A Country is not a Company

For the past few years buoyed by the sub-prime fuelled (now busted) economic boom of 2001-2008, a view was emerging in the national sphere that the nation's economic and social problems could be then and there solved by following an apolitical approach buttressed with management techniques of problem solving.

The presentations made by the former President Dr. APJ Abdul Kalam to the various state legislatures as to how to catapult the state economies to ages of high development are model examples of management approach to problem solving.

Side by side, a ‘consensus’ being posited by some 'interested' sections of the society for an apolitical view for solving the economic and social issues of a nation.

It is in this context, the seminal paper written by Prof. Paul Krugman (Nobel laureate in Economics), “A Country is not a Company” assumes significance and becomes an excellent reading material for such people!

"A Country is not a Company" Paul Krugman

Harvard Business Review, Jan-Feb 1996, (Page 40-51)
Read the full text at:
http://www.pkarchive.org/trade/company.html


Should politicians turn to business leaders for advice in formulating economic policy? Not according to economist Paul Krugman, who argues that executives' advice is often disastrously misguided.

The arguments that economists know to be true seem counterintuitive to businesspeople. For example, executives agree that free trade will result in more exports and therefore more export-related jobs. Economists know, however, that workers who gain jobs from increased exports must gain them at someone else's expense. And businesspeople believe that a country that attracts foreign investment will run a trade surplus, but economists know that such a country will necessarily run large deficits.

It's not that economists are smarter than businesspeople. They simply think a different way. Economists deal with the closed system of a national economy, whereas executives live in the open-system world of business. Moreover, economists know that an economy must be run on the basis of general principles, but businesspeople are forever in search of the particular brilliant strategy.

Business leaders who have been promoted to economic advisers are no more likely to be great economists than military experts. People who have mastered the complexities of running a multibillion-dollar enterprise may think they can make pronouncements whenever the subiect is money, but before they can offer sound economic advice, they must master a new vocabulary and a new set of concepts. In short, they must go back to school.

Visit at: http://www.santhoshtv.in/