Yves here. Let us not forget that George Bush also made much of the fact that he was going to run the Administration like a corporation, with a bunch of supposedly very disciplined MBAs. We have an update on this dodgy Republican pitch via the Real News Network.
KIM BROWN: Welcome to The Real News Network in Baltimore. I’m Kim Brown.
Donald Trump promised repeatedly to, “Drain the swamp,” during his presidential campaign, his vow to end the cycle of corruption within the Federal government. All while touting his own experience as a businessman, as reason enough for him to be Commander-in-Chief.
Yet, his Cabinet appointments and his hand-picked advisors seem to reflect the contrary to draining the swamp, with former hedge fund manager, Steve Mnuchin, as Secretary of the Treasury; former Exxon Mobil CEO, Rex Tillerson, as Secretary of State; and private equity billionaire Wilbur Ross as Commerce Secretary.
But this week Trump’s own son-in-law and senior advisor, Jared Kushner, echoed a very popular sentiment about this White House’s approach to governing — run it like a business. And looking at who so far has been tapped to staff this administration — few folks with any public service or government experience — will this be an effective approach to running the country?
Well, joining us to discuss this we have Michael Hudson. Michael is a distinguished research professor of economics at the University Missouri at Kansas City. He’s the author of many books, including: “The Bubble and Beyond” and, “Finance Capitalism and its Discontents”, also “Killing the Host: How Financial Parasites and Debt Bondage Destroy the Global Economy”, and most recently, “J is for Junk Economics: A Survivor’s Guide to Economic Vocabulary in the Age of Deception”.
Michael is joining us today from New York City. Welcome back to The Real News.
MICHAEL HUDSON: It’s good to be here.
KIM BROWN: So, Michael, in an interview that Jared Kushner gave the Washington Post over the weekend from his West Wing office, where Jared Kushner says that the American government needs to be run like a business — I’m paraphrasing here. This seems to be a feeling, an ethos, if you will, shared by this Trump administration.
So, is it a good idea to try to run government the way that corporations are being run?
MICHAEL HUDSON: Not only is it a bad idea, but yesterday, the Financial Times of London, the premier financial paper, had a wonderful editorial, saying why business cannot make government great. In other words, why it can’t be run like a government.
The main reason is that businesses are run to make a profit. And it’s very surprising that Trump’s supporters say, well, we need a businessman to put the government in order. Business people are their employers.
Imagine somebody working for an employer, and the last thing you want is for the employer to run his business the way he wants, without any safety conditions, without paying you overtime, without paying you a pension, without paying you medical care.
The idea of running it like a business is to screw labor. To pay labor as little as possible, and to get as much money for themselves — the businessmen — as possible. So, when Kushner says, Let’s run government like a business, what he really means is, let’s run government for business.
The Financial Times gave a wonderful example. They said, look at what really made Trump’s reputation in New York politically. And I remember it. I was here. It’s when the city had been trying to build the Wollman Skating Rink, they’d spent like $13 million on it. Trump said, I can do it much cheaper as a businessman. And so, the first thing he said was, well, if I’m going to do it like a businessman, you’ve got to… the rule was you’ve got to suspend the rules about fuel efficiency.
The Financial Times said the Parks Department had a double mandate, of building a rink and making it fuel-efficient. The latter requirement was dropped for Mr. Trump.
So, in other words, running the government as a business says, let’s get rid of the environmental concerns, because that’s a cost to business. Let’s not tax business, because that’s a cost. Let’s get rid of any pro-labor legislation. We have our consumer protection. Let’s get rid of the Consumer Financial Protection Agency that blocks banks from cheating their customers, because business is all about gouging as much as you can get.
So, do you really want a government that is going to be run like a business and gouge people? And then the final kicker that really makes the analogy between business — and a private balance sheet — and government different is that businesses can’t run a deficit. Just like a family household is supposed to save and run a deficit.
But governments are supposed to run a deficit, because they’re supposed to lose money in balance sheet terms. They’re supposed to spend money into the economy; that’s how the economy gets enough money to grow.
And so, the Republicans in the chaos have always said you’ve got to be fiscally responsible, don’t run a deficit. Meaning, don’t dump money into the economy; make the economy borrow from the banks. And what we want is austerity for labor.
Well, now all of a sudden since the Obamacare repudiation didn’t work, they’re not able to get the trillion dollars that they wanted to squeeze out of there. So, Trump says, well, we want to spend money into the economy by cutting taxes on the rich, and also by spending more on the Pentagon.
None of this is going to put money into the economy.
