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Running Government Like a Business is Bad for Citizens

Donald Trump and Jared Kushner say that the government should be run like a business, but that would mean eliminating regulations and expenses that benefit the people says Michael Hudson.

KIM BROWN: Donald Trump promised repeatedly to, “Drain the swamp,” during his presidential campaign, his vow to end the cycle of corruption within the Federal government. All while touting his own experience as a businessman, as reason enough for him to be Commander-in-Chief.

Yet, his Cabinet appointments and his hand-picked advisors seem to reflect the contrary to draining the swamp, with former hedge fund manager, Steve Mnuchin, as Secretary of the Treasury; former Exxon Mobil CEO, Rex Tillerson, as Secretary of State; and private equity billionaire Wilbur Ross as Commerce Secretary.

But this week Trump’s own son-in-law and senior advisor, Jared Kushner, echoed a very popular sentiment about this White House’s approach to governing — run it like a business. And looking at who so far has been tapped to staff this administration — few folks with any public service or government experience — will this be an effective approach to running the country?

Well, joining us to discuss this we have Michael Hudson. Michael is a distinguished research professor of economics at the University Missouri at Kansas City. He’s the author of many books, including: “The Bubble and Beyond” and, “Finance Capitalism and its Discontents”, also “Killing the Host: How Financial Parasites and Debt Bondage Destroy the Global Economy“, and most recently, “J is for Junk Economics: A Survivor’s Guide to Economic Vocabulary in the Age of Deception“.

So, Michael, in an interview that Jared Kushner gave the Washington Post over the weekend from his West Wing office, where Jared Kushner says that the American government needs to be run like a business – I’m paraphrasing here. This seems to be a feeling, an ethos, if you will, shared by this Trump administration.

So, is it a good idea to try to run government the way that corporations are being run?

MICHAEL HUDSON: Not only is it a bad idea, but yesterday, the Financial Times of London, the premier financial paper, had a wonderful editorial, saying why business cannot make government great. In other words, why it can’t be run like a government.

The main reason is that businesses are run to make a profit. And it’s very surprising that Trump’s supporters say, well, we need a businessman to put the government in order. Business people are their employers.

Imagine somebody working for an employer, and the last thing you want is for the employer to run his business the way he wants, without any safety conditions, without paying you overtime, without paying you a pension, without paying you medical care.

The idea of running it like a business is to screw labor. To pay labor as little as possible, and to get as much money for themselves — the businessmen — as possible. So, when Kushner says, “Let’s run government like a business,” what he really means is, let’s run government for business.

The Financial Times gave a wonderful example. They said, look at what really made Trump’s reputation in New York politically. And I remember it. I was here. It’s when the city had been trying to build the Wohlman Skating Rink, they’d spent like $13 million on it. Trump said, I can do it much cheaper as a businessman. And so, the first thing he said was, well, if I’m going to do it like a businessman, you’ve got to… the rule was you’ve got to suspend the rules about fuel efficiency.

The Financial Times said the Parks Department had a double mandate, of building a rink and making it fuel-efficient. The latter requirement was dropped for Mr. Trump.

In other words, running the government as a business says, let’s get rid of the environmental concerns, because that’s a cost to business. Let’s not tax business, because that’s a cost. Let’s get rid of any pro-labor legislation. We have our consumer protection. Let’s get rid of the Consumer Financial Protection Agency that blocks banks from cheating their customers, because business is all about gouging as much as you can get.

So, do you really want a government that is going to be run like a business and gouge people? And then the final kicker that really makes the analogy between business – and a private balance sheet – and government different is that businesses can’t run a deficit. Just like a family household is supposed to save and run a deficit.

But governments are supposed to run a deficit, because they’re supposed to lose jjunkeconmoney in balance sheet terms. They’re supposed to spend money into the economy; that’s how the economy gets enough money to grow.

