Latest / The Capitalism and Freedom in the Twenty-First Century Podcast / The White House vs. Industry Titans: A History of American Power Struggles with Tevi Troy | Hoover Institution

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The White House vs. Industry Titans: A History of American Power Struggles with Tevi Troy | Hoover Institution · The Capitalism and Freedom in the Twenty-First Century Podcast

• 0:09
  - This is The Capitalism and Freedom in the 21st Century
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  Podcast, an official podcast
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  of the Hoover Institution Economic Policy Working group
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  where we talk about economics, markets, and public policy.
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  I'm John Harley, your host.
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  Thanks so much for joining us today.
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  My guest is Te Troy, who is a presidential historian.
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  He has a PhD in American history from University
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  of Texas at Austin.
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  He's a former White House deputy on the Domestic Policy
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  Council and former Deputy Secretary of Health
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  and Human Services during the George W. Bush administration.
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  And he's currently a senior F fellow at the Reagan Institute
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  and a senior scholar at UV University's Strau Center.
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  He's also the recent author of The Power
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  and the Money Epic Clashes Between Commanders
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  and Chief and Titans of Industry.
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  Welcome to, thanks much for joining
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  us. Really excited to have you on.
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  - John, I'm thrilled to be here.
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  I really do enjoy listening to your podcast.
• 0:56
  You have these great economists on
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  and you go in depth about their careers and their thoughts
• 1:00
  and how they advance the ball in their areas of expertise.
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  And it's just you, you do a really
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  great service with this podcast.
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  So thank you for having me on.
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  - Well, thanks so much for having me. I'm really excited
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  to talk to you about you and your career.
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  So, you know, first want
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  to get into your own personal history you grew
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  up in, in Queens.
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  Tell us how you got interested in presidential history,
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  intellectual conservatism and,
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  and also how you stumbled on sort
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  of this interesting dynamic between titans of business
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  and presidents over time.
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  H how, how did you get interested in all this?
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  - Sure. Well, as you said,
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  I did grow up in Queens in the 1970s.
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  It was kind of a rough time, high crime,
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  graffiti inflation unsureness about
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  America's place in the world.
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  And I was from a family that was very patriotic.
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  We were descended from European Jews
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  who had escaped from Europe.
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  And if my ancestors had not left Europe,
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  they probably would've died in all the various tumbles
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  of the 20th century,
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  whether it was in Soviet Russia or Nazi Germany.
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  And so we were very grateful
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  and appreciative of this country.
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  I still remember my mother would take me into the voting
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  booth with her to show me how to vote.
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  And it was a real point of pride back when you actually
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  voted on election day, which I, I still think was a,
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  a good thing and brought a measure of national unity.
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  This is the day when we all vote.
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  I think that was an important thing.
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  My dad was a history teacher, so I had a love
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  of history from him.
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  And when I graduated college, I went to Cornell.
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  I wanted to see if there's a way to try
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  to make things better, to give something back
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  to this great country that I love so much
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  and I was so grateful for, and I gravitated to Washington.
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  My first job in Washington was working at the American
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  Enterprise Institute of Think Tank.
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  Your listeners Will. Noel
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  and I had the privilege of working for Ben Wattenberg.
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  Ben was a former Lyndon Johnson speech writer
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  who was really immersed in data and demographics
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  and the statistics.
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  And so I learned how to use statistics
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  and numbers to marshal an argument from
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  Ben was also a neo-conservative,
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  so he had grown up a democrat, was a proud Democrat
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  and then he didn't like where the Democratic party was going
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  and he was trying to reform the party from within,
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  but the party was moving so far left.
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  And he said he was staying always where he was.
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  But he became known in the eighties
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  as Ronald Reagan's favorite Democrat.
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  And I also looked around the American Enterprise Institute
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  and I saw these titans, not just Wattenberg, but Judge Bork
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  and Jean Kirk, Patrick and Hering Crystal was there.
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  And I was just amazed at how impressive these people were.
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  But also the influence they had, they were able
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  to shape the debate.
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  They were able to go out there
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  and define what American policy was
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  through their conversations with senators and congressmen
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  and cabinet members.
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  And I wanted to do that.
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  I thought that was really cool what they did.
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  So in the days before LinkedIn and
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  before the internet, I tried to isolate what they had done
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  to become what they were.
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  I was a 22-year-old.
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  I I, you know, you either have the natural smarts
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  or you don't, but I didn't have the external things, the,
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  the attributes that you acquire.
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  And I tried to figure out what they
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  had acquired along the way.
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  And what I found, for the most part from these people,
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  the senior levels of think tanks
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  were that they had three things.
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  Number one is they usually had some kind of advanced degree.
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  Number two is they had some kind of book
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  or article that helped make their name.
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  And number three is they usually had some kind
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  of senior government service.
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  Obviously Judge Bork had been a judge
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  and Jean Kirkpatrick had been
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  ambassador to the United Nations.
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  Ben had worked as an LBJ speech writer
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  and I said, I'm gonna go try and do those things.
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  My first step was to get a graduate degree.
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  As you said earlier, I went to Austin, Texas
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  to get a PhD in American Civilization.
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  While I was there, I studied with Elsbeth Rosow.
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  She was the wife of Walt Rostow,
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  who was Kennedy's National Security Advisor
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  and also Johnson's National Security Advisor.
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  And I learned so much about the presidency from her,
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  but also from talking
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  to Walt Rostow who'd been the National Security Advisor,
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  it was really my first encounter
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  with people who'd been in the White House orbit.
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  This was in, in the legendary Kennedy administration.
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  So I went there, got my PhD, I wrote a dissertation
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  that I hoped I could publish as a book.
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  And I did, it was my first book.
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  It was called Intellectuals in the American Presidency.
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  And it looked at intellectuals
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  who worked in the White House for various presidents.
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  People like Arthur Schlesinger under Kennedy,
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  Daniel Patrick Moynihan under, well,
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  he worked under Johnson, but then he was the White House
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  intellectual under Nixon.
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  And then Marty Anderson, who was known to Hoover people
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  'cause he was both in the Nixon White House,
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  but then he was the, the Domestic Policy
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  Advisor under Ronald Reagan.
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  So I wrote that book
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  and then I had the opportunity to work in government myself.
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  I started out on the hill working
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  for the great Christopher Cox,
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  a very smart California congressman with a lot of talent
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  and a lot of ambition, and a real serious conservative.
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  Then I worked for John Ashcroft, the senator from Missouri.
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  He was thinking about running for president.
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  That didn't work out, but it was a good
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  experience working for him.
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  And then I joined the Bush administration
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  where I had a number of jobs starting
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  at the Department of Labor.
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  I was Deputy Assistant Secretary for Policy,
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  which is the office that Pat Moynihan worked in when he was
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  in the Johnson administration.
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  Then I went over to the White House in a variety of jobs,
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  including, as you said, the number two at the
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  Domestic Policy Council.
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  And eventually I became the Deputy Secretary at Health
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  and Human Services.
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  So that was my journey through government.
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  And then I had done all those things that I set out to do,
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  meaning had the PhD, wrote a book, a dissertation
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  that became a book and was published
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  and got some good reviews.
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  And then I served in government
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  and I said, I put these things together,
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  now I wanna build that think tank life.
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  And since then I've worked at a number of think tanks.
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  I've worked at the Hudson Institute, Mercatus Institute.
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  I started a think tank for a while called the American
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  Health Policy Institute.
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  I worked at the Bipartisan Policy Center
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  and now I'm with the Ronald Reagan Institute,
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  which is really a great fit
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  because I'm so committed to the ideas of Ronald Reagan.
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  And it's a terrific place
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  with some great leadership people like Dave Trulio,
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  who's at the head of the whole operation.
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  And then Roger Zackheim who runs the institute.
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  And I write, as you said, I, I write books
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  and I write a lot of articles
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  and I relish having some opportunity to try
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  and shape the debate in a positive way, try
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  and put ideas out there based on my experience
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  and my knowledge of history.
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  - That's fascinating. I mean, your career's been amazing
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  and we'll talk about some of your books just in, in,
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  in a, a few minutes here.
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  But I wanna first talk, talk to you
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  and just help our, you know, listeners
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  and viewers get a, a better sense of how some
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  of these policy functions
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  in the White House within the administration, how they work.