And all of a sudden the Democrats are quite correctly saying, well wait a minute, we are all for running a deficit if it’s to increase employment and raise wage levels. But we’re not for running a deficit simply by cutting money for the rich.
Because the businessmen don’t make their money by employing labor, the businessmen really make their money by increasing the price of their stocks; they make it by speculation; the stocks and bond market; real estate speculation. And they get it by avoiding taxes and avoiding environmental laws; avoiding all of the laws that governments are supposed to impose to create checks and balances, to make a government democratic, and the kind of world the people want to live in. The businessman is pro-business.
KIM BROWN: Well, Michael we have a real world example of this when we look at the State of Michigan, under the Governorship of Rick Snyder, their, One tough nerd, as he calls himself, on Twitter.
After his election, he vowed to make Michigan more financially solvent, and he did this by taking a number of steps, including appointing emergency managers over a handful of Michigan towns; in effect rendering the will of the people obsolete, because now instead of being governed by elected officials, they are being governed by these hand-picked emergency managers.
And obviously, the Flint water crisis is a perfect example of that; how the emergency manager in the interest of trying to save money, decided to change the water source for the Town of Flint from the Detroit River to the very polluted Flint River, and as a result, the entire town has been dealing with lead contamination of all kinds of nasty stuff in their water, for almost four years now.
So, how can we apply how Michigan has been run by Rick Snyder to what the Trump Administration intends to do?
MICHAEL HUDSON: That’s a perfect example. The Trump Administration wants to cover… cutback what they call red tape and bureaucracy.
And what they call red tape is everything that consumers and workers want to protect themselves: to protect themselves environmentally; to protect themselves from fraud, and to protect themselves from being cheated.
And one of the covert reasons for Snyder doing what he did in Michigan was to support fracking. And he had to do the diversion of water in order to let the frackers drill where they weren’t going to affect the local water supply. That’s all been coming out recently.
So, a government run like a business is run for other businesses, and it’s all to give them a free ride and to really dismantle government.
So, running a government like a business means dismantling government; dismantling democratic control; dismantling voters; and really running the economy under emergency conditions.
What you cited in Michigan happened in New York City after 1974, when the city almost went bankrupt, the Emergency Management committee.
Running it like an emergency is treating the economy like Greece is being treated, as an emergency basis, in which you suspend… you don’t pay pensions; you suspend the social laws; you suspend any pro-labor laws there are; and it’s a kind of brutal world that would be created along these lines.
KIM BROWN: So, Michael, and lastly, is there any historical precedent for trying to run the Federal government as a business? I mean, we can go back to the founding fathers who themselves were landowners, plantation owners, slave owners, who had sources of revenue based off the capitalist system. But Donald Trump is something different entirely. Have we seen this ever before in our history?
MICHAEL HUDSON: Not really. I guess maybe in the colonial history you did, when the various colonies like New York State were run like a business and it was really bribery. It was very post-Soviet in a way.
The Governors of the colonies were notoriously crooked, and they were giving land grants here and there and monopoly rights here and there; all up for sale, and the economy looked sort of like Russia did under the privatizers, under Boris Yeltsin. That’s the closest example that I can think of. So, you can think of Trump as America’s Boris Yeltsin.
KIM BROWN: All right. Well, that’s an interesting visual there in my head. We’ve been speaking with Michael Hudson. Michael is a distinguished research professor of economics at the University Missouri at Kansas City. Michael, we appreciate you joining us today. Thank you.
MICHAEL HUDSON: It’s good to be back here.
KIM BROWN: And thank you for watching The Real News Network.
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And what business would this be? To steal our resources, land & infrastructure, part it out to international cartels; rob our wages, retirements and homes, a century of hard-won labor rights; sicken and injure us, drive us to drink or drugs, then have their enforcers rob us blind; indenture the desperate or uneducated with exponentially cascading debt by renting us what they’ve now legally stolen; incarcerating our kids, or sending them overseas to rob, enslave or murder others… in short to run the nation like a YOOJ mob casino for the wealthy; a protection racket for crooks, with sides of loan-sharking, prostitution & drugs? https://arstechnica.com/tech-policy/2017/04/wikileaks-just-dropped-the-cias-secret-how-to-for-infecting-windows/ https://www.salon.com/2017/04/07/u-s-strategic-command-tweets-breitbart-articles-from-official-defense-department-account/ https://medium.com/@shadowbrokerss/dont-forget-your-base-867d304a94b1
“And all of a sudden the Democrats are quite correctly saying, well wait a minute, we are all for running a deficit if it’s to increase employment and raise wage levels. But we’re not for running a deficit simply by cutting money for the rich.”
