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“Trump’s Delusions Of Competence”: Running A National Economy Is Nothing Like Running A Business

In general, you shouldn’t pay much attention to polls at this point, especially with Republicans unifying around Donald Trump while Bernie Sanders hasn’t conceded the inevitable. Still, I was struck by several recent polls showing Mr. Trump favored over Hillary Clinton on the question of who can best manage the economy.

This is pretty remarkable given the incoherence and wild irresponsibility of Mr. Trump’s policy pronouncements. Granted, most voters probably don’t know anything about that, in part thanks to substance-free news coverage. But if voters don’t know anything about Mr. Trump’s policies, why their favorable impression of his economic management skills?

The answer, I suspect, is that voters see Mr. Trump as a hugely successful businessman, and they believe that business success translates into economic expertise. They are, however, probably wrong about the first, and definitely wrong about the second: Even genuinely brilliant businesspeople are often clueless about economic policy.

An aside: In part this is surely a partisan thing. Over the years, polls have generally, although not universally, shown Republicans trusted over Democrats to manage the economy, even though the economy has consistently performed better under Democratic presidents. But Republicans are much better at promoting legends — for example, by constantly hyping economic and jobs growth under Ronald Reagan, even though the Reagan record was easily surpassed under Bill Clinton.

Back to Mr. Trump: One of the many peculiar things about his run for the White House is that it rests heavily on his claims of being a masterful businessman, yet it’s far from clear how good he really is at the “art of the deal.” Independent estimates suggest that he’s much less wealthy than he says he is, and probably has much lower income than he claims to have, too. But since he has broken with all precedents by refusing to release his tax returns, it’s impossible to resolve such disputes. (And maybe that’s why he won’t release those returns.)

Remember, too, that Mr. Trump is a clear case of someone born on third base who imagines that he hit a triple: He inherited a fortune, and it’s far from clear that he has expanded that fortune any more than he would have if he had simply parked the money in an index fund.

But leave questions about whether Mr. Trump is the business genius he claims to be on one side. Does business success carry with it the knowledge and instincts needed to make good economic policy? No, it doesn’t.

True, the historical record isn’t much of a guide, since only one modern president had a previous successful career in business. And maybe Herbert Hoover was an outlier.

But while we haven’t had many business leaders in the White House, we do know what kind of advice prominent businessmen give on economic policy. And it’s often startlingly bad, for two reasons. One is that wealthy, powerful people sometimes don’t know what they don’t know — and who’s going to tell them? The other is that a country is nothing like a corporation, and running a national economy is nothing like running a business.

Here’s a specific, and relevant, example of the difference. Last fall, the now-presumed Republican nominee declared: “Our wages are too high. We have to compete with other countries.” Then, as has happened often in this campaign, Mr. Trump denied that he had said what he had, in fact, said — straight talker, my toupee. But never mind.

The truth is that wage cuts are the last thing America needs right now: We sell most of what we produce to ourselves, and wage cuts would hurt domestic sales by reducing purchasing power and increasing the burden of private-sector debt. Lower wages probably wouldn’t even help the fraction of the U.S. economy that competes internationally, since they would normally lead to a stronger dollar, negating any competitive advantage.

The point, however, is that these feedback effects from wage cuts aren’t the sort of things even very smart business leaders need to take into account to run their companies. Businesses sell stuff to other people; they don’t need to worry about the effect of their cost-cutting measures on demand for their products. Managing national economic policy, on the other hand, is all about the feedback.

I’m not saying that business success is inherently disqualifying when it comes to policy making. A tycoon who has enough humility to realize that he doesn’t already know all the answers, and is willing to listen to other people even when they contradict him, could do fine as an economic manager. But does this describe anyone currently running for president?

The truth is that the idea that Donald Trump, of all people, knows how to run the U.S. economy is ludicrous. But will voters ever recognize that truth?

 

By: Paul Krugman, Op-Ed Columnist, The New York Times, May 27, 2016

May 30, 2016 Posted by | Donald Trump, Economic Policy, Economy | , , , , , , | 2 Comments

“Traded On His Family’s Name”: Jeb Bush Was Born On Third Base. Does He Think He Hit A Triple?

Jeb Bush, you may or may not be aware, spent much of his adult life as a “businessman.” I put that word in quotes because from what we’ve learned so far Bush doesn’t seem to have risen in the business world the way we normally think of people doing, by creating some kind of product or service that can be sold to people, by managing a growing operation, and so on. Instead, his work, such as it was, consisted of opening doors and making deals, something a succession of partners brought him in to do because of his name.

Which isn’t in itself a sin. I’ll get to that in a minute, but first, an article in today’s Times discusses some of Bush’s deals that didn’t turn out so well, and how he reacted:

Yet a number of his ventures before he entered politics have invited criticism that Mr. Bush traded on his family’s name and crossed ethical lines. His business involvement, as the son of a president, was inevitably vetted in public view, subjecting Mr. Bush to so many questions that he angrily accused the news media of treating him unfairly.

