The Difference between Business and Politics

by Burt on October 31, 2011

We always need to keep in mind the key differences between a business career and a political career. And there are some similarities, too. For example, in business you try to make money by identifying a need, making a product to satisfy that need, and then selling it to people at a profit. In politics you try to win elections by identifying a need, campaigning to meet that need, and then selling it to people for their votes. In business, success is measured by money in the cash register, and in politics success is measured by votes at the ballot box. The businessman, in a sense, is greedy for capital and the politician is greedy for votes. Capital and votes are the life blood of business and politics, and both are needed to perpetuate careers in those fields.

The differences between business and politics, however, is where our focus needs to be. In business, you hire people with your profits to make and sell your product. With those jobs, your employees earn money, spend money, and thereby create other jobs by their demand for houses, cars, iPhones, and household products. Wealth expands, new entrepreneurs get new ideas for products to make, and, if society is free, it becomes prosperous.

In politics, you do hire people to run your campaigns and your administration once you’re in office; you do sometimes dole out jobs to build highways, snoop on business, or run the IRS. But almost all of those jobs require other people’s money (i.e. tax dollars) to continue. They take money out of the economy. For example, the jobs created by the Justice Department to check on the trading practices of corporations, the jobs created by the agriculture department to interact with farmers, or the thousands of jobs created to bring trillions of tax dollars each year to Washington are all jobs that take wealth out of the private sector.

Looked at this way, the jobs created in business are the productive jobs, the ones that create wealth and give us the thousands of choices we enjoy in breakfast cereal, cars, clothes, and houses. By contrast, each job created in the political class subtracts a job that could be continued or created in the private sector. Some of these political jobs are needed–to run national defense or enforce legal contracts–but the Founders believed that the political jobs should be few and the business jobs should be many. That’s why they limited government and gave freedom to so many Americans.

If the business community is too heavily devastated by taxes, it loses its competitive edge and ceases to create jobs. Then society goes into decline–especially if jobs are expanded in the political class. In the case of John D. Rockefeller, the first billionaire in U.S. history, he created hundreds of thousands of jobs making kerosene and other by-products from oil. But his profit margin was very small and if he had failed to defeat the competition from the Russians in the 1880s and 1890s, Americans would have lost tens of thousands of jobs and our society would have been much poorer. Would it have been wise for Congress to have taxed him heavily? Likewise, if Henry Ford, the second billionaire in U.S. history, would have been taxed heavily in 1913, he might not have had the capital to experiment with his assembly line production of Model T cars.

As American citizens, we must always be anxious to encourage and expand jobs in business, and to curtail spending in the political class. The differences between business and politics, and how we treat people in business, will determine whether America will continue to be a great country, or will go into sharp decline.

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