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  You know, you, you worked on the Domestic Policy Council.
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  I, I'm just curious, you recently wrote
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  a national affairs article on the history of
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  what are called Policy coordination councils.
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  The Domestic Policy Council is one of them,
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  the National Economic Councils, another,
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  the National Security Councils, also
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  a White House Policy Council as well.
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  You wrote this article on how the White House makes policy.
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  And it's interesting 'cause you know, the,
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  all these policy councils,
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  policy coordination councils were really built
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  after the Second World War, you know,
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  that they aren't in the Constitution.
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  Unlike, you know, obviously
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  that the cabinet secretaries are, are there,
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  and I mean, to some degree,
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  and I think we've seen over time some conflict between the,
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  the policy coordination councils and,
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  and the cabinet secretaries.
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  But I'm just curious, like, could you explain
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  how exactly they work in, in, in conjunction
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  with the entire, you know, white House chain of command and,
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  and how they actually get things done when,
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  when it comes time to legislation or executive orders?
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  - Yeah, it's a great question
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  and the full answer is in my probably 7,000 word
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  piece in National affairs.
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  So I will give a shorter version of that here.
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  But first, lemme say a couple of things.
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  You are correct that there's no
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  constitutional basis for these councils.
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  There's also no legislative basis for these councils.
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  They are wholly the product
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  of the president and the presidency.
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  I I guess the, there's an exception
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  of the National Security Council was, which the first one,
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  but really the president establishes these
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  and can de establish them.
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  So I think that's the first thing to think about.
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  The second thing is that I'm grateful to National Affairs
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  and its editor Yuval Levin, who worked
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  for me actually in the White House back in the
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  George W. Bush days for having a magazine
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  where you can explore these issues.
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  It's obviously modeled
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  after the public interest,
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  which was Irving Crystal's great publication.
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  Irving used to say that it only had 6,000 subscribers,
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  but they were the right 6,000.
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  And now with the internet
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  and some savvy article writing Val's pieces can get, or,
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  or pieces in Val's Magazine can get read by, read by many,
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  many more people than just those 6,000.
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  So National Affairs is a very important institution
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  that allows us to explore questions of governance.
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  Like the one I looked into about the policy council,
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  'cause nobody really has done this kind
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  of deep dive into the policy councils.
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  They did start with the National Security Council,
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  which is part of Truman's effort to find a way
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  to manage the Cold War.
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  You've got the State Department trying
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  to manage diplomatic relations
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  and you've got the Defense Department is,
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  is doing the military stuff.
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  And then you've got the, the newly created CIA
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  and there's all these different pieces moving around
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  and the National Security Council is designed
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  to coordinate all these different pieces so
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  that they're at least moving
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  to some degree in the same direction to the extent
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  that's possible in the behemoth
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  of a government that we have.
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  It's modeled after a, a committee
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  that the British had to help run World War ii.
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  And the Americans saw that that was kind of a valuable way
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  of letting Churchill understand
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  what was going on in the various parts of his government.
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  And so we brought that model in to the US
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  to create the National Security Council.
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  And then it takes a while,
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  but we then create a similar
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  coordinating council for domestic policy.
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  It was originally called the Office of Policy Development.
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  And it is really the ancestor of
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  what becomes first the Domestic Policy Council.
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  And then it's broken up into two things.
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  The Domestic Policy Council
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  and the National Economic Council.
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  They're often political circumstances that come
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  behind these creations.
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  National Economic Council was part of Bill Clinton's effort
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  to show that he was fulfilling his campaign promise
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  of focusing like a laser on the economy.
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  And he said, by creating this separate entity,
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  this national council, it would show us a level
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  of focus on the economy.
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  And then sometimes there's external circumstances that lead
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  to the creation of these things.
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  The Homeland Security Council was founded in the aftermath
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  of nine 11 when it was founded that, that the US doesn't,
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  wasn't really paying attention sufficiently to threats,
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  be they terror threats or natural disaster threats.
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  And the National Security Council wasn't quite the right fit
• 12:20
  for some of these types of threats,
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  specifically the National Disaster one's.
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  I remember Steve Hadley,
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  who's the National Security Advisor under Bush.
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  His attitude was, I don't know anything about hurricanes.
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  Why should I be following that kind of issue?
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  So the, the, the way we have it is there,
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  there's really basically four councils now,
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  the National Security Council, Homeland Security Council,
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  national Economy Council and Domestic Policy Council.
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  The reason I wrote my article was in part
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  because the Biden administration created something called a
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  gender policy council.
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  And I really see no reason for this council.
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  Most of the issues are actually handled
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  by the Domestic Policy Council.
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  And creating extra councils just creates extra
• 13:02
  opportunities for strife.
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  You talked about my books, one of my books is Fight House
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  about Infighting in the White House,
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  and you wanna create these institutions in the White House
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  that can limit in fighting and coordinate
• 13:14
  and get better decision making.
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  But if you have competing power centers, that actually leads
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  to more fighting.
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  So it's, it's almost counterintuitive.
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  You've gotta have some of these, like you had
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  to have a National Economic council
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  and domestic policy council, even though
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  sometimes there's tension between them.
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  But if you have too many policy councils, you start
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  to worry who's mi minding the store.
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  And people really will get in each other's playpens
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  and cause trouble with one another.
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  So these councils, I, I described it when I was,
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  when I was running the Domestic Policy Council,
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  I described it as, you're kind
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  of like a station manager in a train system.
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  There are all these trains moving at various paces
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  and these trains are policy questions.
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  Now Colin Powell has said that the easy decisions,
• 13:59
  the 90 10 decisions get made at the local level
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  by career officials.
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  And then the harder the decisions are,
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  the more they gravitate upwards.
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  Some become done in the regional offices, some get done
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  by political appointees, some get done
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  by political appointees in Washington,
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  the harder decisions gravitate to the White House.
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  And then the hardest, hardest decisions,
• 14:20
  which Powell called the 49.5 to 50.5 decisions.
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  Those decisions have to get made
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  by the president in the Oval Office.
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  So as this coordinator
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  or a policy council, you're trying
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  to decide which decisions can get made where,
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  how quickly they have to be made,
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  which trains make it into the station at what time.
• 14:41
  And then once that happens, there's a three level system
• 14:46
  of meetings at the White House that determine policy.
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  There's the, the PCC, which is policy coordinating,
• 14:51
  then there's deputies where the deputies
• 14:54
  get together, decide things.
• 14:55
  Then there's principles. And
• 14:56
  after all those, if nothing is resolved, then it goes
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  to the president for a decision that's called policy title.
• 15:03
  And a lot goes into that.
• 15:05
  You have to write a memo to the president,
• 15:07
  remember we mentioned you've all worked for me.
• 15:10
  I would have to approve all these memos
• 15:12
  before they moved forward.
• 15:13
  And I I would do this at eight or nine at night
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  after I was through a full day of meetings from 7:00 AM
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  to 7:00 PM at the White House.
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  And I would always take Val's memos
• 15:23
  and put them at the bottom of the stack.
• 15:25
  'cause I knew they wouldn't need any
• 15:26
  editing 'cause he was so good.
• 15:28
  So I, I knew when I got to Yu Evolve's memo,
• 15:30
  I was basically almost ready to go home
• 15:32
  'cause his, his memo would be a, a joy to read
• 15:35
  and not something I had to take a red pen to.
• 15:38
  And so you have
• 15:39
  to have these memos that go to the president.
• 15:41
  You have to decide who's in the meeting with the president.
• 15:44
  A lot of people think they should be in the meeting
• 15:46
  with the president, but they shouldn't all be.
• 15:48
  On the other hand, if you have too few people,
• 15:50
  you might be squelching descent from somewhere.
• 15:52
  You may not be having the right people
• 15:54
  to raise different sides of the argument.
• 15:56
  You also, you don't wanna have a full down,
• 15:58
  full on knockout drag down fight in front of the president.
• 16:02
  You wanna have some sense of what the issues are,
• 16:05
  lay them out in the memo, make sure the people
• 16:07
  who are gonna have the argument will do
• 16:09
  so in a respectful way.
