Businessmen and politics - Politicsweb, 02 March 2017

By Terence Corrigan 

What a business is politics!

‘Maybe the most pernicious myth in American politics is also among the most cherished. It is the faith-based conviction that the federal government can be run like a business, and it would be if we only had leaders with the fortitude to make enemies of the corrupt careerists who thwart this commonsense idea. We are in the earliest days of a grand experiment to test the validity of the notion that the businessman’s dispassionate acumen can transform our sclerotic federal government into something with private sector efficiency.’

So writes Noah Rothman of the American publication, Commentary, in the opening days of Donald Trump’s presidency – an ascendency propelled in large part by the sense that he could bring his business acumen to be bear on government. He understood the real world, the reasoning went, and could credibly assure his supporters that he would make things happen for them. They would ‘get tired of winning’.

As Dennis Rodman, retired basketball great and Trump supporter, put it, ‘We don’t need another politician, we need a businessman like Mr. Trump!’

This is not a uniquely American phenomenon. Businesspeople entering politics the world over have often sought votes on the strength of their business achievements. In South Africa, the flamboyant Dr Louis Luyt contested the 1999 elections with the promise that he was the man to save the country. Only last year, the Democratic Alliance successfully ran prominent entrepreneur Herman Mashaba as its mayoral candidate, and, today, many believe Cyril Ramaphosa’s business skills will be just what the country needs, should his presidential bid be successful.

The outcome of Trump’s presidency – or for that matter, Mashaba’s mayorship, or Ramaphosa’s possible ascendency – will be for future historians to evaluate. Yet, should the verdict be positive, this will be because they will have successfully mastered the skills of the politician rather than performed off the template of the businessperson.

In an illuminating contribution to Forbes magazine last year (as it happens, around the time Trump’s campaign was gaining momentum), Hoover Institution Fellow David Davenport wrote that what makes for success in business is not what is required in politics. Businesspeople have an overriding goal, which is to make a profit. In fairness, corporate governance thinking is increasingly demanding that attention be given to social responsibilities. But this doesn’t alter the fundamental reality that unless an enterprise is turning a profit, it is not viable.

Politicians, by contrast, need to pursue multiple goals, and those that can be measured on a balance sheet will not necessarily be priorities. Indeed, it is hardly unusual for politicians to cast such pedestrian concerns aside. The political equivalent of the great market discipline – that a company will go bankrupt if it doesn’t manage its resources prudently – is a distant and attenuated one. What weighs more heavily on politicians is that governments must cater to their citizens’ demands. We have seen that modern democracies are accustomed to existing semi-permanently in the red, and, provided they manage to avoid a Greece-style meltdown (a real risk when political imperatives comprehensively overwhelm economic realities), relatively few are likely to care.

Academic and former American congressman Mickey Edwards observes: ‘Businesses seek maximum efficiency; governments seek sufficient efficiency.’

Nor are the leadership functions in business and politics directly comparable. Businesspeople typically need a strong hand to push their ideas into action. Seizing a fleeting commercial opportunity requires rapid, purposeful and coordinated action. Nowhere is the term ‘executive’ as accurate as when it is applied to the head of a company.

Governments, on the other hand, are notoriously slow to move, not because of an inherent lack of competence, but because they are complicated organisms embodying diverse interests. Unlike a directive from a company executive, government policy is typically subject to layers of officials, rival politicians, parliamentary processes, and a battery of stakeholders who will need to be convinced of its lawfulness and necessity – and all this before it is implemented. And, unlike in business, the key agency for implementation, the civil service, will always survive the political leadership.

Above all, political leadership is about convincing others to follow you. As Davenport remarks: ‘[Political leaders] have a lot of responsibility, but, unlike a corporate CEO, relatively little authority to get things done. Theirs is the realm of persuasion, not power. They can only get done what they convince Congress and others to join in (doing).’

There is an echo of this in recent events in Johannesburg. Explaining his dismissal of a member of his Mayoral Committee, Mayor Mashaba remarked that ‘we held a difference of opinion on the approach to tackling matters of investigations into alleged fraud and corruption within City Power. I am firmly of the view that I require a team of MMCs who share my commitment to tackling matters of alleged fraud and corruption in the City.’

This is not an unusual sentiment among politicians, whatever their persuasion, but it is one that is bound to be tested over time, as contending with differences of opinion is a routine feature of governance.

So, there is reason to doubt that government can function along business lines. Success in government must be achieved on its own terrain. As Mickey Edwards suggests, candidates for office should be evaluated in terms of the solutions they offer within the logic and limitations of politics rather than on their success in business.

More than that, we – especially those of us who believe in the contribution that business can make to society – must think seriously about how to divide functions between the state and the private sector. Where would we be content to accept socially oriented processes – ‘sufficient efficiency’ – and where would we demand economically oriented ones – maximum efficiency?

Rather than relying on the businessman-turned-politician to transform government into something that it is not, the remedy lies in appreciating government for what it is. The defining role of government is limited, and focused on acting competently to enhance citizenship and address fundamental needs. The role of business is to pursue growth and innovation. These are different responsibilities and skills, which are not to be confused. Allowing each to serve its own sphere is to the ultimate advantage of all.

*Terence Corrigan is an independent governance, research and communications consultant with an interest in business and corporate governance. He is a Policy Fellow at the SA Institute of Race Relations (IRR). Follow the IRR on Twitter @IRR_SouthAfrica.  

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