I can’t remember the last time the Dems leadership made that argument. They were (are) always in the bag for pay-fors and balanced budgets and cutting taxes on the wealthy and trying to convince you they are like your mommies and daddies conscientiously figuring out the family budget at the kitchen table…sure, they were (are) all for running a deficit if it was for helping Obama increase our wars for three to seven but for helping the poor and deplorable then any expense must be paid-for and judiciously balanced with green eyeshades on as the underclasses bloody their hands gripping that artfully crafted knife edge in desperation and agony.
In general, a business purpose is to sell something. And as much of it as possible and at maximum profit. What is Kushners idea what the governments product/service is? Does he believe the gov. should “sell” as much as possible of this to the highest price possible?
Sell as much war as possible to the American people at as high price as possible?
But at the other hand they think that gov. should be minimal and as cheap as possible. Just the opposite to what a business what to achieve. The natural goal for any business is monopoly.
Legally speaking, government is already a monopoly in its own jurisdiction. So mission accomplished!
We are the resource to be mined, our labor pilfered, perpetual debt & rents extracted, children’s peonage speculated-up? WE are their cheap defective product, sold to the highest bidder. http://eji.org/news/convict-leasing-alabama-coal-mines https://www.juancole.com/2017/04/sharpening-contradictions-christians.html
In general, a business purpose is to make a profit. Selling something is one way to do it. Speculating in commodities or other company’s stock is another. Whatever the business, the main purpose is to make money. In the old economy selling something was the where most profit in the economy came from. In today’s financialized economy, the most profit is made via financial transactions.
In the days of making things and selling things, it was not a zero sum game. A manufacturer would take raw materials and turn them into something more valuable to sell.
In today’s financialized economy it is a zero sum game. What ever one business gains, it comes from someone else’s loss. There is very little of value being created.
>A manufacturer would take raw materials and turn them into something more valuable to sell.
Basic wealth creation. The demand pulse goes right back to the mine shovel.
> What ever one business gains, it comes from someone else’s loss.
Service sector, where existing wealth is traded.
The purpose of business is to maximize profit; sell a product using the least investment (poorest quality) at the highest price. The product of government is the protection of its citizens..
What could go wrong?. See how well it is working for healthcare.
Trump was right about the Wollman rink. The city would have saved $20k per year in fuel with their more efficient cooling system. Trump saved millions. The payback is clear.
But of course, construction is his area of specialty. It doesn’t mean that he will make the best decisions in all other aspects of government.
Trump took over an existing project. He used non-union labor. He did not have to tender. He did not have to file environmental planning.
Did Trump deliver it under budget? Yes, but the Wolman rink if overhyped as an example of business (and Trump) doing it better than the government.
If business is so great at doing everything, why don’t we hire professional armies, professional politicians, and professional police force? I bet China would win the defense contract, Italy the political contract, and Nigeria the police contract. Surely that would be GREAT for America.
Michigan’s Snyder just started soliciting bids for contractors to run the State police. This is quickly becoming a state to get out of.
One quibble: Trump’s approach is hardly new since “government is the problem, not the solution” has been the Republican mantra since at least Saint Ronnie. And don’t forget how Al Gore was going to “reinvent government” and give it business efficiencies. The Dem turn toward neoliberalism makes this a bipartisan disease.
Thank you, Carolinian.
We had ReGo, too, in the Mother Country.
Government is supposed to represent the will of the people and protect the people first and foremost. I am convinced that 99% of people making decisions in business are cold-hearted sociopaths who are concerned with money and prestige.
If business running the country is such a great idea, why are all the Republican senators and congressmen still hanging around Washington? They are professional politicians and should quit.
After half a century of life, I still don’t understand how so many people out there are so willing to murder and rob their fellow man and the next generation(s). Bring on the Asteroid!
Well, yes and no. Yes, business CEOs are more likely to be psychopaths/sociopaths than are members of the population in general. But I think that 99% is bit high. I don’t have the book in front of me, but I recall that in Snakes in Suits. Robert Hare and Paul Babiak estimate that about 4% of business CEOs are psychopaths/sociopaths, as opposed to a 1% rate in the general population. There are probably also business leaders who try to emulate successful sociopathic behavior, without having the mental disorder themselves.
I suspect that leaders of most varieties (political, religious, military, as well as business) are more likely to be sociopaths that are members of the general population. It’s also plausible that such leaders are more likely to be narcissists than are members of the population as a whole.
Power. Always power. It has always been thus. The biggest difference between now and “then” is people’s willingness to sit on their asses and take it. These internet forums, for example, are great for spreading information and getting the word out….but if nobody acts on it, all the knowledge and information in the world is as good as useless. The internet is also great giving people the illusion that they are “doing something” rather than wasting time online.
