
A Country Is Not a Company (1996) - seanalltogether
https://hbr.org/1996/01/a-country-is-not-a-company&cm_sp=Article-_-Links-_-Top%20of%20Page%20Recirculation
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jknoepfler
The author's argument could more accurately be summarized as "making good
business decisions requires a different skill-set than making good economic
policy decisions."

The article is not very tightly written, but the reasoning boils down to:
economic policy requires reasoning about an immensely complicated closed
system in which the gains of any individual actor are uninteresting. In
contrast, business strategy requires reasoning about a relatively simple
system in which the gains of an individual actor are all that matter.
Economics requires system-level thinking, business requires individual-actor
level thinking.

By analogy: think of a poker table in a casino. Being a good business person
is making good poker decisions as a player from hand to hand. Being a good
economist is creating the conditions for a healthy poker game with many
winners and losers.

I think the author is right to a certain extent, but they could have written a
much shorter article if they'd started from the observation that good business
decisions and good economic decisions optimize very different objective
functions.

For some reason the article starts with some kind of limp examples of
hypothetical things business people might say when confronted with economic
policy questions and kind of dithers around about why business leaders don't
write great business strategy books. We don't need to put words in anyone's
mouth or operate at such a flimsy biographical level to observe that business
and economic decision making are fundamentally different in kind.

Note that the author is not saying anything about whether or not good business
people make good politicians, which is a fundamentally different question (I
can want to vote a successful local business person into a house seat because
I think they will be an effective political leader without thinking that they
should work in the Fed.)

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mrxd
I assume this was written in response to the widespread assumption that Ross
Perot's business success was a qualification for the presidency.

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Bombthecat
Hm,isn't that also basically the argument for trump?

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kapitza
Some of the confidence of this article (which one could describe as a
remarkably, um, self-confident explanation of basic accounting identities in
international trade) seems a little misplaced 20 years later. Especially if
you've spent much time in the burned-out areas of America.

As an economic doctrine, running a country as if it were a company (in
economic terms) has a name. It's called "mercantilism." Adam Smith coined this
term to describe, essentially, normal economic policy before Adam Smith.

You don't need a time machine to investigate the effects of mercantilist
economics, since the entire modern Far East is run on basically mercantilist
principles. Just visit Harvard, ride the Amtrak to DC (looking out the
windows), then fly to Shanghai. Cost, about $2K. This should give you a good
gut feeling for whose econ professors are on the money.

On the other hand, Adam Smith sure could turn out a sentence. And so can this
guy. Not clear that this is the best way to judge economics professors,
however. For a classic text in mercantilist economics, try Friedrich List,
_National System of Political Economy_ (1844):

[https://books.google.com/books?id=4uuc7tdk0Z8C](https://books.google.com/books?id=4uuc7tdk0Z8C)

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zhemao
Your argument is that mercantilism works better because East Asian nations
have better public transportation and railway networks than the US? Last time
I checked, GDP per capita and labor productivity in the US greatly exceeds
that of China, Taiwan, Japan, SK, or Singapore.

The mercantilism vs. capitalism debate Adam Smith was entering into wasn't
really about internal economic organization anyway, it was about international
trade and economic competition. The old mercantilist idea was that economic
competition was a zero sum game, and that above all else the government should
try to maintain a favorable balance of trade (export more than you import).
Adam Smith's basic argument was that both sides benefit from trade. By
following their comparative advantage and then conducting trade with each
other, two parties could consume more than they could produce alone.

Reading about Friedrich List, some of his ideas do have merit. Protectionism
to foster nascent industries has worked well as a development tool. The US
used it in the 19th and early 20th centuries and the East Asian nations
(except Singapore) used it in the later 20th century. But for that to work,
there had to be certain conditions: a weaker currency and lower standard of
living. So it works well for countries that have not yet developed, but not so
well for countries which have already developed. It also doesn't explain
countries like Singapore, which did not develop based on low-grade
manufacturing, but instead by embracing its important position on key trade
routes and developing its service sector (esp. financial services).

