A Head for Business

Mitt Romney should be president because he has a head for business – he knows the real world and knows how to get things done – he knows how to fix things, or when to just give up and sell off the parts for whatever profit can be salvaged from what’s hopeless – and he knows how to create jobs, for the few who deserve them, those who are willing to work for less, for the greater good of the shareholders. That’s the argument – we need a CEO President. If our Army had to show a profit – if it had to make money – we’d not still be in Afghanistan.

No, wait – no one is making that last argument. But they are making the others. And we’ve heard it before. So let’s join Mr. Peabody and Sherman in the Way-Back Machine and return to July 2002 and James Carney and John Dickerson writing about George Bush in Inside the Mind of the CEO President:

George W. Bush has a story he’s been telling about the scandals plaguing corporate boardrooms. After unveiling his new policies for cracking down on deceitful CEOs to Wall Street a few weeks ago, he was approached by an audience member eager to air his own proposals – a college-professor type, as Bush tells it, with ideas both windy and unwieldy. Then a “regular guy” interrupted. “If you want more corporate responsibility,” the new arrival advised, “start throwing some of them in jail.”

Because he believes it reflects his own life story, Bush loves it when the elite are upstaged by the streetwise. But he repeated the anecdote at the inaugural meeting of his Corporate Fraud Task Force because it reflected his own view: complex reforms of securities law are well and good, but the best way to assure skittish investors that the government is fixing the problem is to nab a few bad guys.

Bush seemed to differentiate between businessmen, with actual businesses, and the parasites and scavengers who got rich by playing clever and obscure investment games – like venture capitalists perhaps, or like the bad CEOs who cooked the books and moved imaginary money around, to show imaginary profits so their company’s stock soared. But there was one group he really didn’t like at all:

Bush remains distrustful and not a little dismissive of the investment bankers who swooped into Texas with saddlebags full of cash when oil prices gushed but galloped out of town when prices sank. Back in April, when the Dow hovered around 10,000, a White House economic adviser told the President at a social gathering that “there’s no reason this market shouldn’t be around 7500.” According to an eyewitness, Bush made a face, turned and walked away, as if the subject bored or annoyed him. Last week Bush was back on memory lane. “When I used to watch the stocks in Midland, Texas,” he said, “I was somewhat skeptical about what was taking place on the floors of these exchanges. They’ll buy you or sell you, depending upon if it’s in their interest.”

And then he started the Occupy Wall Street movement.

Well no, he didn’t. He had his Harvard MBA and folks called him our first CEO President – but he was hardly a deep thinker, and the few things he had run he ran into the ground. But he gave it a go – except for those nasty investment bankers and a few bad apples of other sorts, Bush served the interests of big business. He was one of them, even if he really wasn’t – because he thought like them, even if he didn’t. And that’s what America needed, or so we were told – someone who understood the real world of business, because the business of America is business. And if that is so then America should be run just like a business, without all the sentimental crap. Leave that useless sentimental crap to the wistful Democrats.

That’s an interesting idea, which led to economic disaster, the collapse of the economy in the final months of Bush’s presidency. But we bought into it – it was our grand experiment with a CEO President – and as Paul Waldman in American Prospect says, here we go again:

There’s no doubt that at the moment, Mitt Romney’s greatest strength is the idea that as a successful businessman, he will do a good job stewarding the American economy. In fact, that may be his only strength. He’s stiff and awkward, he has a well-earned reputation for changing his stated beliefs to suit the political moment, he just went through a primary campaign in which he took numerous unpopular positions in order to please an extremist party base, the severe unpopularity of his party in Congress will drag him down, he has nothing particularly compelling to say about foreign policy – you get the picture.

For a while, Democrats believed that if the economy kept improving, that would leave Romney with no rationale for his candidacy. But at the moment, the economy looks like it will continue to shamble forward, moving in the right direction but not with enough momentum to make everyone feel things are going really well (though there will be six more monthly job numbers released between now and election day, and anything could happen). That means that it will be necessary for the Obama campaign to go after Romney on the economy.