Talk-Action = 0
Woooo Michael Hudson! You’re the man!!
This is gold.
Thank you, Yves.
We have the same nonsense in the UK. The delusion goes back to the days of Thatcher, daughter of a shop keeper from Lincolnshire (a county half way up the North Sea coast), and the shysters she brought into government, a mixture of humourless accountants and free market fanatics / philosophers, second hand car dealers and estate agents (realtors, not the archetypal estate owners of Tory history).
Titles in and names of government departments were changed as part of the drive. The Secretary of the local authority became the CE(O). Managing Director was introduced just below that of the professional (bureaucrat) head of a government department. The Department of Trade & Industry has been renamed Business. COOs have become prevalent. Many staff and consultants were recruited from outside, resulting in a revolving door.
I remember an interview with the Head of HM Revenue & Customs (the UK IRS) in the late 1990s. He seemed at pains to say that he ran a business. Some government officials bought into this idiocy, often seeing how lucrative their post government careers and retirements could be.
As the drive to remodel government as or into a business ratched up, so did salaries and benefits (and “sweeteners”. It was the reverse with service and quality.
What gives this ‘government should be run like a business’ line the most appeal are two phenomena anyone who has ever worked with or for government have observed:
1- spend it or lose it budgets
2- drones on government payrolls
These are real problems which the ‘profit motive’ does to some degree (if only so more money can be paid out to bankers, corporate CEOs, raiders, etc). But they are used as a pretext to, as Hudson puts it, “give them a free ride and to really dismantle government.” – the purpose being, of course, to develop new sources of ‘economic rent’ that can be capitalized and sold to ‘rent seekers’ (er, I mean ‘investors’).
If someone could really figure out how to apply real economics (AKA the ‘profit motive’ or more accurately the ‘break even’ motive) to government, it might save government from the Wall Street gangsters.
P.S. starting with the Congressional military industrial complex, we have to come up with a safer, saner, more productive ‘jobs program’ than padded government payrolls.
Run it as a co-operative business?
Wasn’t Herbert Hoover the last to try the POTUS-as-businessman shtick ? Seem to have read somewhere that it didn’t end very well.
At least then there was someone of the caliber of FDR to pick up the pieces and repair the damage. Who have we got now for that role, if it comes to that ? Nothing but political pygmies and credentialed grifters.
Another, often overlooked, problem with “government as business” is that the motivations of the personnel under a business are not the same as with a government. Everyone from the entry level assistant up to the CEO in a business keep their jobs, in theory, by maximizing profitability, as they’re all ultimately held accountable to the board, who represent the shareholders who make their money off the profit. However, in a government the employees and bureaucrats report up to the elected officials, who keep their job by getting re-elected. However, the employees and bureaucrats should be, in theory, serving the public interest, not the interest of the continued employment of a politician. So as much as they can be obtrusive in some ways, things like public unions and strict public sector labor laws ensure the latter do not interfere too much with the former.
So what happens if, as the “Government as business” crowd wishes, you get rid of those things and started hiring and firing on “performance,” like the private sector does? Continued employment now depends on your ability to keep whoever’s in office, in office. So not only is the operation of the bureaucracy getting bent to serve the politicians, but then you run into continued employment used as a threat (“Why aren’t you registered with my party? Do you want to keep your job?”), but also as a form of bribery (“Vote for us, get a job!”). Which creates patronage, and well then just look at the history of Tammany Hall if you want to see where that leads.
William G. McAdoo, in a speech before the
National Democratic Convention in Chicago 1932
“For years the people of the United States
have hugged the error that material achievement
is the one true measure of success. The myth
has been developed that the mere ability to make
money carries with it every capacity and every virtue.
“Bankers, industrialists and the heads of great
corporations were acclaimed as supermen, until
it was actually believed that every governmental
ill would be cured if these master minds could
only be induced to turn their attention to public affairs.
“Of the many crashes that have jarred the
country, not the least is the collapse of this amazing superstition.
Wherever you go today, you
tread a land littered with clay feet of blasted
idols.
“In the face of a disaster largely produced by
their own rapacities, not one of these acclaimed
leaders in finance and industry has contributed
an original idea ; not one has shown a trace of the
power to lead the nation out of the wilderness.
“The ‘Miracle Man’ of 1928, that great executive
genius, who, with one tap of a Moses’
wand, was to lift the country to new and un
dreamed heights of prosperity, now sits amid the
ruins of his and his party’s proud but shattered
pretentions like a Lazarus in his ashes.