• 16:10
  And then the important thing, and this is something I
• 16:11
  learned from Carl Rowe, is you can have the biggest fights,
• 16:15
  you can have the biggest disagreements,
• 16:17
  but once the president makes the decision,
• 16:19
  you've gotta walk outta that room
• 16:20
  and lockstep with your adversaries, meaning the other aides
• 16:23
  with whom you disagreed with on that issue.
• 16:25
  You'll, you might be allies on a different issue,
• 16:27
  but you've gotta walk outta that room in lockstep
• 16:30
  behind the president's decision.
• 16:33
  And that really is in a nutshell, as I said,
• 16:35
  it's a 7,000 word piece.
• 16:36
  But in a nutshell, that's what the policy councils do.
• 16:40
  They try to tee up decisions for the president.
• 16:43
  So the presidents get, gets, the president makes decisions
• 16:47
  with full information in a timely manner
• 16:50
  and in ways that have all the appropriate voices heard so
• 16:54
  that they're not gonna be sniping to the press afterwards.
• 16:56
  I didn't get my say.
• 16:59
  - That's fascinating.
• 17:00
  I I totally understand that the sort of,
• 17:02
  I guess the conflict that exists, you know, part
• 17:03
  between these coordination councils, you know,
• 17:07
  I think at some level the NEC, you know, it's displaced
• 17:10
  what the Council economic advisor's role that it played
• 17:15
  prior to the 1990s.
• 17:16
  This still play plays a significant role,
• 17:18
  but there's now sort of sort of competing tensions
• 17:20
  and the Council of Economic Advisors more analysis now.
• 17:23
  And, and NEC does there a bit more policy now,
• 17:26
  but I'm just curious about the relationship
• 17:28
  between the policy coordination councils and,
• 17:30
  and the cabinet secretaries.
• 17:31
  'cause I know that Colin policy ly said that that
• 17:35
  for example, the, the policy coordination council directors
• 17:37
  are, are kind of like a chief of staff
• 17:40
  to the, the cabinet secretaries.
• 17:41
  But I understand that, that I,
• 17:43
  I think some policy council directors in some respects feel
• 17:47
  like the cabinet secretaries at some level report to them.
• 17:51
  So I'm just curious how this reporting structure sort, sort
• 17:54
  of works in a, like for example
• 17:56
  with the chain of command and defense.
• 17:57
  Like it's very clear that it goes, you know,
• 18:00
  from the president to the Secretary of Defense
• 18:03
  and then on on down on down the chain, you know,
• 18:06
  the various command center commanders and so forth.
• 18:10
  But I'm, I'm curious, you know, my understanding is,
• 18:13
  you know that there's been a lot of conflict
• 18:15
  between these people in the past,
• 18:16
  but you also worked as, you know, deputy secretary at HHS,
• 18:19
  which is an agency and has accountant secretary.
• 18:22
  So I'm, I'm just curious if you've seen
• 18:24
  also from the agency side, how, how sort of
• 18:29
  there's input from an agency
• 18:32
  and how that goes to the White House
• 18:33
  and that interaction there.
• 18:36
  - Well first of all, I knew Colin Powell
• 18:37
  and he was very smart about the mechanics
• 18:39
  of government and how government works.
• 18:41
  And he was a very skilled bureaucratic player.
• 18:43
  But if he said that the policy councils were like chiefs
• 18:47
  of staff to the cabinet secretaries, he was wrong.
• 18:50
  And, and I'm not even sure he said that
• 18:51
  'cause it doesn't sound like it
• 18:53
  because the point, the whole point is that the head
• 18:56
  of the National Security Council is supposed to coordinate
• 19:00
  between state and defense and CIA
• 19:03
  and all the agencies that have some kind
• 19:05
  of national security insight.
• 19:08
  And you can't be chief of staff to one agency
• 19:11
  and be head of the National Security Council.
• 19:13
  'cause you ha have to weigh these competing tendencies,
• 19:16
  these competing interests and these competing personalities.
• 19:19
  And I think Powell is actually there at one
• 19:22
  of the perhaps worst managed periods
• 19:25
  of national security coordination,
• 19:28
  which was in the Bush years because you had a problem there.
• 19:31
  And again, I'm a big fan of George W. Bush.
• 19:33
  I think he did a good job coordinating on the domestic side,
• 19:36
  but that's where his strengths were.
• 19:38
  He was a former governor of Texas.
• 19:39
  He knew the domestic issues on the foreign policy side.
• 19:42
  He was less certain of himself when he came into office.
• 19:45
  That's why he picked Dick Cheney, who had a lot
• 19:47
  of foreign policy background to be his vice president.
• 19:50
  That's why he picked big dogs, people like Colin Powell
• 19:53
  and Don Rumsfeld who had more experience in foreign policy
• 19:56
  than he to be those key cabinet secretaries.
• 19:58
  But the problem was that when you pick all these big dogs,
• 20:02
  the big dogs often fight with one another.
• 20:04
  And he picked Condi Rice with whom he was very close
• 20:07
  to be the National Security Council.
• 20:09
  She again, was very talented person
• 20:11
  and obviously the head of Hoover where you were,
• 20:14
  but she was more junior to a lot of these people.
• 20:16
  And that put her in a tough position
• 20:17
  and she would tell the president,
• 20:19
  these people are fighting, what do I do?
• 20:20
  And he would say, you're the National Security Council
• 20:22
  coordinator, you have to work it out.
• 20:24
  Which was putting her in a tough spot.
• 20:26
  So there was a lot of infighting between those groups,
• 20:31
  especially between state and defense.
• 20:33
  The vice president's office was also involved.
• 20:35
  So it's a lot more than just the chief
• 20:37
  of staff to one agency.
• 20:38
  These council heads really have to coordinate
• 20:43
  and manage the tensions between agencies.
• 20:46
  And I think that's a better way of looking at it.
• 20:49
  - That's fascinating. I, I heard this from General Mass
• 20:52
  that the story about Colin Powell
• 20:54
  and even in the, the Trump administration
• 20:56
  or the, the first Trump administration, for example,
• 20:58
  HR McMaster running National Security
• 21:00
  Council and, and, and Mass.
• 21:02
  And, and there, there's,
• 21:04
  this is just very interesting seeing how, you know,
• 21:06
  there's this new, you know, this new idea
• 21:08
  of policy coordination councils and
• 21:10
  and that's in sort of long run of history, something
• 21:13
  that's new and, and I guess, you know, something that can,
• 21:15
  can cause some tension.
• 21:19
  I wanna get into your books
• 21:20
  because I, I think there are,
• 21:22
  there are really fascinating and
• 21:24
  - Before we do that, can, can we just,
• 21:26
  I just wanna briefly talk about the National Economic
• 21:28
  Council versus the CEA.
• 21:30
  - Absolutely - C
• 21:31
  because that is something
• 21:32
  that people get wrong all the time.
• 21:35
  And I just wanna lay out what the two council, the,
• 21:37
  the CEA is created by Congress, actually
• 21:40
  - One act 1946.
• 21:42
  - Yeah. And it, and it has a Senate confirmed head,
• 21:46
  the the head, the Chairman of the Council
• 21:48
  of Economic Advisors.
• 21:50
  And that is designed to provide
• 21:54
  full economic information from
• 21:58
  e economic experts for the president.
• 22:00
  And it's not even often that partisan in office.
• 22:02
  And I remember listening to your great interview
• 22:04
  with David Henderson where he talked about
• 22:06
  how Paul Krugman was in the White House,
• 22:08
  the Reagan White House, CEA.
• 22:10
  And so sometimes you'll have
• 22:11
  people on different sides of the aisle.
• 22:12
  But these are, well Krugman aside,
• 22:15
  these are usually skilled economists
• 22:16
  who are not too partisan.
• 22:18
  But the, the whole point of the CEA is
• 22:22
  to give the president better economic information, the point
• 22:26
  of the NEC, which is a different entity.
• 22:28
  And I know sometimes the CEA and NEC heads fight,
• 22:31
  but the NEC person is supposed to be a referee
• 22:35
  between competing interests within the economic policymaking
• 22:39
  realm, including CEA, but also including Treasury
• 22:43
  and including OMB and including Department of Commerce.