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edblarney
"The mercantilism vs. capitalism debate Adam Smith was entering into wasn't
really about internal economic organization anyway, it was about international
trade and economic competition. The old mercantilist idea was that economic
competition was a zero sum game, and that above all else the government should
try to maintain a favorable balance of trade (export more than you import).
Adam Smith's basic argument was that both sides benefit from trade."

+1 to this, this is a better description of 'Mercantilism'.

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return0
Haven't things changed since 1996 though? Many countries today seem to be
"selling themselves" to companies and capital, trying to attract investment.

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chillacy
Serious question: does the conclusion change in the absence of the Fed? The
author's examples of a business leader's choices being countered by the Fed,
rendering those results fruitless, makes it seem like the Fed is getting in
the way of the natural consequences of these decisions.

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tinbad
Most of Trumps demographic doesn't read outlets like HBR unfortunately (or
won't read at all).

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Consultant32452
Third party voter here, so no real skin in the game between Hillary and Trump.
I was talking to a friend of mine about the election and it suddenly occurred
to me. Virtually every problem I have about trump could be summed up with a
single sentence about that problem and you'd know exactly what I meant. With
Hillary, on the other hand, virtually every problem I have with her requires a
ton of contextual knowledge. Like if I said to you Hillary becoming president
results in a greater chance of WWIII against Russia and millions of deaths
than Trump, you really have to know a lot about the Arab Spring, what we did
in Syria which was really a proxy war with Iran to depose an Iranian ally but
wound up creating ISIS, that Syria, Iran, and Russia are allies, and tons of
other stuff that most voters simply aren't aware of. It's so much easier to
say, "This guy probably raped some people so I'm not gonna vote for him."

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tinbad
Regardless of political affiliation, it baffles me a person like Trump can get
even close to being president. Disclosure: I'm European and not allowed to
vote in the US (yet)

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Consultant32452
Stop thinking of him as a potential leader of the free world and instead of as
a living, breathing "Fuck you!" to mainstream politics and the wealthy elite.
Donald Trump went to a big Detroit auto show, looked straight at the execs of
the American auto industry and told them if they closed their American
factories and opened them up in Mexico he'd slap them with a 35% tariff. That
kind of shit resonates with a populace who has seen both parties sell off the
middle class to enrich themselves and the wealthy elite. I don't support him
and don't suggest anyone votes for either him or Hillary, but it's very easy
for me to understand why people like him so much.

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tinbad
But isn't he part of the problem then? He has a big mouth but just as entitled
and 'elite' as everyone else, except he lacks all the good traits of a leader.
Whenever something doesn't go his way he resorts to acting like a 5 yr old. He
is a joker of a businessman let alone let him run a country?!

~~~
Consultant32452
Yep, he's an asshole. But, perhaps ironically, he talks to the electorate like
an adult in a way that most politicians won't. He outsourced his manufacturing
to Mexico, he's openly stated why, and what he's going to do about it so that
it's likely that some of those jobs can come back to the US. He's talked
directly about the tax breaks he and the wealthy elite take, why they're
unfair, and what he's going to do about it to bring sanity back to the tax
code. These are things you'll never hear from a Clinton or a Cruz. Yes, he has
a big mouth and is kind of openly an asshole. I fail to see how his elite
status or "good traits of a leader" is really different than Clinton. I mean
she destroyed evidence in her criminal investigation and literally created
ISIS by training, arming, and intentionally radicalizing Syrians during the
Arab uprising. How could you possibly think she's got good traits of a leader?
Because she doesn't cuss on Twitter?

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edblarney
"What people learn from running a business won’t help them formulate economic
policy. "

This is very, very false.

Yes - a nation is not a 'company' \- but most people do work for companies,
and arguably the most important metric in the nation is 'employment'. People
who are employed are happier, fruitful, they pay taxes, they don't consume as
many free government services etc..

It's definitely fair thing to say the country 'should not be run like a
business' \- but as we have seen with Obamacare - and the US' messed up
overseas taxation scenarios - I think it does help to have a good
understanding of the reality of business etc..

Also - one could argue that 'Economics' is not really even a science in the
classical sense. Economists can't predict much, they never agree with one
another even on the most fundamental issues.

