What has commerce got to do with government?


donald trumpDonald Trump constantly mentions his career as a businessman when he calls upon the American people to vote him into the White House. He says he would be better than a politician when it comes to doing “deals”, managing America’s balance sheet, “winning” and generally serving as the president of the United States.

At the weekend, Mr Trump told CNBC’s Squawk Box that US trade deals, especially with China, Mexico and Japan, must be urgently renegotiated. They’re “disastrous”, he said, because “we used people who are political hacks”. Last year he said that “in many ways, building a great business is actually harder [than being president].”

It is a memorable boast and entirely consistent with Mr Trump’s oft-expressed admiration for himself and his corporate record. But how much does the business of government have to do with commerce? Or more specifically, are the skills used in business easily transportable to the task of governance?

These issues come up every time a businessman emerges on the stump in America, eating corn dogs in Iowa and vowing to bring to the White House their managerial efficiency and an eye focused on value creation, sales strategies, big branding ideas and savvy negotiating tactics.

There have been several failed attempts by businessmen seeking to recast themselves as able political managers.

In 2012, Mitt Romney ran a campaign that stressed his private sector expertise. Even though he had more recently been the moderately successful governor of Massachusetts, his supporters said that he learnt to solve big problems and expand opportunity at the private equity fund Bain Capital.

Twenty years earlier, there was tech billionaire Ross Perot. Still considered the richest man ever to have run for president, he got the highest number of popular votes of any third-party candidate since Teddy Roosevelt in 1912. He made much of his business acumen in a country faced with rising unemployment and a massive deficit, brashly declaring that only he could balance the budget, end the outsourcing of jobs and curb free trade. Somewhat like Mr Trump today, he said he could hear the “giant sucking sound” caused by the rush of manufacturing jobs to Mexico. And he insisted that he would run a campaign without “political pros”.

Are professional politicians really so dispensable then? Would businessmen be better managers of the greater common good? The last businessman, and incidentally, the first MBA, to be president was George W Bush. He exited public life having added a huge amount to America’s national debt. Though the so-called War on Terror, which was initiated on his watch, may be described as exceptional circumstances, Mr Bush spent government money without any indication he knew the basics of business. He did not raise taxes or tap into other revenue streams to pay for America’s wars. And he never managed the art of the political deal in his eight years in office, leaving the country more politically polarised than ever.

In fact, some of America’s most successful modern presidents — Bill Clinton and Franklin Roosevelt, for example — had nothing to do with business. It’s been the same with successful, even transformational, leaders in other parts of the world. India’s first prime minister Jawaharlal Nehru insisted on the need to build dams and hold off on economic liberalisation until it learnt how to build most things and serve its domestic market. It was sound, if unbusinesslike, advice at the time. Then there was South Africa’s Nelson Mandela, who understood the moral branding and strength of genuine acts of magnanimity for his traumatised country.

Some years ago, The Economist examined the backgrounds of nearly 5,000 politicians in International Who’s Who and discerned a pattern in the way countries reposed trust in their leaders.

African presidents, it said, generally won power after stints as military or guerrilla leaders. Indonesia went for generals because the army was seen as one of the few national institutions. In most democracies, lawyers dominated.

This is largely because lawyers often engage in considering the same issues as politicians — social justice, a fair society, liberty and security. For businessmen, these are not necessarily significant concerns, except in a limited sense to do with their company.

Robert Rubin, a former head of Goldman Sachs, who served in the Clinton White House and as treasury secretary, once said that he had developed “a deep respect for the differences between the public and private sectors.”

Business has a single overriding purpose, to make a profit, he added, while government “deals with a vast number of legitimate and often potentially competing objectives”.

Mr Trump’s most recent proposal to tackle US government debt — by borrowing more and renegotiating a lower payback, less than 100 cents for every dollar — is a case in point. The plan might make good business sense but not for US treasury bonds, until now a risk-free asset that underpins the global financial system.

The truth is business and government are entirely different streams and require very different skill sets. In business, the chief executive can stay aggressively focused on the bottom line. A political leader has to balance both the budget and the vision for tomorrow. It is the rare individual who excels both at business and the business of government.

Rashmee Roshan Lall is a writer on world affairs

On Twitter: @rashmeerl

Originally published at www.thenational.ae.