Why do some CEOs think they could fix the world if only it were run like a business?

If you've been a policeman for 15 years, you might overestimate how many people are criminals, simply because you're constantly exposed to them. Similarly, working in a cancer ward might lead you to believe cancer is far more common than it is. I think CEOs, due to the nature of their roles, end up with a similar occupational deformation.

As a CEO, people in your company constantly come to you with problems they say are unsolvable for them. But these problems are often unsolvable to them because of constraints like budgets, policies, or conflicting priorities these employees face—but you don’t. Your position allows you to cut through these barriers, making the problem seem very simple to you. This is part of the role of a CEO: to make decisions that others can't. 

Doing this every day for years can create the illusion that most problems are like this: simple, if only someone had the power to make the call. It’s easy to forget that the problems you see at work are a tightly curated set. This illusion can lead to the belief that if only the world were "run like a business," many of its problems would disappear.

Of course, CEOs also face incredibly hard decisions, I don't mean to play this down, but what I'm saying is that the curated nature of the problems they face in their work can distort their perspective over time, making them overestimate how many problems in the world can be solved the way they solve the problems in their business. 

This might be superfluous to state, but if we let politicians truly try to "run government like a business" the predictable outcome is that they'll do well on some problems where red tape and indecisiveness are the limiting factor, but not so well on other less tractable problems. Issues like reducing crime, alleviating poverty, or stabilizing the economy are incredilbly complex and it's easy to be overconfident about your ability to solve them as a politician.