Home > Finance, Politics > Jon Corzine Proves Why Business Experience is Overrated in Politics

Jon Corzine Proves Why Business Experience is Overrated in Politics

With a presidential election a year away, and primary season running at full speed, the political pontificators constantly throw in “business experience” as one of the key distinguishing variables between politicians.  This is also particularly evident in analyses of the Obama Administration, where many critics chide the lack of the president’s “success in real world business.”  Emphasis on business experience and success always irked me for a multitude of reasons, and Jon Corzine just about sums them all up.

You see, Corzine rose to the tops of one of the most revered businesses in America–Goldman Sachs–and his success was apparently a testament to some sort of innate business skill that only a few are alleged to possess.   Corzine’s run at Goldman was not without its problems, but the position alone set him up for a segue into politics.  First came Senator Corzine, then governor Corzine.  Politics was a direct result of the man’s triumphs in his former life as a business leader.

Today, with Corzine back on Wall Street, and helplessly at the helms of a failing institution, the “business experience” people are changing their narrative.  Now the story goes something like this: Corzine is the symbol of a Wall Street drunk on leverage.  Some say “Corzine levered Goldman, then levered the State of New Jersey and then MF Global, all inevitably destined to failure.”  Let’s forget about the fact that New Jersey had a long history of budget travails prior to Corzine’s tenure and think about this a little differently.  None of this matters from the perspective of business success and skill as a prerequisite for an entry into politics.  You either have it or you don’t, and Corzine very much had “it.”

The real lesson to extract out of this is not specific to Corzine, but much broader–business experience is the single most overrated variable attributed to any political candidate.  It is a guise for pundits to sweep under the rug issues that they would rather not confront, and allows people who have accumulated massive wealth (whether justly or unjustly) to seamlessly move back and forth between governance and business without ever articulating a constructive political vision, or worse, without ever proving an ability to understand the social and human element that is so core to governance generally speaking.

Why is business experience overrated?  Well let’s start with what makes a businessman successful.  Success requires hard work, dedication, and vision.  It also requires a bit of luck and fortuitous timing (and I mean timing here in physics terms–time and place).  Warren Buffett has made a great point about this topic in his Philanthropic Pledge:

My wealth has come from a combination of living in America, some lucky genes, and compound interest. Both my children and I won what I call the ovarian lottery…

My luck was accentuated by my living in a market system that sometimes produces distorted results, though overall it serves our country well. I’ve worked in an economy that rewards someone who saves the lives of others on a battlefield with a medal, rewards a great teacher with thank-you notes from parents, but rewards those who can detect the mispricing of securities with sums reaching into the billions. In short, fate’s distribution of long straws is wildly capricious.

In other words, were Buffett born in a place like Cambodia, his skill-set would not have been conducive to success.  Yet, in these days, there’s always a neat and concise narrative for success, but rarely do the most successful ever acknowledge the benefits of luck.  I am a believer that people can play a role in shaping their luck, however I also acknowledge that there is an element of chance that can at times enhance merit, and at other times outweigh merit as the ultimate arbiter of success.

But there is also another element to business success that is destructive in politics.  Many successful businessmen, particularly the more entrepreneurial ones owe a good deal of their success to a willingness to embrace risk.  And not just any kind of risk, but risk where the outcomes are binary–either the person is massively wealthy or nothing is left at all.  In such a situation, a young entrepreneur is not burdened by the “nothing” outcome, they simply try again, but the fact remains that many of the most successful attain that status with a series of outsized bets that work out due to some combination of merit and luck.

In the business world, such risks are what moguls are made from.  However, when it comes to politics, risk takers of that kind can potentially be far more destructive.  The costs of embracing risk in the political arena are far greater than in business.  Nowhere is this more evident than in both parties and the Federal Reserve Bank’s willingness to embrace the notion that markets can self-regulate risk.

We don’t need more successful business people in Congress, after all, there are plenty there already, and successful business people control much of the processes with their open wallets through alternative means of influence (lobbying, the business of politics).  What we need are more good visionary politicians who embrace the notion that the world is not full of black and white absolutes, but rather a series of complex, high-stake decisions, that require levelheadedness and cooperation in order affect positive change.  We need wordly people, with a deep interest in the humanities who want to understand the synergies between politics, economics, sociology, anthropology and history.  Some people with business experience have these attributes, others do not, but business success portends political success no more or less than success in community organization.  Let us all acknowledge that reality.

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