Is the fact that a person has created thousands of jobs while in business relevant to being governor of a state? Only somewhat. Lest we overstate the value of business experience, let me suggest two words: Ross Perot. Remember him? Private-sector genius, public-sector . Well, not so much.
A private sector business leader serves the public in at least two ways. First, he offers a good or service that other people want. Second, if the demand for the good or service rises to a sufficient level, he offers a job to other people, who then contribute to providing that good or service.
What does this have to do with the running of government? On the plus side, it trains the candidate’s mind on the obstacles that government puts in the way of employers. Granted, government has some important responsibilities to undertake if the economy is to thrive (property rights, rule of law, etc.). But overwhelmingly, its greatest potential with respect to the economy is to screw it up through over-taxation, over-regulation, and fostering a climate of corruption and uncertainty (If Jack makes a loan to Jill today, will government come in three years from now and tell Jack that he can’t foreclose on Jill’s house?).
So yes, it’s good to have someone in office who understands the dark side of government’s power. But being a successful business leader doesn’t necessarily translate into being a successful leader in government. The logic of government and of business are not exactly the same, after all. Oh sure, even the smallest of business is rife with organizational “politics,” but that’s not the same as “government politics.” The chief executive of a company has more power, relative to everyone else in the company, than the president or a governor relative to other players in a political system.
Also, the stakes are different. A company that continually makes poor decisions (by reason of politics or otherwise) goes under (at least it used to, pre-TARP). A dysfunctional state, by contrast, keeps going on and on, piling up debt and a history of economic stagnation.
There’s one danger unique to a business executive being in government, and that’s the idea that government can pick and choose winners. Sure, politicians with no political experience can try the game (see: President Obama), but the person who has business experience is subject to the temptation of thinking, “I know a good business when I see one.”
Being a successful government executive requires a certain skill set. Being a successful business executive requires a certain skill set. How much overlap is there? I suspect there’s less than we think.
First printed in the Detroit News on October 12, 2010: http://detnews.com/article/20101012/MIVIEW/10120381/LaPlante–Is-a-good-CEO-a-good-guv?
October 12, 2010 @ 12:34 pm
I think that there is an equal amount of overlap between the two sides and I think it’s a significant amount–especially in today’s economic situation and the realities facing public administrators. But, with that said, there is a significant portion of both of these two types of leaders which do not overlap and are what makes the striking difference between how they can go about their jobs.
Let’s take a look at the public administrator. The individual might be a born business leader. He might be able to foresee the economic downturn and recommend to the political members he consults that they cut back spending in the short term to protect the long term. He might suggest not spending $20 million on infrastructure build-out knowing that in three years the money is going to run out and the elephant in the room is going to bleed their coffers dry.
This type of visioning is available to both the CEO and the public administrator. This is where they overlap. Where they do not overlap is in their ability to carryout the necessary plans to keep the “business'” money. While the CEO can make cuts both in personnel and spending ahead of the projected downturn, the public administrator can only make recommendations to people who are politically motivated. Such cutbacks both in human capital and general funding are not politically popular until it’s too late.
So I think we ignore, far too often, that public administrators are intelligent and worthy individuals but their actions are not always within their control. Their decision-making is tied by legislation, the political necessities of others, and the public–something the general business CEO likely does not have to answer to.
October 12, 2010 @ 4:02 pm
Bill, thanks for stopping by. You are right, public administrators can and often are smart folks. I should have mentioned that, but for some reason never thought of that.
As you say, public administrators can make good recommendations, but on big-picture items, the final decision comes down to the politicians–and they often have short-term considerations.
I wish I had more time to do some reading and thinking about this topic. It is probably easy to draw too bright of a line between, say, governor and corporate captain of industry. Both positions require making significant decisions with big ramifications, but with limited information and competing advisers. And it’s certainly true that a CEO can be subject to political infighting inside his empire, just like, say, president have to deal with cabinet members or others inside the administration who work against them.
Still, I think the mindset required to be a great governor and the one required to be a great executive don’t necessarily overlap as much as some people think. How much, I don’t know.