Why are filthy-rich hedge fund managers, so enamored of Obama in the 2008 race, turning on him now? I endorse the rhetorical explanation: Barack Obama has made a habit of bashing financial types and rich people. Bankers and rich people, being people, do not like being treated as villains in Obama's campaign set pieces. So they are naturally disinclined to support him. I am shocked at how many New Yorkers I had thought to be rock-ribbed Democrats are attending Romney fundraisers. Not a huge number, mind you; it's not like they're going to tip New York from blue to red. But if any New Yorkers of my acquaintance were attending GOP fundraisers in the past, they certainly weren't admitting it in public, unless they already worked for National Review. So it does seem like a real change . . . and what they say when I ask them is that, well, they don't like being treated as villains in Obama's campaign set pieces.
Felix Salmon, however, offers a different view:
There’s a limit to how far you can go asking people to justify their Hitler analogies, so Chrystia asks Cooperman about his “never worked a day in his life” comment. It turns out that by “working”, Cooper means that Obama “never made payroll. He’s never built anything”. In other words, this is very much the Romney version of the great-men-of-history worldview: one where a handful of visionary builders use their skills to create jobs for the masses and wealth for themselves. Recall Nick Lemann, profiling Romney in last week’s New Yorker:
He talks to voters businessman to businessman, on the assumption that everybody either runs a business or wants to start one. Romney believes that if you drop the name of someone who has built a very successful company — Sam Walton, of Wal-Mart, or Ray Kroc, of McDonald’s — it will have the same effect as mentioning a sports hero.
If you’re the billionaire principal of a business you built yourself, then you are very likely to see the world through this lens — and as a result, you’re very likely to be very supportive of Romney’s candidacy.
Felix implies that there is something faintly ridiculous about this. I myself am on the record as saying that being a CEO does not make you a good president. And yet, I do think there is something to this complaint. Obama has almost no experience with the private, profit-making sector: a few summer jobs, and one year as an editor at a business intelligence service.
Obama was a low-level editor in Reference Services, working on reports describing economic conditions in various foreign countries.
By all accounts, he disliked the work, not just because it was pedestrian and boring, but because it was in business. "He calls it working for the enemy," Obama's mother, Ann, wrote after a phone conversation with her son, "because some of the reports are written for commercial firms that want to invest in [Third World] countries."
Of course, we've had many good presidents with no business experience. But Obama's whole administration tends to be light on people from outside the academia--NGO--government triangle. It's something that's increasingly true of Washington in general--and, I think, increasingly problematic.
I have now worked in journalism for (gulp) almost ten years, longer than I've done anything else. But before I worked in journalism, I had permanent, full time jobs as a secretary, a help desk technician, an admin at a corporate training firm, and some higher-level jobs designing and building networks for financial clients. When I was unemployed in New York, I started developing my own technology consulting business for small firms, with all that implies in the way of paying taxes and going on sales calls and managing cash flow. I also, as long-time readers know, spent a year doing administrative work in a construction trailer down at Ground Zero.
These were not jobs that were designed to season young people before moving them up, nor waystops for same; they were mostly permanent jobs, whose main focus was on making customers happy, not nurturing tomorrow's elite. (And indeed, probably half my co-workers had either never attended college, or never finished.) We measured our results in profit and loss, not newspaper writeups or web links.
When I look at a lot of what gets written these days, I see how valuable that is. I'm not claiming that my work experience was all that comprehensive, and as an entrepreneur, I wasn't much of an entrepreneur. But what it does give me is some exposure to the legions of people who labor their whole lives at jobs that are kinda fine--and at least a little inkling about how companies, and company managers, think. Which is often not at all how the policy elites with whom I am now surrounded seem to think that they think.
