January 16, 2011 11:59 pm

The rise of the MBA politicians

 
Hank Paulson

Business and politics: Hank Paulson holds an MBA from Harvard Business School

What do William Hague, Hank Paulson and P. Chidambaram have in common?

Answer: they are all MBA graduates who have reached high public office (respectively British foreign secretary, former US treasury secretary and Indian home affairs minister).

There are plenty of management graduates in politics these days.

In Europe, the current Dutch finance minister, Jan Kees de Jager, is an MBA from Nyenrode (which also produced former prime minister Wim Kok). Jean-Louis Borloo, French minister for ecology and energy until last November and higher education minister Valérie Pécresse are graduates of HEC Paris. In the UK William Hague has an MBA from Insead and Cabinet office minister Oliver Letwin and former shadow home secretary David Davis both studied at London Business School. Harriett Baldwin, Tory MP for West Worcestershire, holds an MBA from McGill, in Canada.

The US has also seen several MBA politicians in recent years, including Mr Paulson, (Harvard Business School) former president George W Bush, (HBS) and former secretary of commerce Donald Evans, who has an MBA from McCombs.

Elsewhere, others include the deputy prime minister of Singapore, Wong Kan Seng, (LBS) and the vice-president of Indonesia, Jusuf Kalla, (Insead).

There are several competing explanations for the prominence of such politicians: from the need for greater professionalism in government, to the simple fact there are more business school graduates in circulation these days.

Not surprisingly, however, opinion is divided about their effectiveness in office. Depending on the point of view, MBA politicians either offer technocratic common sense, or are symptomatic of a creeping managerialism.

Rajeev Gowda, chair of the Centre for Public Policy at IIM-Bangalore, is in no doubt. He says India needs the skills and perspectives MBAs can offer. “As democracies mature, you need different types of people. You go from wanting people who can lead political agitations and write constitutions, to people who can manage a budget and improve the efficiency of programmes. That’s where an MBA training comes in useful.”

India’s raft of MBA politicians include Mr Chidambaram (HBS), the minister of social justice Mukul Wasnik (Nagpur), defence minister Mallipudi Raju Pallam Mangapati (Temple University, Philadelphia), commerce and industry minister Jyotiraditya Scindia (Stanford) and energy minister Jitin Prasada (IMI, Delhi). Sachin Pilot, a 31-year-old minister for communications and technology, studied for an MBA at the Wharton School at the University of Pennsylvania.

Prof Gowda says Mr Prasada, Mr Scindia and Mr Pilot, represent a new guard in public life. “They are less ideological than previous leaders – the ideology today is growth and economic success. The question is how you move from a big government to a government that facilitates, where it is private enterprise that makes the big difference.”

Prof Gowda, a Wharton MBA politician, argues that modern governments need officials who are comfortable interacting with the business community – both to spur economic growth and to deliver social services that the government cannot provide on its own.

This is a theme echoed elsewhere by Kakha Shengelia, president of Caucasus University, Georgia, where several management graduates are in government. Vladimer Gurgenidze, former prime minister of Georgia for example, has an MBA from Gouizueta Business School, Emory University.

“In the old days, we were a Soviet Republic and there was no business education. It was all sciences and mathematics. Now, if you want to be president you need some business education.”

Mr Shengelia, a former deputy mayor of Tbilisi and an MBA from Hartford, credits business school-trained politicians for recent improvements in Georgia’s “business environment”, and in its railway services, for example.

Similarly, last year the Economist praised Mr Hague for bringing an “MBA’s wariness of passions and world views” to the Foreign Office, claiming he had imported a calm professionalism.

Not everyone is convinced that management graduates are as effective as advertised, however.

James Pfiffner, a professor of public policy at George Mason University, who studied George Bush’s performance as the US’s “First MBA President”, says the public tends to over-estimate the abilities of the private sector.

“Voters like to think that business people are efficient and that they can bring good practices to government. But they only think about the best run companies and the worst run agencies. They forget about the thousands of start-ups that go broke every year.”

And, there is no guarantee that management graduates will govern as their training might suggest. Prof Pfiffner argues that an MBA has limited usefulness for aspiring politicians.

“Analytical skills and being able to think clearly are important for politics. But things like accounting, marketing or finance are not going to be directly relevant. The types of things that politicians do need might be better gotten with things like history or even philosophy.”

. . .

But Maurits van Rooijen, rector at Nyenrode, says this misses the point about business school. An MBA is not simply standardised knowledge about various corporate functions he says, but – at its best – is a programme that encourages self-development and fosters leadership skills. It is therefore potentially useful for lots of occupations.

“What we don’t want is the classic MBA who is just capable at analysing data, and making decisions. We are trying to teach contextual intelligence. It’s not always precise data and facts that lead you to a certain solution. You have to develop a sensitivity which goes beyond facts and figures. That’s what you need in business as well as in politics,” he says.

Assessing politicians is subjective. But Prof van Rooijen says whether a politician is effective ultimately depends on the individual, rather than his or her training. “You can do an MBA by sitting behind a computer, acquiring knowledge. Or you can have an MBA that’s beyond the knowledge, where it’s about leadership. That’s what we try to be about.”

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