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Political Physics: From the Boardroom to the Statehouse…

Whitman and Fiorina


a blogumn by Monique King-Viehland

As fiscal crisis becomes commonplace at every level of government and people become more and more dissatisfied with career politicians, alternative options to the everyday candidate are emerging in the political arena.  One such option is the former CEO.  It started with Bloomberg in New York and Daniels in Indiana and now we have Whitman and Fiorina in California.  The question is, does the ability to be able to run a business mean you can also run a city or a state?

When Jon Corzine ran for Governor of New Jersey – both the first and second time around – people lauded his business acumen as the key differentiator between him and his Republican opponent.  After all, Corzine was the former Chairman and CEO of Goldman Sachs.  And he took the helm of Goldman Sachs during a difficult period in which the firm had experienced significant losses. Through a series of tough calls, strategic initiatives, risk diversification, and long-term planning, Corzine was credited with reestablishing Goldman as the leader in investment banking, ultimately taking the company public and creating substantial value for shareholders and employees.

I remember when I was considering returning to New Jersey, I found the notion of bringing the “private sector” to government very appealing.  I mean who better to run a state facing substantial financial challenges then a guy who has turned around a Fortune 500 Company.  And we would not be stuck dealing with politics as usual, right?  We would run government like a business – much more efficiently and effectively.

Or at least that is what I thought.

Now don’t get my wrong, I applaud the significant achievements that Jon Corzine made during his term as Governor of New Jersey and I am very proud of some of the things we accomplished.

As JonCorzine09.Com reads, Governor Corzine reshaped and resized government – “reducing the state workforce 7,000 employees and achieved additional savings by increasing the retirement age from 55 to 62, capping pensions, and asking state workers to contribute for the first time toward the cost of their health care.”  He was also the first Governor in NJ over the last six decades that reduced the size of government – his first budget after taking office was $1.8 billion smaller than the previous fiscal year.  And under his leadership New Jersey launched it’s own Economic Assistance and Recovery Plan, instituted a new school funding formula and “enrolled 80,000 more children in the state’s health insurance program.”

I believe history will be kind to Governor Corzine and credit him with setting New Jersey on a path to recovery without sacrificing critical social service programs.  However, the road was not easy and the “run government like a business” approach floundered early on.  Mainly because that approach ignored the fact that fundamentally government is government and it is structured in a way that makes it extremely difficult to run it like a business.  Not impossible, but very difficult.  And if you fail to acknowledge that government is different and has it own set of rules of engagement that differ significantly from business, then you will get stuck in the mud trying to accomplish the smallest thing – even if you were a big “muckity muck” at Goldman Sachs.

I think this concept of bringing business to government and whether or not business is a legitimate precursor to steeping into political office has become especially relevant as we look at executive candidates popping up nationwide seeking our votes.

As a July 2010 article on KnowledgeatWharton.Com noted, “[a] growing numbers of top business executives in the U.S. appear to be running for political office. Among others, former CEOs Meg Whitman and Carly Fiorina recently won [Republican primaries in California] for governor and senator, respectively, while promising to use leadership skills and financial acumen honed at private corporations to solve thorny public problems.”  However, the article goes on to state “…experts on leadership and politics say that the leap from one world to the other is fraught with challenges. They warn that the ability to rise through the corporate ranks doesn’t always translate into an ability to campaign for office. And managing a city or state, let alone entering a legislative body, has challenges and responsibilities that are much different than those of managing a for-profit business.”

In fact, in a February Newsweek article, former Governor Jon Corzine noted, “that politicians don’t have the flexibility you imagined. There’s no exact translation.” He pointed out that states are much bigger than any business. “It’s 20,000 people versus nine million. I don’t think candidates get the scale and scope of what governing is.”

However, given the electorate’s general dissatisfaction with “politics as usual” or with career politicians, candidates like Whitman and Fiorina may be very attractive.  And there are some examples of extremely successful transitions from boardroom to city hall/state house/congressional chambers.  As the KnowledgeatWharton.Com article notes, “…examples like Bloomberg and Indiana governor Mitch Daniels, who once worked as a senior executive at pharmaceutical giant Eli Lilly, appear to demonstrate that some business people can lead significant change.”  And as I said, I believe history will credit Jon Corzine with beginning to put New Jersey on a path to fiscal solvency.

But the bottom line is that there is a big difference between the boardroom and city hall/state house/congressional chambers.  As Marc Meredith, a political science professor at University of Pennsylvania, notes “businesspeople who think they can just go in and shake things up will be disappointed.”

This does not mean former CEO’s like Whitman and Fiorina will not be successful if elected.  But as a voter, I would not suggest letting someone’s business acumen be the only driving factor for choosing a candidate.  Because at the end of the day the notion that government can be run like a business is a fallacy.

But that is just my two cents.  Sound off in the comments and let me know what you think.