Tuesday, June 19, 2012

The zombie notion that running a private company teaches someone how to be a public executive

Michael Lind lays out the straightforward reason that a successful career in business doesn't in itself mean a person is particularly qualified to govern, especially in a major executive position, in Do we need a businessman in the White House? Salon 06/19/2012.

At first glance, it might seem plausible that successful private sector leaders understand the modern national and global economies. But doing well in one part of the economy is quite different from understanding what is good for the economy as a whole.

Making a fortune running a widget company does not make you an expert on quantitative easing, or nontariff barriers used by Asian mercantilist countries, or the impact of productivity growth and population estimates on the future of Social Security. Unless you have been spending your nights and weekends studying these arcane subjects while selling widgets by day, your opinion on these subjects is of no more value than that of any random bystander in the street.
The politics of Congress or a state legislature or even the city council of a major city is often very different that dealing with a corporate board of directors.

Addressing constituents is also a very different thing. When eMeg Whitman ran for California Governor against Jerry Brown in 2010, her deficiencies as a candidate weren't able to outweigh her substantial advantage in funding, largely from her own personal fortune. CEO's get accustomed to making speeches to admiring and friendly audiences, most of whom are more interested in kissing up to them than in challenging what they say. eMeg compounded that weakness by seeking out friendly interviewers like FOX News.

When she found herself facing more challenging questioning and audiences during the general election campaign - and going head-to-head with Jerry Brown, a brilliant and experienced debater - she wound up making rookie mistakes.

And elected officials not only have to deal with voters who feel entitled to their attention and service, but to party officials and legislators who may not see their own interest as being as identical with following the wishes of the executive to the extent a CEO normally experiences. In other words, organization politics in a typical business corporation are more structured and follow more regular lines of authority than politics does. Stakeholders in the political sphere operate in different ways. Or, as Lind puts it, "a private sector CEO possesses the kind of despotic authority that presidents in our system can only fantasize about."

None of this is to say that a capable private businessperson can't successfully make the transition. But it is a transition to a different environment. Success in the one is not necessarily a qualification for success in the other.

In Romney's case, he actually does have more political experience than he likes to pretend. Not only did he grow up in a political family, becoming part of a political dynasty we could say. He served a term as Governor of Massachusetts, ran for Senate against a very formidable opponent, Ted Kennedy, and has basically spent the last eight years running for President. So you can't say he would be coming into it cold. But as Lind observes:

The fact that Mitt Romney was a Republican governor of Massachusetts, a generally liberal Democratic state, would have worked in his favor, in any other time. But the capture of the Republican party base by Tea Party conservatives forces Romney to downplay his accomplishments as a governor — including Romneycare, the state health care planned that served as one of the models for Obamacare. And so Romney has emphasized his private sector past, which, whatever you think about Bain Capital in particular or private equity in general, is much less relevant to the challenges he would face as president than his public career as a governor.
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