• 22:47
  And the head of the NEC isn't necessarily supposed
• 22:50
  to have his thumb on the scale.
• 22:51
  These advisors provide advice to the president
• 22:54
  and the NEC coordinator is supposed
• 22:55
  to create a forum in which they can have this done.
• 22:58
  Now it doesn't mean there always aren't,
• 23:00
  they aren't always like that.
• 23:02
  I mean, you know, now Larry Summers always would have his
• 23:04
  thumb on on the scale.
• 23:05
  But the idea is that the NEC is supposed to be the referee,
• 23:09
  just like the head of the DPC is supposed to be the head
• 23:11
  of the referee, the, the referee
• 23:13
  where they bring these ideas, these issues to the president.
• 23:15
  The president can ask the head of the DPC
• 23:17
  or the head of NEC, well what do you think?
• 23:18
  And that's fine, but they should be setting up a fair
• 23:22
  conversation for the president
• 23:24
  and the president's advisors to hear the competing questions
• 23:27
  and competing interests.
• 23:28
  And then the president can make an informed decision.
• 23:31
  And I, I can't believe I actually interrupted you when you
• 23:33
  were about to ask about my book, so I'm always happy
• 23:35
  to talk about my books, but I
• 23:36
  really wanted to get that out there.
• 23:38
  - Well, that's fascinating just about that, the N-A-C-C-A
• 23:40
  and a long, long history there too.
• 23:44
  You know, many CEA chairs over time, Marty Feldstein,
• 23:49
  CEAI think during, during Reagan, Larry Summers
• 23:53
  and Paul Krugman and,
• 23:55
  and many others, John Cochran,
• 23:58
  Greg Manky, they were all there.
• 24:00
  It's, it's pretty, pretty impressive.
• 24:03
  - Some, basically some of our,
• 24:04
  our best known economists have worked as a CEA.
• 24:08
  - Absolutely. And so I, I just wanna pivot to some
• 24:11
  of your books here because some of them I think are,
• 24:13
  are really interesting in
• 24:14
  - All of them actually.
• 24:16
  - All of them. Very interesting.
• 24:17
  I think some in particular, just on of this topic of
• 24:21
  sort the relationship between business and,
• 24:23
  and business titans
• 24:25
  and the White House in your most recent book,
• 24:27
  but you've written a lot of amazing books on the American
• 24:30
  presidency, including intellectuals in the American
• 24:33
  presidency, shall we Wake the President Fight House,
• 24:36
  Jefferson Red, Ike watch, and Obama tweeted
• 24:39
  and most recently the power of the money epic clash
• 24:42
  between commanders and Chief and times of industry.
• 24:45
  I'm just curious, you know,
• 24:46
  what have you learned about the office
• 24:48
  of the presidency in writing all these books?
• 24:52
  - Oh, that's a great question.
• 24:54
  I've, I've learned
• 24:55
  so much more about the presidency than I knew when I worked
• 24:59
  in the White House and I knew a lot
• 25:00
  'cause I had already been a PhD and studied the presidency.
• 25:02
  So it really has helped inform my knowledge, understanding
• 25:07
  of the office, the history.
• 25:09
  I mean, well one person has joked me,
• 25:10
  you have a presidential story for every occasion.
• 25:12
  And, and I kind of do, I I like
• 25:14
  to throw presidential stories out there,
• 25:17
  but in each of my books I've written five books on the
• 25:19
  presidency, as you said, in each of my books, I'm trying
• 25:23
  to address the question of presidents and blank
• 25:27
  and the blank is something that has not yet been covered
• 25:30
  with respect to the presidency.
• 25:31
  But also, I'm not just trying to do trivia here.
• 25:34
  So I don't do presidents and their dogs,
• 25:36
  for example, although that's fine.
• 25:37
  If you wanna do that a good book, it'd be fine.
• 25:40
  But it's been done by the way.
• 25:42
  But I'm trying to do something that answers the question of
• 25:46
  where we are in 21st Century America.
• 25:49
  Something about the blank, applying it to the presidents
• 25:52
  that can inform us about this country at this time.
• 25:55
  That's why power in the Money,
• 25:56
  I think was really struck such a resonant note
• 25:59
  that it was really coming out at the right time when you had
• 26:03
  Elon Musk advising president on Doge.
• 26:05
  And you have these corporate titans
• 26:07
  who are more important than ever in what's going on in
• 26:09
  Washington, but government's more important in what they do
• 26:12
  and whether they can be successful in their businesses.
• 26:15
  I wrote Fight House at a time when there's a lot
• 26:17
  of tension within the Trump administration and infighting,
• 26:20
  and I showed that there had been infighting in many
• 26:22
  previous administrations.
• 26:24
  So with all my books, I'm trying to get to a larger question
• 26:27
  of where we are in 21st century America, even
• 26:29
  as I explore some new aspect of the presidency
• 26:33
  that hasn't really been delved into by previous historians.
• 26:38
  - That's fascinating. And, and they're all really terrific.
• 26:42
  So I wanna focus a little bit more on just your most
• 26:45
  recent book, the Power and the Money.
• 26:46
  You know, the, this, you're cataloging a lot of, you know,
• 26:50
  relationships between business people
• 26:52
  and the presidency over the years.
• 26:54
  And it, it starts sort of in the late 18 hundreds, you know,
• 26:57
  at the rise of these, you know, big tycoons, you know,
• 27:00
  the Rockefellers, the Carnegies, the JP Morgans
• 27:04
  l let's start there.
• 27:05
  You know, there were a lot of examples of, I I think
• 27:09
  that JP Morgan, you know,
• 27:12
  was involved in the 1907 bailout, you
• 27:16
  and they, the US created the Federal Reserve almost in
• 27:19
  response to that, in the sense
• 27:20
  that they didn't wanna rely on private actors
• 27:22
  as a lender of last resort.
• 27:25
  But then you, you know, you also have Rockefeller
• 27:27
  and Standard Oil around that time, the rise of antitrust
• 27:31
  and, and trust busting under, under Teddy Roosevelt.
• 27:35
  I'm curious, you know, what, what was going on at at
• 27:37
  that time in terms of, you know, I guess
• 27:39
  how these titans were interacting with presidents, you know,
• 27:42
  were they donors, you know, what, what was exactly going on?
• 27:45
  And, and,
• 27:47
  and I guess what was the sentiment
• 27:49
  around folks like Teddy Roosevelt that obviously, you know,
• 27:54
  we're taking a very, you know, heavy handed approach with
• 27:58
  breaking up many of these, you know,
• 28:00
  very large firms have the, the standard oils of the world
• 28:03
  and, and you know, applying the, the, you know,
• 28:05
  the Sherman Act and,
• 28:07
  and all these antitrust laws that,
• 28:10
  that were being passed around that time.
• 28:14
  - Yeah, it's a great question
• 28:15
  and it's really that period
• 28:17
  that got me interested in this topic.
• 28:19
  I was obviously seeing a lot of parallels between today
• 28:23
  and what was happening in the late 19th century.
• 28:26
  And what you have in the late 19th century is the rise
• 28:28
  of these new industries.
• 28:29
  Industries don't exist before railroads.
• 28:31
  Oil and government has no mechanism for trying
• 28:35
  to reign them in if reign them in, if they
• 28:37
  so desire they may not desire.
• 28:39
  But there, there's no mechanism if they do.
• 28:42
  And so you have, you have Rockefeller
• 28:46
  who comes from nowhere,
• 28:48
  builds this massive empire in a 10 year period from
• 28:51
  1870 to 1880.
• 28:53
  He creates standard oil.
• 28:54
  It's interesting, the name Standard Oil is
• 28:57
  because he was trying, trying
• 28:59
  to create a standard for what oil should be.
• 29:01
  At the time, oil was combustible, unreliable.
• 29:04
  You didn't know what you were gonna get when you purchased
• 29:06
  it, but you knew if you got a standard oil shipment of oil,
• 29:10
  it was gonna be reliable.
• 29:12
  And so he was in many ways a regulator himself.
• 29:15
  It was a private sector form of regulation.
• 29:17
  You knew you were getting a reliable product if you were
• 29:19
  getting it from rock belt.
