Those who run businesses often become exasperated at the political world. They observe misbehaving senators or a mayor not easily fired or how rhetorical skills might trump merit, and are dumbfounded at how the political world operates.
One obvious difference between the business and political worlds is the competition dynamic.
Most businesses face competitors 24/7 and must constantly innovate to please potential customers. It is that or end up broke and bankrupt.
In politics, the competition for “consumers” – voters – occurs about once every four years and the “product line” usually consists of two or maybe three choices, i.e., the choice of political parties.
Once in power, the only spur to innovation comes from self-motivated parliamentarians and outside forces: the opposition party, media and independent forces such as advocacy groups, think-tanks, unions and others.
But here is another way in which politics is profoundly different from business: the power of the story and how it can last much longer in the more protected political world than in business.
This difference occurred to me recently when a former British Columbia MLA wrote to suggest I read the Genesis story of Joseph.
The MLA complained about a recent Alberta column I wrote that noted the plunge in Alberta’s net financial assets. That decrease occurred only in part because of the recent drop in resource revenue. Instead, a big part of Alberta’s decline resulted from government spending on programs near historic per-capita highs. That imperils the Alberta advantage the longer it continues.
The former MLA never spelled out exactly what lesson he wanted me to learn from the story of Joseph. Later, it occurred to me his reference was to how, in the biblical story, the Egyptian pharaoh has a dream that Joseph interprets as foretelling seven years of plenty followed by seven years of famine. In response, grain is stored up for seven years, an action that comes in rather handy when the seven-year famine indeed arrives.
The former politician was, in the context of other remarks, defending the Keynesian notion that governments should spend when times are bad to rescue the economy. But the problem with holding to that narrative religiously is how it ignores a few real-world facts.
For example, few governments ever record surpluses. Since the Second World War, the federal government has produced black ink budgets in only two out of every seven years. On the provincial side of things, and dating back to 1961, the provinces together have recorded only one surplus year for every four deficit years.
The let’s-apply-the-Joseph-narrative-to-modern-government-budgets also fails when contrasted with another reality: the recent recession.
Federally, much of the “stimulus” spending introduced because of the 2008-09 recession was spent long after the recession ended in June 2009. So unless one believes government spending later in 2009, 2010 or even in 2011 can magically time travel back to affect the economy in late 2008 or early 2009, the notion that government spending pushed Canada out of that recession is a myth.
But here’s the thing about myths. They guide much of life, including politics, more than people admit. Such stories are also why those in business pull out their collective hair when a politician or some activist successfully tells fables that will be disastrous in practice. (Here’s one: That Canada can be prosperous without resource development. Hardly, and not for the many Canadians who need jobs.)
In business, narratives must eventually correlate with reality or else trouble soon results. For instance, I imagine the late Steve Jobs’ narrative went something like this: “We at Apple are the little David up against the big Goliath, but we will win because we are smarter and more agile.”
That worked for a while and because Jobs initially delivered a decent product, the early Apple computers.
But as the early history of Apple also demonstrated, Jobs was once fired by his own board because the story wasn’t enough; the great narrative had to continually be connected to reality, i.e., the re-creation and delivery of products desired by consumers.
It was only after much more life experience that Jobs came back to Apple, slightly chastened, and where the story and reality were more often in sync. That’s the difference between business and politics. In politics, the story and the reality can be badly out of sync for a long time before the consequences appear. •
