Monday, December 5, 2016

Donald Trump could be good for American economy


A businessman with a lifetime of experience in management has been elected president of the United States. Donald J. Trump’s administration may be viewed as an experiment — an opportunity to discover whether one particular businessman’s perspective and skills will be assets in governing a nation.

Mr. Trump’s background evidently appealed to voters, but he should be careful not to be overconfident. His election may be a culmination of a trend in society of lionizing business stars and expecting too much of them.

We’ve seen this phenomenon in the outlandish salaries paid to top chief executives and in the public enthusiasm for them. Rakesh Khurana, dean of Harvard College, described the trend eloquently in his book “Searching for a Corporate Savior: The Irrational Quest for Charismatic C.E.O.s” (Princeton, 2002). He discerned a long trend in American business toward choosing chief executives from outside a company and paying them handsomely for some presumed business flair despite their ignorance of the long-term internal issues facing a company.

Professor Khurana warned that expecting these people to perform acts of genius was asking for trouble. The charismatic outsider tends to become authoritarian, alienating others in the company. The executive’s desperate efforts to live up to their promise may sometimes result in wild gambles. There are grounds for concern that President Trump could be this kind of outsider chief executive.

Mr. Trump has a number of business books to his name, all written with co-authors. Often these books are amusing, if simplistic and boastful. “How to Get Rich” has advice like “Business Rule #1: If you don’t tell people about your success, they probably won’t know about it,” “Business Rule #2: Keep it short, fast and direct” and “Business Rule #3: Begin working at a young age. I did.” Maybe these nostrums are important for Mr. Trump but they seem to have little to do with making a country rich.

But there is still possibly another, more interesting strand in his advice: Mr. Trump’s admonition to be ambitious.

“How to Get Rich” also includes a “final rule,” “Think big and live large.” The book says: “In some ways, it’s easier to buy a skyscraper than a small house in a bad section of Brooklyn.” I’ve actually been giving a version of this advice for years to my students: Go for big ideas and avoid the trivia. My version of big and Mr. Trump’s are different, of course: He is known for his large, splashy buildings, while I try to encourage out-of-the-box economic ideas. Big ideas can lead to great things when they are encouraged, perhaps especially by a president.

Ambitious thinking led to big infrastructure projects like the Hoover Dam, the Golden Gate Bridge and La Guardia Airport, the kinds of projects we could use today. It also led to intellectual and humane triumphs, like the Dorothea Lange photo record of poverty in America, financed by the New Deal program the Farm Security Administration. Those stunning images gave dignity to the people of that difficult time.

A business-oriented president could be helpful in this intellectual world, too, by taking actions like doubling the budget for the National Science Foundation, which was created in 1950 when Harry S. Truman was president, and infusing the National Institutes of Health, the National Endowment for the Arts and the National Endowment for the Humanities with more cash. But of course a president must resist the temptation to meddle in their grant-making process. These are democratic institutions and must stay that way.

An inspirational business-oriented president would also promote enlightened business thinking — an approach that would embrace kindness and consideration to all people, workers included, and wouldn’t be focused only on those destined for fortunes. The country could also use an emphasis on the technical side of business, an aspect that may be unexciting and even off-putting to many people but remains very important. I’m thinking of such things as actuarial science, accounting, securitization and structured products.

Business has many dimensions. Consider another book, one by Georgia Levenson Keohane, the executive director of the Pershing Square Foundation. It is “Capital and the Common Good: How Innovative Finance Is Tackling the World’s Most Urgent Problems” (Columbia University Press, 2016).

Ms. Keohane focuses on the welfare of those people who aren’t anywhere close to becoming billionaires. She describes the theory and history of social impact bonds, green bonds, vaccine bonds, micro-finance, public-private partnerships and other routes to financial inclusion. Ms. Keohane has many ideas that could do much good and could conceivably be pursued much further under a business-oriented president.

In the best of outcomes, Mr. Trump will find a way to live up to this opportunity in the coming years, carefully fulfilling a promise to bring in the “best and most serious people” in the business community rather than the most loyal — choosing people who have a history of thinking big while not overreaching and who have technical expertise and compassion as well.

To be truly successful, Mr. Trump shouldn’t shoot for flashes of genius with immediate results. It would be better to work patiently, in the hope of bettering lives over the long run. With the proper approach, modern business could really improve the work of our government institutions.