The battle lines are draw, and Waldman cites Time’s Mark Halperin noting here that the Obama campaign’s research suggests Romney “has exactly one rhetorical path to victory, as a can-do businessman able to fix what’s broken.” So Obama’s team “intends to focus as much of its formidable firepower as necessary to dismantle Romney on that front.”

Waldman simply hopes that they aren’t too timid, and that they get to the core issue here:

What I’d really like to see is the Obama campaign taking on the whole idea that because you made a lot of money in business, that means you’ll be brilliant at setting macroeconomic policy for the country. This idea gets repeated a zillion times every election by candidates saying, “I’m not a politician, I’m a businessman,” as though that were a compelling argument for why you’d be successful in politics, not business.

But it is not compelling argument, as he had previously explained, because, for one thing, businesspeople are really not “from the real world” at all:

When we say a politician is removed from the real world, what we mean is that her daily life is so unlike that of ordinary people that she can’t understand them or grasp their concerns. Once you’ve made your climb up the corporate ladder and made enough money to fund a campaign, you’ve left ordinary people behind. If anything, the CEO’s life is even less like that of “the people” than a politician’s. The CEO travels on a corporate jet, makes millions of dollars a year, and only talks to the thousands of drones who work for her if she’s in the mood. A U.S. senator, on the other hand, makes $174,000 a year, flies commercial most of the time, and is constantly forced to talk to her constituents and nod sympathetically as they explain what they’re upset about.

Yeah, he was talking about the former CEO of HP who was running for the senate seat our here in California, who lost by the way. And by the way, businesspeople may or may not know how to create jobs:

A businessperson creates jobs by selling a product or service at a profit, then growing her company to require the hiring of more people. All well and good – but it has almost nothing to do with the rather limited range of things a politician can do to create jobs. The knowledge you gain in business could certainly be a help in understanding some of the issues around job creation, but it won’t help you much at all if you can’t do things like build coalitions to pass legislation.

It’s a different job in government, a completely different process, as is balancing a budget:

A business’ budget and a government’s budget are profoundly different animals. Balancing the federal or state budget isn’t just a matter of technical expertise, where you need someone with a head for numbers to go carefully through a spreadsheet. It involves highly ideological battles over spending and taxation. … Balancing government budgets isn’t an accounting problem – it’s a political problem – which makes it infinitely more complicated.

So successfully managing large operations to achieve goals is pretty cool – but there are all sorts of operations. In government you preside over what Waldman calls “a teeming mass of competing interests.” You can’t fire people who don’t toe the line – you have to deal with them, and their interests, and their egos. No CEO faces that. And you cannot dismantle unprofitable subsidiaries and sell off the parts for whatever profit can be salvaged from what’s hopeless, and then pay back your investors. None of it was set up to make money after all.

But Waldman recognizes that no one seems to believe that:

I’m not naive enough to think the Obama campaign is going to spend time arguing against something so many people believe in without thinking. Instead, they’re going to comb through Romney’s career and figure out what combination of attacks will create a negative association in the public’s mind when the words “Romney” and “business” are mentioned together. Maybe the key will be his personal wealth and hilarious habit of saying things that reinforce his distance from the struggles of ordinary people, or maybe it will be stories of layoffs at companies Bain Capital acquired, or maybe it will be some new story we haven’t yet heard of. But they’ll be attacking him on it, good and hard.

In response, Romney will keep saying, “I know how the economy works,” which is just an assertion, not an argument. For the moment, that seems to be somewhat persuasive; polls show him leading on the question of who would do a better job managing the economy…

But people really should look at what Romney is actually proposing:

Romney does have a lengthy economic plan, but it amounts to the same thing Republicans always advocate: tax cuts, particularly on the wealthy; spending cuts in domestic programs; eliminating regulations; free trade; undermining labor unions, and so on. The closest thing to an innovative idea is the creation of a “Reagan Economic Zone,” which presumably will create wealth through the repeated incantation of the great one’s name.

Which is just the point: if Mitt Romney’s experience in private equity gives him such unique understanding of the economy, why is what he proposes exactly what you’d hear from any Republican who spent his working life in government? It’s partly because Romney is a Republican, and things like tax cuts and reductions in regulation are just what Republicans believe. But maybe it’s also because when it comes to the things government can do to affect the economy, being a businessman doesn’t give you such special insight after all.

