Business and Politics

The concept of a "revolving door" has piqued the imagination of many people in recent decades. The concept's central idea is the shifting of positions between the private and public sectors by businesspeople and politicians. As a result of outsourcing services through privatization and procurement of previously government-owned assets, there has been an increase in interaction between business and government. Transparency International performed research in more than 20 European Union countries in 2011 to determine the extent to which the "revolving door" affects business and politics (Brezis and Cariolle 2014, p. 12).  The outcomes revealed that the concept is behind the escalating corruption cases in the region. Countries have been witnessing influential business-people turning into politicians. At the same time, some politicians turned out to be successful in the field of business. Having politics run by business people, taking up crucial leadership positions, in most cases results in the collapse of the businesses and it is therefore important to leave the field to professional politicians.
Imbalance between Sufficient and Maximum Efficiency
The 'revolving door' debate has revealed many disadvantages that businesses encounter as a result of politics been run by business-people. Contrary to the expectations, non-professional politicians may have the interest of their customers and wish to conduct politics using the codes of conduct from their businesses, but this does not work well. Been in the government, the business-people will shift their focus and concentrate on seeking sufficient efficiency (Gerber and Hewitt 1987, p.451-460). This is opposed to seeking maximum efficiency that businesses should be seeking. As a result of this, the non-professional politicians corrupt the very principles that create a conducive environment for the businesses to thrive, hence the poor performance in the business world. Besides, the government makes some choices reluctantly while business requires then to be done routinely. This changes the manner that the business-people make decisions because of the interference from the political realm.
If not protecting their firms, business-people in politics are likely to overprotect domestic market through giving preferential treatment. Local businesses cannot continue to provide or improve their delivery of quality service if foreign entrants are not allowed and given a fair competitive platform. This has been proven true when considering Latin American countries like Venezuela and Argentina. The two nations have a history of upholding the populist approach when it comes to the outward flow of trade (Daniels et al. 2007, p.27). Much of the focus is placed on the local investment and import substitution while oscillating between the nationalist views and the protection of the local firms. The countries further push for pragmatic policies that allow selective imports and the inward foreign investment. Similarly, the ruling class of business-people is likely to take up this stand, which will limit the economic growth.
Vulnerability to Political Corruption
Vulnerability to political corruption is another problem that would affect the performance of businesses once the non-professional take over. Economists have proved that corruption that is evident in the political arena diminishes the economic growth. Besides, corruption is behind the discouragement of the private investors coming to an affected country. Research done by renown scholars such as Wei and Shleifer proved that there is a negative correlation between the level of corruption in a given country and its potential for direct foreign investment (Wei 2001, p.45). In as much as the business leaders who assume political position may wish to avoid corruption and stick to their previous field's codes of conducts, the pressure is just too much for them. There might be so many deals that have been conducted illegally through corruption over the past that are difficult to terminate because of the power of cartels. For this reason, politics should just be left for the professional politicians as business people stick to their field for the growth of the economy and inspiring the growth of upcoming potential businesses.
Political corruption's vulnerability by the new class of business-people has a further differential impact on the firms that operate in a country. More specifically, large firms will have an advantage over smaller ones when corruption becomes rampant in a country (Aterido et al. 2011, p.609-611). Big companies in this environment will have access to the policy makers in the public sector thus facilitating their special treatment. Besides, these firms have enough resources to engage in bribery something that smaller firms cannot. This has a negative impact on the bidding on contracts and influencing the regulatory agendas in the ministries.
The Predictability of Government Policies
Professional politicians are the only one who can guarantee a fair predictability of government policies. Government policies ought to be consistent with the success of the industries with the constraints in place guaranteeing that the policies will not change arbitrarily over the future (Welch, Hinnant and Moon 2004, p.371-373). This predictability will give room for the private firms to make investment decisions that are based on economic considerations instead of speculations about the political environment in the future. Political business-people will want to use the power and the authority vested in them to maximize their profits in their existing firms hence impacting negatively on the predictability.
Managers try as much as they can to avoid uncertainty in a given political environment. The biased business-people are more likely to cause instability in those government policies that focus on the regulation of businesses, tax policies and the intervention in the market. The situation would even be worse in developing nations compared to the industrialized trade partners because the later has a degree of bigger confidence in their economic policies. Firms are also likely to view the business-people in leaders as schemers hence a variation of their predictability assessment on the domestic policies. Whenever firms are facing competitions, they expect this to happen on a platform that is free, fair and transparent. However, given that the people running the political affairs are their potential competitors, the condition is likely to raise eyebrows and scare the powerless businesspersons.
