mr. Romney, along with his supporters, would have you believe that his business experience is one of his (if not the) primary qualifications for serving as our country’s 45th chief manager of the national economy. For, as they argue, the stuff of good business executives is substantially the same as the stuff of good presidents.
As his opponents point out, however, business experience should have little relevance to presidential potential simply because businesses bear little resemblance to countries. Paul Krugman, perhaps most prominently, has noted this on many occasions, writing in one instance:
Making good economic policy isn’t at all like maximizing corporate profits. And businessmen — even great businessmen — do not, in general, have any special insights into what it takes to achieve economic recovery. Why isn’t a national economy like a corporation? For one thing, there’s no simple bottom line. For another, the economy is vastly more complex than even the largest private company. Most relevant for our current situation, however, is the point that even giant corporations sell the great bulk of what they produce to other people, not to their own employees — whereas even small countries sell most of what they produce to themselves, and big countries like America are overwhelmingly their own main customers.
To be sure, Krugman’s point that the national economy is more complex than even the largest company is clearly true, but insufficient by itself to distinguish meaningfully a nation from a business. If the distinction were merely one of complexity, then a corporate CEO might be prepared for the presidency in the same way that a high school basketball coach might be prepared for the NBA. This is not an entirely outlandish proposition, as the best high school basketball coach, although unlikely, may indeed be well-suited for a successful NBA career. For the core, the primary substance of what one does as a basketball coach, is the same, no matter how complex the setting – which is to say that high school basketball is the same kind of thing as professional basketball. Because of this, the skills suitable for one naturally translate to the other. So if business were something like the minor leagues of government, Mr. Romney’s experience as an incredibly successful businessman may very well have prepared him for the Oval Office.
But the distinction between a nation and a business goes much deeper than complexity. A business, no matter the industry, is always a group of people who organize their labor and assets in order to do one thing: make money. And the performance of a business is easily judged, quantitatively, by the amount of money it makes – the “simple bottom line.” By contrast, at least according to the US Declaration of Independence, government, the managers of a nation, is instituted to secure the unalienable rights of all people, among which are life, liberty and the pursuit of happiness. There is no “bottom line” correlative to this standard, a standard which is notably, and by design, ambiguous. So on the one hand, we have business, a group organized to maximize a single, easily quantifiable thing, and on the other hand we have government, a group organized to maximize an ideal, a concept, something that perhaps can be approximated, although not uncontroversially, by the term, the “general welfare.”
A nation, and the government that manages it, is thus not just much more complex than business, it is an entirely different kind of thing.
When Krugman indicates that the customers of business are mostly external while the customers of a nation are mostly internal, this is another way of underscoring the categorical difference between the two. A business can layoff half of its workforce and be better off for it, so long as the layoffs have a positive effect on the bottom line. In fact, the jobs created by business are not just dispensable, they are costs that always negatively affect the bottom line. If a business could reduce its costs by firing all of its employees and replacing them with robots, it would not hesitate to do so. Indeed, in certain instances the managers of the business may even have a fiduciary obligation to the owners to do this! On the other hand, job loss is always a bad thing for a nation because people suffer when they lose employment. Put another way, something that is clearly a benefit to a business’s bottom line can, and often is, a detriment to the general welfare.
Similarly, the same business that will not hesitate to replace its workforce with robots will also not pause to pollute the environment. If the Onceler can sell more Thneeds and thereby make more money, it matters not that the river next to his factory has turned into gluppity glup and shloppity shlop. Perhaps the community will object to this practice by refusing to buy Thneeds. The Onceler may then tweak his factory in response. But he would not be doing this out of concern for the general welfare of the community, he would be doing it because he could make more money without polluting. Just as easily, if he could make more money by, rather than stopping the pollution, spending a few dollars on a misleading ad campaign to damper the community outrage against the gluppity glup and the shloppity shlop, the Onceler would not waver.
This is all to say that jobs and pollution are examples of business externalities – jobs are positive, pollution negative, both subordinate to the business’s primary task of making money. And in this way, the business of government is not business at all, for those things that are external and subordinate in business, are the principal concern of government.
It follows from this that a business wizard, as Krugman writes, would have no special insight into the task of government. And as it turns out, a seasoned business executive may even be particularly unqualified for government, as she may have the inclination to run government like a business, ignoring its fundamental directive to promote the general welfare.
Consider the Republican obsession with deficit reduction. On the same web page where Mr. Romney touts his experience at Bain Capital, a banner heading reads, “We have a moral responsibility not to spend more than we take in.” This is a very business-like approach to government. The national debt looks something like a bottom line – it is quantitative and relatively simple to track. The bigger the number gets, the larger the country’s long term obligations. So in one important sense, deficit reduction is good insofar as it helps to lessen our long term burdens. And if deficit reduction is made an end in and of itself, government indeed begins to mimic business with the clear implication that business experience is absolutely relevant to the work of government. The former CEO, a skilled profit maximizer, will more naturally be able to treat cutting government services like cutting business costs. Like the cost of labor to a business, which when eliminated helps the bottom line, the cost of, say, education, can also be discarded in order to help that bottom line.
The obvious problem here is that with debt reduction as a primary concern (or any other narrowly conceived quantifiable measure), the effects of diminished government services become subordinate, even external.
To view government in this way is, charitably, a banal and gross oversimplification, realistically, a pernicious dismemberment of the one institution that is designed to protect the interests of all. With debt reduction replacing the general welfare as government’s primary concern, the victims of austerity whose interests must necessarily be considered for the general welfare, become bothersome externalities, like gluppity glup and shloppity shlop. One need look no further than Florida, where former business executive Governor Rick Scott, during its worst tuberculosis outbreak in 20 years, supported closing the state’s only tuberculosis hospital, citing budget constraints. This decision no doubt helped the state in one sense by reducing the financial burden of the tuberculosis hospital. But at what cost to society?
Government, in order to do what our Declaration of Independence says it is to do, must balance the many values, some of which are competing, that comprise the general welfare. A business executive is particularly unsuited for this task, as the inclination to impose a simple bottom line upon the populace, as we’ve seen in Florida and elsewhere, is too strong.
Mr. Romney says we have a moral responsibility not to spend more than we take in. Mr. Jefferson says we have a responsibility to secure the unalienable rights of all people, among which are life, liberty and the pursuit of happiness.
I’m with Jefferson.