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Captain America?

from Peter Radford

The Economist’s astonishingly tone deaf editorial on Mitt Romney – “America’s next CEO?” – is partisan, wong-headed, and naive. The very title gives away the fundamental error: America does not need a CEO. The popular notion that business experience somehow makes for a more productive president is horribly misguided and displays a misunderstanding of politics that, frankly, the Economist ought to know how to avoid.

That many voters are tired of the gridlock in Washington is understandable. We are stuck in a deeply partisan era, forced on us, by and large, by a recalcitrant extreme wing within the Republican party. So far has that wing been able to shift the center of gravity of the Republicans that none of Eisenhower, Nixon, or even Reagan, would qualify any more as a suitable standard bearer of the GOP cause. The gridlock has not come, as the Economist and many others imply, from an intransigent left wing president. Obama is not a hard leftist. Indeed a major criticism often leveled at him is that he has trimmed too far to the center in order to attempt to reach reconciliation with the hard right. No, Obama is centrist, so the Economist’s comment that Romney’s erstwhile centrism would somehow haul Obama back towards the “ignored middle” is laughable. The middle has been long ignored by the hard right, so much so that the entire thrust of policy over the last thirty years has been designed to support business and upper income interests. Or, at least, that’s the way it has turned out.

Policy after policy, for three or four full decade,s has been designed to open up the economy and deregulate business. Taxes have been asymmetrically cut in favor of the very wealthy. Spending on programs that benefit the middle class most have ben either attacked or left to fade away. We have overspent on wasteful wars. We have underspent on domestic programs. We have to fight tooth and nail to keep cash flowing to the unemployed. We have bailed out banks with abandon. The list is endless. This is hardly testimony to a left of center leaning. It is exclusively a hard right agenda.

So why the need to call Romney’s putative centrism a mitigating influence on Obama?

None. It is simple partisan pleading.

As for the notion that Romney’s business experience will make him more effective – nothing could be less true.

In order for any president, on either side of the political divide, to be effective, the US governance system dictates that there is broad consensus in Congress. This is the very thing we are lacking at present. So no one, absolutely no one, can get much done. I very much fear that this election will change nothing.

The gridlock that ails us is a function of the deep flaws within the US political system itself. The vaunted and much admired – here at any rate – system of checks and balances is designed to prevent the emergence of a strong government. The Senate is deeply undemocratic in structure because it gives far too much power to states with small populations. So it is easy to cobble together opposition to practically any program, whether right or left. It encourages barter and back room dealing. It encourages pork barrel spending in order to buy the votes in order to create coalitions. And Senate rules – not the constitution – allow tiny minorities of Senators to obstruct any policy they object to.

None of this will go away were Romney elected. The Senate will still be an obstacle no matter what.

This is the way the Founders set the game up: they were so terrified of mid eighteenth century monarchical authoritarianism that they wanted to prevent the US from having a powerful central authority. Ever. So they condemned us to weak government. They wanted legislation to be labored and consequent to endless compromise. This was the central virtue they thought they bequeathed us: no one can get anything done unless we all can get along.

Which, when there is a vocal and extreme minority, we can’t. Right now the continued existence of the Tea Party is the single most important blockage to policy making. It is not the competency, or otherwise, of the president. As an example look at the disaster we went through in order to raise the debt ceiling. Romney would have faced the same set of circumstances.

In my opinion a Romney victory in November will not reduce, but enhance, the likelihood of policy gridlock. The extreme right will feel vindicated and will start, in the House of Representatives, to introduce extreme legislation. The Senate will grind to a halt as it debates that legislation. If the GOP controls the Senate it will attempt to pass along that extreme legislation only to face a filibuster by the minority Democrats. If the Democrats control the Senate, they will attempt to modify the extreme legislation, only to run int to a Republican filibuster.

Were legislation to find its way to Romney’s desk he will be faced with a dilemma: does he sign into law extreme right wing policies? Or does he veto his own party? Either he falls into the Obama trap and appears incapable of getting something done. Or he ends up as an enabler of the extremist wing of the GOP. By failing to recognize this trap, the Economist presents a naive and erroneous view of Romney’s prospects.

The conundrum is clear: either Romney falls down as someone who can execute. Or he falls down as being a centrist. In any case he is doomed to fail. The system dictates failure. It as designed that way. It is supposed to create gridlock in the brace of extremism.

Put it another way: Romney cannot be effective – getting stuff done – or centrist at the same time. Not in our current political climate. He has to pick which he wants to be. Just like Obama. There is no difference.

The Founders got it right. Much to our chagrin and frustration.

The solution is to get rid of extremism. Not to elect former executives.

Besides, as I have written about before, CEO’s are not at all adept in democratic circumstances. They are petty dictators. That’s how they get things done in corporations. They rule by fiat and centralized diktat. They have cadres of bureaucrats – aka management – at their bidding. They can make arbitrary decisions without having to face a vote. Popularity is not an issue. Employees cannot vote a CEO out of office because of opposition to an unpopular policy. Indeed many of our most famous CEO’s are proud of being unpopular. That’s how they earned their tough get things done image. At no point did they have to compromise. They trampled on employees to make a profit.

