A Country Must Be Run Like A Business

September 23rd, 2011
in Announcements

By Frank Li, Ph.D.

I believe I have most accurately identified the root cause of many American ills and provided the best solution. The foundation of my solution is to run a country like a business, or it will go bankrupt, like what the West is experiencing now. So “why” is too silly to be discussed here. This article will focus on “how”.

I am a technologist by training, armed with a Ph.D. degree in Electrical Engineering. However, soon after I started working in the real world (vs. academia), the ambitious me realized that I was on the wrong track: Why are most of the top guys in business sales people, not technologists like me? I learned and have been running my own business for 6+ years.

Follow up:

What is business?

To me, there are four basic principles in business:

(1) Making money:

Business is about making money. A company, no matter how big it is, can be simply divided into two parts: a profit center and a cost center. The former brings in money, while the latter spends it. So the management focus is almost always on the former, sales especially. When times get tough, without adequate money coming in, you must cut deep into the latter.

(2) Sales are not everything.

Sales are the only thing. Business is driven by sales, with the arrival of a purchase order triggering everything. Still wondering why it’s almost always the sales people that make it to the top? Wonder not!

(3) No democracy.

I learned this early in my career from my boss: “you guys discuss, but I will make the decision because I always have n+1 votes,” where n equals the number of his direct reports.

(4) No unions.

The world is becoming increasingly more competitive. The damage a union can do is more obvious in an internationally competitive business than a non-international one. I worked for both NEC USA and Fujitsu USA, and learned one open secret in these Japanese companies: no unions allowed in America. Look around: there is no union in any of the Japanese companies in America! In fact, there is no union in any of the Asian companies in America! So unions in American companies, among many harmful things, are making American companies less competitive than their Asian counterparts. Plain and simple!

Running a country like a business

Now, let’s apply the four basic business principles to running our country like a business:

(1) Making money:

The revenue of a country comes [chiefly] from taxes, and there is only one [chief] profit center in any country: business, the source of all taxes, corporate as well as personal. So a country must do everything possible to promote and support business. Everything else belongs to the cost center, which should thus be subject to big cuts when times get tough. In a simple business sense, America’s #1 problem today is not jobs per se. Rather, it’s the debts and deficits that are leading the country toward bankruptcy. Therefore, America must be restructured, as in business, getting its fiscal house in order first before anything else, such as hiring (= jobs).

Oh, by the way, if you think America’s #1 problem today is jobs, you either have a problem of your own (e.g. un-employed or underemployed) or have been brainwashed by the politicians (and the media)! The politicians worry about jobs for the sake of their own jobs, only to destroy America by emptying her treasury systematically, however individually unintentional maybe. Let’s be absolutely clear: There is no quick and easy solution to the jobs problem in America, other than the changes and time. Meanwhile, the more the government tries to do along the same old line of out-of-control spending, the worse off we are, because it drives us down the road toward bankruptcy, faster! We should leave the economy alone to recover on its own.

(2) Sales are not everything.

Sales are the only thing. Sales, in terms of a country in this global economy, simply mean selling to other countries. Unfortunately, we have trade deficits with more than 90 countries. No country or company can keep going like this! So rather than fighting with those 90+ countries one by one for fairness or currency, or both, why can’t we be honest with ourselves once by simply admitting that we have a big problem? What then is our big problem? Our cost structure is too high! Unconvinced? Just read this: in 2011, there are nearly twice as many people working for the government (22.5 million) than in all of the manufacturing (11.5 million). This is almost exact reversal of the situation in 1960, when there were 15 million workers in manufacturing and 8.8 million collecting a paycheck from the government … More Americans work for the government than work in construction, farming, fishing, manufacturing, mining, and utilities combined. We have moved decisively from a nation of makers to a nation of takers.

Still unconvinced? Read this: The national security state is out of control. What, then, is the most obvious solution in business terms? Restructuring! Cutting the costs (e.g. two-tier wages) and cutting more jobs if necessary, especially in the public sector! Oh, by the way, do you believe in the “infrastructure bank” President Obama recently proposed in his “misleading” jobs bill? I do not and here is why: Everything we do must directly contribute to the “sales”, or it’s just yet another cost, making a bad problem worse! In other words, our sales are down largely because of our high cost structure. Is it time to borrow more money to keep some employees busy by having them shine the windows in the factory? You will never do that in business! Note that some infrastructure projects are necessary. Do them for the sake of business (i.e. shareholders), not for jobs!

