Sunday, September 26, 2010

Majority of voters in 2008 made a hiring mistake

Published in The Tennessean, Sunday, September 26, 2010

Majority of voters in 2008 made a hiring mistake

by Richard J. Grant

The head of a very large corporation, who is described as a “die-hard Obama fan,” was recently quoted as saying that “the president could have used some executive experience on his all-academic economics team.” Noting that there is no former business executive in the Obama cabinet or among the top economic advisers, he opined, “I think it was a hiring mistake for the administration.”

Who else made a hiring mistake? Was this business leader not also a voter and, possibly, a campaign supporter and contributor? Are the skills needed to run a major corporation not transferable to one’s judgment at the ballot box? Was it terribly difficult to notice that one of the leading presidential candidates was a man in his 40s who had not yet outgrown his schoolboy Marxism?

This top business executive has subsequently discovered that his political actions have imperiled the welfare of not only his shareholders, but also of his customers, his employees and many others. But what is the solution?

Some believe that the president should replace his soon-to-retire, top economic adviser, Lawrence Summers, with a business leader. Would they be happy to bring back Henry Paulson, a former top investment banker who, like Summers, also has previous experience as Treasury Secretary? This is not likely to happen for reasons that include, but also go beyond, party affiliation.

Rumors suggest that the president will replace Summers with a “woman CEO.” This alone would rule out Paulson. Further, given the number of complaints we hear that too few women serve as top executives, it also rules out far more that 50 percent of possible choices. But it also brings our attention back to the priorities and judgment exhibited by the president.

Those of us who have worked in both academia and in business are well aware (or should be) that there are people in both these activities who are suitable to serve as presidential economic advisers. There are also top people in both activities that are clearly not suitable for public policy work.

Business people are just as susceptible as academics to the fantasy that they can cross over seamlessly into that third arena of government management and set everybody straight. Perhaps their experience with office politics and lobbying will prepare them for what is to come. But they are entering into an activity that has no clear bottom line, and the currency of collectivized, all-or-nothing decision making is very different from that offered by business customers.

Those who land in Washington with promises to cut away the “red tape” and get things done, soon discover that they no longer have the same sense of direction that they got from prices and customers in business. They also often discover, perhaps too late, that “red tape” is another name for “checks and balances,” which are essential to protect us all from the otherwise unlimited power potentially exercised by politicians and bureaucrats.

The essential element that is missing from the Obama administration is not business experience but good judgment.

Contrast the 20-month performance of President Barack Obama, with his Ivy League education, to that of a previous president who inherited a similar situation. President Ronald Reagan had majored in economics at Eureka College, a small Midwest liberal arts institution affiliated with the Disciples of Christ. He graduated in 1932, before Keynesian economics and a love of government money came to dominate academia.

President Reagan’s choice of economic advisers worked out for us much better than did President Obama’s. Reagan understood that people thrive on productive activity, and that production must always necessarily come before consumption. Recognition of this natural necessity leads to a moral imperative. It is the antithesis of “stimulus” theory.

Somewhere there is a board of directors of a very large company that might need to choose a new chief executive. Somewhere there is a large country where the voters must definitely do the same thing.

Richard J. Grant is a professor of finance and economics at Lipscomb University and a scholar at the Tennessee Center for Policy Research. His column appears on Sundays. E-mail:

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