Businessmen in Politics

January 19, 2017

An article in today’s business section of the New York Times presents the Trump cabinet as an excellent experiment to determine if the skills that make a successful businessman transfer readily to the challenges faced by political leaders. Never before has a collection of very wealthy leaders of business compiled a presidential cabinet as the group nominated by Donald Trump.

But the more obvious test is that of Trump as president. He has only a few predecessors with a business background and really none who’d been previously involved in as many big deals as Mr. Trump. It’s been said by many critics that the U.S. might be better served by leaders with a business background than career lawyers and/or politicians, which is the field that has provided the majority of post-nineteenth century presidents. The thinking is that successful businessmen are well-organized people driven to accomplish something great. While the businessman says go, the lawyer is trained to think not so fast, conjuring up all the reasons why something can’t or shouldn’t be done or why it has to be done in a less efficient, less profitable way.

Alas, a look through lists compiled by historians of best and worst presidents since the early 1900s doesn’t support the thinking that backgrounds in business make the best presidents. The most heralded presidents in this category are the two Roosevelts, Truman, Eisenhower, and Wilson. FDR had a prior career in public service as an assistant secretary of the Navy, an unsuccessful VP candidate, and governor of New York. He was trained as a lawyer. Teddy Roosevelt was a jack of many trades, with experience as cattle rancher, a writer, a state assemblyman, the U.S. civil service commissioner, head of the Rough Riders in the Spanish American War, the NYC police commissioner, assistant secretary of the Navy and governor of New York. Truman had been a farmer, a captain in World War I, a failed retail businessman, a county judge, and a U.S. senator. Eisenhower went to West Point, rose to the top military posts in the military, then became an ivy league university president, and a commander of NATO. Wilson’s training was as a lawyer. He was a college professor, went on to be a university president and New Jersey’s governor.

Former presidents with low reputations in this same era tend to be Harding, Hoover, Carter, and George W. Bush. Harding’s stewardship is remembered for its corruption. He’d been a teacher, journalist, state senator and U.S. senator. Aside from Trump, the wealthiest president with a business background was Hoover, who made his fortune as a mining engineer and then served as a U.S. food administrator and secretary of commerce. Carter initially had a career in the navy, then ran a family peanut farm business. In politics, he was a state senator and governor in Georgia before getting elected president. George W. Bush was born into a family whose business was politics. He earned an MBA at Harvard and then had a number of business experiences in the Texas oil industry and as part-owner of a major league baseball club. Only then did he go into politics, serving six years as the governor of Texas before getting elected president. Only Donald Trump is making the transition directly from business into the top politically elected job in America.

As noted at the top of this update, its inspiration was a press article pointing out the business-intensive background of the incoming Trump cabinet. Along such lines, three appointees of earlier presidencies, two by Carter and one by Reagan, come to mind as examples of extremely successful business people not making a smooth transition to the public sector. Carter’s first appointee to be Fed Chairman, G. William Miller, had been CEO of Textron and followed Arthur Burns, whose own term had ended in March 1978. Miller largely disregarded increasingly rising inflation, focusing instead upon his hope to use monetary policy to goose business investment. He’d been appointed to a four-year term, but in August 1979, just 17 months into his Fed assignment, he was swapped out to be U.S. Treasury Secretary, and N.Y. Fed President Paul Volcker, an economist and banker, was promoted to the Fed Chairmanship with the task of restoring price stability, whatever such might take.

Don Regan, had been Merrill Lynch CEO for several years when cherry-picked by President Reagan to be Treasury Secretary in 1981. One of Regan’s top lieutenants, Beryl Sprinkel, opposed currency market intervention under all circumstances, and Regan’s four years as at the helm of the Treasury Department was a time of ballooning fiscal debt and a dollar that soared to a very uncompetitive level. For Reagan’s second term, Regan swapped jobs with the president’s chief of staff, James Baker. Baker went on to become a highly touted leader of the Treasury Department and subsequently the State Dept under Bush41. Regan, on the other hand, was chief of staff when the Iran-Contra scandal broke, and he also clashed repeatedly with the president’s wife.

These examples, to be sure, represent a small sample, but the evidence suggests that different skill sets are needed for a successful career in business and handling the challenges that high office in public service requires. And yes, the Trump presidency offers a fine opportunity for answering the question if accumulating great wealth through business dealing is a great training ground for becoming a great president.

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

 

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