Sunday, December 11, 2016

On running government like a business

One of the standard lines among Republican politicians for a long time is that government should be run like a business.  Trump is now President-elect.  He has no political experience.  He only has business experience, with his success coming primarily as a show business personality.  He is staffing his cabinet with business executives, including possibly Rex Tillerson from Exxon as Secretary of State (sorry, Charlie Brown, I mean, Mitt Romney...).

This is what we call, in political science, an "experiment."  What happens when we put business executives in charge of government?

Let's make sure to be realistic about what an executive branch can do.  There is more downside than upside.  An executive branch that is well-run cannot give us long-term, stable 4-5% economic growth.  When you hear unrealistic growth projections and promises, be they from Trump or Sanders (and both gave us economic plans based on such nonsense), they are just plain bullshit.  Presidents and cabinets just can't do that.  Developing countries can sustain higher levels of growth because they are building infrastructure at a faster pace.  We have already built a lot of infrastructure.  We could repair what we have, but that's not the same rate of growth.  So, no, an executive branch, no matter who is in charge, can't give you 4-5% growth.

However, an incompetent executive branch can do a lot of stupid stuff.  Most importantly, if there is a crisis, they can react badly.  The presumption of the "run government like a business" crowd is that knowing how to turn a profit is the same thing as understanding economic policy.  If so, then when faced with a crisis, an executive branch filled with executives will implement policies that will stave off catastrophe.

Consider the 2007-8 economic collapse.  It could have been a hell of a lot worse.  How much worse?  How about The Great Depression?  The wrong choices could have led there...

Of course, Hank Paulson was involved in decisions to head off another Great Depression, and you know what he did before becoming Treasury Secretary?  Goldman Sachs.

This will be interesting.

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