• 29:21
  It doesn't mean he was a, the nicest guy
• 29:24
  and you know, obviously had some sharp
• 29:26
  elbowed business practices.
• 29:27
  But what he was trying to do is create a standard
• 29:29
  for what oil should be.
• 29:30
  And he did, he builds this empire over a 10 year period
• 29:35
  and in the beginning of 1880, he has 90%
• 29:38
  of refining capacity in the US massive empire.
• 29:40
  Complete control over prices, over everything.
• 29:43
  And there are presidents who look at these trusts
• 29:46
  and start complaining, including Ulysses S Grant,
• 29:48
  but they have no power to do anything about it.
• 29:51
  And it's only in 1890 when the Sherman Antitrust Act passes
• 29:55
  that suddenly there's something that government can do.
• 29:57
  It has its first arrow in the quiver, if you will.
• 30:01
  But having a law
• 30:03
  and having it enforced are different things.
• 30:04
  You don't really have any presidents who are
• 30:05
  so interested in pursuing this
• 30:07
  until Teddy Roosevelt when he comes to power.
• 30:10
  And it's important to remember that Teddy Roosevelt was kind
• 30:12
  of an accidental president.
• 30:14
  He was made vice president
• 30:15
  because he was seen as such a pain in by forces in New York,
• 30:19
  including the standard oil people.
• 30:20
  They said, let's put him, make him vice
• 30:21
  president, get him outta the way.
• 30:23
  And then he, the thought is, you know, he's working
• 30:26
  for McKinley who's a vigorous young, powerful president,
• 30:30
  and McKinley is shot.
• 30:31
  And when McKinley dies,
• 30:33
  and they didn't even think McKinley was gonna die initially,
• 30:35
  but then he, he does die from his wounds.
• 30:38
  Then Roosevelt becomes president and I think it was Mark
• 30:41
  and that da that damn cowboys now in the White House.
• 30:44
  So Roosevelt's now in the White House
• 30:46
  and he is of a much more progressive bent than McKinley
• 30:50
  or the Republican party pen jars who, who put him forward
• 30:55
  and he wants to make changes
• 30:57
  and he sees the Sherman Antitrust Act
• 31:00
  and he creates the Bureau of Corporations
• 31:02
  and he has all these possibilities
• 31:04
  for reigning in companies.
• 31:05
  And he sees the value in making Rockefeller his villain,
• 31:10
  his target if you will.
• 31:12
  And Rockefeller at this point is already retired from the
• 31:17
  day-to-day management of the company.
• 31:18
  But that doesn't matter. Ro Roosevelt sees the value in
• 31:22
  using Rockefeller as a symbol of all
• 31:25
  that is evil in these new co corporations.
• 31:28
  And he starts the process
• 31:30
  by which standard oil is eventually broken up.
• 31:33
  He doesn't see the breakup as president himself
• 31:36
  'cause that happens under his successor William Howard Taft.
• 31:40
  But it does happen in his lifetime
• 31:42
  and it really is an initiative that he started
• 31:45
  and Rockefeller for all these years,
• 31:48
  while he was amassing all his power,
• 31:49
  he never really paid attention to government.
• 31:51
  'cause he didn't think government was that important.
• 31:53
  And for most of his career he was right.
• 31:54
  But this happens a lot of time with innovators.
• 31:57
  They are frozen in time at the time when they
• 32:00
  grew up in the business.
• 32:01
  And they see things at that moment
• 32:03
  and they'll always tell stories, well, I was growing up,
• 32:05
  I did this and that, but it's not always applicable when the
• 32:09
  government rules change.
• 32:10
  And what happened was over the course
• 32:11
  of his lifetime, the government rules changed.
• 32:12
  Government got more power, government got more tools,
• 32:16
  and suddenly government was a threat to his company.
• 32:19
  And he recognized it too late.
• 32:21
  This is actually a theme in the power of the money
• 32:23
  where I talk about multiple CEOs who thought
• 32:26
  that they didn't have to worry about government
• 32:28
  and then government came for them
• 32:30
  and they either had to adjust, change tack
• 32:33
  and become more involved.
• 32:34
  Or they, they suffered or sometimes they suffered
• 32:37
  and then they got more involved.
• 32:40
  - It's fascinating and,
• 32:42
  and I, I guess just moving forward here in, in history
• 32:46
  to sort of the more, the early 20th to mid 20th century,
• 32:51
  the whole concept of, of government really changes in,
• 32:56
  in the us you know, from the sort of madisonian sort
• 32:59
  of concept to what really I think a lot
• 33:02
  of the progressives envision.
• 33:03
  So you have, you know, the 13th that sort
• 33:06
  of the 16th amendment, which introduces the income tax.
• 33:10
  You've got obviously 1929,
• 33:13
  the collapse in the stock market in the US you falling
• 33:15
  by almost 80, 90%.
• 33:18
  You've got the great, the Great Depression.
• 33:21
  You've got the, the enormous growth of government
• 33:25
  during the FDR era and,
• 33:27
  and also this sort of idea that began even earlier,
• 33:30
  which is sort of this reliance on, on experts.
• 33:33
  And this is sort of what leads to the rise
• 33:36
  of the administrative state.
• 33:38
  So one, I'm just curious like what's going on
• 33:40
  during this time where, you know, we, we sort
• 33:43
  of shift from having a government going including Supreme
• 33:47
  Court that in general, you know, was ruling, you know,
• 33:51
  making many sort of favorable pro business rulings
• 33:54
  to on this era of FDR and,
• 33:56
  and other progression of Woodrow Wilson as well as,
• 34:00
  you know, Teddy Roosevelt who's sort of a, you know, a pro
• 34:04
  to, to some of these others.
• 34:05
  But, but the whole concept of government changes
• 34:07
  and in many respects, you know, government experts are, are,
• 34:12
  are given lots of power in making
• 34:14
  regulation and and so forth.
• 34:17
  I'm just curious like how was business responding
• 34:19
  to that at the time?
• 34:21
  How were these business teams responding to that?
• 34:22
  Obviously many were not fans of FDR,
• 34:26
  but I'm just curious, you know, what was going on
• 34:28
  amongst the business leaders during this time?
• 34:31
  Obviously there was a lot happening.
• 34:33
  You there, you had the rise of the auto industry,
• 34:37
  you Henry Ford, you had the rise of of, you know,
• 34:39
  the banks obviously you know JP Morgan
• 34:43
  and I think you know, that that was broken up.
• 34:44
  You had Morgan Stanley, you had and, and,
• 34:47
  and JP Morgan, what it's known as today.
• 34:49
  But they were at 1.1 company.
• 34:52
  You know, you had you for example, glass Segal,
• 34:55
  which you know, was separating commercial banking from
• 34:58
  investment banking.
• 34:59
  There was a lot going on in that period.
• 35:01
  I'm just curious what the sort of stories that,
• 35:04
  that you included in your book or,
• 35:06
  or that you researched about when,
• 35:07
  when you were talking about this period.
• 35:10
  - Well first of all, it's important to remember
• 35:12
  that business is always against regulation
• 35:14
  until they see it's inevitable.
• 35:15
  And then they wanna be part
• 35:16
  of the shaping of the regulation.
• 35:18
  And in in doing so what they do is create a barrier
• 35:23
  to entry for other smaller potential entrants.
• 35:26
  And as you know, complexity is a subsidy,
• 35:29
  the more complex you make the environment,
• 35:31
  the more expensive it is to get into an area
• 35:34
  and get into an industry.
• 35:35
  And so the big businesses can afford the lobbyists
• 35:39
  to shape the regulation.
• 35:40
  They can afford the lawyers to tell them how
• 35:42
  to deal with the regulation.
• 35:43
  They can afford the personnel costs
• 35:46
  that HR regulations impose.
• 35:48
  And so it's easier for them to have a regulated environment,
• 35:52
  even though you would say, oh,
• 35:54
  regulation costs the company billions of dollars a year.
• 35:57
  But yeah, they have the billions
• 35:59
  and a smaller entrant that's trying to get in.
• 36:02
  They say, I can't deal with all this paperwork.
• 36:04
  And they just give up and then they go work
• 36:05
  for the bigger corporation.
• 36:07
  'cause they, they can't cope
• 36:08
  with all the regulatory imposition.
