The country cannot, in fact, be run like a business.

[Einzige]

I want to address this point independent of any ongoing controversy surrounding Trump's business activities, simply because this perspective is so prevalent and so fallacious that it's bound to come up again in some future election further down the line.

The Presidents with the most private sector experience in the past century were Herbert Hoover (who owned a mining engineering firm), Jimmy Carter (whose peanut farm was actually a major operation, not the family farm he played it off as), and George W. Bush (Arbusto and the Texas Rangers). America's most popular Presidents - the Roosevelts, Eisenhower, Kennedy, Reagan - had no experience in business.

Oh, yeah, Warren Harding owned a newspaper.

As a corollary to this, there's absolutely nothing wrong with being a "career politician", except that most "career politicians" are actually career lawyers. This is an especially annoying populist canard because it implies that businesspeople are 'outsiders' who can achieve 'real world results', when the practical results of putting businesspeople into office (at least at the executive level) have all been disastrous.

There are several very good historical examples of the tendency to try to 'capitalize' government failing miserably, on a bipartisan basis.

For example, Jimmy Carter's Civil Service Reform Act tried to emulate the efficiency of business by making civil servants directly subordinate to elected politicians, on the theory that business succeeds because it has greater accountability over its employees than government does.


The practical effect, however, was to politicize what had been a professional, nonpartisan core of workers, and make them dependent on the same kind of patronage that went out with Jackson's spoils system. Long-time professional civil servants were replaced with political adjuncts, not for any evil motives but on the purely egalitarian theory that efficiency and accountability would improve service. Just like in the business world.

http://www.presidency.ucsb.edu/ws/?pid=30438

Quote:I have also directed members of my Administration to develop, as part of Civil Service reform, a Labor-Management Relations legislative proposal by working with the appropriate Congressional Committees, Federal employees and their representatives. The goal of this legislation will be to make Executive Branch labor relations more comparable to those of private business, while recognizing the special requirements of the Federal government and the paramount public interest in the effective conduct of the public's business. This will facilitate Civil Service reform of the managerial and supervisory elements of the Executive Branch, free of union involvement, and, at the same time, improve the collective bargaining process as an integral part of the personnel system for Federal workers.

It's also instructive to remember that Robert McNamara, Secretary of Defense under Kennedy/Johnson and chief architect of the Vietnam War, tried to structure that conflict along the same business principles he used as head of the Ford Motor Company.

https://hbr.org/2010/12/robert-s-mcnamara-and-the-evolution-of-modern-management

Quote:In 1946, rather than returning to academia, McNamara became part of an elite team from Statistical Control that joined Ford. They were nicknamed the Whiz Kids. The firm’s young president, Henry Ford II, charged them with overhauling the once-proud company, now in disarray and losing money. McNamara’s star rose as he brought the discipline of rational analysis to Ford’s sprawling bureaucracy, emphasizing facts and figures. Austere and formal, with rimless glasses and neatly slicked-back hair, McNamara projected a no-nonsense air. The financial turnaround at Ford was remarkable, yet he did not focus only on shareholder returns. He went about his work with an acute sense of social responsibility. Unlike most automobile executives, he was an early champion of passenger safety. He later recalled, “The prevailing idea in the auto industry was that if you talked about safety, you’d scare the public.” Under McNamara’s leadership, Ford’s 1956 models featured padded instrument panels and safer steering wheels, and were the first passenger cars with seat belts. Rivals scoffed: “McNamara sells safety, Chevrolet sells cars.” Yet he persisted, guided by his sense of responsibility to the public.

Quote:


...





At the Pentagon, McNamara applied his usual rigorous approach to the management of the vast military establishment. Until then, each branch of the service had had its own budget and pushed its preferred weapons systems. The result was massive inefficiency and questionable effectiveness. McNamara set out to optimize the nation’s arsenal, to provide the best military capability in the most efficient manner, subordinating the parochial interests of the individual services. He also overhauled U.S. military strategy, replacing the potentially catastrophic doctrine of massive retaliation with a doctrine of flexible response, which insisted on proportionality and sought to avert escalation. Congress was highly impressed. Republican Barry Goldwater called McNamara “one of the best secretaries ever, an IBM machine with legs.”



...



Focused to a Fault

Whether at Ford or in the military, in business or pursuing humanitarian objectives, McNamara’s guiding logic remained the same: What are the goals? What constraints do we face, whether in manpower or material resources? What’s the most efficient way to allocate resources to achieve our objectives? In filmmaker Errol Morris’s Academy Award–winning documentary The Fog of War,McNamara summarized his approach with two principles: “Maximize efficiency” and “Get the data.”



Yet McNamara’s great strength had a dark side, which was exposed when the American involvement in Vietnam escalated. The single-minded emphasis on rational analysis based on quantifiable data led to grave errors. The problem was, data that were hard to quantify tended to be overlooked, and there was no way to measure intangibles like motivation, hope, resentment, or courage. Much later, McNamara understood the error: “Uncertain how to evaluate results in a war without battle lines, the military tried to gauge its progress with quantitative measurements,” he wrote in his 1995 memoir, In Retrospect.“We failed then—as we have since—to recognize the limitations of modern, high-technology military equipment, forces, and doctrines in confronting highly unconventional, highly motivated people’s movements.”