And Kevin Drum seconds that:

I’m not sure that Romney’s business shtick is really such a good one for him. After all, when was the last time America elected a president whose background was primarily in business? That would be – never. I mean, sure, Bush Jr. rounded up investors for a baseball team and Jimmy Carter was a peanut farmer, experiences that they used as part of their resumes, but they basically ran as politicians. The last person to seriously run as a businessman was Ross Perot, and that didn’t work out so well.

And Drum says people do understand:

Like it or not, most Americans don’t really trust business figures to run the country on their behalf. They expect business figures to run the country on behalf of business, and that’s a very different thing. What’s happening, though, is that Romney keeps saying he’s a businessman, and because the economy is weak and voters are taking that out on the incumbent, Romney’s poll numbers have remained fairly healthy. But my guess is that he could be doing even better if he’d tone down the wealthy capitalist routine. All he’s doing is leaving himself wide open to some pretty obvious and pretty devastating attacks from the Obama campaign.

Of course Romney knows this, and now John Dickerson reports on the Romney countermeasures:

Mitt Romney has been running a vast focus group for months. He says that almost every day during his campaign he has secretly sat down with three or four families who are being hurt by Obama’s economy to learn what their lives are like. He’s been on the road for a long time, which means he must have met hundreds of families. Since the whole business happens on the QT, you can imagine the candidate suddenly appearing from behind the detergent display at the all-night Target to get the views of the startled Anderson family.

That Romney was having so many secret meetings was a surprise to nearly everyone who has covered him. Where does he find the time? But more puzzling is that he seems to show so little return for his investment.

But Romney is just trying to connect with the middle class to show that he gets it, whatever that might be. He may not be sure. But Dickerson notes this is something that just has to be done:

The political and governing challenge for Mitt Romney is how he adapts his businessman’s worldview to the real world he faces. He’s no longer shrinking payrolls to meet the bottom line. He has to think about the people who are being crunched by his decisions. Sometimes he’ll have to ignore the pain that some will suffer for the larger good. That is what presidents do. It’s why they deserve a vacation now and again. The job is hard. And sometimes he’ll have to know when to tweak something or change his priorities to help people who are really hurting.

Romney says he is running to help the middle class and its distraught members whose faces appear in his campaign ads. So there’s got to be some benefit to all of these meetings beyond the production of new campaign propaganda about how they are hurting.

But Dickerson seems skeptical and wants the Romney campaign to say more:

Fine, keep the meetings secret, but tell us what he’s learned and how his thinking has evolved. He wouldn’t want to just use these good people as props to beat up the president. They’ve suffered enough.

But maybe that is what he wants. You know these big money guys – they’ll buy you or sell you, depending upon if it’s in their interest.

And people know they’re being screwed. There’s that Newsweek item exploring the question of Obama’s Justice Department’s failing to press any major criminal charges against Wall Street – you know, “finance-fraud prosecutions by the Department of Justice are at 20-year lows.” And that woman who blew the whistle on Countrywide is till urging the Justice Department to do something about that mess – but is getting nowhere.

Alex Pareene notes those items and adds this:

Wall Street blew up the world economy, then got bailed out to the tune of billions of dollars, and then resumed being hugely profitable and irresponsible as everyone else suffered through foreclosures, massive debt and mass unemployment. In this narrative, the government, led at various points by members of both parties, did everything in its power to maintain the status quo on Wall Street, while offering primarily temporary relief and various ineffectual half-measures to everyone else. Eventually the Democrats passed some form of “financial regulation” that largely has not yet gone into effect and that will not do much to stem or reverse the financialization of our economy. (The SEC is way, way behind on implementing Dodd-Frank and seems in no great hurry to finish.) The president eventually began noting the existence of mass outrage toward the financial sector, but he did little to actually address that outrage beyond proposing a new tax bracket for millionaires.

And this only encouraged these folks:

If anything, the president’s failure to treat the chicanery and fraud that led to the crisis as crimes worth prosecuting had the same effect that his failure to prosecute the architects of Bush’s torture regime had: It emboldened the wrongdoers, who are now convinced that they never did wrong. In this environment, the public’s real and justified outrage at Wall Street is wholly inexplicable to finance types, who blame it on the media and Obama’s occasional rhetorical populism. (He is making people hate bankers by pointing out that people hate bankers!)

