by From Robert Locke The management principles Trump evokes in Think Big and Kick Ass are those for self-enrichment reminiscent of robber barons during the Gilded Age. In his election campaign Trump promised to use his knowhow to restore prosperity to the dispossessed white middle class in rust belt communities. Will his management principles, if they served him and other billionaires well, do the same for the white middle class communities? This is a question economists seldom ask since they exclude management systems and methods from their analytical purview. It is also a question that Trump has not asked, inasmuch as he attributes the impoverishment of industrial America’s white middle class to NAFTA and other trade agreements, misguided environment policies that destroy jobs, e.g., in coal-mining regions, and tax provisions that encourage corporations to move manufacturing off shore. If economists and Donald Trump ignore the management question, historians have not, and for good reason. History involves specificities that differ in time and place. The specific time referred to here in US history is when in the 1980s and 1990s the old staple mass production industries (automobiles, steel, rubber, consumer electronics, and their suppliers) succumbed to Japanese competition.
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from Robert Locke
The management principles Trump evokes in Think Big and Kick Ass are those for self-enrichment reminiscent of robber barons during the Gilded Age. In his election campaign Trump promised to use his knowhow to restore prosperity to the dispossessed white middle class in rust belt communities. Will his management principles, if they served him and other billionaires well, do the same for the white middle class communities? This is a question economists seldom ask since they exclude management systems and methods from their analytical purview. It is also a question that Trump has not asked, inasmuch as he attributes the impoverishment of industrial America’s white middle class to NAFTA and other trade agreements, misguided environment policies that destroy jobs, e.g., in coal-mining regions, and tax provisions that encourage corporations to move manufacturing off shore. If economists and Donald Trump ignore the management question, historians have not, and for good reason.
History involves specificities that differ in time and place. The specific time referred to here in US history is when in the 1980s and 1990s the old staple mass production industries (automobiles, steel, rubber, consumer electronics, and their suppliers) succumbed to Japanese competition. Trump is a great believer in what the Germans call the Führerprinzip (leadership principle), which he thinks is the key to success. A good leader is needed to harness the will and energy of the people in the enterprise and the nation, for “without leadership,” he says, “organizations slowly stagnate and lose their way… Leaders influence behavior, change the course of events and overcome resistance and therefore leadership is regarded as crucial in implementing decisions successfully.”
But in the timeframe under consideration, American director primacy forms of management did not protect American mass production industry and the blue collar populations it succored nearly as well as the stakeholder forms of management that had developed in Germany (and other northern European countries) after the war as alternate forms of firm governance (Albert, 1993).
That the German story is radically different from the American can be demonstrated through comparative analyses of the top twenty firms in each country, ranked by revenues (2012):
USA
- Exxon AT&T
- Wal-Mart Valero Energy
- Chevron Bank of America Corp
- Conoco-Philips McKesson
- General Motors Verizon Communications
- General Electric JP Morgan Chase & Co
- Berkshire-Hathaway Apple
- Fannie Mae CUS Caremark
- Ford IBM
- Hewlett-Packard Citi Group
- AT&T
- Valero Energy
- Bank of America Corp
- McKesson
- Verizon Communications
- JP Morgan Chase & Co
- Apple
- CUS Caremark
- IBM
- Citi Group
(Source: Stahl, 2013, 59)
Germany
- Volkswagen
- E.ON
- Daimler Robert Bosch
- Siemens RWE
- BASF Rewe Group
- BMW Edeka Group
- Metro Audi
- Schwarz
- Deutsche Telekom Deutsche Bahn
- Deutsche Post Bayer
- Aldi Group
- BP Europa SE
- Robert Bosch
- RWE
- Rewe Group
- Edeka Group
- Audi
- Thyssen Krupp
- Deutsche Bahn
- Bayer
(Source: Ibid., 61)
Some firms on each list are classifiable under the same rubric, e.g., retail giants (in the US, Wal-Mart and McKesson; in Germany, the Aldi and Edeka Groups). Others are famous oil and energy firms, mostly on the US list. But there are two big differences between the lists that are of interest here.
One is that among the top twenty US firms there are many drivers of financialization (Berkshire-Hathaway, Fannie Mae, Bank of America, JP Morgan Chase Co, Citi-Group, and GE Financial), or US firms that are the creation of financialization (Hewlett-Packard: IPO 1957; Apple: IPO 1980). On the German list, there are none, i.e., not one is a financial institution, not one is a stock market IPO creation.
The financialization referred to is not limited to the concentration on financial outcomes that had become the preoccupation of top management in large firms, although that is part of it. Rather it is the change during the last three decades of the 20th century from viewing a business as a vehicle for earning “returns on investment… based on the value created by productive enterprise” to viewing a business “as assets to be bought and sold for maximizing profits through financial strategies” (Ball & Appelbaum, 2). This is the world that Donald Trump knows and in which he operates.
Read more in Trumponomics, firm governance and US prosperity