(3) No democracy.

Democracy, as we know it today, is a luxury we can no longer afford.  However, running a country may not be a pure business per se. For this reason, let’s give democracy another chance by reforming our political system now!

(4) No unions.

Union, in its extreme form, is a de facto communist thing  (i.e. the Soviet Union or China under Mao), with everything belonging to “the people”. This everything will quickly be reduced to nothing when “the people” are in charge, as history has repeatedly shown, from the ancient Rome to the modern Greece. Yes, everything of nothing is still nothing! Public-sector unions? Union against whom? The United States of America? They should not have been allowed in the first place (blame JFK!). They must be abolished immediately and banned forever!


Still in doubt if America will lose its #1 position to China by 2030? It will happen unless America changes soon! What’s the secret behind China’s success? Running a country like a business! In fact, the CPC (Communist Party of China) has recently been characterized as “the world’s largest chamber of commerce” - I agree! In short, today’s Chinese government is of the business, by the business, and for the business, while America remains a country of the people, by the people, and for the people, which apparently includes a new class warfare against the rich. It will be a disaster! The Chinese know, as they have been there, done that!

Related Articles

Articles by Frank Li

About the Author

Frank Li Frank Li is the Founder & President of W.E.I. (West-East International), a Chicago-based import & export company. Frank received his B.E. from Zhejiang University (China) in 1982, M.E. from the University of Tokyo in 1985, and Ph.D. from Vanderbilt University in 1988, all in Electrical Engineering. He worked for several companies until 2004, when he founded his own company W.E.I. Today, W.E.I. is a leader in the weighing industry not only in products & services, but also in thought and action. Dr. Li writes extensively and uniquely on politics, for which he has been called "a modern-day Thomas Jefferson" (see page 31).

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  1. Chuck Szkalak says :

    Dear Dr. Li:

    Thank you for writing. I am deeply appreciative of your wisdom.


  2. Roger Erickson says :

    Brilliant! A currency issuer should operate like a currency user?

    Werks fur mi! [Can't get more illogical than that.]

    Hint: If you can't grasp context, you shouldn't try to write about the meaning of data.

    Since you're an EE, here's an analogy for you. A electricity generator should act like an electricity load?
    Kirchoff might ask you to accurately define the circuit before making such ridiculous statements.

  3. *----

    There's no reason to think that the firm, which employs a few tens of thousands at most, can scale to the size of the problems that government faces and solves.

    And anybody who's ever worked in a cube knows that a corporation, from the inside, is no better, and in some cases a good deal worse, than a typical government department.

    And that's before we get to ethics and morality. If you really want to run a country for profit, then legalize slavery, child labor, and so on and so forth.

    The tired old talking that "government should be run like a business" should be put to rest forthwith. We've let businesses run the government for thirty years under deregulation, and the result has been disaster on every side.

    Please, Dr. Li, stick to fields that you understand!

  4. Frank Li says :


    Here is my prediction: (1) China will bail Europe out soon, and then own it. (2) China will chair IMF by 2020. (3) RMB will become an alternative reserve currency to US$ by 2025. Meanwhile, the US can keep printing money, let inflation go sky high, and fade in power, until it is also owned by China like Europe! The bottom line: getting better now or bankrupt! Yes, keep printing money is a form of bankrupt too, just taking a bit longer!!!

  5. Clonal Antibody says :


    The fundamental premise of this article is not correct.

    Since you know how a business works, you are probably quite familiar with the ins and outs of a business.

    Whenever I want to learn about something I am not intimately familiar with, I start not by seeking similarities with that which I am intimately familiar with, but rather to see where and how they are dissimilar.

    Because you are familiar with how a business runs, you have sought to find similarities between business operations and government operations, and have chosen to ignore the differences, and highlight the similarities.

    That is a fatal shortcoming. Please heed the advice of the above two comments, and re-evaluate what you have written.

    You are also inherently making the assumption that a businessman is somehow more ethical and/or more capable and somehow God has given him/her more sense than a government official. Another fatal assumption.