The mightiest financial mind of Republican savor
since Alexander Hamilton, hastily exiled from
the scene of his blunders, now licks his wounds
in the quiet of the court of St. James.”
Running the Federal government like a business is impossible — the expression is just a ‘feel good sound bite’ that can’t ever be implimented.
Everyone interprets it to mean something different, too.
Jared probably thinks it means running things more effectively, more efficiently.
This is wholly impossible for government.
In business affairs, the management is top down, and without a tremendous amount of debate.
In our government, the debates NEVER stop.
Resistance to the president always exists and crosses all party boundaries.
Even Jimmy Carter bitterly complained that he could not see his plans executed.
Similar laments can be found from every president that ever held the office.
My test is simple. Start here. if you want to run government like a business,
1) Reform the federal programs for grazing, timber, etc. so that they produce a profit.
2) Hire 5000 IRS auditors. If they can show a profit, hire additional people until they don’t show a profit. I believe that it’s called maximizing revenue
3) Eliminate managers with a dubious mission. There are likely managers, generals, admirals with an office and staff but no one knows what they do. Every organization that I have worked for has such people.
Robert Clive’s violent privatization of the Bengali state – initiated at the battle of Plassey in 1757, and fulfilled by installing a collaborationist and puppet ruler, Mir Jafar, a General in the forces of the Nawab of Bengal’s army – is perhaps the supreme neoliberal privatization scheme we have yet seen, with corporate power consuming the state itself.
On victory, the EIC emptied the Bengal treasury, using over 100 boats to ship gold and silver to its Calcutta headquarters, enriching the Company and Clive, and, back in London, sending its share price into the stratosphere. Unable to restrain itself from the profit opportunities its political intervention opened up, the Company soon assumed control (Diwani) over the tax revenues of Bengal, and so became a state in everything except political responsibility: for a corporation may have suppliers, financiers, clients, and its own mercenary armies, but it does not have citizens, nor does it want them.
The full privatization of the state is the end of the state (just as the privatization of the personal sphere is the end of the personal). For a corporation that displaces the state still has need of certain state functions and provisions, though without the state’s underpinnings of identification and loyalty, commitment and respect. It needs an army, and it needs an administrative and judicial order, it needs a reliable revenue collection system, and it needs at all times to reduce the transaction costs of rule; but none of this is easily or well provided by corporate means. The army is mercenary, the administrative and judicial order lacks any sense of the common or public interest, revenue collection is typically a matter of forced extraction in a context of all pervasive corruption, and the transaction costs are appallingly high. And so the Indian Mutiny… (with the British State having to step in…)
(This critiqe of the privatisation of the state project as “incurably faulty” (Smith, 1937, p. 603) can be found in Adam Smith – the hero of those who never read him, and never this far – in Book IV of Wealth of Nations.)
I love how they take one comment out of context and run with it. Running government like a business means less bureaucracy and trying to get stuff done in a cost effective manner. there’s way too much red tape and bs costs that we as taxpayers pay for to get stuff done within the government for our citizens. lets trim the fat… yes of course if you let them run wild without any rules it can get extreme. I think most would have to admit that the govt regulations and policies along with inefficient use of capital within our system could use some cleaning up.
Maybe read the article before commenting and advertising the fact that you, in fact, did not read it. Just a suggestion.
You read into the government as business statement what you wanted, but how do you know that’s what Kushner meant by it? You don’t. And you would have to be quite naive or ideologically blinkered to think that the Chump administration wants to make government more “efficient” from the point of view of people using or relying on its services. If that were the case they wouldn’t be gleefully gutting every program and service that isn’t dedicated to killing foreigners and destroying their countries.
It is against our written site Policies to comment without reading a post. Commenting here is a privilege, not a right.
This whole idea of government being inferior to business needs to die.
It was always a right-wing propaganda exercise to try to privatize critical government services. Usually when it happened, the employees got screwed and the public had to pay more for inferior quality services. Not always, but in most cases.
There are just many services that need to be done by government because they are not meant to turn a profit.
Likewise, often public private partnerships don’t work out. The taxpayers get a bad deal for the money.
Michael Hudson raises a very sensitive point. Often these services are given away at fire sale prices. The similarities between Russia in the 1990s under Yeltsin and America today are disturbing, but a sign of the times. The private sector will surely extract economic rent with their gains, while we get screwed. Queue the crapification of everything.
There will surely be more Flint, Michigan like poisonings soon enough. Unfortunately though it is not just Michigan. This neoliberal class warfare is happening everywhere. Trump is just the latest manifestation of it. No doubt Clinton would have been the same.