Do CEO’s come from the real world?

In his American Prospect column, Paul Waldman does an interesting job of dissecting a refrain used by business executives when they run for office, like former ebay CEO Meg Whitman and former Hewlett-Packard Carly Fiorina who are the Repub nominees for guv and senator in California.

Waldman takes off from a single sentence of Whitman’s, spoken at her joint victory party with Fiorina after primary a week ago. Said Whitman:

“Career politicians in Sacramento and Washington, D.C., be warned — you now face your worst nightmare; two businesswomen from the real world who know how to create jobs, balance budgets and get things done!”

Wrote Waldman: “In this one sentence there are four separate claims that pretty much sum up the argument businesspeople generally make when running for office, so it’s worth looking at each in turn.”

Waldman takes them each in turn and inflicts some damage. Of course this kind of bland sloganeering goes on in all campaigns, and slogans are necessarily on the shallow side. Still, I enjoyed seeing Waldman put the four businessman/woman in politics memes under the microscope.

Comments (8)

  1. Submitted by Matthew Hauck on 06/16/2010 - 11:51 am.

    Of course, Carly Fiorina caused HP to shed jobs with great haste and fundamentally ruined their business model. But whatever, she got things done!

  2. Submitted by John E Iacono on 06/16/2010 - 04:31 pm.

    >Business people come from the real world. I meet them all the time. What this means is that (unlike politicians) they must constantly keep in mind what the impact of their decisions will have on the present and long term financial success of their enterprise, whether it be large or small.

    This experience can be very helpful for an executive political position such as governor or president. Not so much, though for members of legislatures — Mr. Dayton for example.

    This is true no matter the “perks” they have come to enjoy as rewards for successful management, and reference to these is beside the point. And their accumulated wealth is more like the added stars on a general’s uniform — evidence of past successful performance. Their lack of current employment, however, suggests it may have deteriorated.

    >On creating jobs: Not only do business people create jobs: they are the ONLY ones who do. No politician ever created a job by simply adding to the rolls of the welfare state. Creating a job means to come up with a way to add to the overall wealth of the community and to share some of that wealth with those who are put to work to create it.

    Dig up some coal, find someone who needs coal, and find a way to get it to him at reasonable cost. That someone can then use it to make steel from iron ore, eventually giving us an automobile. Business persons do this all the time, politicians hardly ever (Hoover dam a notable exception).

    Creating a job is NOT taking wealth created elsewhere and redistributing it to someone else with no wealth added to the community.

    >Regarding budgets – business people, unlike politicians, cannot simply order the customer to pay more for their goods, regardless of how shoddy. They have to find ways to present goods or services to the public at prices that will entice them to buy, and thus further the well being of the company. This can be a very helpful mindset in times when government is under richly deserved attack for providing goods and services that cost too much and are of poor quality. Still, a business is more or less a dictatorship, so this same mindset can be a detriment.

    >”Getting things done” is something sometimes honored in the breach (BP?) but generally is a valid characteristic of successful business persons. And firing a company employee is just as painful and difficult for a business person as for a government executive. It requires the insight to perceive WHO should go, and the guts to make the decision and stick with it, jumping through the hoops always needed. Politicians and civil service supervisors, not having a “bottom line” to worry about, tend to shirk this most painful of all decisions. But ANYONE can be fired, in government or out, by an able executive.

    On balance, it seems to me that one could do a lot worse than to “hire” a successful busines executive to do a similar task within government. But it seems to me it might be poor preparation for a legislative position.

  3. Submitted by Karl Bremer on 06/16/2010 - 08:09 pm.

    >On creating jobs: Not only do business people create jobs: they are the ONLY ones who do. No politician ever created a job by simply adding to the rolls of the welfare state. Creating a job means to come up with a way to add to the overall wealth of the community and to share some of that wealth with those who are put to work to create it.

    Oh really, John? ALL government jobs are simply additions to the welfare rolls? No government jobs add to the overall wealth of a community? It must be nice to live in such a simpleton’s world. Turn off Rush and Jason Lewis awhile and look around you. What do you call school teachers? Conservation officers? Firefighters? Soldiers? Public health workers? Building inspectors? Aircraft inspectors? Child welfare workers?

