business and the oval office…a duck out of water
A good read in today’s Wall Street Journal, the following article brings perspective to the requirements of the Oval Office. Where I couldn’t quite put my finger on what I felt in my gut, this writer nailed it. Perhaps you’ll agree. Let me know what you think.
The Case Against a CEO in the Oval Office
by Alan S. Blinder
Mitt Romney bases his case for being president on his evident success in business, where he made a fortune as CEO of Bain Capital. But are business achievements important, or even relevant, to the presidency?
Probably not. Presidential history teaches us that the abilities, character traits and attitudes it takes to succeed in business have little in common with what it takes to succeed in government. In some respects, they are antithetical.
Think of our greatest presidents. Abraham Lincoln, George Washington, Thomas Jefferson and the two Roosevelts didn’t have any business accomplishments to their credit. (Well, maybe Washington did, a little.) Neither, by the way, did Republican icon Ronald Reagan, who was once a union leader. Harry Truman sold a few hats, and Woodrow Wilson was a professor. On the other hand, the two truly successful businessmen to win the presidency were Herbert Hoover and George H.W. Bush.
This negative correlation between business success and political success is probably not a coincidence. Nolan Bushnell, the highly successful entrepreneur who founded both Atari and Chuck E. Cheese, once observed that “Business is a good game–lots of competition and a minimum of rules. You keep score with money.” That’s virtually the opposite of being president of the United States: The president has no direct competitors (though he does have opponents), must abide by numerous rules and certainly doesn’t keep score with money.
The differences between business and government are manifold. Start with democracy, the preservation and strengthening of which may be a president’s first duty. Not many successful companies are run as democracies; benign dictatorship works far better. All the checks and balances that characterize American democracy would drive a hard-charging CEO, accustomed to getting his own way, crazy.
Sound companies dote on efficiency. They’d better, for the competitive marketplace is a tough environment. If you’re less efficient than your competitors, you’ll founder and probably fail. That’s what we love about capitalism–the survival of the fittest.
While there are niches in the federal government where efficiency matters a great deal, such as in defense procurement or running the General Services Administration, the White House isn’t one of them. Hoover was a sterling manager. But as he learned painfully, the big decisions aren’t about efficiency at all. It may even be critical to cut people a little slack here and there.
Rather than worshiping efficiency, some notion of ” fairness” is typically paramount in government. One of the key success criteria in politics may be public perceptions of fairness, for perceptions and realities don’t always line up.
Fair dealing can be important in the business world, too. But fairness per se–in the sense of everyone getting his or her just deserts–rarely is. Markets are engines of efficiency, not fairness. In fact, a generous helping of greed may be good in business, as Gordon Gekko–and before him, Adam Smith–taught us.
Which brings us back to keeping score. Top business executives focus single-mindedly on the “bottom line,” meaning profits. Among the reasons why so many smart business people fail in politics and government is that there is no bottom line–or perhaps I should say there are so many bottom lines that the search for a single one is futile.
A president wants to further the national interest. But that amorphous phrase subsumes dozens of goals, some of which are vague and several of which may conflict with others. Governing is certainly not about profits, whatever that might mean in a political context. The crisp political goal analogous to maximizing profits is maximizing your chances of re-election. But do we really want a president who dotes on that every day? By that ignoble standard, Richard Nixon was surely one of our greatest presidents and Lincoln one of our worst.
A long-standing debate rages over whether companies should act solely in the interests of their shareholders or should consider more broadly the well-being of “stakeholders”–a more encompassing term that includes (at a minimum) employees, suppliers, and the communities in which they operate. Stakeholder versus shareholder perspectives can lead to quite different decisions. Think, for example, of laying off workers or closing a plant. But there is no such debate in the private-equity world, Mr. Romney’s business home. Bain Capital’s website says that the firm’s mission “is to produce superior investment returns for our investors,” period. Governments need a wider view.
A good president communicates well with people and inspires them. Think about Lincoln or Franklin Roosevelt–or more recently, Reagan and Bill Clinton. Corporate leaders need communication skills, too, but of rather different sorts. Mitt Romney’s repeated verbal stumbles bear witness to the differences; I presume he was a whiz with balance sheets and corporate boards. Barack Obama may never have met a payroll, but he’s a gifted orator, and empathy and fairness are in his bones.
Presidents must also be patient, a trait not prized in CEOs. A CEO often demands quick action and results. But the American system of government wasn’t designed for rapid change. Those annoying checks and balances are meant to get in the way. You don’t have to remind President Obama that Congress often tosses his ideas out the window–or totally ignores them. That doesn’t happen much to CEOs, whose underlings generally snap to attention. That may be why Mr. Romney keeps telling us all the things he’ll do in his first days in office. Oh, really? He apparently hasn’t met the U.S. Congress.
Setting foreign and military policy is the one place where, as George W. Bush inelegantly put it, the president often is “the decider.” But it’s the rare corporate executive who has any experience in, or even much knowledge of, these matters. Recall former Godfather’s Pizza CEO Herman Cain stumbling over the names of countries. But it is the rare president who is not immersed in foreign policy virtually every day.
So don’t be surprised to find a superior businessman looking like a duck out of water as a presidential candidate. It is what history and logic should lead you to expect. The business of America’s government is not business.
(Mr. Blinder, a professor of economics and public affairs at Princeton University, is a former vice chairman of the Federal Reserve.)