Mitt Romney’s experience with the remarkable supply-sider Bill Bain is reason enough to expect big things from his presidency. From our September issue.
IN THE EARLY 1980s, soon after the publication of Wealth & Poverty, I received a phone call from a man with a mellow mid-Southern accent, honed from roots in rural Tennessee and long years talking down to top executives of American enterprise. William Bain was the name, “but everyone calls me Bill,” he said. I had never heard of him, or his eponymous company, a consulting firm in Boston with ambitions in venture capital, but I was soon on board calling him “Bill” and listening closely to what he had to say.
He invited me to speak to his team of Bain & Company partners, and also, if he might…no Offense…he wanted to impart some ideas of his own, some points I might have missed on supply-side economics.“We’ve done some research,” he said, “that shows the theory is much more general and powerful than even you believe.”
As one unused to charges of underestimating the power of supply-side theory, I was intrigued. I went on to give many hundreds of speeches and do scores of debates with such figures as Robert Reich, the Harvard professor who became secretary of labor under President Bill Clinton; Lester Thurow, the eminent MIT professor and bestselling author;And the legendary six-foot-eight-inch tribune of tall taxes, John Kenneth Galbraith of Harvard and Gstaad, Switzerland. I received astonishing fees of up to six figures (a level I breached for an event in Cambridge, UK, for a German bank). At the time, supply-side was that hot. But every speech and book that I produced from then on bore the imprint of my conversations with people at Bain. I learned more from them than from any other audience or, if truth be told, from my four years of Harvard, which included little economics beyond disgruntled attendance at a lecture by Galbraith reading out loud word-for-word from his bestselling book.
What I gathered from Bain was the key role of learning and information in economics. Later I immersed myself in the works of Claude Shannon, MIT’s legendary inventor of mathematical information theory and conceiver of the information “bit” as a unit of surprise. But even before I received these theoretical underpinnings, the practical lesson in information economics that I gained 30 years ago with Bain was transformative. It replaced the stimulus and response incentive structure of original supply- side theory with the sound microeconomic underpinnings of learning, information, and entrepreneurial surprise.
Across from the oldest cemetery in Boston under chandeliers at the Parker House, the Bain meeting brought together, as I recall, perhaps 100 men in suits. Notable in the group were Bain himself, a spruce young man with blond hair brushed straight back, and an Israeli woman, Orit Gadiesh, who within 10 years would rise to the top of the organization.But Bain seemed more eager to introduce me to one Mitt Romney.
I recall the introduction vividly, and not just because of a dismal year I had spent working for his father, George, then the governor of Michigan, in 1966 and 1967, ghosting an unpublished presidential campaign tract called The Mission and the Dream. I had been a speechwriter for Nelson Rockefeller, a dyslexic who treated his writers as royalty. Romney treated my emergent tome with all the gravity he might have devoted to the owner’s manual for the Nash Rambler.I ultimately learned from my time in Lansing that the worst periods of your life can be redemptive (I would later learn, as a dot-com-era businessman, that the euphoric times can be catastrophic).
Worked out during dark months in a motel in Lansing with only occasional interaction with the supposed author—who was guarded by a coterie of careful protectors from any haunting by ghosts from east of Grosse Pointe—the research and themes of The Mission and the Dream foreshadowed and enabled Wealth & Poverty. My lack of a paycheck as his campaign collapsed impeded my futile efforts to date the damsels of Michigan State and left me subsisting on ever more dubious items from deep in my motel refrigerator. My ordeal was not improved by my residual link to the Rockefellers, embodied in a borrowed white Plymouth, whose parking tickets from extended stays on the street in front of the Romney office—ignored by me—went to 5600 Rockefeller Plaza in New York, followed in the course of time by two solemn state policemen from Michigan, who traveled all the way to Rockefeller Center to collect the money. This pilgrimage marked a low point in my relations with both the Eastern Establishment and the Romney campaign.
Romney’s failure to pay me, however, did allow me to keep the research and writing from The Mission and the Dream. With a rapidity that would have been impossible starting from scratch, a decade or so later I could turn it into the book that popularized supply-side economics and made me Ronald Reagan’s most quoted living author.
I REMEMBERED MITT at the Parker House because of his striking looks, confidence, and charisma, which I remarked at the time were even more impressive than his father’s. Winner of joint degrees from Harvard Business and Law Schools, he had been one of the leading candidates in the country for the super-competitive realms of the Boston consultancies. More significantly, I believe, he conveyed the gravitas of a graduate of the Mormon school of hard knocks and hair shirts as a missionary for two years selling his religion’s bread-and-water regime in Bordeaux, France. He had also been a narrow survivor of a fatal head-on collision with the careening car of a local Catholic priest, which took the life of the wife of Romney’s mission president.
Consultants with a modus operandi, unique to Bain, of attaching themselves to companies only at the CEO level, none of these young corporate quarterbacks showed any propensity for attentive service on the benches of life. These were young men, alone in America, with the leverage and audacity to advise famously imperious chief executive officers on lifeand- death matters in their companies. But at the Parker House meeting in 1981, among all these luminaries, Mitt was already clearly ascendant.
He seemed only mildly interested in my association with his father, and he gave me the impression That I had lived in Lansing longer than he had. Out in Lansing, I had come to admire George as a man who got up every morning at five and played a round of golf with three golf balls in parallel, while running from shot to shot. He was a magnificent creature, an inspirational entrepreneurial leader at American Motors, and an exemplary father for Mitt. But I eventually found him gullible to the point of brainwashing about liberal ideas.
The elder Romney was abashed by Ivied expertise, the great peril of establishment Republicans from the time of both Bushes through the presidential candidacy of John McCain. All cherish the illusion that leading Yale, Harvard, and Princeton economists possess some useful wisdom about the economy. They generally don’t. Their preoccupation with static macroeconomic data blinds them to the actual life and dynamics of entrepreneurship. Their preoccupation with liabilities and debt blinds them to the impact of their policies on the value of economic assets. Their GDP model, which measures everything as kinds of spending, pushes them to manipulative policies and redistributions inimical to business equity value and growth, innovation, and creativity. Believing that a weaker dollar is just the thing to spur a sluggish economy, by hyping the spending category of “net exports,” they miss the consequent devaluation of all the assets of the country.
George Romney capitulated to these forces. His great achievement as a big-spending governor of Michigan was the enactment of a state income tax.As Nixon’s secretary of housing and urban development, he followed the liberal temptation into a series of ineffectual big-government programs. Tangentially ensnared by a scandal surrounding FHA and Ginnie Mae mortgage-based securities that he pioneered, he even could be described as an early source of the feel-good finance of confectionary home ownership that ultimately brought the economy down at the end of the Bush years.
I was hopeful that the son would surpass the father as a man with a mind of his own, resistant to the wiles of wishy-washy “compassionate conservatism,” the Republican form of Obama’s hopeychange.Thus I looked on with nothing short of horror at his can-you-top-this effort to win a Massachusetts Senate race by sloughing off every principle of his upbringing to thread his way down the slim sidelines to the left of Ted Kennedy.
He even repudiated Reagan, who had actually won Massachusetts twice.
A man of faith in a godless age is hitting Americans where it hurts.
Mr. and Mrs. American Spectator Reader, let P.J. O’Rourke talk sense to your kids.
In Britain, defending your property can get you life.
It won’t take long for conservatives to scratch this presidential wannabe off their 2008 scorecard.
Was the President done in by the economy, or by the politics of the economy?