Tap CEOs for top jobs
Is it possible for Deepak Parekh or K V Kamath to become India’s FM? The answer is likely to be no, because of perceived conflicts of interest and also because the political system doesn’t trust businessmen. That’s a state of mind, which is a hangover from the socialist era and needs a radical rethink. The US, the world’s oldest democracy, has no hesitation tapping knowledge and expertise wherever it can be found. Earlier this week President Bush nominated Henry “Hank” Paulson, chairman and CEO of Goldman Sachs, as Treasury secretary. Mr Paulson joins a long list of top level US corporate executives who have joined government. Robert Rubin, President Clinton’s Treasury secretary was also a former chairman of Goldman Sachs. In the current administration, Joshua Belten, the White House’s chief of staff, is a Goldman alumnus. Paulson’s two predecessors and vice-president Dick Cheney have all run companies. A two-way flow between industry and government is commonplace in most advanced markets.
There is no doubt that there are potential conflicts of interest. For starters, Paulson will have to ‘ring fence’ his vast personal fortune, which essentially means putting his assets in a blind trust so he has no knowledge as to how they are managed. Every word Paulson speaks, and every action he takes will have an impact on Goldman, one of the largest investment banks. As Treasury secretary, he will have to represent the US’s interests in talks with China, a country whose leaders he had avidly wooed in his Goldman avtar. Remarkably, at least for us Indians, no one in the US thinks that these conflicts disqualify Paulson. No one suspects that he will be secretly on China’s side in negotiations over, say, currency changes. It is simply assumed that his dharma from now on will be to serve the interests of the US government, to the best of his ability. In India, suspicion and ignorance of business, and not completely unjustified fears that conflicts cannot be managed, prevent the polity from using the services of CEOs who may be inclined towards public service. The country is the loser.
-- The Economic Times Editorial dated 3rd June, 2006
There is no doubt that there are potential conflicts of interest. For starters, Paulson will have to ‘ring fence’ his vast personal fortune, which essentially means putting his assets in a blind trust so he has no knowledge as to how they are managed. Every word Paulson speaks, and every action he takes will have an impact on Goldman, one of the largest investment banks. As Treasury secretary, he will have to represent the US’s interests in talks with China, a country whose leaders he had avidly wooed in his Goldman avtar. Remarkably, at least for us Indians, no one in the US thinks that these conflicts disqualify Paulson. No one suspects that he will be secretly on China’s side in negotiations over, say, currency changes. It is simply assumed that his dharma from now on will be to serve the interests of the US government, to the best of his ability. In India, suspicion and ignorance of business, and not completely unjustified fears that conflicts cannot be managed, prevent the polity from using the services of CEOs who may be inclined towards public service. The country is the loser.
-- The Economic Times Editorial dated 3rd June, 2006
posted by Loco at Monday, June 05, 2006
0 Comments:
Post a Comment
<< Home