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Running America The Corporate Way: Welfare Vs. Profit Maximization

Running America The Corporate Way: Welfare Vs. Profit Maximization

Most nations have modeled themselves after the concept of welfare state, a form of governance where a state is vested with the responsibility of tending to the needs of the economic and social well-being of the people.

A Welfare State

This term is supposed to have originated in Germany in the 19th century, when Otto von Bismarck, the first German chancellor, modeled his government on the concept. The most salient features of a welfare state, are, according to Britannica:

  • The state should be based on the principles of equality of opportunity.
  • There should be equitable distribution of wealth.
  • It should be responsible for providing everyone with at least the minimal provisions of a good life, such as basic education, health services and housing.
  • A fundamental feature of the welfare state in most advanced industrialized countries is the provision of social security, as it is called in the United States.

Juxtaposed with the concept of the welfare state is the profit motive — the principle on which business is built. Businesses strive to consistently grow profit and, in the process, generate maximum returns to shareholders.

Will Profit Motive Work For A Nation?

Running the federal government as a business, with the president acting as a CEO, isn't feasible, a professor of legal studies in business ethics at Wharton, Peter Conti-Brown, a professor of legal studies in business ethics at Wharton, said during a recent podcast.

"The instinct to want to have market structures, incentive-based compensation, command-and-control approaches to government as we see in business can come from anyone who's gone and spent too much time at the DMV," Conti-Brown said.

"It's like, 'Oh, this is miserable. If this were privately run, this would be very different.' But virtually nothing about the architecture of government, in the United States or in other places, corresponds to that model. Your interactions with Congress, your interactions with the public, with foreign countries, the entire fiscal dynamic, budgetary dynamics differ widely between public sector and private sector."

Has The Clamor For Corporatization Come Only With Trump?

A Washington Post article quotes many past instances of people wanting to run politics as a business:

  • Franklin MacVeagh, who was appointed as treasury secretary by former President William Taft, said in 1909 that he was making an effort to run the Treasury like a business — and added that the department "sadly needs it, as nearly all the offices of the government do."
  • The article quotes Fiorello La Guardia, New York's mayor in 1938, as saying: "I seek to run [the government] as any honest man attempts to run his business and to live within my revenue."
  • In 1961, New York governor Nelson Rockefeller pronounced that big government was "here to stay" — but that the state needed to run more like a big business.
  • In 1978, Fob James, who ran for governor of Alabama, and later in 1981, John Brown, former Kentucky governor, pledged to run their respective states as a business.
  • In 1992, third-party presidential candidate Ross Perot pitched his election campaign on the premise "like a business."

A Precedent For Trump

When President Donald Trump, who hasn't had prior experience in politics, promised during his campaign that he would fix the federal government using his business acumen, it wasn't a groundbreaking statement.

Trump is arguably seeking to run the government like the private sector. In late March, Trump announced that the White House Office of American Innovation would make recommendations concerning improvement of government operations and services, quality of life for Americans and job creation.

These recommendations, according to the release, would be developed in collaboration with career staff along with private-sector and other external thought leaders. The initiative is to spearheaded by the president's son-in-law Jared Kushner, who has little political expertise, but who is expected to plunge headlong into a range of policy issues that may have been alien to him in his past experiences.

Some past administrations have also sought support from business leaders to streamline operations. One example, when former President Ronald Reagan formed the Grace Commission, with businessman Peter Grace at the helm, was cited by The Atlantic in a story about whether Trump can succeed in applying business principles to government.

Executives And Political Takes

The business leaders Trump has been relying on have strong political stances of their own.

Peter Thiel, the cofounder of Paypal Holdings Inc (NASDAQ: PYPL), who was named to the executive committee of Trump's transition team in November, is a self-confessed opponent of regulations.

Trump has critics among corporate leaders as well. Shark Tank's Mark Cuban recently retweeted a Talking Points Memo article that was anything but bullish on Trump: 

Related Links:

How President Trump's Plans Will Affect Individual Income Taxes

How Trump's Tax Policy Could Affect Large Companies Like Apple

Image Credit: "President Donald Trump attends a strategic and policy CEO discussion in the State Department Library in the Eisenhower Executive Office Building at the White House, Tuesday, April 11, 2017." By D. Myles Cullen - Photo of the Day: April 12, 2017 on, Public Domain, via Wikimedia Commons


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