Now, in lieu of subpoenas and indictments, we have mild criticism – Obama’s occasional off-message mentions of “fat cat bankers” or whatever – and those mild criticisms set off hysterical waves of paranoia and self-righteous fury.

So maybe George Bush was right:

Because no one was hauled off in chains, the people who wreaked so much havoc think it’s actually been established that they did not do wrong.

And Pareene covers the things that CEOs and investment bankers seem to be thinking now:

That President Obama and the Democratic Party have treated wealthy finance industry titans maliciously and unfairly.

That the fact that they are perversely wealthy and growing richer during a period of mass unemployment and staggering debt is a sign that the economy is functioning correctly.

That poor people, and not the finance industry, are responsible for the financial crisis and subsequent recession.

That the ultra-wealthy are wealthy because they are smarter and work harder than everybody else, and that they are resented for their success.

That the ultra-wealthy in general, and finance industry executives in particular, are the victims of widespread prejudice akin to that faced by ethnic minorities.

Pareene simply calls them America’s Idiot-Rich:

There can be no reasoning with people this irrational. Any attempt to do so will fail, as Barack Obama, whose main goal is to maintain, not upend, the system that made these people so disgustingly wealthy, is learning. It’s growing harder and harder to pretend that the fantastically wealthy have a sophisticated understanding of politics – or math, or economics, or cause-and-effect.

And they want a CEO President of course. They’re funding Romney this time around, not Obama:

Perhaps the most persuasive argument – for Republicans – for nominating Mitt Romney was that he is of this class. The fact that he is more comfortable in a boardroom than a Pizza Ranch is actually a major asset, because the Democrats had, since the Clinton years, gradually won over much of Wall Street, helping them to erode the GOP’s massive Reagan-era fundraising advantages. Romney can win that money back.

But it’s absurd:

Clinton rewarded his super-rich donors with extensive deregulation – and they rewarded him by shifting the majority of their donations back to the GOP. (Finance, naturally, likes to chase winners: They give more to whichever party seems to be on the upswing, as Obama learned in 2010 and will learn again this year.)

But Pareene gets it:

So Dodd-Frank made them very, very mad. But not just mad: Confused, hurt, betrayed. There is a psychosocial element to the response, clearly on display in the story of the rich people who wish for a speech about how they are not evil. They are essentially spoiled children who have just been lightly reprimanded for the first time that they can remember.

Obama has not been remotely unkind to Wall Street, even as he’s grudgingly adopted a slightly more leftist tone. The grotesque nature of our campaign finance system has effectively made economic populism impossible. Even populist rhetoric not backed up by any sort of action is apparently hurtful to these masters of the universe.

And then Pareene commits heresy with this unthinkable assessment:

The rich are not intrinsically more virtuous or hardworking than the masses. They are also, decidedly, not any smarter. And they receive their news, and their political opinions, from the exact same organs as everyone else. They may be more likely to read the Wall Street Journal than the New York Post, but both of those Murdoch-owned newspapers carry similar lies on their editorial pages. In other words, they actually believe their bullshit. They honestly believe that mean Democrats invented “Occupy Wall Street” in order to make them scapegoats for a crisis that they feel no responsibility for – people who are in the business of extracting fees and interest from consumers, or moving rich people’s money around, unironically think of themselves as “job creators.” …

But there’s not much to do about it:

Appeals to logic, history and common sense will not get you far with a roomful of very rich guys who feel paranoid and victimized. The Wall Street types asked to become Obama donors wanted assurances that the president would not criticize his opponent’s finance industry record. It’s not enough that they’re ridiculously wealthy: They wish to be utterly above criticism. That’s the most important thing to remember: These people, the .01 percent, are mostly childish idiots. Idiot children have now accumulated all of the nation’s wealth and they are terrified that someone might try to take some of it away.

And that’s why we need a CEO President, or they do. But we know better now. Or maybe we don’t.

