Business
Steer the world
by David W Young
Why being a good business person doesn’t necessarily make you a good politician.
Even if mushroom clouds form over the 49th Parallel, the sun will always shine in the propaganda centre that pumps out surreal announcements on the North Korean official news website. “The whole world have come to know clearly that [Kim Jong II] is steering the world.” The Dear Leader’s spin doctors are endlessly earnest and forever on message.
Maybe it’s a socialist thing, because the same traits can be found in local announcements by the Anti-Capitalist Alliance (ACA). The ACA is standing mayoral candidates in Auckland, Wellington and Christchurch. It hopes to highlight “two, interconnected wars being waged by the New Zealand ruling class”: the battles against oppressed people in the Third World and the working class.
It says something about local government that ACA’s obsolete riff on class warfare seems novel. Most mayoral candidates are spouting the same message: “I’m a tried-and-true business person. Look at my success making widgets. Imagine what a hit I’d be wearing the mayoral chains.” At the first Auckland challengers’ debate hosted by the Gay Auckland Business Association, Chris Fletcher, John Banks and Dick Hubbard stopped just short of whipping out company chequebooks and shrieking, “Mine is bigger than yours.” Would-be municipal leaders around the country parade entrepreneurial experience as a qualification for the job.
It is easy to incorrectly assume that someone who has done well in business knows how to make a regional – or even a national – economy more prosperous.
As American economist Paul Krugman points out, “Business people who have mastered the complexities of running a multi-billion-dollar enterprise may think they can make pronouncements whenever the subject is money, but before they can offer sound economic advice, they must master a new vocabulary and a new set of concepts.”
Running a business is about juggling resources to produce what customers want. Running an economy means setting the rules and incentives for individual firms and entrepreneurs – establishing the road code, not being in the driver’s seat.
Good executives are focused and deeply knowledgeable in a narrow field. Businesses aim for particular sections of the market or target a specific range of products and services. But political administrations are less coherent and much more fractious than companies. A good mayor needs a broad oversight of the bigger picture.
Of course, there are some similarities. Incentives matter to both a company and an economy. A good executive will structure pay to increase productivity. A good mayor will balance the rates burden between businesses and households to give breathing room to both. The main overlap is a need to run things efficiently.
Yet, business people who try to carry over what they have learnt in commerce to running an economy will often get it wrong. Business skills are hands-on, whereas an economy will flourish with a lighter touch.
Ratepayers expect basic services. If the council overdoes things, the economy will be strangled by asphyxiating rates, or debt will pile up for the next generation.
The citizens making up a city do not have a single vision. They have diverse and sometimes conflicting preferences and values.
Treating an economy of any size as though it were a company means having the central planning approach of Kim Jong II. Indeed, if North Korea and its joke-shop allies have provided anything other than propaganda and misery, it is the cautionary lesson that “hands-on approach” and “successful economy” will never be part of the same sentence.
None of this is to say that voters should run from every candidate with a history in business. Almost nobody wants to fill mayoral vacancies with the unemployed or – God help New Zealand – the ACA. But it shouldn’t be taken for granted that a wealthy entrepreneur will be a good mayor or prime minister.
The set of skills required for business is not superior to those needed for political leadership, just different. Few politicians make good business people.
Soon all contenders – business-savvy and otherwise – will find out their fate. If any successful candidates do find themselves out of depth upon taking office, they can simply copy North Korea and issue reams of press releases announcing their citizens’ glorious happiness and eternal love for their Dear, Dear Mayor. Go forth, local government candidates, and steer the world.
