January 20: Can capitalism save democracy (and New York)?

20 January 2010 | 201 Comments » | pablo

Today I’m returning to my roots as an entrepreneur and marketing man.  My blog’s fundamental premise:  New York competes in a marketplace of states . We vie with other states for population, talent, jobs, and especially for taxpayers.  Therefore we would be best-served by organizing and conducting ourselves like one very big, very smart modern brand-oriented company.  Today’s winning products and companies become leaders through innovation, through meeting real customer needs, and by delivering great service.

Does this sound like our state government to you?

There exist all kinds of philosophical and pragmatic reasons to expect fair, far-sighted and capable government to provide its citizens with necessary services, infrastructure, protection, and law and order.  Our free, elective system of democratic government is a beautiful thing in the history of the world.   The “one person, one vote” concept places the citizen — philosophically — at the center of our system of government. 

The problem is:  it’s not working.  Democracy in this state has failed to secure for the majority of the paying customer base (the taxpayers) a fair, far-sighted, and capable governance.  Taxes and state spending are skyrocketing.  Mandates are crushing.  Regulation is stifling.  People are moving away by the millions.  Jobs are starting elsewhere rather than here.  Upstate is dying economically. 

Democracy in New York State has been foiled by partisan, unethical politics in Albany.   “A problem cannot be solved by the same level of thinking that created it in the first place.”  (Einstein)  Our future success obviously requires another, different approach.

It’s time to take a closer look at capitalism

Capitalism is the fundamental economic system underlying our democracy.  Capitalism is of course based on the “invisible hand” of market forces competing on a self-interested basis.  Thought experimentWhat if our state were a modern, leading for-profit business — a big corporation?  We would have:

  • A CEO (the chief executive, akin to our governor)
  • An organization with executives, managers and workers (akin to our legislature, authorities, staffers, and employees)
  • Products/services of real value to mass markets of paying customers (ahh, we fall down woefully here–highest property taxes in nation; nearly highest energy costs; 50% HS graduation rate)
  • Shareholders or investors (but 20% of our population is poor and 3 million people moved away since 1990; source Empire Center)
  • Stakeholders affected by our corporate actions (political parties; schools; health care providers; unions. Do you know that we’re the most unionized state with 25% of the workforce in unions?  Source: AARP)
  • Regulators (federal goverment, state attorney general and comptroller, and I would put the federal and state judiciary in this class); and last but perhaps most important
  • A board of directors elected by the shareholders (the  missing link; there is no equivalent state government oversight function – a steering committee in some senses — except for a smattering of not-for-profit research and watchdog groups like the Empire Center, Unshackle Upstate, and Citizens for a Better New York, whose clout is occasional media attention.  Some argue that voters are the board of directors because in a democracy voters can fire everyone.  Problem is, they rarely do.  Incumbents almost always win.  A company’s board of directors is charged with hiring/firing the CEO and generally setting or approving long term corporate business strategies.  A convening of wise men and women with no axe to grind except the continued and growing success of the enterprise. Wouldn’t that be nice for NYS!)

The most successful, profitable companies dominate market share and attract and retain customers through innovation and powerful business models that are customer-centric.  Today’s Albany is party-centric.  Its customers are itself.  Taxpaying citizens and businesses are not customers of this government. 

We may live in a democracy.  But maybe it’s time to find a way (Constitutional amendment?) to vote for capitalism to take the upper hand from its sister philosophy, democracy.  Let’s authorize establishment of a 15-person non-partisan blue ribbon State Board of Directors that weighs in publicly at least annually with wisdom and recommendations about executive and legislative performance and the state’s long term strategic plan for success in quality of life measurements.  (More on the State Board of Directors idea in future blogs.)