WPenner's Blog

Having just finished an MBA, I\'ve been thinking about the intersection of business and politics a bit. This is a completely new field for me, so in the post below, I explore some ideas that seem connected. Not confident that the ideas land, but want to share what\'s banging around the neurons recently.

There is a group of people who think that the government should run like a business. What society needs, according to this group, is practical, tough nosed business people to take hold of the public purse and bring sanity to politics. Such people might be free market advocates. Or libertarians. Or one of the growing number of people of every stripe who think of our current system as a kind of kleptocracy.

The last businessman-president that the world saw was an example of this genre of politician and he ended up doing poorly. One lesson to take away from his term is that being brash in business, and being brash in politics, have very different consequences. The attitudes that made the man successful in business were unappreciated by enough people that he lost the subsequent election.

Part of the reason business leaders make poor politicians is that the problem of civic leadership is only partially one of management. Today\'s business leaders are masters of management --- the science of efficient and effective use of resources. Their bias is toward trying to manage political problems in the same way. While that is a fine approach in business, in the public square, citizens expect more than maintaining the status quo.

Adding labour or capital without an increase in benefits is called involution. It was first described by Clifford Geertz, an American anthropologist, in 1963 to describe a situation where a greater input (e.g. increased labour) does not result in greater output (e.g. crops).¹

Nearly every project has an involution point, where adding more money or people don\'t make progress go any faster. The insider joke when I was studying project management (long, long ago!) was that "9 women can\'t deliver a baby in a month"; some processes are simply fixed. Only offering the public the status quo is a failure that more resources cannot fix.

Given that labour and capital involute at worst and at best deliver linear results, figuring out the source of the exponential growth of the last 80 years is important. The Solow-Swan growth model (SSM) considers an economy with capital, labour and technology as inputs. The model clearly points to technology, and only technology, as capable of producing exponential returns. ²

What this means for anyone wanting to keep society growing it is insufficient to throw money at a problem (money printer go brrrrr) or rally people to fight the war on (terror, hunger, drugs, poverty, covid, Russia or) whatever. Rather, it is necessary to come up with better technological solutions.

The crux of the problem is that like many business people, politicians and bureaucrats are managers, and managers receive incentives to optimize within status quo orthodoxy. Improving technology is the opposite of orthodoxy, requiring constant doubt while testing assumptions and hypotheses in a continuous state of flux and failure.

Importantly, this is also how the Western version of public discourse in many domains should function. Unfortunately, with managers in control, maintaining the status quo increasingly means "nobody can disagree". And so there are increasing examples of the settled question fallacy in public discourse (e.g. "follow the science", "scientists agree" and labelling disagreement "misinformation").

So we\'ve seen that for government to lead requires technological innovation, which includes the freedom to ask bold questions and possibly fail. Political leaders and bureaucrats must then deliver a steady stream of innovative uses of technologies. They must leverage old technologies in new ways while creating new technologies. Except for those not paying close attention, neither politicians nor bureaucrats are good at this kind of innovation.

There is another class of business people that are not professional managers, though: entrepreneurs. Entrepreneurs are adept at spotting problems and leveraging technologies (new and old) to solve those problems. Entrepreneurship requires massive amounts of creativity applied to many areas, like setting a vision, getting people rally behind the vision, negotiating with stakeholders, and scrounging resources. Entrepreneurs regularly use technology in off-beat ways to solve problems that in retrospect look obvious and inspire an entire generation of me-too followers with pitches like, "It\'s the Facebook for goldfish".

So, the best politician is probably an entrepreneur.