    >Dig up some coal, find someone who needs coal, and find a way to get it to him at reasonable cost. That someone can then use it to make steel from iron ore, eventually giving us an automobile. Business persons do this all the time, politicians hardly ever (Hoover dam a notable exception).

    Let’s see, how about some government mine inspectors to make sure those coal miners aren’t buried alive? Or do we leave that to Massey and Co.? Then how about a few federal judges and pollution enforcement officers to go after the steel and ore companies who would willingly poison our air and water if left to their own devices (remember Reserve Mining, John?). Oh, and we could probably use some government workers to enforce safety standards on those automobiles, right John? Or do we leave that to your hallowed “business people” too? Did you ever drive a Pinto, John, or a Corvair?

    Yes, life is so much easier when you can just denigrate all of government and dismiss anyone who works in it as just “welfare rolls,” isn’t it, John? Next time your house is on fire, or you’ve been robbed, or BP dumps a few million gallons of oil in your yard, just call a businessman, John. He’ll get ‘er done.

  4. Submitted by Paul Udstrand on 06/16/2010 - 11:06 pm.

    John’s forgetting a couple things.

    Sure, executives create jobs sometimes, but the reason we have those “welfare rolls” in the first is those executives also destroy millions of jobs. In fact, for the last ten years or so they’ve been pretty much destroying as many jobs as they’ve been creating, and in the last two years they destroyed more jobs than they created. Meanwhile, the idea that all jobs are created by the private sector is just plain silly, ask the contractors who built the new 35W bridge who created that job.

    Furthermore the infrastructure, security, stability, and legal framework the government provides is an integral part of “wealth building”. Without the social stability government provides profitable commerce would be nearly impossible outside the context of criminal syndicates. This is why the United States is the wealthiest nation on the planet instead of Somalia. These small government types can never explain why there is not inverse relationship between big government and wealth of nations. Wealthy nations always have “bigger” governments than poor nations.

    The problem with complaining about wealth redistribution is that the government redistributes more wealth towards the wealthy than it does anyone else. The current gulf disaster is just once example of government favoritism at the expense of poor and middle class Americans. The biggest welfare recipient in the state is the Pohlad family who are currently getting $20 million a year free taxpayer money. You can complain about class warfare if you want, the problem is the war is over, the wealthy won.

  5. Submitted by John E Iacono on 06/17/2010 - 01:07 am.

    Karl and Paul:

    For discerning thinkers not grinding an ax, there is a difference between “rolls of the welfare state” (my words) and “welfare rolls.”

    I believe 35W bridge construction MIGHT fit in the same category as the Hoover dam. Still, one has to wonder if the old one would have fallen if our highly paid government watchdogs had been properly doing their job. One hopes the private business firms (not government employees) that built the new one did a better planning and constructing job, and that the chastened government employees did a better job of oversight this time. If not, I’m sure the reason given by the latter will be that they “needed more staff.”

    As for the many jobs mentioned, generally they do not create wealth. They are expenditures made by those who DO create it to preserve what they have created. I do not disagree that such roles may be needed, but that does NOT mean that the huge bureaucratic structures that have grown around them are in any way helpful to the underlying purpose. In business, such dross would likely by burned away under the pressure of cost containment, but for the bureaucrat added staff is a key to job security. So I’m all for Emmer’s desire to rethink our core government functions with appropriate pruning of the tree. In accounting we call it “zero based budgeting.”

    On Marx’s class warfare, except in some obsolete leftist circles that war is over: nobody won. Still, it seems to get votes here or there on the left. It never played well in the U.S., as we tried instead (until lately) to get a more fair distribution of wealth created to those who do the labor. We still have not reached a “Kumbaya” world, though.

    Government does NOT distribute wealth to the wealthy: it just takes more from them than from the lower half of the population (who pay nothing for the most part) while still leaving them some. Honesty in assertions helps.

    The case becomes clear when one considers what would happen if all the current wealth providers disappeared, leaving none but government beneficiaries. Since none of them create wealth, no tax revenues would be available, and the entire system would collapse. And not even all of the wealth providers need disappear, as Greece so well illustrates. The government would take over the production of wealth, you say? Ask the Soviet and Chinese peoples how they liked that.