And so, the Republicans in the chaos have always said you’ve got to be fiscally responsible, don’t run a deficit. Meaning, don’t dump money into the economy; make the economy borrow from the banks. And what we want is austerity for labor.

Well, now all of a sudden since the Obamacare repudiation didn’t work, they’re not able to get the trillion dollars that they wanted to squeeze out of there. So, Trump says, well, we want to spend money into the economy by cutting taxes on the rich, and also by spending more on the Pentagon.

None of this is going to put money into the economy.

All of a sudden the Democrats are quite correctly saying, well wait a minute, we are all for running a deficit if it’s to increase employment and raise wage levels. But we’re not for running a deficit simply by cutting money for the rich.

Because the businessmen don’t make their money by employing labor, the businessmen really make their money by increasing the price of their stocks; they make it by speculation; the stocks and bond market; real estate speculation. And they get it by avoiding taxes and avoiding environmental laws; avoiding all of the laws that governments are supposed to impose to create checks and balances, to make a government democratic, and the kind of world the people want to live in. The businessman is pro-business.

KIM BROWN: Well, Michael we have a real world example of this when we look at the State of Michigan, under the Governorship of Rick Snyder, their, “One tough nerd,” as he calls himself, on Twitter.

After his election, he vowed to make Michigan more financially solvent, and he did this by taking a number of steps, including appointing emergency managers over a handful of Michigan towns; in effect rendering the will of the people obsolete, because now instead of being governed by elected officials, they are being governed by these hand-picked emergency managers.

And obviously, the Flint water crisis is a perfect example of that; how the emergency manager in the interest of trying to save money, decided to change the water source for the Town of Flint from the Detroit River to the very polluted Flint River, and as a result, the entire town has been dealing with lead contamination of all kinds of nasty stuff in their water, for almost four years now.

So, how can we apply how Michigan has been run by Rick Snyder to what the Trump Administration intends to do?

MICHAEL HUDSON: That’s a perfect example. The Trump Administration wants to cut back what they call red tape and bureaucracy.         And what they call red tape is everything that consumers and workers want to protect themselves: to protect themselves environmentally; to protect themselves from fraud, and to protect themselves from being cheated.

One of the covert reasons for Snyder doing what he did in Michigan was to support fracking. And he had to do the diversion of water in order to let the frackers drill where they weren’t going to affect the local water supply. That’s all been coming out recently.

So, a government run like a business is run for other businesses, to give them a free ride and to really dismantle government.

Running a government like a business means dismantling government; dismantling democratic control; dismantling voters; and really running the economy under emergency conditions.

What you cited in Michigan happened in New York City after 1974, when the city almost went bankrupt, the Emergency Management committee.

Running it like an emergency is treating the economy like Greece is being treated, as an emergency basis, in which you suspend… you don’t pay pensions; you suspend the social laws; you suspend any pro-labor laws there are; and it’s a kind of brutal world that would be created along these lines.

KIM BROWN: So, Michael, and lastly, is there any historical precedent for trying to run the Federal government as a business? I mean, we can go back to the founding fathers who themselves were landowners, plantation owners, slave owners, who had sources of revenue based off the capitalist system. But Donald Trump is something different entirely. Have we seen this ever before in our history?

MICHAEL HUDSON: Not really. I guess maybe in the colonial history you did, when the various colonies like New York State were run like a business and it was really bribery. It was very post-Soviet in a way.

The Governors of the colonies were notoriously crooked, and they were giving land grants here and there and monopoly rights here and there; all up for sale, and the economy looked sort of like Russia did under the privatizers, under Boris Yeltsin. That’s the closest example that I can think of. So, you can think of Trump as America’s Boris Yeltsin.

This is a transcript of an interview on The Real News Network.

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Michael Hudson is the author of Killing the Host (published in e-format by CounterPunch Books and in print by Islet). His new book is J is For Junk Economics.  He can be reached at mh@michael-hudson.com

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