The Business Platform

"U.S. businessmen," lamented Time magazine in August 1956, "whether Democrats or Republicans, have a deep-seated aversion to political activity." These days, however, every election brings a new spate of CEO candidates, arguing that their know-how in the ways of commerce makes them far better suited for government service than people who actually have some experience at government service.

This year is no different. In last week's primaries, Republicans nominated two corporate titans -- Meg Whitman, the former CEO of eBay, and Carly Fiorina, the former CEO of Hewlett-Packard -- as their candidates for governor and senator, respectively, from California. They join Linda McMahon, former CEO of World Wrestling Entertainment, who is the GOP nominee for Senate in Connecticut. Their candidacies rest on two things: the copious amounts of cash each are willing to spend (Whitman has already dropped a remarkable $71 million of her own money into her campaign, before the general election has begun), and the claim that business leaders will perform better in political office than "career politicians." This is a remarkably common assertion, but one that is almost never scrutinized. Give it a few moments of thought, however, and you realize that it's almost entirely bogus.

At last Tuesday's joint victory party, with Fiorina standing beside her, Whitman proclaimed, "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!" 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.

First, Whitman says that unlike those career politicians, businesspeople are "from the real world." But how true is this? When we say a politician is removed from the real world, what we mean is that her daily life is so unlike that of ordinary people that she can't understand them or grasp their concerns. Once you've made your climb up the corporate ladder and made enough money to fund a campaign, you've left ordinary people behind. If anything, the CEO's life is even less like that of "the people" than a politician's. The CEO travels on a corporate jet, makes millions of dollars a year, and only talks to the thousands of drones who work for her if she's in the mood. A U.S. senator, on the other hand, makes $174,000 a year, flies commercial most of the time, and is constantly forced to talk to her constituents and nod sympathetically as they explain what they're upset about.

Yes, there are ways in which influential politicians sometimes get excused from the daily aggravations that the rest of us have to deal with. But Meg Whitman is worth $1.2 billion, according to Forbes magazine. The forms Fiorina filed as part of her candidacy put her worth somewhere between $27.7 million and $121 million. More power to them -- I wouldn't mind being that rich, nor would most Americans. And the reason is precisely because if you've got that kind of money, you don't have to live in the real world. You can get other people to clean your house, and fold your laundry, and cook your food. You can drive an absurdly luxurious car -- or get someone else to drive you around. People treat you with deference and obsequiousness. You have choices and possibilities available to you that the rest of us only fantasize about. In short, the whole point of being a billionaire is that you don't live in the real world.

The next part of Whitman's claim is that business people "know how to create jobs." This might seem obvious, but is it, really? A businessperson creates jobs by selling a product or service at a profit, then growing her company to require the hiring of more people. All well and good -- but it has almost nothing to do with the rather limited range of things a politician can do to create jobs. The knowledge you gain in business could certainly be a help in understanding some of the issues around job creation, but it won't help you much at all if you can't do things like build coalitions to pass legislation.

Whitman's next claim was that businesspeople know how to "balance budgets." But a business' budget and a government's budget are profoundly different animals. Balancing the federal or state budget isn't just a matter of technical expertise, where you need someone with a head for numbers to go carefully through a spreadsheet. It involves highly ideological battles over spending and taxation. Is Whitman's experience in generating profits at eBay going to enable her to get Californians to go along with huge education cuts? I doubt it. Balancing government budgets isn't an accounting problem, it's a political problem -- which makes it infinitely more complicated.

The last part of Whitman's claim is that businesspeople know how to "get things done." Since she's running for governor, it might seem that her experience building eBay will be relevant here, and it would to some degree -- not a great degree, but some. In business, "getting things done" can mean successfully managing large operations to achieve goals. But the key difference between business and government is that a governor presides over a teeming mass of competing interests. Unlike a CEO, the governor can't fire most of the people who work in state government. In order to do most things, she has to cajole a legislature -- and if Whitman wins, the legislature will be controlled by the opposing party.

For Fiorina, who is running for a spot in the Senate, "getting things done" is even less important. Passing legislation isn't a matter of will or organizational acumen. When she was running HP, Fiorina could institute a new policy by telling her underlings to make it so. You can't do that in the Senate, where you need to get 50 of your colleagues to agree with you before you can win a vote.

There are plenty of business leaders who have won office with the same argument Whitman and Fiorina are making. But the list of those who have actually performed well at the offices they won is far smaller. Recent years have seen multiple CEO candidates who have struggled to produce impressive achievements when in office. John Corzine (a former CEO of Goldman Sachs) was undistinguished in the Senate, then had a tumultuous term as New Jersey governor before being cast out of office. Mark Warner had one successful term as Virginia governor, but has been almost invisible in the Senate. Others, like Wisconsin Sen. Herb Kohl (of Kohl's department stores), have served lengthy terms without becoming national figures. And let?s not mention George W. Bush, the first president with an MBA. In fact, if you're looking for contemporary examples of businesspeople who came into government and did all the things businessperson-politicians always promise -- change the way things are done, bring efficiency and competence, produce demonstrably better government outcomes -- the list is pretty much limited to one guy, New York mayor Michael Bloomberg.

Maybe Meg Whitman and Carly Fiorina would make the best governor and senator California has ever seen (anything's possible). But if they did, it wouldn't be because they succeeded in business. It would be because they learned how to succeed in politics. The two could hardly be more different.

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