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Tuesday, November 20, 2012

Greed is Good. For Your Competitors

Kevin Drum has a very good post describing how terrible a manager Romney is as demonstrated by his shambolic campaign.  The key result is that the huge amount of money raised by Romney seems to have gone in large part into the pockets of his top campaign aids.

I think this is bound to be a weakness of organizations which rely on greed and not ideology, esprit de corps or a sense of mission to motivate their employees.  This is not a new hope (I read it in Plato's "Republic" and I doubt the idea was new then).

I speculate and gloat in a comment which I cut and pasted below.

My theory  (which I also read at Brad DeLong's blog) is that the Romney campaign was basically a scam* and people eager to lead it were basically grifters whose main aim is always getting their hands on money.   I think it is demonstrated that the campaign was based on lies.  A problem with lying as a strategy is that the team of liars will lie to each other.  

This theory leads to optimism.  If people who believe in a cause are much more efficient than cynics who are in it for money or even just winning for the sake of winning, then the truth will tend to come out.  If efforts to distort the debate using money are weakened by the self interested behavior of people who are willing to lie for money, then they will be less damaging.

The problem is that candidates who are not compulsively honest had efficient campaigns.  The Romney team was no less honest than Karl Rove and the Bush campaigns weren't undermined by self dealing.  Bush was not uh reliably honest but he had extremely loyal aids (I am thinking of Harriet Miers and Karen Hughes.  Bill Clinton is not always honest and willing to do extreme things to win elections (such as having Ricky Ray Rector killed) yet he inspires great loyalty (including I fear someone who will angrily reply to me in comments -- nah not to worry no one will read a comment this long).  Why even Richard Nixon himself had extremely loyal aids.

My guess is that Romney has a very particular problem with equating self dealing with brilliance and good management.  The case for Romney was that he had acquired a lot of money demonstrating ability so we should hire him as our President.  My guess is that he was sincere about this.  So I guess he decided that people who had done very well for themselves in politics were smart and hired them.  

I think the point about how success in private equity and managing a firm are different is very important.  My sense is that Romney 's core competency was separating counterparties (including the other people who worked at Bain) from their money.  Such an approach can make people rich, but that skill isn't socially useful and has nothing to do with managing in the pre 80s sense of the word.

The recent performance of the US economy sure suggests that a lot of US businesses weren't run the way you imagine businesses are run.  I must resist temptation to speculate (again) that most businesses are mostly run for the benefit of top management.  You've worked for a for profit firm and find the Obama campaign familiar and the Romney campaign strange.   But some are and their managers are superstars because they have obtained great wealth.  The greed is good error (that is the illusion that the greedy are useful employees -- I am talking about top bosses who don't know how to get what they want and not about right and wrong) saved us from a Romney presidency.  But it also helped cause the great recession.

* I am honestly trying to be polite here.  I personally think the Republican party is a scam, but I don't have to make so broad and harsh a claim.

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