A government run by professional politicians is less likely to impose obstacles to the growth of potential firms due to the expected rise in revenue (Alesina and Rosenthal 1995, p. 76). On the other hand, political businesspersons will first scrutinize the potential firms that want to invest and evaluate the impact of possible competitions by their privately owned firms. From this point of view, the non-professional politicians will always collude and engage in cartel business if not using their monopoly powers to outdo competing firms. Besides, the firms that have access to the policy makers are likely to influence the designing and the implementation processes in a manner that favors them. Firms run by the business politicians are also likely to evade the enforcement of policies and in some cases, receive an early notice that an enforcement will be applied. All these factors prove that politics should be run by professionals and just like there was the separation of politics and religion, business and politics should be independent entities. This fact has been proven theoretically and practically, thus nations should be cautious when pursuing such a path.
Possible Stereotypes and Hatred
Business have their unique customers with divergent political views. There is a high chance that due to the increasing number of political business-people, most managers will be affiliated to a given regime. The managers might be compelled by their masters in politics to express ideas that favor the ruling business class. Because of this behavior, there is a high likelihood of a major fallout with potential customers. Expressing of political thoughts by businessmen will damage their investments because customers might consider a manager to be a fanatic (Rose-Ackerman 1997 p. 60). Besides, it should be understood that employees are ambassadors for a given business and thus important to have good and independent policies in place.
Having a political affiliation with the ruling class of business-people can further ruin the relationship with employees (Freeman 1994, p.409-410). Holding a strong belief on certain issues may affect the workers and prospective candidates thwarting efforts geared towards retaining and recruiting best people. Some employees may interpret a given stand on an ideology as a personal attack, an event that may have long-term consequences like lowering the companies' output. It is almost difficult for the potential business-people to join the ruling class to avoid taking and pushing for a stand on a given political issue. This is why it is better to let the professional politicians engage in the authoritative allocation of resources while businesspersons concentrate on the agendas that will boost the economy with minimal interference from the political realm.
Conclusively, the involvement of more business people in political affairs has a detrimental effect on the success of businesses. The field of politics should only be left to the political professionals who are geared towards the provision of a fair competitive forum for small and large firms to thrive as well as encourage the foreign direct investment. This fair play will result in boosting the economy and providing a chance for the various types of investors to learn from each other. The business-people might be aiming at attaining sufficient efficiency which was previously their goal in the business world thus resulting in the provision of poor services to the people and the investors. While the business people may be determined not to bow to the corruption pressure and the influence of the cartels in politics, their efforts do not bear fruits. They may end up being in a greater danger of exploitation as a result of their inexperience and naivety in political affairs. For this amongst other disadvantages of doing away with professional politicians, business-people should stick to activities that spur economic development while their political counterparts provide a conducive environment for the overall success. Just like politics was separated from religion as advocate for by classical theorist like Machiavelli, the modern world should understand that politics and business should be independent and autonomous.
















References
Alesina, A. and Rosenthal, H., 1995. Partisan politics, divided government, and the economy. Cambridge University Press.
Aterido, R., Hallward-Driemeier, M. and Pagés, C., 2011. Big constraints to small firms' growth? Business environment and employment growth across firms. Economic Development and Cultural Change, 59(3), pp.609-647.
Brezis, E.S. and Cariolle, J., 2014. The revolving door indicator: Estimating the distortionary power of the revolving door (No. 2014-13). Working Papers, Bar-Ilan University, Department of Economics.
Daniels, J.D., Krug, J.A. and Trevino, L., 2007. Foreign direct investment from Latin America and the Caribbean. Transnational Corporations, 16(1), p.27.
Freeman, R.E., 1994. The politics of stakeholder theory: Some future directions. Business ethics quarterly, pp.409-421.
Gerber, R.I. and Hewitt, D.P., 1987. Decentralized tax competition for business capital and national economic efficiency. Journal of Regional Science, 27(3), pp.451-460.
Rose-Ackerman, S., 1997. The political economy of corruption. Corruption and the global economy, 31, p.60.
Wei, S.J., 2001. Corruption in economic transition and development: grease or sand?. UN.
Welch, E.W., Hinnant, C.C. and Moon, M.J., 2004. Linking citizen satisfaction with e government and trust in government. Journal of public administration research and theory, 15(3), pp.371-391.