A COUNTRY IS NOT A COMPANY

Should politicians turn to business leaders for advice in formulating economic policy? Not according to economist Paul Krugman, who argues t hat executives' advice is often disastrously misguided. The arguments that economists know to be true seem counterintuitive to business peop le, For example, executives agree that free trade will result in more exports and therefore more export-related jobs. Economists know, howev er, that, workers who gain jobs from increased exports must gain them at someone else's expense. And businesspeople believe that a country t hat attracts foreign investment will run a trade surplus, but economis ts know that such a country will necessarily run large deficits. It's not that economists are smarter than businesspeople. They simply think a different way. Economists deal with the the closed system of a nati onal economy whereas executives live in ,the open-system world of busi ness. Moreover, economists know that an economy must be run on the bas is of general principles, but businesspeople are forever in search of the particular brilliant strategy. Business leaders who have been prom oted to economic advisers are no more likely to be great economists th an military experts. People who have mastered the complexities of runn ing a multibillion-dollar enterprise may think they can make pronounce ments whenever the subject is money, but before they can offer sound e conomic advice, they must master a new vocabulary and a new set of con cepts. In short, they must go back to school.