• 36:10
  So I think that is a recurring tension
• 36:14
  and recurring theme in American life that I see.
• 36:18
  And I also talk about how since you had
• 36:20
  that first incursion, if you will, the, the, the
• 36:25
  Sherman Antitrust Act,
• 36:26
  since then you've seen government get
• 36:29
  more and more involved.
• 36:30
  In fact, I have an amazing index in my book where I show
• 36:33
  what I call the end of the white space, the,
• 36:36
  when Rockefeller comes in, it's, he has a blank slate.
• 36:39
  He can operate without regulation other than the regulation
• 36:42
  he imposes on his own standard of o what oil should be.
• 36:46
  But over time, government has more
• 36:49
  and more regulations, more and more agencies, more
• 36:51
  and more legislation and business
• 36:53
  becomes more and more constrained.
• 36:54
  That doesn't mean they can't make a profit,
• 36:56
  they make huge profits,
• 36:58
  but they do so in many ways today at almost at the behest
• 37:02
  of government government's telling them
• 37:04
  how many people they can hire and at what wages
• 37:06
  and what what demographic characteristics the people they
• 37:09
  should hire can be and where they can sell their product.
• 37:12
  And are there tariffs on the products
• 37:13
  and what they can do with their environmental offshoots.
• 37:17
  And so many things are governed by government often to try
• 37:21
  and attain certain social goods.
• 37:24
  And businesses are in some ways the enabler, the participant
• 37:29
  with the government in doing this.
• 37:31
  So it's not just business thinks regulation,
• 37:35
  bad business wants get rid of regulation,
• 37:37
  it's business recognizes that government is there
• 37:40
  and they need to find strategies
• 37:45
  for not only dealing with the regulations that exist,
• 37:48
  but also shaping the regulations in ways that help them.
• 37:51
  And often that help either their,
• 37:53
  that don't help either their competitor
• 37:56
  or the new entrant into the labor market.
• 37:59
  - But it's fascinating and,
• 38:01
  and you just,
• 38:02
  I I I guess fast forwarding a little bit more in this mid
• 38:07
  20th century period, you know, we've got, you know,
• 38:10
  Detroit ends up becoming, you know, the, one
• 38:13
  of the largest cities in America has the highest per capita
• 38:17
  incomes out of any metropolitan area,
• 38:19
  or to believe that now sort of 75 years or so later.
• 38:23
  But, you know, you've got also, you know, the rise of,
• 38:26
  you know, business groups like the Chamber
• 38:28
  of Commerce and Business Roundtable.
• 38:29
  You've got the rise of unions and,
• 38:31
  and that sort of represented
• 38:34
  by these big conglomerates like a Ffl CIOI I'm just curious,
• 38:37
  I mean you also have, you know, mega donors also from,
• 38:41
  you know, representing are often being the heads of,
• 38:45
  you know, these various company fortunes.
• 38:48
  I'm, I'm just curious you what, what exactly are the sort
• 38:50
  of, you know, business versus labor dynamics at the height
• 38:54
  of, you know, union power looking alike?
• 38:56
  And, and obviously unions have changed enormously since,
• 39:00
  you know, the, the fraction of of workers
• 39:04
  of private sector workers that are affiliated
• 39:05
  with the union now are, I think less than 10%
• 39:08
  of the American workforce down from, in much higher numbers.
• 39:13
  It is the mid 20th century.
• 39:15
  But I'm just curious how how has
• 39:17
  that dynamic really shifted a lot and,
• 39:20
  and what, what were sort of the business titans saying or,
• 39:24
  or, or in terms of their interactions with the president,
• 39:27
  any particular stories that
• 39:28
  that were interesting at, at all?
• 39:29
  I know I, I I think Henry Ford's mentioned your book there,
• 39:33
  there's many others that, that are interested
• 39:34
  that are mentioning in your book as well.
• 39:35
  But I'm just curious what, what exactly you know,
• 39:40
  was going on sort of behind the scenes
• 39:42
  with the presidents over those years.
• 39:46
  - Yeah, there's a lot going on there
• 39:48
  and I talk about multiple auto executives.
• 39:52
  I'd say there are three key automotive CEOs in my book.
• 39:56
  First there's Henry Ford
• 39:57
  and he grows up in this era
• 39:58
  where it's relatively light regulation When the New Deal
• 40:02
  comes around, he's very angry and bitter about it.
• 40:04
  He hates Franklin Roosevelt,
• 40:06
  although he does make some kind of accommodation
• 40:08
  with Roosevelt when World War II comes about
• 40:11
  and the US needs to build up its industrial armaments
• 40:16
  and he creates the largest armaments factory in the
• 40:19
  world at Willow Run.
• 40:20
  And Franklin Roosevelt, again, who has a terrible relation
• 40:23
  with the Ford, they really just like each other,
• 40:26
  Roosevelt even comes out to Willow Run
• 40:28
  and does a automotive vehicle tour of Willow Run.
• 40:31
  They have to do it in a car of Ford of course,
• 40:34
  because it's so vast and they drive around together.
• 40:36
  And Ford apparently is sitting in the middle seat
• 40:40
  of the back of this Ford squeezed between Franklin
• 40:44
  and Eleanor, both of whom he hates.
• 40:46
  And their son, his son Edsel,
• 40:49
  is sitting in the jump seat facing Ford
• 40:51
  and reported
• 40:52
  that Ford was giving him the stink eye the whole time
• 40:54
  'cause he was so unhappy sitting between Franklin
• 40:57
  and Eleanor Roosevelt.
• 40:59
  But he helps the US even though he was
• 41:04
  not a fan of Roosevelt, even though
• 41:06
  Hitler actually mentions him in Amp, the only American
• 41:09
  to be mentioned in Amp.
• 41:12
  Even despite all these things,
• 41:13
  he really helps America build the armaments they need
• 41:16
  to fight World War ii.
• 41:18
  And then you have Lee Iacocca, who's the second
• 41:20
  of three auto CEOs I talk about in the book.
• 41:23
  And Iacocca enters the story
• 41:26
  as a republican anti-regulation kind
• 41:30
  of free market guy who works for Ford initially.
• 41:35
  And his first appearance in the book is in the Nixon White
• 41:38
  House when he comes
• 41:40
  to argue against Ralph Nader style regulations being imposed
• 41:43
  on the auto industry.
• 41:44
  And he actually is quite successful in getting the White
• 41:48
  House to push, push back against Department
• 41:50
  of Transportation's efforts to impose these regulations.
• 41:54
  But then over time the auto industry goes from on top
• 41:57
  of the world to being less successful in large part
• 42:01
  because you mentioned unions, the labor contracts
• 42:04
  that were negotiated by Walter Ruther, who's the head
• 42:07
  of the U-E-U-A-W end up becoming crippling to Detroit.
• 42:11
  They impose these huge long-term costs
• 42:13
  that the Detroit auto manufacturers thought they were
• 42:17
  getting good deals 'cause they limited the,
• 42:19
  the wage rises in the short term.
• 42:22
  But in the long term there were all these pen pension
• 42:24
  benefits and health benefits that ended up being crippling,
• 42:26
  crippling to making the price of American cars affordable.
• 42:31
  And at the same time, these regulations are being imposed
• 42:34
  by government and by the US government
• 42:36
  and it makes it more expensive to build cars.
• 42:38
  And so you see the rise of automakers, especially in Japan
• 42:42
  that are really eating America's lunch.
• 42:44
  And so Iacocca first, now he's head of Chrysler, he has
• 42:49
  to get a bailout from the US government,
• 42:50
  which he does under Jimmy Carter,
• 42:52
  but then he also wants all these tariffs
• 42:55
  and limits placed on Japanese cars coming into the us.
• 43:00
  So he goes from this really kinda free market Republican
• 43:03
  to a pro interventionist Democrat as the interests
• 43:07
  of his company changed.
• 43:08
  And this reminds me of something that Elaine Cha,
• 43:11
  who was one of my first bosses in Washington, I I worked
• 43:13
  for her when she was Secretary of Labor.
• 43:15
  She told me that you can never count on business
• 43:19
  to be in the foxhole with you.
