Monday, January 07, 2013

Politicians As CEO's

When Brian Mulroney first ran for prime minister, his sales pitch was that he would run government like a business. Mike Harris liked to refer to himself as Ontario's CEO. George W. Bush's calling card was that he possessed a Harvard MBA. All three were successful politicians but lousy mangers.

Donald Savoie writes that the notion  that government should be run like a business is wrongheaded:

The notion that public administration could be made to look like private-sector management has been ill-conceived, misguided and costly to taxpayers. Management in the private sector has everything to do with the bottom line and market share. Administration in the public sector is a matter of opinion, debate and blame avoidance in a politically charged environment. It doesn’t much matter in the private sector if you get it wrong 40 per cent of the time so long as you turn a handsome profit and increase market share. It doesn’t much matter in the public sector if you get it right 99 per cent of the time if the 1 per cent you get wrong becomes a heated issue in Question Period and the media.

Most strikingly, the business model has not relied on evidence to produce policy. The second president Bush touted the fact that he relied on his gut to make decisions.  Even though public servants now produce "all manner of reports  . . . they remain unread unless one of them has information to embarrass the government."

The old notion of public service -- despite its shortcomings -- worked. Our politician CEO's have gone to war against government bureaucracy and produced more bureaucracy:

Traditional public administration values have been tossed out the window, including the commitment to a parsimonious culture. Public servants have lost their way, uncertain how they should assess management performance, how they should generate policy advice, and how they should speak truth to political power and even to their own institution. If anything, recent management reforms in government have made public servants feel worse about their institution than they need to.

The result is that the public service has been knocked off its traditional moorings. Simply saying that government managers should operate like their private-sector counterparts without changing how political and administrative institutions function remains a sure recipe for failure. It entails a steep rise in the overhead cost of government that can’t be attributed to programs and services to the public.

The idea that government can be run according to the principles of McKinsey and Company is a lie. Those who peddle that idea are selling snake oil.


karen said...

Last week a blogger named Sol Chrom said, "the public good is not the same as the bottom line." I'm going to get that printed on a t-shirt.

My daughter gave me a textbook from a history class she took from a self-described anarchist to read. It was "How 2 Take an Exam & Remake the World" by Bertell Ollman. It challenged me to think about the word a whole new way. It was impossible at first to think about the world from a non-capitalist, non-monetary point of view, because that is what I have been steeped in all my life. The more I thought about it, though, the more nothing we have makes any real sense to me. It's kind of disorienting, but I think its a good thing.

Owen Gray said...

We consider capitalism axiomatic, Karen. And capitalism has its strengths. The problem is that it has been raised to the status of a religion. We are told we must accept it as an article of faith.

And there's the rub. Markets can be a good for organizing one's finances. They are not good for organizing one's government or one's life.

Beijing York said...

All three, Mulroney, Harris and Bush, would be considered failed business managers given the massive deficits they left behind. They failed to raise money for government reserves, cut services and taxes, and incurred debt that only made their contractors rich.

Owen Gray said...

Exactly, Beijing. They weren't managers. They were con artists -- and we were the marks.

ChrisJ said...

In the college where I worked, there was a contingent of upper- and middle-level administrators who always sang the praises of the entrepreneurial way. Most of them would have been out of business in a month running a post-secondary institution that was not state funded.

To some folks, profit is the first, and sometimes only, human good to strive for. Some of them will never get past it.

Owen Gray said...

The Neo-Conservative Revolution -- which began with Margaret Thatcher and Ronald Reagan -- sold people the idea that government was the problem and profit was the solution, Chris.

They both left their citizens with mountains of debt. And their disciples have merely made the mountains higher.

That's a solution?

Beijing York said...

The industrialists themselves have become lousy managers when you think of it. Who created this recent recession?

Profits are distributed to shareholders without any thought to reinvestment, job creation or research and development. Money is just moved around from one entity to another in order to make more profit on the money itself. When buying debt becomes a lucrative business, you have to figure that whole thing has become a sham.

Owen Gray said...

You're right, Bejiing. The problem is not just that politicians make lousy CEO's.

This generation of CEO's, following a model advocated by Mitt Romney, has focused on short term profits.

They have suggested that leveraged buyouts are the way to make money. In the end, that model results in the dismantling of companies and the selling off of what's left of the enterprises.