“By definition, every single business transaction I am involved with may give the appearance that I am trading on my name,” Mr. Bush wrote in The Wall Street Journal during the final days of his father’s re-election campaign in 1992, responding specifically to stories about his involvement with the sale of M.W.I.’s water pumps. “I cannot change who I am.”

Months earlier, he had written a 1,400-word defense of his business dealings in The Miami Herald in which he condemned reporters for having “gone too far in delving into the private lives of the families of public figures.”

“Being part of America’s ‘First Family’ is both wondrous and challenging,” he wrote in the newspaper, adding that he desired to have his successes or failures “measured by his own performance and behavior, not those of his parents.”

There isn’t necessarily anything wrong with making money the way Bush did. He had a famous name and connections that that name produced, and people were willing to give him large quantities of money to use it to their advantage. Every once in a while we hear of some wealthy heir who gives away all their inheritance and makes a fresh start with nothing, but most of us wouldn’t have the guts to do that. Connections and renown were Bush’s inheritance, an invaluable currency that could be traded for riches and power. He accepted that inheritance, like most people would.

But what I’d like to know is how Bush himself thinks of his career, and how self-aware he is today. At the 1988 Democratic convention, Jim Hightower said of Jeb’s father that he “was born on third base and thinks he hit a triple.” What does Jeb think he hit?

I’m sure he would like to believe that every dollar he ever made came because of his skills, smarts, and hard work. But it didn’t. Like his brother George (who had a similar business career in which people lined up to give him money), Jeb had opportunities that are available to almost no one else in America.

So imagine if he said, “Look, I know that my career has been different from most people’s. My grandfather was a senator and my father was the president. Did that ease my way? Of course. It would be ridiculous of me to claim otherwise. But I tried to operate as honestly as I could, work hard, and learn as much as possible in the business world.” If Bush said that, he could earn a lot of respect, even from his political opponents.

When he was born, Jeb Bush won the lottery. We don’t condemn anyone for winning the lottery, but we do judge what they do afterward. Some people win it, buy a nice house, and then set up a foundation to help other people. Other people win the lottery and blow the whole thing on hookers and cocaine. Bush’s history seems to be somewhere in between.

Most of the people Bush is running against in the primaries are the dreaded “career politicians,” and those who have made their careers outside of business (Ted Cruz was a lawyer, Rand Paul and Ben Carson were doctors). Since Republican ideology has it that businesspeople are the most noble and heroic among us, it will be tempting for Bush to tout his business experience as a key credential during the primaries. It will also be tempting for his opponents to criticize him as a scion of the elite, particularly since it fits well into the narrative that he’s the “establishment” candidate while they’re representatives of the grassroots. The question is whether Bush will deny that he’s any different from any other successful businessman.

 

By: Paul Waldman, Senior Writer, The American Prospect, April 17, 2015

April 18, 2015 Posted by | Bush Family, George W Bush, Jeb Bush | , , , , , | Leave a comment

“The Scourge Of The Businessman Politician”: I’m No Politician, But I Can Clean Up Washington

Attentive readers will recall that among my many pet peeves (and being able to complain to a wide circle of people about your pet peeves is one of blogging’s greatest fringe benefits) is the candidate who proclaims that you should vote for him because he’s “a businessman, not a politician.” As though the fact that there are a lot of shady car mechanics out there means that when you need a new timing belt, the best person for the job would be a florist or an astronomer, because they’re not tainted by the car repair racket.

I’ve written at some length about why exactly success in business doesn’t prepare you to be a good senator or governor, but the short version is that the two realms are extremely different. So it isn’t too surprising that when businesspeople decide to run for office, most of the time they fail. They come in with a lot of money, flush it down the toilet on an overly expensive campaign, and quickly discover that there is a whole set of skills necessary for success that they don’t possess. When you try to think of business leaders who got elected, then used their business acumen to do things differently and really made a major impact, it’s hard to think of many names other than Michael Bloomberg. Here and there you’ll find someone like former Tennessee governor Phil Bredesen who did pretty well, but more common is candidates like Ross Perots, or Meg Whitman, or Linda McMahon, or Al Checci (there’s a blast from the past for you political junkies). They think, “Sure I can do this better than those empty suits—I’ve made a billion dollars!” And then they lose.

Not every time, of course, but most of the time. Which is why Democrats should be pleased to hear this:

Republicans are banking on businessmen to help them retake the Senate in 2014.

A half-dozen top GOP candidates boast records as wealthy businessmen and entrepreneurs. If voters decide they’re successful job creators on Election Day, Republicans could be on their way to the six seats they need to win the upper chamber.

Now maybe these candidates are all going to turn out to be just aces. But if history is any guide, more than a few of them are likely to be terrible at running for office. For many of them it’s their first time, which is often a disaster, and it’s particularly hard to have your first run for office be a high-profile Senate race with lots of pressure and press scrutiny. (The list of highly successful politicians who had a loss in their first run for office, or one of their first runs, is a notable one. It includes Barack Obama, George W. Bush, and Bill Clinton, among many others. It seems that early loss is a highly edifying experience.)

