Sunday, June 10, 2012

Paul Krugman is Right: Government isn't a Business. But would we want Romney as CEO if it were?



Giving us the business: Government provides services to improve peoples' lives. Businesses sell goods
and services to improve their bottom lines. The same thing, right? Wrong. (Source)
Paul Krugman has stated on a few occasions that electing a business man president doesn't make sense because the country isn't, in fact, a business. Back in January 2012, Krugman said:
But there’s a deeper problem in the whole notion that what this nation needs is a successful businessman as president: America is not, in fact, a corporation. Making good economic policy isn’t at all like maximizing corporate profits. And businessmen — even great businessmen — do not, in general, have any special insights into what it takes to achieve economic recovery. 
Why isn’t a national economy like a corporation? For one thing, there’s no simple bottom line. For another, the economy is vastly more complex than even the largest private company.
The Business of Government. If we take the analogy further, under a "government-as-business" model, who are the shareholders in the United States? Its citizens. How, exactly, will shareholder value be maximized if Romney is elected? Well, it won't be: the new CEO of the corporation will continue to cut back on "customer service"--because the company doesn't need social programs, or firefighters, police, or teachers. The corporation will continue to decrease investments in capital infrastructure--because roads, bridges, and highways are not all that important to the bottom line, which is, well, um, what, again? The corporation will also continue to shrink it's workforce, while funneling more and more money to fewer and fewer people--because that's how things are done in the real corporate world. 


(Source: Mario Piperni)
Vulture Capitalist in 2012! Forget the fact that Romney never really "ran" a business; that he and Bain capital essentially bought distressed companies, loaded them up with debt, shed employees, and sold them, not makes Romney a "vulture capitalist," not a political leader. (There's a difference--but there won't be, of course, if the plutocrats the Koch Brothers, get their way.) But this brings to mind something that a lot of us in the blogosphere have written about, and that's this: corporations don't have the best interests of the public in mind. They have profits in mind--and shareholder value--that's their legal charter. It's what corporations are supposed to do. Government is supposed to provide services for the general welfare of the American public (as Article 1, Section 8 of the Constitution states).


As CEO of the United States, you can rest assured that Romney would bring his "experience" to bear on the United States of Corporate America. But I wouldn't buy stock in a company like that, and neither should you.



1 comment:

  1. Bain Capital didn't buy distressed companies, they purchased companies that were doing well, then they borrowed heavily using said companies as collateral, paid their investors heavy dividends, refused to invest in the companies they took over, put the companies in financial peril, laid off employees and then parceled off the remainders. Which is what Romney will do to the government, given the chance.

    ReplyDelete