By Lynn Parramore, senior research analyst at the Institute of New Economic Thought. Originally published on the website of the Institute for the New Economic Thought
There is a family myth in American politics: that of the meaningless business leader that cuts the bureaucracy and obtains results. It feeds the belief that executing a country is like directing a company, and that executives, with their joint room instincts and their background mentality, are exactly what the government needs.
But that myth collapses under the weight of what real corporate leadership has become, and what happens when it migrates to a public office.
Economist William Lazonick has spent decades analyzing that transformation. Hey argues that corporate America has been abandoned its commitment to innovation and productive investment, replacing it with a laser approach in cost reduction, price balance and tax dust to increase profits so that they can make more shares of shares. Most executives are no longer rewarded for building lasting companies or contributing to the real economy, are rewarded for how efficiently extract value of the companies they control.
Lazonick calls this model a “scourge”, blaming him for weaving technological leadership of the United States, promoting mass inequality and destabilizing the broader economy. Now, he warns, this same extractive logic is infiltrating the federal government.
The under 2025 budget debates are a case in question. Under the pretext of “efficiency” and “fiscal responsibility”, the Trump administration has proposed the reduction of $ 163 billion of federal expenses, cuts that would destroy education, housing and medical research, all of which are essential for the creation of value. Language reflects what executives have used for a long time to justify dismissals, relocation and disinversion. But in this case, it is not a hollowed corporation. It is the state itself.
Lazonick argues that this should not surprise anyone. “Because these people have gods with corporations looting, they have come to believe that it is their right looting the State,” he says. Even among the technological figures that have built or led the construction of real products, such as Elon Musk, Jeff Bezos and Mark Zuckerberg, Lazonick points out a right mentality: “They deal with the resulting wealth as theirs, as if Myny only won it.” That thought now shapes public policy, where deregulation and budget cuts benefit the rich while dismantling protections for workers and consumers.
Take musk, for example. As head of the Government Efficiency Department (Doge), he has worked to agit regulatory agencies such as the Office of Financial Protection of the Consumer and the National Board of Labor Relations, which supervise parts of their commercial empire. At the same time, its continuous companies ensuring massive federal contracts, including a possible FAA agreement of $ 2 billion, which increases conflicts of interest. As Lazonick and colleague Matt Hopkins argue in a recent article for the Institute for the New Economic Thought, Musk has advanced through a “dangerous corporate governance system” driven by the inequality of shareholders and the erosion of the inequality of the United States. His mandate in Dege is simply more of the same: dismantling the supervision, channeling public resources to private companies and treating the government as another asset to extract.
Musk’s Corporate Empire-Tesla, Spacex and Neuralink-Botea much of their success in taxpayers funded and government support. Tesla was launched with the help of federal loans and subsidies of electric vehicles. Spacex is based on R&D decades financed by NASA and now depends on public contracts of one billion dollars. Even Neuralink is largely based on neuroscience work with public funds. Despite the mythology of the private sector genius, these companies are deeply rooted in public investment. However, the public sees little return.
And the mentality is not limited to musk. President Trump and his family are carrying the corporate model that Lazonick describes to new heights, using the government as a platform for private enrichment. Eric Trump recently promoted the last cryptographic company of the family, making the president an important cryptographic player while shaping federal policy towards that same industry. The 60% participation of the Trump family in World Liberty Financial, which now attracts a great investment, has intensified concerns about conflicts of interest. Meanwhile, under Eric’s leadership, the Trump organization has reached a controversial agreement of $ 5.5 billion with a state -owned Qatar company to build a luxury golf resort, the despite of Trump’s previous commitment to Trump Commitment in office.
Trump has also issued executive orders to “rationalize” federal acquisition and contract reviews. While they are marketed as measures against waste, critics see them as a rear door to lead government business to favored contractors, including those with family ties. The line between the public service and the private gain has rarely been thinner.
Lazonick warns that bets are high. When corporations prioritize shareholders’ payments on real investment, society loses: when governments adopt the same model, the count aggravated. Not only are we talking about fragile companies. We are talking about the erosion of public institutions, the growing inequality and a democracy that serves less and less people.
To reverse the course, Lazonick argues that we need a deep structural reform in how corporations operate, and by extension, governments. That means prohibiting shares, being in executive compensation linked to the performance of manipulated actions and reinvesting profits in innovation, workers and communities. It means adopting a model of government of the interested parties that sees corporations not only as wealth machines, but as administrators of social value.
Because we do not solve the defects of the sememos, the looting stopped. It will only be deepened and extended.
