Andrew Carnegie was a man of steel. Steel creates jobs. Henry Ford was a man of cars. Cars create jobs. Thomas J. Watson was a man of computers. Computers create jobs. Robert Woodruff was a man of beverages. Beverages create jobs. Sam Walton was a man of stores. Stores create jobs. Bill Gates is a man of software. Software creates jobs. Entrepreneurs like them are among the most significant engines of our economy, always have been. Their creations make things, bring them to market or provide a unique, often society changing, service. US Steel, Ford Motor, IBM, Coca-Cola, Wal-Mart and Microsoft helped transform the country, taking it to a new level and directly or indirectly putting untold millions of men and women to work.
Mitt Romney is a man of financial engineering. Financial engineering can be clever, perhaps at times even brilliant, but it invents nothing new. Creating companies that turn innovation of one kind or another into something tangible and concrete is just not what private equity firms do. They themselves are usually relatively small employers and except tangentially they don’t create other jobs. Private equity firms may fix broken companies or facilitate their owners cashing out, but they have but a single goal: making money for themselves and their investors. Sometimes, but not always, that means cutting payroll. The role of private equity firms, who essentially reshape often troubled existing comanies as contributors to the economy can be debated. It is probably less significant than the one played by venture capitalists who put private seed money into new and innovative enterprises. One might argue that Apple, Google and Facebook would not exist without their early financial support. But no VC would ever claim their role was more than being a smart investor looking for a big payday. In doing so, and largely out of self interest, they might also offer a modicum of sometimes valuable business advice, but that’s about it. Steve Jobs, Larry Page and Mark Zuckerberg made their individual companies rock; it is they who can be credited with creating all those jobs.
So it’s kind of silly for Mitt Romney to claim creating jobs and equally silly for others to put him down for not creating them. Job creator was not in Romney’s own job description, so to judge him as a past or potential job creator doesn’t wash. If it makes you happy, it’s true that he invited the challenge by making the claim, but going there is beside the point. That said, since jobs are a key issue in the current campaign, we should put the role of our presidents as job creators in perspective.
In truth, much as private equity executives have no substantive role in creating jobs, presidents have, at best, a very limited one. For one thing, any program they might devise to stimulate the economy can only be implemented if Congress agrees and, most importantly, acts. One of the truly weak spots in this downturn is in public sector jobs. While there has been substantial (albeit, not enough) private sector job growth, government jobs are contracting along with budgets. For a variety of reasons, they are unlikely to return to their former levels. Even were that not the case, presidents can’t do much to impact when, where and if jobs might return. Without funding, presidents can’t expand the federal workforce (Capital Hill controls the purse), much less impact on employment at the state and local level where they have virtually nothing to say.
If we are totally honest with ourselves, and the candidates return the favor, its unlikely that either Barack Obama or Mitt Romney will have much chance of turning this economy around except perhaps at the margin. The president may promise more stimulus and the former governor may feel that extending, and perhaps enlarging, tax cuts for business and the wealthy class will do the trick. Even if these philosophically driven changes took place neither is a magic bullet. I am for the former and against the latter, but stay with me here. Our economic problems, and that includes the absence of jobs, have little to do with tax incentives or even with short-term stimulus that, by definition, is limited in both scope and duration. What we’re witnessing now is not that any individual employer or group of employers fear making investments. Advances in technology have reduced the need for as many employees as before. Have you ever checked yourself out at Home Depot or a supermarket, made a purchase, renewed your car registration or banked on line? Some worker is no longer needed to assist you with that transaction. She or he has lost a job, one that isn’t coming back. In fact, different technologies will wipe out other jobs as well. Count on it and know that there is absolutely nothing presidents, Democrat or Republican, can do to alter that reality.
Our economic problems are systemic and in the global economy when Europe or Asia sneezes we are likely to be laid low with a cold. If presidents have limited control in their own domain, they have far less in other jurisdictions. The Euro is in deep trouble — defectively created and, as such, hard to fix. We have little or no role in that, but be assured that last Friday’s job numbers reflect global troubles as well as our own. Can Mitt Romney and his trickle down (speak of self-interest) approach do damage to our economy? I think so, absolutely. Perhaps by Election Day a majority of voters will agree with me. But, as I’m suggesting, presidents are limited when it comes to the economy. It’s the economy, stupid was a great tag line but it implied a promise upon which no president could deliver, including Bill Clinton.
To me this election, and my choice, comes down to just two words: Supreme Court. I have always felt that way, a view reinforced on June 28, the day of the Affordable Care Act 5-4 decision. Who sits on the Supreme Court, a lifetime appointment — now that is within a president’s power. Talk about Iraq and Afghanistan and how George Bush screwed both up all you want, but that president’s most lasting legacy, can also be summed up in two words: Roberts and Alito. As South Carolina’s Lindsey Graham so rightly said in the face of the now Justice Sotomayor’s nomination, elections do count. And it did matter a lot that Al Gore (and the country) was deprived of his victory. The current court’s conservative tilt and balance is the work of three presidents — Ronald Reagan (Scalia and Kennedy), George H.W. Bush (Thomas) and George W. Bush (Roberts and Alito). As the youngest of the conservative set, W’s appointees are likely to last the longest including a Chief who probably will be in place for decades to come.
So if you’re voting the economy in the fall, I understand, but think your head is in the wrong place. If your thinking just two words, Supreme Court, that vote and the reason you’ll cast it may really count. If you want to help the country long term, tell your friends: two words. If they can’t get to the polls on their own, give them a ride, let them lean on your helping arm. More than anything else, our future may depend on how our vote defines those two words.