Chicago Columnist Illinois Leader Entrepreneur Political Analyst Business Advisor Illinois Review

Thursday, September 29, 2005

By Ralf Seiffe

OPINION - The hundreds of letters I get about these columns each week are divided between the fawning, the nasty, the humorous and the poignant.

Last week I got one that’s worth a public response because it represents typical left-hand thinking about the Katrina Disaster and government generally.

The column in question recommended that George Bush act more like a business school graduate than a politician.

Moreover, it advised the president to address Republican objections to his plan to spend the $200 billion his Jackson Square speech proposed. That’s because opposition will likely come from that direction; victims will be glad to get the money and Democrats rarely object to increased federal spending.

I recommended that the president position himself as a CEO and that he read what Peter Drucker had to say about the tasks CEOs must undertake if they expect to have an effect on the outside world.

Essentially, I asked that President Bush explain, in his own words, how the costs he proposed will translate into worthwhile results on the Gulf Coast.

Sharon McBride wrote to complain that the Republicans had mismanaged Homeland Security.

Supporting her argument, she cited the new agency’s largess and offered the example of a small town police department getting federal, anti-terrorist money to buy new leather jackets. She’s troubled because the terrorists don’t know, can’t find and won’t attack the little town.

She’s exactly right and her example neatly proves the point of the column.

Those brand-new leather jackets symbolize the difference between a CEO’s and a politicians’ approach to a problem.

When a businessman surveys a situation or opportunity, he does so in the context of limited resources. These resources include people, expertise, capital and their limits impose a discipline that forces the businessman to make choices. He discriminates by deciding where best to invest his assets, knowing they are inadequate to undertake every available project or opportunity.

The better the choices he makes, the better the outcomes and these accomplishments are the basis for market rewards. Good CEOs focus on stretching the resources available and maximizing outcomes. Buying leather jackets wouldn’t make the cut.

Politicians, on the other hand, approach problems quite differently. They succeed when they convince their colleagues to vote for a program or initiative.

For the sponsor of legislation, this means gaining the consensus of congressmen or senators who may have little interest in the parochial interests of their district or state. One way to get their colleagues’ attention is to provide something that does interest the other politicians.

This means that the pols start adding inducements to appeal to as many of their colleagues as possible. The leather jackets Homeland Security bought for the motorcycle cops in Reedsburg, Wisconsin will make running their speed trap more fun but it won’t catch many terrorists. What that money will do is buy their congressman’s vote.

In the politician’s world, the measure of success is not outcomes, it’s the size of the inputs.

The greater the inputs, the more there is to spread around. Good politicians focus on the size of their budgets and always strive to enlarge their supply of resources. That the problems they chase don’t go away is not a sign of failure; it’s justification for even higher budgets.

The fundamental difference between the CEO and the politicians is not the horse-trading because bargaining and dealing exist in all human transactions.

The real difference between the private and public approach is the notion of limits. CEOs always feel them but politicians aren’t so embarrassed.

This is the signal problem of mature representative democracies. As politicians acquire more economic power, the more political power they accrue. The more political power they get, the greater their sway on the economy.

Harry Hopkins, FDR’s political genius recognized this and Democrats have used the tax-spend-vote strategy ever since. Republicans have now embraced it too, if their recent behavior is any indication. It appears that both parties have forgotten that the Constitution is a limit, not a license.

George Bush is in a unique position to use his graduate school training to make a CEO’s case for reconstruction. He must properly discriminate between worthwhile federal relief and really cool leather jackets.

At the same time, he should work to reconstruct the public’s and politicians’ regard for economic and political restrictions.

As CEO, applying those business school concepts regarding the allocation of scarce resources will work to maximize the return on both economic and political capital.

© 2005 IllinoisLeader.com -- all rights reserved

Ralf Seiffe advises business start-ups and product launches from Chicago, Illinois and is a political analyst and columnist for the Illinois Leader.