The increasingly mandarin elite, hygienically removed from the grubby business of scrounging for customers, frequently seems to have no idea at all what goes on in companies. Stop grinning, Republicans; I mean you too. Yes, too many liberals seem to believe that all infelicitous market outcomes can be cured by appointing a commission composed of really top-notch academics--during the debate over health care reform, the words "peer reviewed study" were invoked by supporters with no less touching a faith than an Italian grandmother performing a rosary for the salvation of the godless Communists. On the other hand, here comes the GOP claiming that entrepreneurship can be started or stopped with small changes in marginal tax rates, as if one were turning on and off a light. This is no less of a technocratic fallacy, even if, as with many technocratic fallacies, there is a grain of sound theory buried somewhere under that towering mountain of unwarranted assumptions.
The result is that companies usually get treated as a rather simple variable in a model rather than the complex organizations they are. For example, you see people reasoning from corporate behavior to efficacy: if fast food companies spend a lot of money on advertising, then said advertising must make kids eat more fast food; if hiring managers demand a college degree for positions that didn't used to require one, there must be a good business reason. "They wouldn't do it," says the argument, "if it didn't work."
If you've actually worked at a company, this is a ludicrous statement. Companies do stuff that doesn't work all the time, and it can take decades to unwind even the stupidest expenditures and rules. More importantly, when they do have good reasons, they are often not the reasons that outsiders think. The elite projects their own concerns onto the company, instead of asking the company what it's worried about.
Take advertising. Some of it aims to increase consumption of a product; the "Got Milk?" campaign is a famous example. But that doesn't mean it works--the Got Milk? campaign,which went nationwide in 1995, doesn't look to me like it had much lasting impact on milk sales. Yet that doesn't mean it was unsuccessful, because the trade association that paid for it probably did achieve its primary goal: showing members that they were actively promoting the interests of dairy farmers. The members, not milk-buyers, may have been the real "audience" for that campaign.
But advertising isn't even always aimed at raising consumption. GM does not spend money on car ads because it hopes that many more people will start driving, or that some of them will buy three cars instead of one. The purpose of a car ad is to make people buy your car instead of your competitor's. It's certainly possible that this is how McDonalds thinks about its advertising, but the policy elite isn't worried about McDonalds putting Burger King out of business, it's worried about fat kids.
And of course, we shouldn't count out the possibility that companies spend a lot on advertising because they don't know whether it works--and don't dare find out. An immense amount of IT spending is done this way.
I'm not claiming that McDonalds advertising doesn't make kids eat more, by the way; I'm just saying that this is a fact which has to be proven on its own merits, not inferred from corporate behavior.
The flip side of this is the people who think that companies don't do anything at all that couldn't be done better by government or academia . . . except sit back and rake the money in. This is particularly prevalent in discussions of health care, but it frequently pops up elsewhere. My favorite in this genre is Jerry Avorn, the professor of pharmacoeconomics who told Ezra Klein that we didn't really need drug companies because now academics with good drug prospects could simply go straight to the capital markets and raise money to fund their own projects.
This is simply breathtakingly wrong. For one thing, venture capitalists want an exit strategy before they will put money in, and in biotech, exit is often a sale to a big pharmaceutical firm; no Big Pharma, no VC funds. And second, few newly hatched biotech firms have the complementary capacities to bring a drug to market by themselves. Forget the sales force; I'm talking about the expertise to get the thing through the FDA approval process and produce it in massive quantities. How do they acquire those capacities? They partner with Big Pharma, or license to them.
I doubt Jerry Avorn would tolerate someone making sweeping statements about what a hypertension drug would do without, say, making a basic investigation into the properties of the cardiovascular system. But among policy elites, there's frequently a reluctance to do this with companies, because the companies are seen as self-interested; spending too much time listening to them will only compromise your objectivity.
At a salon dinner in Washington not long ago, I found myself explaining why so many people go into consulting: it's less exhausting than corporate jobs. One of my friends who went into the management training program at a telecom firm out of business school found himself managing a call center. It's a responsible position, but it's also a little stressful and not always interesting.
