Political Capital
Published: March 12th, 2012
By: Tom Morgan

Political capital

Sometimes watching a president is like watching a small business operator. Or the CEO of a big business. Or the big business itself. This is particularly true with President Obama. It can help you understand why he does what he does.

A president arrives from his election with political capital. This is a currency he can spend. It is made up of the good wishes of the people who voted for him. And good wishes from many who did not. These are people who simply want a president to do a good job.

A small business also owns capital. This is money, assets of the business. And the good wishes of customers, employees, bankers who finance it.

A CEO has capital too. It is the support of the board that hired him or her. As well as the analysts on Wall Street who watch his moves under a microscope.

Meanwhile, a big business has capital in the form of money and other assets.

The vital question is: How wisely do each of these spend their capital?

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Let us say the small business deploys its capital wisely. This earns more capital in the form of more customers, more business, happy employees. Since it made good use of its capital, it also can now borrow more easily from the bank.

If it spends its capital poorly, its business does not grow. Maybe shrinks. So its options get trimmed.

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