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Donald Trump is about to find out you can’t run government like a business

Republican presidential candidate Donald Trump is photographed during an interview with The Associated Press in his office at Trump Tower in New York, Tuesday, May 10, 2016.
Mary Altaffer | AP
Republican presidential candidate Donald Trump is photographed during an interview with The Associated Press in his office at Trump Tower in New York, Tuesday, May 10, 2016.

Despite widespread discussion of the idea, the United States has never before had a president whose background is primarily in the business world. To many people this seems like a good idea, both in the sense that Trump's business acumen seems to have led many voters to believe he'll steer the broader economy to prosperity and also because many observers believe a corporate-style decentralized management structure would be a good idea.

"He's running it much like he'd run a Fortune 500 company," Texas Agriculture Commissioner Sid Miller told Politico after his meetings with Reince Priebus and Steve Bannon. "He's finding the best people he can and he's going to turn the reins over to them to see what they can do. He wants them to perform."

Trump, it's worth emphasizing, has never run a Fortune 500 corporation. No board of directors of any company has at any point even considered hiring Trump as a CEO. He did have a stint running a publicly traded company that he started during the 1990s stock market mania, and it turned out (like his fake college) to be a scam, in which he enriched himself at shareholder expense. It is true, however, that many big companies (though not Apple) are run along these kinds of decentralized lines. And it's easy to see why Trump, assisted by a core team of Priebus, Bannon, and Jared Kushner — none of whom have any experience working in government or running a successful publicly traded company — would come up with this facile and deeply flawed analogy between the two kinds of undertakings.

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But you can't run the government the way you would run a publicly traded conglomerate for roughly the same reason actually successful CEOs don't host reality television shows — it's not the same thing.

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To see why, just look at Trump's first major policy action — an executive order directing the secretary of health and human services to exercise his discretionary authority "to the maximum extent allowed by law" to start changing how the Affordable Care Act operates. It's a reasonable subject for Trump to tackle early on. But the order itself provides no information about what kind of outcome he is hoping Tom Price will achieve. And if Trump really plans to just leave the specifics up to Price, he could be in for a nasty surprise. Because in business, it goes without saying that the boss wants you to bring home profits, while politics is nothing but an endless series of trade-offs.

The government doesn’t make a profit

The promise and peril of running an operating unit of a publicly traded company is that on some level you are going to be judged by your unit's profit and loss. If you're brand new you can argue that sacrificing profits for growth makes sense. And if it was a bad year for the entire economic sector you operate in, you can argue that poor results aren't really your fault. But sooner or later, you are either bringing in profits or you aren't.

The government isn't like that.

When Trump looks back at HHS's work in three or six or nine months, he is going to have to evaluate the quality of Price's use of his discretionary authority through some other metric. But there are a number of different plausible goals Price could be pursuing. It's not just that he is going to need to decide how he goes about doing his job. He's going to have to try to decide what it is he is trying to accomplish. The executive order, as written, offers no guidance about that whatsoever.

Price needs to know what Trump actually wants

The problem on the Affordable Care Act is this: The Trump administration faces a trade-off between its legislative priority (repeal) and its brass-tacks political interest in making conditions in America better rather than worse. It would be plausible for the Trump administration to make a calculated risk that it's smart to try its best to blow up the ACA marketplaces, risking a disastrous situation for millions of patients, in order to turn up the heat on Congress to pass a repeal bill. But it's certainly not a no-brainer.

It would also be plausible for the Trump team to regard this as too risky. They might prefer to tweak the law in minor ways in a good-faith effort to make things work better. The ACA has been enjoying record sign-ups this winter, and there are indications that after spiking last year premiums may stabilize this year. The smart play for Trump might be to hope for the best, and then if the marketplaces do stabilize, simply claim credit.

"In business, profit and loss numbers more or less speak for themselves as a metric of result. Government requires a lot more micromanaging of the sort Trump doesn't appear to enjoy."

That would take some of the wind out of the sails of repeal in Congress, but it's not clear that ACA repeal is a personal passion point for Trump. He might prefer the less politically risky route.

This sort of thing recurs over and over and over again in the world of politics. There are lots of thorny trade-offs to be made between priorities. And public-facing statements like presidential tweets and executive orders usually don't clarify what trade-offs the president favors, because politicians don't like admitting publicly that there are downsides to any course of action.

Appointees can go rogue

Beyond that, politics and government offer some decidedly mixed incentives. A business executive wants to make money for the boss and get promoted. Many executive branch staffers are looking for promotion too. But many of them aren't. It's not at all rare to shift out of government into a private sector gig, and the impulse to try to lay the groundwork for cashing out can put subordinates' interests in conflict with their bosses.

Especially if Trump continues to be unpopular, subordinates who plan to continue working in politics for decades to come may feel that they have incentives to "distance" themselves from Trump in ways the boss doesn't like. In business, profit and loss numbers more or less speak for themselves as a metric of result. Government requires a lot more micromanaging of the sort Trump doesn't appear to enjoy.

That said, if he does come around to the view that it's necessary, he may find that he reaps political benefits. Josh Dawsey at Politico reports that "one person who frequently talks to Trump" worries that aides are going to need to learn to do more to "push back privately against his worst impulses," because left to his own devices Trump "gets bored and likes to watch TV." White House senior staffers under Bush and Obama that I've talked to report a variety of experiences, but none describe their time of service as boring. It's extremely busy precisely because decentralization doesn't work. If Trump realizes that, he may find the job is a little less fun than he imagined — but also find that he has less time to spare shooting himself in the foot with overreactions to cable segments or Saturday Night Live sketches.

Commentary by Matt Yglesias, a writer at Vox. Follow him/her on Twitter @mattyglesias.

For more insight from CNBC contributors, follow @CNBCopinion on Twitter.

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