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Tag Archives: John Steele Gordon

I posted my comments to John Steele Gordon’s article on other forums and found it difficult to stay clear of the political leanings of authors. I am not interested in the political leanings of any author.

I believe if a government, any government, has to step-in to bail out private enterprise on the scale the US is now doing, than we are witnessing the failure of corporate governance in the private sector.

Both sides can fail as pointed out by Gordon’s and myself. And there are no assurances of either success OR failure at the outset.

The Port Authority of Singapore, and Australian healthcare services are two examples of excellent government run services – excellent. The Apollo program of the 1960s is a US-based public sector success, and a tremendous success it was.

I think the impact of point (1) is underestimated in the private sector. Just because a private sector C officer is in the private sector does not mean that he/she runs an organization solely by merit, i.e. political considerations come into play.

For example (without naming names) board members are often selected / approved by whether they will implicitly support the Chairman / President / CEO, and not for their independent views. So you get entrenched blocks. With entrenched blocks leadership goes out the window because leadership is no longer required to keep your position.

To avoid the risk of massive failures, real corporate governance needs to come into play, but how?

Benjaimn T Solomon
Managing Principal
QuantumRisk LLC

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Disclosure: I’m a capitalist too, and my musings & opinions on this blog are for informational/educational purposes and part of my efforts to learn from the mistakes of other people. Hope you do, too. These musings are not to be taken as financial advise, and are based on data that is assumed to be correct. Therefore, my opinions are subject to change without notice. This blog is not intended to either negate or advocate any persons, entity, product, services or political position.
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In his article Why Governments Can’t Run a Business Gordon raises many good issues, but Mr. Gordon here is a reminder and rebuttal to each of your points:

1. Governments are run by politicians, not businessmen.
Quite obviously I do not know how you would define businessmen. Remember, Worldcom, Enron, Arthur Andersen, Merrill Lynch, Morgan Stanley, AIG…

2. Politicians need headlines.
Using the examples above I can understand why businessmen don’t like headlines.

3. Governments use other people’s money.
How do banks get their funds?

4. Government does not tolerate competition.
Have you forgotten Standard Oil?

5. Government enterprises are almost always monopolies and thus do not face competition at all.
Oh wow, if cutting cost is alien to the culture of all bureaucracies, then private medical insurance must be free by now, right?

6. Successful corperations are run by benevelont despots.
Sorry, I forgot GM had over-looked 50 years of losing market share.

7. Government is regulated by government.
Have you forgotten what happened to Wall St in 2008 with minimal regulation?

 

My point is, blaming the other side either overtly or covertly, is not going to help America.

Benjamin T Solomon
Managing Principal
QuantumRisk LLC

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Disclosure: I’m a capitalist too, and my musings & opinions on this blog are for informational/educational purposes and part of my efforts to learn from the mistakes of other people. Hope you do, too. These musings are not to be taken as financial advise, and are based on data that is assumed to be correct. Therefore, my opinions are subject to change without notice. This blog is not intended to either negate or advocate any persons, entity, product, services or political position.
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