"I'm sorry," said one of the other attendees, a very smart and insightful person who writes beautifully and knows a whole lot about economics, "but if you get an MBA from Chicago, and you manage a call center, you're an idiot."
This is pretty much exactly wrong. If you are going to someday be a senior manager at a major telecom firm, you should absolutely manage a call center: nowhere else will you get the kind of hands on experience with the firm's customer base in their most irascible, demanding moments, or learn as much about the company's cost structure and operational challenges. And surely it is not actually idiotic, even for someone with an MBA from a top school, to want to be a senior manager at a major telecom firm?
And yet, it's such an unsurprisng remark, because this so often seems to me to be the animating spirit of our governing class. The purpose of an elite education, the thinking goes, is to equip you to design and run the system by which 300 million Americans live together--and to ensure that you never, ever have to actually interact with the 280 million who did not graduate from an elite academic program.
To be sure, that's a charge that can often be leveled at consulting and finance--the two jobs where Romney got his fortune, and apparently, many of his supporters. But at least the consultants and the bankers have to convince some very non-elite CEOs to give them money, and their non-elite employees to give them information. At least their performance gets measured by a metric that's hard to fudge for very long, or spin into something more pleasing: is there more money in the bank, or less, at the end of the quarter? And the people who do run non-elite, consumer focused small businesses are also disproportionately going for Romney over Obama.
This is not to disparage jobs outside of business. I have one. So do most of my friends and family. The people in those jobs work very hard, they are often brilliant, and they even occasionally contribute something positive to the world--something that is hard to say about, say, an associate structuring a really innovative tax-arbitrage deal.
But ultimately, businesses are where all the money comes from to pay for us to opine about the state of the world--present and potential. They are the ones who generate the goods and services, the advertising dollars and tax revenue, that keep the rest of us afloat. It matters that fewer and fewer of us have any real experience at all with how they work. We sit in our air conditioned offices and presume to plan the economy, yet how many of us could keep a trucking firm in business for a whole month, sell a customer on an unfamiliar new generator technology, or turn a lawn-mower repair shop from deficit to profit?
I'll be the first to say that I couldn't. What my time in the private sector gave me is mostly a terrific respect for how hard it is to manage a business, particularly one filled with workers who are doing a job, not pursuing a vocation.
The world appears to be overflowing with academics and journalists who could do a much better job running the Fortune 500 than those grasping yahoos in the C-Suite . . . if only they weren't so busy with their research. But I am not among them. I hate repetitive jobs unless they involve data collation, dislike telling other people what to do, can't stand to make sales calls, and have a low tolerance for the minutiae of management. And so my hat is off to anyone who manages to keep a business in the black. Even if they make a bunch of really stupid mistakes.
When Obama sat down with the auto task force to confront the problems of reorganizing GM, the first thing he asked was "Why can't they make a Corolla?"
There are a lot of answers to that--cost structure, labor practices, the structure of the American car market, the pool of automotive engineering talent available to American manufacturers. But the simplest one is that GM is not Toyota. Companies are individuals, with individual strengths and weaknesses, and a Car Czar cannot turn one company into another any more than a surgeon could turn you into one of your cousins. To even ask the question seems to reveal immense hubris: why, oh why, has GM not done the obvious and produced what I, in my imperial wisdom, believe to be the car of the future?
I think you can make an argument that consultants and bankers do quite a bit of this, with money and interest rates replacing policy levers. But I also think you can argue that they do somewhat less of it, because at the end of the day, they do have to get in there and deal with an actual company; if sales plummet, it's no good pointing to your model and declaring that it's still working fine.
This emphatically does not necessarily mean that Romney will therefore be a great president, or that you should vote for him. I have lots of thoughts on this, but given how long this post is already, I will have to share them on another day. For now, I'll just say that whatever the flaws of Mitt Romney, or the financiers who support him, I think that the worry about Obama's lack of business experience is a fair concern--and that I wish more of our leaders and policy analysts had started their careers in the private sector, seeing how it creates the wealth that they deploy.
