Just before the US invaded Iraq in 2003, I was debating the matter over brunch with a friend who is a multimillionaire entrepreneur. “Of course we should invade,” he said. “The Middle East can’t get any worse, so if you change something, it’s bound to get better.” I don’t know what surprised me more: the weirdness of his argument or his certainty in expressing it. He was suffering from what I now know as the “CEO fallacy”: the belief that if you have run a successful company, you can run a country.
Mitt Romney’s campaign for president rests on the “CEO fallacy”. As Romney says, “Other people in this race have debated about the economy … but I’ve actually been in it.” However, the CEO fallacy is a fallacy. To quote Larry Summers, former adviser to Barack Obama, now professor at Harvard’s Kennedy School: “The idea that you can extrapolate from the one-business level to the national economy seems to me a profound confusion.
The CEO fallacy goes like this: successful business people ran tight ships and made money. We, the country, want to run a tight ship and make money. Business types know how, and so they should rule. That’s why early admirers of George W. Bush’s administration called it “the CEO presidency”. The UK’s government wouldn’t have let a professor of medieval literature review the oil sector, but it got John Browne, former head of BP, to review British higher education.
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