• 43:21
  They're not ideologically committed to the same things
• 43:23
  that we were as George W. Bush Republicans,
• 43:25
  they're committed to the interest of their business
• 43:27
  and they will abandon you if whatever position you're taking
• 43:30
  is not in the interest of their business.
• 43:32
  I thought it was a really important lesson
• 43:33
  and there's something that stuck in my
• 43:34
  head as I wrote this book.
• 43:38
  - It's fascinating. The, the whole concept of, you know,
• 43:40
  regulatory capture.
• 43:42
  This is an idea, you know, advance by the, you know,
• 43:45
  Chicago comms George Sigler in the 20th century.
• 43:48
  And I think it's an idea that that really, you know,
• 43:51
  has resonated a lot over time.
• 43:53
  And you know, at some level, you know,
• 43:54
  it's large companies have a big incentive
• 43:56
  to form these regulatory moats
• 43:59
  or to, you know, capture some sort of subsidies in some way.
• 44:04
  And, and obviously, you know what,
• 44:05
  what's pro business in this sense is not necessarily,
• 44:08
  you know, pro market or, or you know, pro American people
• 44:12
  or, or you know, favorable to, you know,
• 44:14
  using taxpayer dollars wisely that you know, it's promoting,
• 44:17
  you know, good outcomes for, you know, the, the,
• 44:20
  the broader, you know, broader population.
• 44:23
  I, I wanna fast forward a little bit further here and,
• 44:27
  and really talk about like the, the rise of, of tech.
• 44:30
  You know, obviously the tech lobby is, is now, you know,
• 44:33
  hugely powerful in in in many ways in,
• 44:38
  in both parties.
• 44:39
  And I'm just curious about what, who are the, you know,
• 44:43
  main figures that you talk about?
• 44:45
  I mean, obviously Elon Musk looms very large right now, or,
• 44:48
  or has loom very large in in the second Trump
• 44:51
  administration, but I'm just, I'm interested in, in
• 44:54
  what you have to say about the, the rise of the,
• 44:56
  the tech sector in general
• 44:58
  that's really grown enormously since the 1990s
• 45:02
  and the, their interactions with, with presidents,
• 45:05
  which seem to be, you know, increasingly more,
• 45:09
  more relevant and more important.
• 45:11
  - Yeah, so high tech comes in two waves really.
• 45:15
  There's the nineties growth of high tech, mostly Apple
• 45:18
  and Microsoft and
• 45:21
  that era I talk about Bill Gates
• 45:24
  and Bill Gates was kind of like Rockefeller in
• 45:27
  that he creates this new industry,
• 45:28
  he doesn't think government's relevant to him.
• 45:30
  I ha he have this quote, great quote from him in the book
• 45:34
  where he says that the private sector is three times the
• 45:37
  fastest than government and the high tech sector is three
• 45:40
  times fast as the regular private sector,
• 45:41
  which means we're nine times faster than government.
• 45:44
  Okay, great. You're nine times faster than government,
• 45:46
  but government's also big and they grab you
• 45:47
  by the ankle, they're not letting go.
• 45:49
  And I think he failed to grasp that.
• 45:51
  And I think when the government under Bill Clinton goes
• 45:54
  after Microsoft in the nineties, that really hurt Microsoft.
• 45:58
  Obviously now it's a multi-trillion dollar company
• 46:00
  and they're doing fine, but at the time it really did set
• 46:04
  them back and allow a lot of these competitors to emerge.
• 46:08
  And Gates is chastened by what happens.
• 46:13
  And I speculate in the book
• 46:15
  and you know, there's some reason behind it,
• 46:17
  I don't just make it up that he leaves the CEO position
• 46:21
  of Microsoft in part
• 46:23
  because he's unable to make peace with the government
• 46:25
  and the new leadership that comes in
• 46:27
  after him is more accommodating to Washington
• 46:30
  and what Washington wants
• 46:32
  and Gates tries
• 46:34
  to transform himself from this kind
• 46:38
  of avaricious sharp elbowed,
• 46:41
  incredibly competitive person to being the kind
• 46:45
  of a ular philanthropist that we see him as today.
• 46:49
  But that's not what his perception was in the 1990s.
• 46:52
  And I have all these great book, great jokes,
• 46:54
  Microsoft jokes in the book,
• 46:56
  in my appendix I have an appendix about jokes told by
• 46:59
  and about CEOs.
• 47:00
  And one of the jokes
• 47:03
  in Microsoft world was,
• 47:06
  and this is based on Gates' sharp elbow
• 47:09
  and very competitive interest is, is
• 47:13
  Windows ain't done to Lotus don't run, which means
• 47:17
  that Windows is, the Microsoft software platform was
• 47:20
  designed in such a way that Lotus,
• 47:21
  the IBM spreadsheet program wouldn't run effectively on it.
• 47:25
  So they wanted to make the Windows platform a platform
• 47:30
  that you, you were, you would prefer
• 47:31
  to use Microsoft products on rather than
• 47:33
  other companies products.
• 47:35
  And so that was just one of many jokes about how
• 47:39
  Microsoft really was trying to keep out competitors
• 47:42
  and it ended up not working out well for Microsoft
• 47:44
  because the government came after them and,
• 47:47
  and took some real hits.
• 47:49
  The company took some real hits and we also know
• 47:52
  that Gates learns this lesson, not just
• 47:53
  'cause he leaves the company and tries to remake his image,
• 47:56
  but when he meets a young Mark Zuckerberg
• 47:57
  and Zuckerberg is really at the cutting age
• 48:00
  of the second wave of high tech starting
• 48:01
  in the early two thousands.
• 48:04
  He tells this young Mark Zuckerberg get an office there now,
• 48:09
  and by there he means Washington, DC
• 48:12
  and Zuckerberg, as you well know,
• 48:14
  has built up a very powerful office in Washington headed
• 48:18
  by my former White House colleague Joel Kaplan.
• 48:21
  And it's one of the biggest lobbying shops in Washington
• 48:24
  and they're involved in everything and they see everything
• 48:27
  and they're spending a lot of money.
• 48:28
  And it's in large part
• 48:29
  because of that lesson that Bill Gates imparted
• 48:33
  to Zuckerberg, Zuckerberg saw Gates as a model.
• 48:36
  They both grew up in upper middle class households,
• 48:39
  they both started coding at an early age.
• 48:41
  They both went to Harvard and dropped out to,
• 48:43
  to build their businesses.
• 48:44
  And when Gates gives them a lesson like that,
• 48:48
  Zuckerberg absorbs it and takes it in.
• 48:52
  - That's really interesting, really fascinating
• 48:54
  and just the, the whole enormous growth of,
• 48:56
  of the tech sector in its lobby, I feel like now you've got
• 48:59
  the crypto lobby is very powerful.
• 49:01
  There's many of these, you know, powerful groups.
• 49:04
  I also wanna talk a little bit about sort of
• 49:07
  the international components of some of these things.
• 49:08
  You, since 2016, there's obviously been sort of a shift in
• 49:12
  thinking about trade.
• 49:14
  Obviously, you know, both the rise of Bernie Sanders,
• 49:18
  democratic Socialists, sort of wing of the Democratic party,
• 49:21
  very much opposed to sort of the free trade, you know,
• 49:24
  Clinton Knight era.
• 49:26
  And and similarly, you know,
• 49:27
  president Trump obviously a big, big proponent of terrorists
• 49:29
  as as well.
• 49:31
  I'm curious what, in your research
• 49:34
  and all the work that you've done on this,
• 49:36
  where does trade factor into some of these things and,
• 49:39
  and any interesting sort of tidbits on sort
• 49:42
  of the international dynamics of, of some of these things
• 49:45
  The US has obviously become, you know, the, the,
• 49:48
  it has been the world's largest economy for
• 49:50
  for quite some time,
• 49:52
  even though it only has the world's third
• 49:54
  largest population.
• 49:56
  I'm just interested in what you've learned about maybe trade
• 50:00
  or, or, or some of these other sort of
• 50:05
  relationships around some
• 50:06
  of these particular policy issues over time.
• 50:08
  I mean, trade isn't exactly a, a new issue either in,
• 50:13
  in the sense that even in the Bush era there were some Bush
• 50:16
  43 era, there were some tariffs in the Reagan era,
• 50:20
  there were some tariffs on on Japanese steel,
• 50:23
  but from a foreign policy standpoint, things,
• 50:26
  you know, trades mattered.
