The CEO Myth and Romney’s Misleading Rhetoric

The Health Care Renewal blog talks about how hospital systems today are often being run into the ground by executives that don’t know squat about health care. The nice folks at the blog were therefore pleased to tell us about an article by Gretchen Morgenson in the New York Times in September:

http://hcrenewal.blogspot.com/2012/10/more-reasons-to-doubt-how-ceos-are.html

http://www.nytimes.com/2012/09/23/business/ceos-and-the-pay-em-or-lose-em-myth-fair-game.html?_r=0

Morgenson in turn reported on a study conducted by Charles M. Elson and Craig K. Ferrere of the University of Delaware. These folks looked at the argument used by corporate boards to justify sky-high pay for their CEOs—that the CEO of one successful company is likely to jump ship and go work for another big firm unless well compensated, and so to decide fair CEO pay, the board needs to look at a wide range of comparable firms. That in turn assumes that the successful CEO has extensive general knowledge of how businesses work, and can easily transfer those skills from a company that makes automobiles to one that makes computers or pharmaceuticals.

Elson and Ferrere looked at the record and decided that this idea of easily transferable skill is a myth. CEOs, it turns out, do better by far when they stick to the company that they know and understand. If they try to take on a very different sort of firm, they usually flop. In short, it really does matter whether the company you run makes widgets or something else.

What does this have to do with today’s presidential politics? Somehow Gov. Romney has pulled the wool over most everyone’s eyes through his mantra that as a successful businessman, he knows what it takes to get the nation’s economy back on track. Now, this is wrong at almost too many levels to count. As Paul Krugman has pointed out repeatedly, what a businessman needs to know to run a firm and what government leaders need to know are radically different things. Krugman also recently pointed out:

http://www.nytimes.com/2012/10/19/opinion/krugman-snow-job-on-jobs.html?partner=rssnyt&emc=rss

--that Gov. Romney has had the gall to say that not only is he an experienced businessman; he’s also experienced in small business—pointing to the few employees Bain Capital had when it started up.

Now, my daughter may know something about starting up a small business. She worked for a while making artfully decorated cake pops for some local shops and private parties, and had to fill out a ton of forms to get the required permits. But if she was bankrolled when she started out to the tune of $37 million—the amount of dough that Bain Capital had at its disposal as a “small business startup”—then somehow I missed hearing that fact.

So Romney is wrong when he tells us that because he once ran a business, he knows how to be President and run the nation’s economy so as to make more jobs. But the Delaware study shows that he‘s even more wrong because he suggests that because he knew how to run one business, he must know all about all businesses. That, as their CEO survey reveals, is pure hogwash.

So why does the American voter so eagerly lap up this nonsense? That’s where we’re back to the seductive powers of the quasi-religion known as economism.

The Incoherence of the Republican Right; and How Economism Accounts for It

            This is a belated commentary on the first Presidential debate which addresses two points—first, why the Tea Party fringe that seems to have commandeered the Republican Party appears incapable of coherent thought; and second, in what way the ideology of economism helps us better understand that.

            I need to explain that I did not actually watch the debate, which does not matter, as the point I wish to make has nothing to do with what actually happened there, much less what I thought of it. The point is rather how (reportedly) the Republican base responded to Mitt Romney’s performance.

            The mainstream media helpfully informed us that Romney won the debate and in the process energized his party pumping enthusiasm into many voters who’d been lukewarm toward him since the primaries. The media also informed us that Romney “won” in good part by coming across as a moderate. Let’s assume all that’s accurate.

            Now, as best as I can recall the mood of the Republican right wing back in the spring, their main complaint was that Romney was too moderate for them and was not trustworthy as a true conservative. So, if this wing of the party was capable of coherent thought, the response to this debate should have been, “We knew it all along! We could never trust that guy. As soon as he had the nomination wrapped up, he runs right back to the center, just as he did when governor of Massachusetts.”

            So how is one to explain this sudden falling in love with the previously distrusted candidate, once he proves that the reasons for distrust were perfectly valid?

I propose that the reason is very simple—in the debate, he looked like he could defeat Obama. The right wing wants above all else to defeat Obama. Anyone who can do so is their darling of the moment.

So—how does economism help to explain all this illogic?

The absolute, unmitigated hatred of Obama, among the denizens of the right wing, requires some explaining. Clearly, in my view, some of it is racially motivated, as much as all try to deny it. I really doubt that if Obama was white, there would be the “birther” gang out there; and that so many would apparently believe he’s Muslim despite his insistence that he’s nothing of the sort.

But the fact that so many on the right felt so comfortable in saying from the very moment of his inauguration that defeating him was their absolute number one priority—never mind if they wrecked the nation in the process—seems to me to indicate a key premise of economism at work.

Economism is warmed-over religion disguised as economic science. The two religious traditions from which economism draws—see our “economism primer,” http://theeconomismscam.blogspot.com/2012/09/economism-primer.html---both coalesce around the idea that God determines the way the world is down to the smallest detail.

So this visceral hatred of Obama seems to arise from a deep conviction that Obama represents something unworthy in the eyes of God. This could be for some voters because he is pro-choice or accepting of gays. For many voters, this would be because he seems antithetical to the unregulated free market. For some it would be both. But from God’s point of view, this man is an “Obamanation” as the book title has it, and he must go.

For people who get their marching orders directly from God, or think they do, all of this hangs together and makes good sense.