About Alan

The editor is a former systems manager for a large California-based HMO, and a former senior systems manager for Northrop, Hughes-Raytheon, Computer Sciences Corporation, Perot Systems and other such organizations. One position was managing the financial and payroll systems for a large hospital chain. And somewhere in there was a two-year stint in Canada running the systems shop at a General Motors locomotive factory - in London, Ontario. That explains Canadian matters scattered through these pages. Otherwise, think large-scale HR, payroll, financial and manufacturing systems. A résumé is available if you wish. The editor has a graduate degree in Eighteenth-Century British Literature from Duke University where he was a National Woodrow Wilson Fellow, and taught English and music in upstate New York in the seventies, and then in the early eighties moved to California and left teaching. The editor currently resides in Hollywood California, a block north of the Sunset Strip.
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2 Responses to A Head for Business

  1. Rick says:

    Two points:

    (1) On who on Wall Street to blame for the economy, and what to do about it:

    People keep asking why nobody on Wall Street has been sent to jail for what they did to the economy — which sort of reminds me of candidate John McCain’s solution to the crisis of 2008, which was calling for the firing of SEC Chairman Christopher Cox, as if that guy was somehow the cause of it all.

    The question is, who should we send to prison, and for breaking which law? Obviously we shouldn’t pull a McCain and just grab some random scapegoat and charge him for violating some law that doesn’t exist, just because we’re pissed off and think somebody’s head needs to roll.

    The other thing people complain about is that, after we bailed out all these fat cats, their firms have been wildly successful — as if they didn’t have the good taste to just put a lid on it and struggle along for a few years, as if we don’t really want anyone anywhere to be successful right now.

    Yeah, I know, the real problem is, these people we bailed out are doing gangbusters, while we, the ones who saved their sorry butts, are still struggling — and to top it off, some of those Masters of the Universe have developed a real snotty attitude about it.

    But in fact, I really don’t think all this happened because of evil Wall Street bankers, it happened because of a housing bubble that most people, not even Alan Greenspan, realized at the time was a bubble. And what made it much worse was Wall Street bankers doing what some investment bankers do, which is trying to find risky, innovative investment “instruments” — risky enough to attract gamblers looking for big returns, but innovative enough to escape regulation, at least until regulators get a chance to look at them and see how much damage these “instruments can do when things go bad.

    The solution, I think, may be to not allow new investments to come to market until they can be previewed and approved by regulating agencies, maybe the SEC. After all, we don’t allow new medicines on the market until the government can determine they’ll do what they’re supposed to do, without hurting anyone, and state governments don’t allow just any old thing with wheels on the road until they can make sure it’s safe.

    Yes, I know, Republicans (and, of course, talking heads on CNBC) will argue that all this regulation has a chilling effect on economic growth, but these people seem to overlook what has happened to economic growth in the last several years, all because of too little regulation instead of too much.

    (2) On whether businessmen should run the government:

    As for what the Obama campaign might try to sell to voters about Mitt Romney, I don’t find it a compelling argument that the skills of a businessman are next to useless in politics. No, it’s not that I don’t believe it, it’s just that I don’t think most voters can be so easily convinced of it.

    Still, whenever I hear people argue that the government should be run more like a corporation, I want to remind them that government IS a corporation, just not the kind of corporation that most of what we call “businessmen” are used to running: it’s a not-for-profit business we all set up way back when, for the purpose of handling our collective affairs.

    The goal of a profit-making company is necessarily to make money, with the product or service being incidental. The goal of a nonprofit is to deliver a necessary product or service, with the question of how to pay for it secondary (although, if possible, without losing too much money in the process).

    To put it another way, the point of a nonprofit is to do good, to serve people. Not that it makes them bad people, but people we usually call “business people” are not in the business to do good, and that includes Mitt Romney. If we really want a businessman as president, maybe we should nominate someone who has run a successful charity.

    A side question is whether businessmen know more than anyone else about the economy. In fact, business people may know the ins and outs of running a business, but they are not economists, and economists are much better equipped to speak about the economy as a whole.

    If we really need a president who knows how to fix the economy, forget Mitt Romney — I nominate Paul Krugman.


  2. Madman says:

    I eagerly second the nomination of Paul Krugman For President — or, at least, Secretary of the Treasury.

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