That is fundamental to business: every large corporation is run along the lines of a Politburo. Our CEO’s would be more at home in the old Soviet Union. The idea that a tough CEO can get stuff done in Washington is therefore mistaken. The US is not a corporate style dictatorship. It is run on compromise and public acceptance of policy. Popularity matters. So as soon as a CEO arrives in Washington they have to unlearn the very things that made them a successful CEO.

By the way: this is the same reasoning that exposes CEO hypocrisy about economics. None of them, not one, runs their company along free market rules. Every single one of them runs a Politburo management style. Yet they all endorse free markets outside the boundaries of their business. They seem quite happy with this dualist and internally inconsistent position. Efficiency at the business level requires dictatorship. It requires central planning and control. It is the antithesis of what orthodox economists advocate and model. Efficiency in a closed system is not attainable without ruthless centralization. Efficiency in an open system is simply unattainable due to the vagaries imposed by uncertainty.

I have said it before: in the face of uncertainty, things such as inefficiency, duplication, tolerance for redundancy and other horrors of potential ‘waste’ are essential to long term survival. Inefficiency, in an evolutionary sense, turns out to be a very good thing. It enables more effective adaptation to change. Ergo survival.

But I digress.

The point is that Romney’s business experience was gained in the wrong setting. It is worthless in national politics. Worthless. Romney’s ability to get stuff done as president – which seems to be the reason people are attracted to him – would not be a function of his experience at all. It would be a function of our ideological divide and the political system. Since that doesn’t appear to be going away or changing, he cannot be any different from Obama. Indeed, for the reasons I gave above, there is every likelihood he would be worse.

One last thing: people, seem also to assume that business leaders have an inside knowledge of economic policy. So, they are supporting Romney because he ‘understands’ how to create jobs.

Wrong. Many times wrong.

Macroeconomic policy is far more nuanced than running a business. For one thing there is no bottom line. The US is not a for profit enterprise, so it has no one, single, goal for economic policy. Creating jobs is a major goal, but low inflation is another. The two can conflict. Business does not suffer from this ambiguity, so solutions are easy, clean, and simple. So the Economist’s defense of Romney’s business history – Bain Capital’s success was largely driven by its ability to make arbitrary and narrowly focused decisions without reference to their repercussions on society at large – is both simple minded and misleading: it is a non-transferable skill set. It is enormously useful in the private sector. It is potentially massively damaging for the nation as a whole. You don’t have to quibble about Romney’s job generating history to make this point. It doesn’t matter how good he was at Bain. It is not relevant to being president.

So the Economist, and any other person or organization, arguing that Romney has superior skills to be president because he has been successful in business is simply wrong. They need to read up on American civics; and to get a better handle on the difference between business and economics.

Two things I would have thought the Economist was strong at.

Apparently not.

  1. s h a r o n
    January 18, 2012 at 8:57 pm

    A keeper, Peter.


  2. Dave Taylor
    January 19, 2012 at 3:08 am

    “I have said it before: in the face of uncertainty, things such as inefficiency, duplication, tolerance for redundancy and other horrors of potential ‘waste’ are essential to long term survival. Inefficiency, in an evolutionary sense, turns out to be a very good thing. It enables more effective adaptation to change. Ergo survival.”

    Say it again and again, Peter, but learn the lesson of Shannon’s information theory, which does not “tolerate” redundancy (horrible thought) but uses it to put right what has been done or gone wrong.

    • January 19, 2012 at 9:10 am

      Yes, say it again and again. What we are living in is a routinized regime that, as seems to be widely believed, only needs to be administered. But we don´t need a good “manager” in Washington. Instead, what we need to overcome our serious economic problems – you may call it a crisis of the market economy – is indeed change, and entrepreneurial thinking at the top. Unfortunately a core problem is, that mainstream economics by no means is able to show a way to an entrepreneurial regime, and Romney is just another “manager”.

  3. Ken Zimmerman
    January 19, 2012 at 6:55 am

    Peter, you are correct, as far as you go. But you don’t take the necessary next step. That step is that many like Romney and those who support him as a “business President” who can get things done, are aiming to remake American civics and economics on the model of a modern corporation, such as Bain Capital. How does that fit into your equations?

  4. Alice
    January 19, 2012 at 10:16 am

    Yes a keeper. “Creating jobs is a major goal, but low inflation is another. The two can conflict.”
    The two are conflicting and I wonder what happened to the trade off on the Phillips Curve except to suspect employment was the thing that was traded off lightly fpr decades (and we cant ignore the manipulation over time of the unemployment stats by leaders by any means fair or unfair).

  5. lynxreign
    January 23, 2012 at 3:40 pm

    The Economist degenerated into a right-wing rag back in the 90s. They’re partisan and ignorant like the rest of the right. They’re wrong on economics, wrong on policy and wrong on business.

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