Does Business Experience Matter? One VA Professor Says No

From Pete Snyder to Donald Trump (and, oh-so-awkwardly, Terry McAuliffe), political candidates tout business experience as proof they can get things done.  We hear this most often when it comes to economic leadership, as candidates make the reasonable-sounding argument that a background in running a business makes them more attuned to the needs of businesses and thus able to help them create jobs.  It is also used as proof of forward thinking and fiscal discipline – unlike the government, a private business must beat the competition and pay its bills.

But is this true?

According to a study co-authored by an assistant professor at William and Mary, the answer is no – at least at the city council level.  Brian Beach and his co-author Daniel B. Jones (of the University of South Carolina) studied California city councils and found no observable change in policy.  This means elected officials who came from the private sector spent the same amount in taxpayer money, created the same amount of jobs, and won re-election at the same rate.

How can this be?  Shouldn’t a swashbuckling businessman (or woman) be able to cut through the red tape which paralyzes government?  The paper largely demurs from offering explanations for the lack of improved outcomes, but here are a few possible explanations:

– The businesspeople who choose to run for elected office are those most similar to the politicians we already have.  After all, those who run are a self-selecting group, and one that seemingly tends more toward the extravagant Donald Trumps (or Linda McMahons) than the workmanlike Warren Buffets of the business world.  A corporate titan may be just as out of touch with reality as a bureaucrat – and more egomaniacal.

– Government is too different a beast for private sector experience to translate.  Business leaders expect their decisions to be followed, and they have wide latitude to change up their teams if that doesn’t happen.  Too many government bureaucrats know that they can simply stall for time and wait for the elected official they disagree with to get distracted, move on, or lose the political capital to keep fighting on an issue.

For those worried that California city councils are a poor proxy for Virginia (or anywhere else), the authors note that these councils are almost always non-partisan and have extremely well-documented outcomes.  I’ll also note that people underestimate how many localities in California are conservative, especially when you move outside the state’s major metropolitan areas.  The state did elect Ronald Reagan, Pete Wilson, and Arnold Schwarzenegger to the governor’s mansion – twice each.

One final aspect worth mentioning is that California city councils are largely comprised of five members, placing them somewhere between the unruly mob that is Congress (or many state legislatures) and a single executive.  You could argue that a single executive would be able to implement their business-inspired ideas more easily, but they still must deal with legislatures, and as The Economist noted a few years back, “there is little evidence to support the common belief that businesspeople possess management skills that can easily be imported into the public sector.”

More research must be done (as always), but for now, voters should make sure a businessperson touting their bottom-line experience also has the other skills necessary to succeed if elected to public office.

The full working paper referenced above can be found here: http://wmpeople.wm.edu/site/page/bbbeach/research