Donald Trump 2.0 and the limits of CEO as president
Do Trump and his team have the wisdom to know the difference between a country? Time will tell.
Donald J Trump has officially become the 47th President of the United States (US). An interesting feature of the Trump team is that many of his appointees are wealthy elites, billionaires, and multimillionaires from the business and financial world — all bound, among other things, to win Trump’s trade war with tariff revisions. Given his successful experience on The Apprentice television show, Trump believes that governing a country is like running a corporation.

Should a President govern a country like a CEO running a big corporation? Paul Krugman, a winner of the Economics Nobel, argued in a Harvard Business Review article (1996) that a country is not a company, and business leaders need to understand the differences between economic policy on the national and international scale and business strategies on the organisational scale. Though related, economics and business are distinct disciplines requiring different mind sets, styles, and thinking skills. An executive thoroughly comfortable with corporate finances does not necessarily know how to read national income accounts, understand a country’s trade balance and its balance of payments, or monetary or fiscal policy, and how they are related.
The economy, in contrast to a corporation, is the ultimate giant conglomerate, with hundreds of thousands of product lines and services united only by the fact of being within the country’s borders. This complexity means that a national economy must be run based on general principles and theory. Best economic management almost always consists of creating a market-friendly environment based on a sound analytical framework. The idea rarely sits well with businesspeople, especially with know-it-all billionaires.
Most corporations are built around a core competence, for instance, a particular technology or an approach to a specific type of market. Corporate CEOs succeed not by general concepts or theory, but by finding specific product strategies or organisational innovations that work for their businesses. Successful business leaders have trouble accepting the comparatively hands-off role of a wise economic policymaker.
In his analysis, Krugman also pointed out another difference. Economists view the national economy as a closed system with strong feedback implications and much uncertainty. In the business world, businesspeople are accustomed to thinking of an open system, and feedback tends to be more certain and positive. This is particularly relevant when it comes to Trump’s tariff policy to address America’s trade deficit. The trade imbalance, to economists, is a macroeconomic condition determined by the difference between investment (both domestic and foreign) and savings (private and public or government’s budget surplus or deficit). As an accounting truism, the deficit or surplus must be matched by corresponding capital (financial) inflows or outflows. Trump’s approach from an open system (a zero-sum perspective) is unlikely to rebalance America’s trade deficit and can even be counterproductive.
This leads us to the broader question: Is experience in running large corporations a reliable qualification for running a country and its economy?
During the high stagflation of the 1970s and early 1980s in the US, Arthur Okun, the late professor at Yale University and chairman of President Lyndon Johnson’s Council of Economic Advisors, developed the Index of Discomfort designed to measure the material well-being of the people living in the country. The index is simply the sum of inflation and unemployment rates. When the index is higher — high inflation and more unemployment — people feel less well off. It was intended as an intuitive measure of economic conditions that affect everyday life. In the 1980 campaign against the incumbent Jimmy Carter presidency, Ronald Reagan popularised the index and renamed it the Misery Index.
We analysed the change in the Okun Misery Index over the period from 1948 to the present, spanning 14 presidencies, from Harry S Truman to Joe Biden (up till the latest available data). Five of the 14 presidents were businessmen — four successful and one failed businessman (President Truman). Carter, George H Bush, George W Bush, and Trump were successful businessmen before they became presidents. George W Bush and Trump can even boast of having formal Ivy League MBA training in their resumes, at Harvard and the University of Pennsylvania, respectively. Yet, both ended up leaving a “more miserable” legacy than when they assumed the presidency. On the other hand, Reagan and Biden — the former an actor-turned-politician and a state governor and the other a career politician who is a former senator and vice-president — seem to defy the myth of prior business success and wealth as prerequisites for a successful presidency. Both had inherited high misery from their predecessors and managed to turn it around. Reagan left office with the largest turnaround in misery (15 points). Biden turned around the economic misery from the Covid-19 pandemic he inherited and changed it for the better by more than six points.
The Okun Misery Index, of course, has its limitations. It is not intended to be predictive as some political pundits have implied; rather, it is a lagging indicator measuring a president’s aggregate performance over a period of time.
In most societies, business success is respected and valued for legitimate and good reasons. Political leaders will rightly and inevitably seek advice from business leaders. Do Trump and his team have the wisdom to know the difference between a country and a large corporation and a proper sense of what business success does or does not teach about economic policy? Time will tell.
Kiertisak Toh is former senior fellow at Duke Center for International Development, Duke University (North Carolina, USA), and Prahlad Kasturi, is emeritus professor of economics at Radford University. The views expressed are personal