It’s easy to see why this is happening. These candidates are attractive to party leaders because they bring their own money. Republicans have also spent years creating a cult of the businessman, trying to convince others, and no doubt convincing themselves, that those who succeed in business are the most virtuous, brilliant, and generally admirable of all human beings. And that may extend to primary voters, to a degree anyway. Which gives them a good shot to make it to the general election, and which also means that we’re going to have to endure a lot more of that “I’m no politician, so I can clean up Washington!” crap in this election. But what else is new.

 

By: Paul Waldman, Contributing Editor, The American Prospect, February 26, 2014

March 3, 2014 Posted by | Businesses, Politics | , , , , , , | 1 Comment

“The Wrong Résumé”: The Myth Of The Businessman President – A Prelude To Disaster

Lost in the exhaust of mendacity left in Las Vegas this week, after Donald Trump brought his birther fantasies to town on behalf of Mitt Romney, was a curious statement by the man who has now cinched the Republican nomination for president.

On Tuesday, the same day Trump proved yet again that money and truth, like money and taste, are seldom twined, Romney talked about amending the Constitution to require the president to have business experience. He spoke approvingly of a notion from a store owner who wanted to make anyone who does not have at least three years of business background ineligible to lead the country.

“He said, ‘I’d like to have a provision in the Constitution that in addition to the age of the president and the citizenship of the president and the birth place of the president being set by the Constitution, I’d like it also to say that the president has to spend at least three years working in business before he could become president of the United States,’” said Romney, cheerfully summarizing this rewrite of the founders’ governing blueprint.

Well, there goes Teddy Roosevelt, the writer, rancher and police commissioner, not to mention his distant cousin Franklin Roosevelt, the assistant naval secretary and politician, or Dwight Eisenhower, the career soldier. Ike’s résumé, which includes defeating the world’s most concentrated form of evil in Nazi Germany, would not be enough to qualify him for the presidency.

Romney has made business experience the main reason to elect him. Without his business past or his projections of business future, there is no there there. But history shows that time in the money trade is more often than not a prelude to a disastrous presidency. The less experience in business, the better the president.

In a scholarly ranking of great presidents, a 2009 survey conducted by C-Span,6 of the 10 best leaders lacked sufficient business experience to be president by Romney’s rumination. This list includes Ronald Reagan, the actor, union activist and corporate spokesman, and John F. Kennedy, the naval officer, writer and politician. There is one failed businessman on the list of great presidents, the haberdasher Harry S. Truman.

By contrast, two 20th century businessmen — George W. Bush, whose sweetheart deal with the Texas Rangers made him a multimillionaire, and Herbert Hoover, who came by his mining fortune honestly — were ranked among the worst presidents ever by the same historians. Bush left the country in a sea of debt and an economic crisis rivaled only by the one that engulfed Hoover.

Both George W. Bush and Romney are Harvard Business School graduates, further padding their business cred. Once they started governing, both men failed to improve the economic lives of those under them.

At Bain Capital, Romney as C.E.O. practiced a very Darwinian form of capitalism for 14 years; he points to his time there as a model for how he would turn around the American economy. But it’s clear that enriching a handful of shareholders often has very little to do with job creation. The point of private equity, after all, is to make deals that turn investments into profits — nothing more. In that realm, Romney has succeeded.

Once he moved from running Bain to running the Bay State, Romney was a failure at job creation. His state ranked 47th. Job growth nationwide, even under the sluggish economy of George W. Bush, was five times higher than it was in the Massachusetts run by Romney from 2003 to 2007. This was reflected in his approval ratings — 34 percent in the last full year of his term, making him one of the most unpopular governors in the country, ranked 48 out of 50.

The biggest job creator of modern times, Bill Clinton, wouldn’t know a spreadsheet from a cooked derivative. His business experience was nil, but he had governing smarts, and his instincts were usually right. Under Clinton’s watch, the United States added 23 million new jobs — this after he raised “job-killing” taxes on the rich.

Romney never mentions Clinton’s formula for prosperity, or that of Franklin Roosevelt, the other business-challenged president who took the American economy to new highs. Roosevelt had been through a traumatic life experience, the diagnosis of polio, that made him a man of resolve, with empathy for the average person.

“If you spent two years in bed trying to wiggle your toes, after that anything would seem easy,” said Roosevelt. When he ran for president in 1932, his theme was “the forgotten man.”

Romney has shown a strange tendency to fetishize wealth, from his belief that “corporations are people” to his boasting of how many Cadillacs his wife drives. His European role model would have to be Silvio Berlusconi, Italy’s richest man. A media tycoon, the Rupert Murdoch of his country, Berlusconi was laughably bad as a three-time prime minister.

The verdict is still out on Barack Obama, the community organizer, lawyer and writer. Because he got hit with the Bush hangover, his overall job numbers show a net loss of about 850,000, from January 2009 to the present. But if you start a year into his presidency, Obama has added almost four million jobs.

We aren’t electing a C.E.O. to occupy the White House. We’re looking for good judgment, broad life experience, flashes of wisdom. Still, for those who insist on making business the bottom line in who they pick, the past is indeed predictive.

 

By: Timothy Egan, The New York Times, May 31, 2012

June 3, 2012 Posted by | Election 2012 | , , , , , , , , | Leave a comment

   

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