• 50:27
  You know, there, there wasn't very much trade
• 50:29
  with the Soviet Union and,
• 50:31
  and there was sort of thought as you had the first world,
• 50:33
  the free world, the the second world or the communist world,
• 50:36
  and then you had the third world, which you know,
• 50:39
  is African elsewhere where the, the whole phraseology
• 50:42
  of the third world comes from.
• 50:44
  But I'm just interested in sort of your long run sort
• 50:47
  of historical perspective.
• 50:48
  How did you know the thinking around formulation,
• 50:52
  certainly in the Soviet era, impact thinking on trade then
• 50:56
  and, and what were sort
• 50:57
  of the business people thinking then?
• 50:58
  Obviously, you know, selling to more markets, you know,
• 51:01
  helps, you know, business people in a lot of ways.
• 51:05
  But now the US is home
• 51:06
  to all these massive multinational companies that, you know,
• 51:10
  are selling to, to many, many, many, many countries.
• 51:14
  And that's part of why these companies are so big today.
• 51:16
  But I'm just interested in, in, in your reading of things,
• 51:20
  any sort of international
• 51:22
  or other policy tidbits that you learned.
• 51:24
  - Yeah, it's, it's really interesting
• 51:25
  and first I, I may have to try your chosen profession
• 51:28
  of economists because they thought that it was just
• 51:31
  so obvious that free trade was correct
• 51:33
  and I, I am a free trader,
• 51:34
  but they stopped making the argument.
• 51:36
  They just assumed, well, you know, if,
• 51:37
  if you don't believe free trade's, right, you're ous.
• 51:40
  And they just stopped putting out additional research
• 51:42
  showing the benefits of free trade to the point
• 51:45
  where the American people forgot that there are benefits
• 51:48
  that it, that go to all when you have free trade,
• 51:51
  even though there are some people
• 51:53
  who might suffer overall everybody is better off.
• 51:56
  And so that argument stopped being made.
• 51:58
  Then you have the business people,
• 52:00
  and I talked about Lee Iacocca
• 52:01
  and you know, these, these people are happy
• 52:03
  to be free traders when it helps them get into foreign
• 52:05
  markets, but they don't wanna be free traders when it
• 52:07
  threatens their own businesses.
• 52:08
  So the business people really had no ideological
• 52:11
  commitment to free trade.
• 52:13
  And then you had the kind of globalist foreign policy types
• 52:18
  who thought, well if other company,
• 52:21
  if other countries are involved in trade with us,
• 52:23
  then they're gonna reform and become democratic capitalists.
• 52:26
  And you know, maybe we were, you know, too arrogant
• 52:30
  after winning the Cold War,
• 52:31
  but this thought that if you just get economic
• 52:34
  liberalization to China,
• 52:36
  then it will become a democratic free society.
• 52:39
  And that was just wrong.
• 52:41
  And I worked for Chris Cox in the 1990s.
• 52:43
  He was warning against that.
• 52:45
  He had a democratic partner with him at the time,
• 52:47
  a relatively junior member named Nancy Pelosi.
• 52:50
  Both of them were warning about the dangers of integration
• 52:53
  with China and,
• 52:54
  and maybe we should have listened a little
• 52:56
  more at that time.
• 52:57
  So I think you had failures in multiple places
• 53:00
  and it used to be when I was growing up that,
• 53:03
  or growing up in politics that the Republicans were mostly
• 53:07
  for free trade and they could get enough Democrats on board
• 53:11
  to pass free trade agreements.
• 53:14
  And now it's the Democrats are all against free trade
• 53:17
  unless they wanna criticize Trump
• 53:19
  and the Republicans are split,
• 53:21
  but many of them will go along with Trump and back.
• 53:25
  I think if perhaps there's a new leader,
• 53:27
  the Republican party in the post-Trump era
• 53:29
  who is a free trader,
• 53:30
  I think the Republican congressman would probably go
• 53:33
  back in that direction.
• 53:35
  But for the most part what you see is that the,
• 53:38
  whoever's the standard bearer of the Republican party gets
• 53:41
  to determine what the issues are
• 53:43
  and what the issue mix is and what the emphasis are.
• 53:45
  When I was working for George W. Bush, he would tell me
• 53:49
  and others in, in the Oval Office, I'm against nativism,
• 53:52
  isolationism and protectionism.
• 53:54
  That's not something you hear from the
• 53:56
  current Republican administration.
• 53:57
  George Bush was head of the Republican
• 53:58
  party not that long ago.
• 54:00
  I mean 15 years ago.
• 54:01
  He was 17 years ago, he was still head
• 54:03
  of the Republican party and these things change.
• 54:07
  So I think these battles have to keep being won.
• 54:11
  I remember Nathan Glaser, the great neoconservative,
• 54:14
  was presented with some Marxist arguments once,
• 54:17
  and he said that, your, your questions are so old.
• 54:21
  I've forgotten the answers,
• 54:22
  but you can't forget the answers.
• 54:24
  You have to keep working at it.
• 54:25
  You've gotta win this every generation over and over again.
• 54:28
  You can't just assume that people are gonna say, oh yeah,
• 54:30
  free markets and democratic capitalism are the way to go.
• 54:34
  You've gotta keep winning that fight
• 54:35
  and you gotta keep fighting that fight to win it.
• 54:38
  - Absolutely. And and I was born on November 11th, 1989,
• 54:41
  actually won the Berlin Wall fell,
• 54:43
  and basically everyone born
• 54:44
  after doesn't have any memory of the USSR and,
• 54:47
  and the sort of pernicious effects of socialism that,
• 54:51
  that the people born prior to being, you know, remember.
• 54:54
  I'm just wondering, any final stories
• 54:57
  or thoughts from all your fantastic experiences in, in,
• 55:01
  in Washington and in your time working in the White House
• 55:03
  and in Congress
• 55:04
  and elsewhere, you know, all the research for these books?
• 55:07
  Any other stories or,
• 55:09
  or things about sort of, you know, business people and,
• 55:11
  and presence and,
• 55:12
  and Congress that, that you wanted to share?
• 55:16
  - May maybe I'll share some life advice.
• 55:18
  'cause people often ask me for advice, especially young,
• 55:21
  I know you have some younger listeners,
• 55:23
  which is the importance of reading.
• 55:25
  You've just got to read in order to know things.
• 55:28
  I mean, people today, they,
• 55:30
  they assume they can learn everything from TikTok videos.
• 55:32
  There's really a whole world out there.
• 55:34
  And just listening to your podcast,
• 55:35
  I get all these ideas about books to read.
• 55:37
  Economists maybe who had thought of it a a long time,
• 55:39
  and it's really reading the written word is the
• 55:44
  basis of our civilization.
• 55:46
  And our civilization
• 55:48
  for a long time has been moving in the right direction.
• 55:50
  I'm worried about some recent tendencies,
• 55:52
  but I'm kinda, like I mentioned Irving Crystal earlier.
• 55:55
  I believe in what Irving Crystal said,
• 55:57
  which he was short-term, pessimistic, long-term optimistic,
• 56:00
  and so long-term optimistic on America
• 56:03
  and democratic capitalism and our values are better values
• 56:06
  and they will win out in the end.
• 56:08
  But we're, we may have some hard days
• 56:11
  ahead in getting there.
• 56:13
  - Well, it's really amazing just talking
• 56:15
  to Tevye about all your books
• 56:18
  and all your fantastic experience in in Washington.
• 56:21
  It's a real honor to you on
• 56:23
  and a real fascinating discussion, learning
• 56:26
  and all these bits of history
• 56:29
  between various titans and presence.
• 56:31
  It's really fascinating, the power of the money.
• 56:34
  A really great read. Thanks so much for coming on.
• 56:36
  - Thanks for having me and thanks for doing your podcast.
• 56:39
  - This is The Capital Moon Freedom the Train First Century
• 56:41
  podcast, an official podcast
• 56:42
  of the Hoover Institution Economic Policy Working group
• 56:45
  where we talk about economics, markets, and public policy.
• 56:47
  I'm John Hunter, your host. Thanks so much for joining us.