  6. Clonal Antibody says :


    China has run a consistently high budget deficit. How do you think the Yuan can remain pegged to a falling dollar? See China’s state budget deficit is tip of iceberg http://blogs.reuters.com/columns/2010/03/03/chinas-state-budget-deficit-is-tip-of-iceberg/ This is from 2010

    When China publishes its budget report on March 5, Beijing may congratulate itself for achieving 8.7 percent GDP growth with a fiscal deficit that is just 3 percent of GDP. But the real cost of stimulating the economy has been much bigger – thanks to frantic borrowing by local governments.

    State media reported that China’s local governments borrowed 3.8 trillion yuan ($556 billion) from banks last year, to keep the economy humming. They also raised 450 billion yuan ($65.9 billion) indirectly via the bond market. Add those debts to Beijing’s own, and the real 2009 fiscal deficit could be 15 percent of 2009′s GDP.

    Further, China's M2 has been growing at ~20% per year compared to a historical GDP growth rate of 8-9% and inflation of ~2-3%If that is not printing money, I don't know what is!

    By comparison, The US M2 has been growing at a mere 5.3% compared to a nominal GDP growth rate of 5.5% over the same period.

    So which country is printing money?

    It is pretty obvious that you do not understand what you purport to speak about.

  7. Frank Li says :


    Thanks for your long & thoughtful post! Unfortunately, you seem to have become yet another victim of the US media, which is ridiculously biased (I will write about it and publish soon). To balance a bit, read this: http://econintersect.com/b2evolution/blog3.php/2011/09/19/china-fears-much-ado-about-nothing.
    Knowledge is power. True knowledge!!!

  8. Clonal Antibody says :

    It appears that it is you who has ideological blinders and are oblivious to the facts. The M2 money supply is a matter of fact and not of conjecture. M2 comes from money printing. See - China's Money Supply "Unprecedented in History": Report http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20110108000102&cid=1102

    China has not only been the country that prints money at the fastest rate but also been the country with the largest money supply in the world in the past decade, according to the Chinese-language Southern Weekly.

    Furthermore, China continued to be the largest money-supplying country in 2010 as its M2, a broad measure of money supply, was up 19.46% at the end of November from a year earlier, said the weekly.

    This compares with 3.3% and 2.5% of annual M2 growth in the US and Japan respectively over the same period.

    As of the end of November last year, China's broad money supply rose to 71.03 trillion yuan (US$10.71 trillion) from a year earlier, larger than that of the US and Japan, while its M1, a narrower measure of money supply, increased 22.1% to 25.94 trillion yuan (US$3.91 trillion), according to statistics from the central People's Bank of China.

    In the past ten years, China's M2 has expanded at the average rate of 18.8% a year, despite the fact that the country, which has an average gross domestic product (GDP) growth rate of 10.9% and an average inflation rate of 3.2%, needs only 14.1% of growth in money supply to sustain its economic development.

    This has driven China's M2-to-GDP ratio in the past decade to the highest in the world.

  9. Frank Li says :


    Come 2 levels up! Forget about all the technical analysis. Forget about all the #s - No #s out of China can be trusted! It's called garbage in, garbage out! In a top-down system like China, the low level people make up the #s to please their bosses! Instead, look at the big picture, macro economics, and think outside of the box: political economics, government structure, geo-politics, history, and read Frank Holmes' article as I cited above. Partial knowledge and out-spoken can be a dangerous comb!

  10. Clonal Antibody says :

    And my posts are in no way denigrating China's achievements, but rather are just saying that China has made very effective use of fiscal policy to achieve what it has.

    Something that cannot ever be achieved by adopting the Government as business paradigm.

    A government is not a business, and a business is not a government. Confusing the two, will either get you in jail, or get your country into a frigging mess!

  11. Sanjeev Kulkarni says :


    1. "A Country Must Be Run Like A Business" Great! So like companies what do you do when folks become old fire them ooops make them conveniently disappear?
    China is facing an aging population...it would be interesting to see long term impact.

    2. Monetary policies numbers as Clonal Antibody has pointed out...do not compute.

    3. A nation is not a company...and i guess this is the conceptual divide between democratic nations and dictatorships.

    4. Finally the jury is still out on long term growth prospects...50 years success is a blip on radar. Countries with large populations like China and India have ticking demographic time bomb...and nations with sparse populations might win the race.


