Friday, August 31, 2012

Romney: Inspired by Paper-Clips

I was left cold by Romney's speech last night. I found the speech a focus-group-driven attempt to tick boxes for various demographics. It was bland, politics-as-usual, and timid.

We learned much more about his personal inclinations. Some of that was frankly impressive, especially the stories of helping others as a pastor. He is an accomplished man, with a lovely family.

But he just does not seem to have any ideas, or desire to do specific things. He is an administrator, not a leader. Any politician in the last sixty years could - and mostly did - promise to create jobs. That is not new.

He claimed he would run the economy better because of his business experience. (I guess we can just be glad he didn't break out PowerPoint slides.) But we heard a lot back in 2000 about how George W. was the first President with an MBA, too. It didn't work out so well.


There is too much emphasis on vague business talk, and too little about where he wants to take the country. He wants the keys to the car, but just wants to leave it in the garage while he tinkers with the engine.

He tried to talk more about his own life story. But his primary problem is not woodenness or reticence. It is a sense of purpose. It's the vision thing.

You can't simply extol "business" as a vague catch-all term of praise, and think that is enough of a sense of direction.

America has a well-justified fascination with the entrepreneur who starts with nothing except an idea in an empty garage, and builds something great. It is the contemporary version of the pioneer who heads off to the frontier and builds a cabin with his own hands. Building something new on the frontier strikes all the right chords. It's a dream with deep roots. That's what the signs in the hall "We Built It" are trying to evoke.

But the reason to respect business is not the Fortune-500 courtier or bureaucrat, administering the routine budgeting and HR policies. It isn't the massive corporation or bank with a smooth lobbying operation in DC. It isn't the rentier and coupon-clipper or the smarter tax lawyer. That's not the essence of America. There were plenty of courtiers and big organization people at the court of George III.

Instead, it is the streak of innovation and daring and flexibility that we should praise. It is the sailing off to an unknown shore, like the Pilgrims. It is the cabin in the wilderness. It is the lure of the open road and the distant peaks.
But what did we see last night? What did Bain Capital contribute to America? Staples, we heard. A slightly cheaper place to buy paper clips. Mitt was very focused on the price of paper clips.

Paper Clips.


I find it hard to imagine voting Democrat. To me, they're tainted by their hard left wing. And Obama certainly does not have an inspiring record as a "community organizer." But I really don't find this paper-clip driven Romney approach very ... inspiring.

I am deeply skeptical about his private equity experience. Private equity is mostly not about frontiers or new visions or markets. (Not even venture capital does that these days). It is the paper-clip driven side of business.

I've seen one episode of private equity investment up close, and I found them to be accountancy-driven, out-of-touch failures, with little understanding of actual business growth or strategy. (They lost a lot of money, too). They could ride a credit bubble, yes, and make a lot of money over time because of attractive tax treatment of carried interest. But bank covenants were more important than hard thinking about the product or customers. Financial engineering substituted for understanding the market. It wasn't business skill or daring or understanding customers, or a desire to innovate. All they had to do was leverage up and collect checks.

Private equity is often largely an ability to negotiate financing from foolish banks at attractive terms. It is more like crony capitalism than genuine wealth creation or innovation. There's not much difference between many private equity honchos and Chinese Communist Party apparatchiks who make a lot of money out of borrowing money at preferential terms from the tame state bank, and milking dividends while the going is good. With enough loose credit, anyone can look like a business genius - for a while. That isn't a skill which is going to put America back to work.

What America needs is not really better administration - although it wouldn't hurt. It isn't simply a negative vision of cutting back government.

It is a sense of the renewal of the promise of America. And America is more than just dreaming of a cheaper paper-clip. It isn't more efficiency we need. It's a sense of purpose.


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