The CEO Test for Bush
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Bush gave a long speech Thursday night, which sounded like a laundry
list of promises more than anything else. He pointed to few genuine
accomplishments during the past four years, and seemed stuck in
fall, 2001.
If you think about George W. Bush as CEO of America, Inc., it
becomes clearer why his poll numbers have been so low (low to mid
forties) in the run up to the election. No president with those
kinds of poll numbers in the spring before the election has ever
won.
Bush's basic characteristic is not steadfastness, as the convention
attempted to argue, but rashness. He is a gambler who goes for the
big bang. He loses his temper easily, and makes hasty and uninformed
decisions about important matters. No corporation would keep on a
CEO that took risks the way Bush has, if the gambles so often
resulted in huge losses.
Let us imagine you had a corporation with annual gross revenues of
about $2 trillion. And let's say that in 2000, it had profits of
$150 billion. So you bring in a new CEO, and within four years, the
profit falls to zero and then the company goes into the red to the
tune of over $400 billion per year. You're on the Board of Directors
and the CEO's term is up for renewal. Do you vote to keep him in?
That's what Bush did to the US government. He took it from surpluses
to deep in the red. We are all paying interest on the unprecedented
$400 billion per year in deficits (a deficit is just a loan), and
our grandchildren will be paying the interest in all likelihood.
And what if you had been working for America, Inc. all your life,
and were vested in its pension plan (i.e. social security)? And you
heard that the company is now hemorrhaging money and that the losses
are going to be paid for out of your pension? What if you thought
you were going to get $1000 a month to retire on, and it is only
going to be $500? Or maybe nothing at all? Because of the new CEO
whose management turned a profit-making enterprise into an economic
loser? Would you vote to keep him on?
What if the CEO convinced himself that the Mesopotamia Corp. was
planning a hostile takeover? What if he had appointed a lot of
senior vice-presidents who were either incompetent boobs or had some
kind of backroom deal going with crooked brokers, and fed him false
information that Mesopotamia Corp. was making a move and had amassed
a big war chest for the purpose? And what if, to avoid this
imaginary threat, he launched a preemptive hostile takeover of his
own, spending at least $200 billion to accomplish it (on top of the
more than $400 billion he is already losing every year)? Remember,
it was a useless expenditure.
It turns out that Mesopotamia Corp. was a creaky old dinosaur with
no cash reserves, and couldn't have launched a hostile takeover of
the neighborhood mom and pop store. And, moreover, its arena of
operations is extremely dangerous, and nearly a thousand America,
Inc. workers get killed taking it over. And it turns out that the
managers that the CEO put into Mesopotamia Corp. were bunglers. They
adopted policies that made the taken-over employees bitter and
sullen and uncooperative. Instead of standing on its own, the wholly
owned subsidiary of Mesopotamia, Inc., requires continued infusion
of capital from America, Inc. It looks increasingly as though
Mesopotamia, Inc., will have to be let loose, and that its new
managers will opt for interest-free Islamic banking as soon as they
can.
Meanwhile, the real threat of a hostile takeover comes from
al-Qaeda, Inc. Because 138,000 employees had to be assigned to
Mesopotamia, Inc., there are few left to meet that challenge.
So given this kind of record, do you vote this CEO back in? It is
often said that a lot of Americans want to stick with Bush to "see
Iraq through." But if you think about him as a CEO, and look at how
well he has run things, you can see the idiocy of this argument. The
real question is, do you throw good money after bad?
Juan Cole
Friday, September 3, 2004
from www.juancole.com |
