Be careful what you wish for

Published 3:00 am Thursday, December 15, 2016

Many politicians today have essentially spent their entire adult lives in politics, first as legislative staffers and then holding elected office.  Some pundits argue that career politicians are out of touch with ordinary Americans, and specifically unaware of the burdens that taxes and regulations impose on businesses.

Does personal experience running a business affect governance?  Consider an observation by George McGovern, the long-serving U.S. Senator and 1972 Democratic presidential nominee.  After retiring from politics, Senator McGovern ran a hotel and remarked, “I wish that someone had told me about the problems of running a business.  I have to pay taxes, meet a payroll – I wish I had a better sense of what it took to do that when I was in Washington.”

If business experience affects governance, America is in for a change.  President-Elect Trump and his picks to head the Departments of State, Treasury, Commerce and Labor have all had careers in business.

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Whether one thinks that a government official’s background and life experience matter depends on how one views life and politics.  To see why, let’s revisit Senator McGovern’s words.

The Senator likely learned a lot about running a business during his second career.  But surely someone could have, as he wished, told him while he was in the Senate how higher taxes or the minimum wage affect business.  I’m sure some people tried. 

Limitations in our ability to communicate can allow politicians’ backgrounds to matter.  Consider the related argument that we must elect more women and minorities to ensure that government decisions reflect their views and concerns.  In all three cases, communicating concerns to a sympathetic representative lacking personal knowledge is not enough.  Perhaps Senator McGovern simply couldn’t process business persons’ concerns.

For politicians’ backgrounds to matter, elected officials must also be able to act on what they learn.  If elections are really effective, office holders will have do what their constituents want.  Senator McGovern would have burdened businesses because this is what his constituents wanted.  Even if the “constituents” are special interests, representatives beholden to whomever put them in office will not be able to act on the insights their backgrounds provide.

Elected officials consequently must have discretion over at least some of their decisions.  Discretion can arise because elections do not work so well, or simply from the larger number of actions they take.  Members of the U.S. House typically cast over one thousand roll call votes during a two year term; we vote once every two years regarding their performance.  Elected officials might have to do their constituents’ bidding on some issues, but possess discretion on other issues.

To explore if a business background matters, economist Rex Pjesky and I examined Congressional voting on issues tracked by the U.S. Chamber of Commerce.  We titled our paper “Searching for Cincinnatus,” after the Roman citizen-soldier who (supposedly) twice left his farm to help save the Republic and then returned home after each crisis.  Critics of career politicians imply that we need more politicians like Cincinnatus today.

Our first task was documenting the backgrounds of members of Congress.  About one third of House and Senate members during the years of our study had professional business experience, with more Republicans having a business background.  Members with a business background voted more consistently with the Chamber of Commerce’s position, but our statistical analysis found that the difference was due primarily to other factors like party affiliation.  The difference attributable to a business background was generally small.

Our paper only looked at roll call votes, and so background might matter for other things.  For instance, Congressional hearings can attract media attention and lay the groundwork for future change.  Representatives might have discretion over hearings.

Will the influx of business leaders in Washington under President Trump lead to major changes?  Based on my research, I won’t be holding my breath in anticipation.  But we’ll have to stay tuned to see for sure.

Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University and host of Econversations on TrojanVision.  The opinions expressed in this column are the author’s and do not necessarily reflect the views of Troy University.

About Dan Sutter

I am the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University.

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