Ben Adler is a contributing writer for The Nation.
To look at Mitt Romney — the boxy power suits, the body toned by jogging — he is the financial industry personified. To listen to him, whether casually offering a $10,000 bet or flatly declaring, "corporations are people," is to hear the unrestrained id of Wall Street. Remarkably, in the middle of a sluggish economy brought about by the irresponsibility of bankers gambling with other people's money, Romney thinks this is his greatest asset.
Romney likes to contrast his own résumé with President Obama's by saying, "To create jobs, it helps to have had one." He means that a job is not really a job unless it is in the for-profit sector. Likewise, Romney asserts, "I'm a guy who has lived in the world of business. [If] you don't balance your budget in business you go out of business. So I've lived balancing budgets."
Even some of his erstwhile rivals say Romney's experience in consulting and private equity qualifies him to be president. Former New York Mayor Rudy Giuliani, who harshly criticized Romney's record when running against him in 2008, recently offered this endorsement of Romney on CNN: "Governor Romney has almost a perfect record for a person to be running right now, experience in government, experience in business, understands the economy."
It is notable that in a country that idolizes successful business executives and fetishizes great wealth, there have been so few presidents from a business background. That's because Romney's pitch is actually quite unusual in American history and it grows out of the recent evolution of the modern GOP.
Back in the Gilded Age the great titans of industry were generally averse to running for office. The massive inequality of the era created resentment, and being fabulously wealthy was seen as a liability rather than an asset in a popular election. "It was something to run away from," says David Nasaw, a history professor at CUNY and author of biographies of Andrew Carnegie and William Randolph Hearst. The robber barons generally controlled public policy by pulling strings from behind the scenes, serving as patrons and advisors. "They preferred to have friends in office," says Richard White, a professor of American history at Stanford.
The one notable outpost of robber barons in public office was the U.S. Senate. Prior to the ratification of the Seventeenth Amendment in 1913, senators were chosen by state legislatures. Consequently, the Senate was filled with businessmen who literally bought their seats through bribery, hence the body's nickname "millionaires club" which persists to this day. (Tea Party activists have recently raised the idea of repealing the Seventeenth Amendment.)
These were not a particularly distinguished group of statesmen. Contra Romney's rhetoric, businessmen do not always come to Washington merely to get government out of the way of self-sufficient businesses. Rather, they often came specifically to get laws passed that would favor their personal interests. Many of them hailed from extractive industries such as mineral mining, or mass agribusiness like cattle ranching, which needed cheap access to federal land. Others, most notably Leland Stanford of California, were railroad barons who sought federal subsidies. "To think of business and government as two separate worlds utterly misportrays reality. The two are intertwined," says White. "Without government [robber barons] have no business."
They often proved ineffective legislators even by their own corrupt standards. "[Robber barons] were often not men of great talent outside a narrow realm," notes White. Take Stanford, who purchased his Senate seat in order to get the federal government to forgive a loan that was coming due for the Central Pacific railroad company. He failed to do so. "Stanford was a pretty poor senator," says White. "He was more useful to the railroad industry when controlling the [California] legislature than when he was in the Senate."
After they lost the ability to buy Senate seats outright, captains of industry generally contented themselves with high-ranking cabinet positions. The secretary of the treasury often comes from the private sector. The most powerful treasury secretary since Alexander Hamilton was Andrew Mellon, who served under three consecutive Republican presidents: Warren Harding, Calvin Coolidge and Herbert Hoover. (One contemporaneous joke meant to illustrate Mellon's power was that the three presidents served under him.) Before coming to Washington, Mellon had expanded the business empire established by his father that included interests in banking, steel, aeronautics and oil.
Although the 1920s is generally remembered as an era of prosperity, it was one of growing inequality. Decisions by Mellon to loosen regulations or scale back their enforcement contributed to the crash of 1929. When the Great Depression hit, Mellon's infamously cold-hearted anti-interventionist advice to Hoover — "Liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate" — proved disastrous. Romney has echoed those themes today, urging Washington to "Let Detroit Go Bankrupt" and let the real estate market "hit the bottom."
More recent treasury secretaries from the financial industry have had blind spots similar to Mellon's, whether due to ideology of conflicts of interest. William Simon, who was treasury secretary under Richard Nixon, came from Salomon Brothers and was a vociferous advocate of deregulation, as were Clinton's first two Secretaries, Lloyd Bentsen and Robert Rubin, who had both been executives at financial firms. And, of course, Hank Paulson, who like Rubin came from Goldman Sachs, favored shoveling condition-free funds into Wall Street firms during the 2008 financial crisis. "Paulson made decisions because he had close ties to people on Wall Street, and those decisions were not always helpful," says Jeff Madrick, author of The Age of Greed and a senior fellow at the Roosevelt Institute.
The only example in American history of business executives playing the role in national government that Romney promises to fill — disinterested bearer of managerial acumen — was the class of patrician "Wise Men" who served in post-war cabinets. Many of them were recruited to government from Wall Street or corporate law firms. Although these were not ideologues like Mellon or crony capitalists like Stanford, they were quite capable of making of devastating mistakes. "The 'Whiz Kids' come out of Ford, where Robert McNamara trained, presumably applying to foreign policy and war-making the lessons learned at Ford and other corporations," says Steven Fraser, a professor of American studies at Columbia who has written several books about Wall Street. And you know how well that turned out in Vietnam.
But no sooner did McNamara's Vietnam quagmire end than the Reagan Revolution created a new paradigm that is favorable to Romney: the assumption among Republicans that the private sector is always superior to the public sector.
The election of 2000 was the first time a Romney-esque figure, George W. Bush, a minor oilman and partial baseball team owner before serving as governor of Texas, became president. Bush, the first "MBA president" and his powerful Vice President Dick Cheney, who had been CEO of Halliburton, disproved the notion that businessmen are efficient managers or fiscally responsible in public office. The Bush-Cheney record — bungled occupations of Iraq and Afghanistan, the non-response to Hurricane Katrina, exploding national debt — and recent economic history should make Romney's pitch a bad one for this election cycle.