Tuesday, August 18, 2015

A country is not a business


Also worth noting, cities, towns, counties, and states are not businesses.

That seems kind of obvious, but not every compliment for Trump has been about how refreshingly honest he is. I have also seen some comments that a businessman is what we need.

One could argue that even if that were true, Trump might not be the best businessman for the job given the bankruptcies in his past. I believe he has defended that those were not personal bankruptcies. This could be a poor defense, because if it is his business acumen that we want, his business dealings are more pertinent than his personal life.


It gets to the heart of the matter anyway, because it is normal for businessmen to put other people's money at risk, so that if something goes wrong personal wealth remains intact. For an example of this, let us consider Portland's own Rose Garden, now officially Moda Center.

Team owner, Microsoft co-founder, and billionaire Paul Allen financed the construction in 1993 for $155 million. He did not want to personally guarantee the loan, which raised the interest rate. This may have made it easier to call the terms of the loan unfavorable when he defaulted on it, blaming reduced revenues due to the poor economy. This was in 2004, before the 2008 crash.

Now you might think that while this deal did protect Allen's personal assets, it at least meant that he lost the Rose Garden. That was true for a couple of years while he threatened to sell the team and the team demanded expensive renovations, but somehow in 2007 Allen was miraculously the owner again. The terms were undisclosed, but I suspect I know who got the better end of the deal. Allen's current net worth is 17.5 billion.

There is actually a lot that could be explored there about how professional sports require subsidies, thus making a sports franchise often a bad deal for a city, but that is a separate topic. David Cay Johnston's Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You With the Bill) is a good starting point.

The real problem is that the purpose of a business is to make money. Government has many purposes to fill, but they should center around the public welfare. The common argument on the right is that governments are more inefficient than businesses in doing so, making privatization preferable.

Businesses may indeed find ways to be innovative and efficient in search of a profit, but when the financial interests are threatened they may also get evil. This can lead to things like...

- Halliburton subsidiary KBR billing for meals it didn't serve, overcharging and inflating prices, and refusing to turn over electronic data


- Enron defrauding California and manipulating the energy supply


- Tobacco companies hiding what they knew of smoking health risks (I recently learned that some companies with foods containing trans-fats worked hard to delay those risks coming out as well)


- Private juvenile facility owners bribing judges in the Cash for Kids scandal


This list could go on and on (I haven't even mentioned Wall street or diploma mills!), but often it is something as simple as holding down wages, because there are enough people desperate for jobs that you can get away with it.


The Waltons are just one example, but certainly an egregious one.

You can run a business successfully in a way that damages the threads of society. Lots of companies kind of are doing that now. It is also possible to run a business well and ethically, but it is not necessarily the same skill set needed for governance.

So, getting back to ways to help after we diverged for a while, one of the ways to help is not running a government entity like a business. More on that tomorrow.

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