    Scripture says “Thou shalt not muzzle the ox that treads the grain.” Because if you starve him, you will in the end have no useable grain to “share.” I agree with this thought, even though it IS a couple of thousand years old or so.

    For the record, I don’t listen to Rush, and who is that Jason fellow?

  6. Submitted by Paul Udstrand on 06/17/2010 - 10:13 am.

    //… one has to wonder if the old one would have fallen if our highly paid government watchdogs had been properly doing their job. One hopes the private business firms (not government employees) that built the new one did a better planning and constructing job, and that the chastened government employees did a better job of oversight this time.

    John, you’re being seriously disingenuous here. Both the old and the new bridge were built by private sector contractors, and it was private sector engineers that designed the bridge that collapsed. Private sector contractors were also in charge of the repairs, and structural recommendations. Your reference to “overpaid” watchdogs is simply pejorative since none of them are paid much as the contractors. As for watchdogs, you can demand small government for 40 years and then complain about lack of oversight when you actually get the small government you’ve been demanding. That position lacks integrity however.

    //As for the many jobs mentioned, generally they do not create wealth.

    Dude there are thousands of guys who made their fortunes off of lucrative government contracts. Howard Hughes for just one instance. This goes all the way to the Revolutionary war.

    //Government does NOT distribute wealth to the wealthy: it just takes more from them than from the lower half of the population (who pay nothing for the most part) while still leaving them some. Honesty in assertions helps.

    Yes honesty helps, if you look at the latest tax incidence studies you’ll see that the top 10 percent pay a smaller percentage of income tax than the all the deciles below them. The assertion that the 50% pay nothing is blatantly dishonest since you claim to be an accountant. Are you telling us your clients pay no taxes? Or are all your clients millionaires? And yes government does distribute wealth upwards, the Twins stadium is a sufficient example of this but I could provide more, Northwest Airlines, the big mall, etc. Anyone who wants more should read: “Free Lunch: How the Wealthiest Americans Enrich Themselves At Government Expense (And Stick You With The Bill)” by David Cay Johnston. Another book would be: “Wealth and Democracy” by Kevin Phillips. Neither of these guys are Marxists by the way. Phillips is a died in the wool conservative from the Reagan Administration.

    Wealth disparity in the US is almost greater now than it was during the Gilded Age, this is a documented fact regardless of anything Marx have said. There is no doubt that the war is over and the wealthy won.

    //The case becomes clear when one considers what would happen if all the current wealth providers disappeared, leaving none but government beneficiaries.

    Actually this is an absurd reduction that illustrates nothing except an ability to imagine some kind of class based rapture. No one of any consequence anywhere on the American political landscape is advocating a control economy, and we are and never have been anywhere near even remotely creating such an economy.

    The problem with John’s accounting method is it treats taxes like ordinary expenses instead of investments and government as a liability instead of an asset. This is an ideological decision not an objective one based on economics. We’ve seen the result of these accounting practices- permanent budget crises, crumbling infrastructure, and near collapse of the middle class.

    The other problem more broadly speaking is the idea that the whole function and purpose of our nation is to create wealth for wealthy. As if we’re all here just to make someone else rich. Obviously we need a functioning economy, but this promotion of greed as a national interest and a focus of public policy is probably suicidal. It assumes that the pursuit of wealth is the only form of freedom and liberty human beings care about or should care about. History shows us that such nations and empires end up collapsing under the weight of their own inequity. And I hate to say it John, but even as an atheist I know that greed is a deadly sin according to your scripture. Have you ever considered the possibility that there may be a reason for that?

  7. Submitted by John E Iacono on 06/17/2010 - 12:52 pm.

    Hmmm. What I read from Paul’s comment (#6)

    >Apparently MnDOT had no responsibility to review the plans for the original 35 bridge, or to inspect as it was built — it’s all on those nasty private contractors. The left did not seem to feel that way when going after Molnau who was NOT there, but that was yesterday. I suppose it will be all on BP, and not at all on the federal overseers when the oil spill is discussed, too.