Equally serious was a failure to insist that data be impartial. Much of the data about Vietnam were flawed from the start. This was no factory floor of an automobile plant, where inventory was housed under a single roof and could be counted with precision. The Pentagon depended on sources whose information could not be verified and was in fact biased. Many officers in the South Vietnamese army reported what they thought the Americans wanted to hear, and the Americans in turn engaged in wishful thinking, providing analyses that were overly optimistic. At first, being likened to a computer was meant as a compliment; later, it became a criticism. In the wake of Vietnam, McNamara was derided for his coldness and scorned as one of the so-called best and brightest who had led the country into a quagmire through arrogance.

And of course we can't forget the original attempt to structure government along industrial lines - Herbert Hoover's adherence to Taylorite Efficiency Principles.

[pbrower2a]

Business has such concerns as marketing  (Get sales!) and profit-and-loss, both of which can be incompatible with the reasonable objectives of a government. Prisons run for profit? The Gulags and Nazi labor camps were profitable. So was the Tucker Prison Farm in Arkansas, a reality shown in the movie Brubaker.  A profit-conscious judicial system would send innocent people as well as crooks to highly-profitable Gulags.

Cozy relationships between business and government? That's one effect of fascism.

[Einzige]

Even beyond that, market models are demonstrably incompatible, on an organizational level, with government.

[Bob Butler 54]

(09-28-2016, 05:22 PM)Einzige Wrote: Even beyond that, market models are demonstrably incompatible, on an organizational level, with government.

From my point of view, the attitude towards finance and money is and ought to be very very distinct.  To a business, money is the prize to be striven for, and indication on whether one is 'winning' the game or whether one's organization is stable.   To a government at the largest scale, money is a lubricant.  If sufficient people have enough  funds, transactions will take place and the economy is healthy.  If one group of another lacks money, they are to that degree eliminated from the economy, which is thus diminished.

Before Keynes, governments acted much like businesses during an economic downturn.  They scaled down, slowed down, made sure the books were balanced, and waited until things recovered before upscaling again.  Keynes suggested the opposite.  When there is no money floating around, you have to kick things alive by priming the pump.  Thus was born the idea of stimulus, of improving the economy by putting money in the hands of this group or that which could kick things alive by spending the money.

This doesn't answer the balancing questions.  Do the Robber Barons need more money?  If so, supply side stimulus.  Do the People need more money?  If so, demand side stimulus.  Is too much of the budget going to paying off debt instruments used to create the above stimulus, thus crippling the ability of the government to do stuff?  If so, buy down the debt rather than apply stimulus.

Businesses just don't think in such terms, and ought not to be thinking in such terms.  Meanwhile, government financial people shouldn't go in blinded by a political dogma, thinking that one of the above policies is always correct no matter what the current state of the economy.  The question is not which of the three above principles are correct, but how one should ideally balance the three given the current state of the economy.

I recently started reading Thomas Piketty's Capitol.  It was named for Marx's work, and attempts the once every 50 years reevaluation of how economics works.  It is a lot more complex than my simple summary above, not in principle, but in how many types of capitol and labor there are.  Land is different from factories which is different from services.  Farmers are different from factory workers who are different from service providers, who are different from investors, who are different from innovators...  etc.  There are not just two buckets to be balanced, the supply bucket and the demand bucket.  There are lots and lots of buckets.  

Piketty is interpreting hundreds of years of tax records attempting to figure out the importance and proper worth of each of the above.  Managing the economy requires all of the above groups getting a return on their efforts.  The data is available to understand what it takes.  The computers are available to build models and balance things out properly.  But, no, main stream economics, their political masters, and their financial sponsors, are more interested in self justification and self interest than a healthy economy.

[Bob Butler 54]

(09-28-2016, 07:47 PM)X_4AD_84 Wrote: I used to be a big supply sider. To be fair, I still am in a sense, but with the following proviso. Everyone, including rent seekers and super rich who don't have normal salaries, and therefore have mainly cap gains, needs to pay their fair share of taxes. Presently you have some, especially super rich, who essentially pay something between 0 and 15%. That's shyte. If you are going to give the rich easy money for their investments than we need to have easy tax recovery in return.

There are times for supply side.  The principle is not without merit.  However, right now we have low interest rates and a huge division of wealth.  There is no lack of funding for new ventures.  Also, we have a large government debt.  This is not time to go hog wild with any flavor of stimulus.  Right now pushing additional supply side will only increase the debt while starving main street of the funds it needed to get real work happening.

Might drive the production of extreme luxury goods, but that's about it.

[pbrower2a]

Keynes told people to cut spending and raise taxes in time of inflation. In times of depression, cost-cutting measures do more harm than good.

[TnT]

The prevalence of the "Run Government Like A Business" myth has its foundation in the fact that many people can only think in terms of their own personal experience.

When I think of the times I've heard my brethern compare their own household "economy" with that of governments, and suggest that government should be run like their own, I could throw up.