  12. Admin (Member) Email says :

    Good exchange going on here.

    Frank has already cited a recent Investing blog article by well known international investor Frank Holmes (http://econintersect.com/b2evolution/blog3.php/2011/09/19/china-fears-much-ado-about-nothing) who feels China has excellent economic balance. A counter view has been posted by respected international economist Michael Pettis who has lived, worked in finance and taught (Univ. of Beijing)in mainland China for many years. Michael feels that China will have to make some adjustments to regain economic balance. See http://econintersect.com/wordpress/?p=11599
    Article title: China Can Avoid a Hard Landing but not an Ultimate Reckoning.

    Sorry the links are not active. Please paste and copy into your browser URL address window.

    John Lounsbury

  13. Frank Li says :


    You are right about this: "Countries with large populations like China and India have ticking demographic time bomb...and nations with sparse populations might win the race."

    I simply could not imagine China's success without the 1-child policy in place ~30 years ago! On the other hand, the aging population will be a big problem soon. This is like development vs. pollution. It comes in sequence. Prosperity 1st, aging next.

    India will never achieve prosperity without some kind of population control, which will never happen under democracy, unfortunately.

  14. Clonal Antibody says :


    From my point of view, China is not the issue, it is Frank's idea of running the government as a business. That concept is deeply flawed.

    China could never have achieved its growth without its fiscal policy, that calls for large deficit spending. That could not have happened in Frank Li's paradigm.

    It is this government budget as analogous to a business or household budget is what is killing the US economy. There is also a grave misunderstanding of the meaning of the word "debt" when looked at from the perspective of a "currency user" vs a "currency issuer"

    As far as China is concerned, as it is an issuer of its own currency, and can theoretically continue expanding its money supply unless inflation rises to unacceptable levels or a significant proportion of the population finds its income unable to keep up with inflation.

  15. Clonal Antibody says :


    You said "India will never achieve prosperity without some kind of population control, which will never happen under democracy"

    Again you take a model that has worked - China's and assume that it is the only model that will work. And again you work on assumptions as opposed to facts.

    As of the latest 2011 Census, 14 out of 35 States and Union Territories that comprise India, 14 states with over half the population are already below a TFR (Total Fertility Rate) of 2.1 (which is replacement) The overall fertility rate of India is now at 2.5 The states where the TFR is the highest are now showing the fastest declines.

    However, the reason for the high TFRs was a "Lost Generation" that happened because a China type program was adopted in these states in the early 1970's and in a democracy like India, a China style program does not work! The population rebelled, and for a generation (20 years) family planning was considered a joke and associated with coercion and state corruption.

  16. Admin (Member) Email says :

    Comment submitted by e-mail:


    1. Assuming that what works for one nation will work equally well for others is wishful thinking.

    As Clonal wrote the coercive limited family programs of 1970's had just the opposite effect. This was the darkest age in Indian history when Indira Gandhi imposed dictatorship and the country did not accept the dictatorship. She was thrown out and democracy was restored.


    So what works for the goose does not work for the gander. To quote what Steven Hansen publisher of this magazine wrote in private conversation on May 21, 2011:

    "i see comparisons between China and India as apples and oranges. If we put the Chinese under the Indian system - there would be chaos. and if the Indians were under the Chinese system, people would revolt." Steven Hansen wrote on May 21, 2011

    2. Your article assumes that all businesses are alike, which is not supported by reality. A software organization with global operations is structured absolutely different than a contract manufacturing organization. You might find find "The World Management Survey" interesting. the findings are fascinating and is at odds with your generalized one shoe fit all paradigm.


    3. Finally scaling a single business culture as outlined by you to running a nation seems to be a big leap of faith.


  17. Frank Li says :


    If you haven't noticed, I stay at a very high-level and talk about principles only. Of course, no 2 businesses are exactly alike, and no 2 countries are exactly alike.

    Now, India ... As I said in this article ( http://econintersect.com/b2evolution/blog2.php/2011/07/08/emerging-economies-an-overview-from-30-000-feet)
    , Indian is having the worst of both socialism and capitalism! I just do not see how India could possibly achieve the kind of prosperity China is having. India needs dictatorship, just like America does!

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