    >Apparently the poor innocent government overseers who signed those “lucrative government contracts” were just taken in by those “guys who made their fortunes.” That may have been incompetence, but we paid the overseers anyway. Or maybe the contractors provided good value for their contracts, and deserved every penny they got. One way or the other, please.

    >Smaller percentage of their income, but all of the personal taxes for the bottom 50%. You don’t get your own facts. As for those government subsidies of stadiums, etc — I always voted “no” but nobody listened. But at least there is a stadium there (see Hoover dam), and the money has not all been spent buying a free lunches for somebody who drank up his disability check.

    >Wealth disparity is a given, if differing abilities to contribute to society are assumed. Creating a fair playing field for all with appropriate laws is fine, but will not change this. In this, I’m more with the little red hen, not the jealous others that would not lift a finger while she grew her grain.

    >Control economy: Apparently Paul is a little out of touch lately. Hasn’t heard about the health care plan, the bailouts, the energy and other czars. Fortunately, most of us have heard.

    >Investments vs expenses: as any elementary accountant or economist knows, what determines the difference is whether, when the funds have been expended there is any value left for the future. Build a house? Investment. Buy groceries and eat them? expense. When dems call every expense they want to fund an “investment” I am reminded of Lincoln’s question: If you call a dog’s tail a leg, how many legs does he have? Four.

    >Wealth for the wealthy: No, ONE major function of a society is to create wealth. Assuring equitable sharing of that wealth in proportion to one’s contribution by appropriate laws is a government function. If wanting to own one’s own home, and working 80 hours a week to get it makes one “greedy,” I plead guilty. By this definition, the little red hen is “greedy.” But I think such a broad definition of “greed” is at best silly and at worst dishonest.

  8. Submitted by Paul Udstrand on 06/17/2010 - 02:23 pm.

    //>Apparently MnDOT had no responsibility to review the plans for the original 35 bridge, or to inspect as it was built — it’s all on those nasty private contractors.

    John, ya can’t have it both ways. I’m all for more government oversight and always have been. You’re the one who’s against it and thinks it’s unnecessary. You’re the one who wants the heavy boot of government bureaucracy lifted from the necks of the private sector. According to you the private sector needs no regulation so no one should have had to second guess their engineering in the first place. You’re the one the horns of a dilemma my friend not me. You cut government transportation budgets for 20 years and then you want to know where the government was when something collapsed, that’s so typical. You’re the one who thought MNDOT was overfunded and overstaffed and that our transportation budgets were bloated and unsustainable, now you want to blame illusory overpaid state employees for the results. You’re guys who thought a part time ex-farmer could do the job of a full time transportation engineer, and run the education department to boot. You politicize the entire process and then try to blame it’s failures on $70,000 a year state employees. And then you claim to be champions of personal responsibility.

    //>Smaller percentage of their income, but all of the personal taxes for the bottom 50%. You don’t get your own facts.

    Facts John? Again, are you saying the bottom 50% pay no income taxes?

    Just you may vote against wealth redistribution for the wealthy once and while doesn’t mean it isn’t happening.

    //>Control economy: Apparently Paul is a little out of touch lately. Hasn’t heard about the health care plan, the bailouts, the energy and other czars. Fortunately, most of us have heard.

    Even if the health care plan was a single payer plan, which it isn’t, it wouldn’t turn our economy into a command economy. Those “bailouts” are examples of that wealth redistribution John claims isn’t happening. And the czars haven’t exactly been controlling industry with an iron fist now have they?

    //>Investments vs expenses: as any elementary accountant or economist knows, what determines the difference is whether, when the funds have been expended there is any value left for the future.

    Right John, there’s absolutely no future value in school systems, or fair and effective court systems, or fire trucks, or building and maintaining the road in front of your house. No future value at all. By the way, when you build your house are you going to connect to a city water supply or sewer system?

    >Wealth for the wealthy: No, ONE major function of a society is to create wealth. Assuring equitable sharing of that wealth in proportion to one’s contribution by appropriate laws is a government function.

    Sounds kinda: “From each according to ability- to each according to need” to me. Be honest John, are you a closet Marxist?

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