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Government is not a business

By       Message Seymour Patterson     Permalink
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Circa 420 B.C., Plato weighed in on the class of people from whom rulers of the country should be chosen. As a philosopher himself, he might have betrayed a sliver of bias in promoting his class as rulers. A second motivation might have been a sincere belief that smart people should be rulers; and philosophers are smart people. In any event, he was making a case for specialization as a conduit to successful rule. About two millennia later, Adam Smith (1776) argued that specialization and division of labor in a laissez faire marketplace made the country economically better off. Plato might have been about how to live peacefully and Smith how to prosper. What qualities in a person would achieve these two objectives? That is, who should be president--philosophers, military men, farmers, tailors, diplomats, ranchers, teachers, and actors? U.S. Presidents have come from various groups of men, but mainly from lawyers. However, according to Article II, Section I, Clause 5 of the Constitution, the qualifications for president are: natural born citizen, at least 35 years old, and lived in the U.S. for fourteen years. The Constitution has nothing to say about profession or income as qualification for the office of the presidency. Therefore, a candidate with no government experience (or with no income or education) is not less qualified to be president than a person with experience. Being a community organizer is no less a qualifier for the office than being a businessman.

The United States of America has had 45 presidents (including Donald Trump) and 53 percent of them had been lawyers. In a way, the bias for lawyers makes sense since these are men who have some acquaintance and understanding of legal matters that impact our daily lives. A Lawyer would seem a natural fit for the office. None of the presidents from my Wikipedia source were philosophers. Plato would have been disappointed. The new president is a billionaire, a builder, and a businessman. As such, he is hardly an outlier. Two of his recent predecessors were also businessmen: George H. W. Bush and George W. Bush. It is not clear that they brought any unique business acumen to the job of president, however.

On January 20, 2017, Donald Trump is set to take the oath of office and become the 45th president of the United States of American, assume the trappings of power associated with the office, and thus become the most powerful man in the world. Moreover, he will have at his fingertips an arsenal of nuclear weapons whose use could have apocalyptic consequences for the world.

There is absolutely nothing wrong with businessmen heading the government. There is nothing in the U.S. Constitution that prohibits their ascension to the high office of president. There is, however, no guarantee that the skill sets needed to run a business translate necessarily or overlap with the ones needed to run the government. Government is not a business. Government is about maximizing the general welfare as noted in the Preamble of the Constitution. On the other hand, the purpose of a business in a broad sense is to maximize shareholders' profits. And the goods offered by business are private goods--goods that exclude none paying consumers or at the very least these goods are not jointly consumed. You pay to consume. Public goods like defense are consumed by all of us, even when some of us don't pay.

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The drive for profits can lead some businesses down paths of illegality and immorality. For example, remember the effects on boys' breasts; of the drug Risperdal approved for schizophrenia and bipolar disorder in adolescents (See Natural News), or Johnson & Johnson (J & J) ignoring research that demonstrated that Talcum power caused ovarian cancer. J & J knew about this for decades and did nothing about it. According to The Ring of Fire "At this point, there are 1,200 lawsuits have been filed against J & J. Several of the cases that have been tried have resulted in verdicts ranging from $50 million to $70 million dollars, after the jury has seen how callous and how corrupt the conduct of J & J has been." There can be side effects of drugs from medication that unconnected to any malice. For instance, antibiotics such as azithromycin and amoxicillin might have morbidity issues. A quote from LifeScience asserts this: "The new results are in contrast to those of a 2012 study that linked azithromycin with a higher risk of dying from heart problems than the antibiotic amoxicillin. That study and others prompted the FDA to warn the public in March that azithromycin may cause abnormal, and sometimes fatal, changes in heartbeat in people at risk for heart problems." These side effects are in some ways the unavoidable results of medical and scientific pursuit of cures for diseases that plague human existence. What is unacceptable are deliberate efforts by some businesses to hide deficiencies in their products that harm users the products the sell. Volkswagen admitted to using software on their cars to misdirect regulators: "The software is designed to switch on fume-supressing technology during testing, allowing cars to pass strict environmental checks, while still spewing out dangerous levels of nitrogen oxides on the road." In this case, the company's profits might improve at the expense of general welfare. There is a reason for the expression 'caveat emptor.'

And don't forget the role of bankers and Wall Street in the collapse of the US and the world economy in 2008: the quest for profitability resulted in record numbers of foreclosures, bankers risking your deposits like a casino, and bungling mortgages and creating secondary markets for them. We turned around and bailed them out. They lost nothing but many people lost everything. This was immoral business behavior even when it was probably not illegal. Remember, too, how the bankers rigged LIBOR (The London Interbank Offered Rate) in order to take more money out of your pockets and increase their shareholders' value. Among the banks involved in the LIBOR scandal were: Citigroup, JP Morgan, Bank of America, Deutsche Bank, and Barclay (which was fined 290 million pounds by regulators in the US and the UK). (See BBC) This does not mean business people are bad and driven by evil and malice. Rather, they are people driven by the need for the survivability of their businesses defined by profit margins. The criminality of the LIBOR activity was self-evident as collusive behavior and immoral when it caused interest rates to rise on student loans, mortgage loans, credit cards, and other activities tied to interest rates that have disparate effects on top and low-income groups.

Mr. Trump's cabinet will consist of billionaires who will bring to the government the skill sets needed to succeed in business. In a way, these choices might be antithetical to successful governance, inasmuch as the goals of business are measured in terms of profit maximization, while government is concerned with welfare maximization. Incidentally, the inference from Trump that "smart" and business experience are recipes for success government might be overstated.

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Seymour Patterson received a Ph.D. in economics from the University of Oklahoma in 1980. He has taught courses and done research in international economics and economic development. He has been the recipient of two Fulbright awards--the first in (more...)
 

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