The Feudal Future Podcast . Hello and welcome to another episode of the Feudal Future Podcast .
I'm Marshall Tzavlansky , I'm Joel Kotkin and Joel , we're just past the election , we're just by a couple of days , and one of the big topics that people are talking about right now is what is the relationship between the Trump administration and the business community going to be like ? And to help us with that today , we asked Tevi Troy to join us .
Tevi's book , which is the Power and the Money , is all about that . It traces the relationship between CEOs and POTUSes all the way back to Ulysses S Grant . Tevi , welcome .
Thanks for having me . I'm a fan of both you and of the podcast .
Well , thank you and Joel , you want to kick us off with a ?
question . I mean , one of the things that I've been trying to follow is the shift in the support base of the presidential candidates In 2020 , it seemed to me that Biden had virtually all the big powers in Silicon Valley and Wall Street , which are the dominant groups . Has that changed significantly ?
I wouldn't say that it's changed significantly . I think we're seeing some large tectonic shifts that come in from two places . Number one is it used to be a more industrial economy , so the big companies were car companies and oil companies and railroad companies , and those leaders tended to be more Republican .
And today , when you have Silicon Valley and Hollywood and media , those tend to be more Democratic . So that's one factor . The second factor is that Republicans now join Democrats in being regular critics of big business . So the Democratic , the Democrats are going to go after him , the Republicans are going to go after him .
So CEOs say well , both parties go after me , but my kids go to the same school as these Democratic legislatures . I'm more culturally conservative , culturally comfortable with the Democrats , so I'm going to hang out with them . And as long as I'm going to get hit , I might as well find the team that I'm comfortable with . So I'm going to hang out with them .
And as long as I'm going to get hit , I might as well find the team that I'm comfortable with . But I wonder , has there been any movement ? I mean , it just seems to me that we are seeing prominent Wall Street people and Elon Musk , of course , and also some of the techies shifting to Trump . Is that a significant move , or is it just a few individuals ?
Well , it's significant in that I think they had an outsized impact on this election , especially Elon Musk , and other CEOs might follow . I mean , they're not the boldest crew , they're mostly a risk averse crew , but if Musk goes in first and it works out well for him , they may do the same in the future .
But I would say that right now , the business leadership of the country , especially in those places Silicon Valley and in the entertainment and the media , those tend to be liberal and will continue to be so .
Well , I'd like to back us up a little bit , because you make some really wonderful points in the book about what the nature of the relationship is between businesses and the government .
You know , we typically , especially with this election cycle , we start looking at Musk's lottery system and all this stuff , and it's all about elective politics , it's all about campaign contributions , but really there is a fundamental justification for having a relationship between business and policymakers . So how do you see that ?
What is it all about and how has that evolved over time ?
Yeah , I think you see this recurring trend in the power and the money which is CEOs think that they can do whatever they want and they don't have to worry about government . And then government comes to bite them and then they say , okay , I'm going to pivot and I'm going to get much more involved in government . I'm going to change my strategy .
It happened with Rockefeller when the Roosevelt Teddy Roosevelt administration came after him . It happened with Lou Wasserman , a Hollywood mogul who had no interest in government until Bobby Kennedy's Justice Department came after him . It happened with Bill Gates , who said we're going to get bigger and faster than the government and not have to worry about them .
And then , obviously , bill Clinton's Justice Department came after him and the government and not have to worry about them . And then , obviously , bill Clinton's Justice Department came after him . And then later , what Gates does is when he meets a young and somewhat starry-eyed Mark Zuckerberg , he says to him get an office there now .
And there is obviously Washington DC .
Wow , and right now , from what I'm understanding , tech is one of the most powerful lobbies in Washington .
Yeah , but they started with Microsoft pretty much ignoring it . Amazon had a very small operation , and so they eventually realized that they really have to get off the schneid and get much more involved in government .
But the way you're describing it is , at its core , kind of an adversarial relationship . You know , business wants it to do what it wants to do . Wants it to do what it wants to do , goes too far , gets reeled back in . Is there a more positive aspect to it ?
Is there a development of joint public policy in order to be able to see the economy grow , or is that just wishful thinking ?
Well , there is , but perhaps in a way that's more worrisome than what you suggest . A lot of times , when government says we're going to regulate this industry , you see the heads of the biggest companies in that industry say , yes , we want regulation . And why do they want regulation ?
Because complexity is a subsidy and it allows them to maintain their market position at the expense of innovators who might be coming up , who are less equipped to deal with the regulatory state's burdens , less equipped to have the lawyers and the lobbyists and the compliance officials who will get you through that regulatory arrest .
So the idea is that regulation is really actually a barrier to entry for new entrants in a marketplace that actually protects the position of the existing players .
I think that's very well said and that is pretty much where it has developed now . Now that wasn't always the case , so I talk about in the book in the Power of the Money , when Rockefeller was starting up and he created his monopoly with a lot of sharp , elbowed tactics and inappropriate tactics , but they weren't illegal because there were no laws preventing it .
I actually call that section of the book the blank slate , because there was no government telling you you can't do this . Now there was public opprobrium and he was unpopular . He had to sleep with a revolver under his pillow but there were no laws saying don't do these things .
So let's look at that period a little bit further , becauseitive behavior that led ultimately to the development of antitrust laws . Is that where it started ? Is in the Rockefeller kind of kind of behavior in the oil market or was it railroads ? What was , what were the , what were the iconic pieces that led to the development of antitrust legislation ?
Well , I wouldn't distinguish Rockefeller from the railroads too much because a lot of what was going on was he got special subsidies and kickbacks from the railroads for transporting his oil at the expense of his competitors . So they were kind of in bed together . But yeah , it was those types of behaviors .
Rockefeller would famously go into a town , lower the prices , then the other oil companies would close up shop and then he'd buy them up at a fraction of the cost . The other thing that he did and this is more of a positive is he kind of self-regulated the oil industry when there was no government regulation .
The reason his company is called Standard Oil is because he created a standard for what you can expect from the oil product Less combustible , more reliable . You knew if you were buying Rockefeller's product you were getting a good product . There was no international regulatory commission on energy to tell you what the product should look like .
Rockefeller established the standard itself .
So for those of you at home that are listening to this and wondering what standard oil is , just look at ExxonMobil . That is what it is .
That is the Chevron . That's what we have today .
That's a great point so when the Roosevelt administration's idea to break up standard oil happens and it happens after the Supreme Court rules , during the Taft administration , so after Roosevelt's no longer president this is Teddy Roosevelt , by the way- people who are rockefeller is playing golf with a priest , and he was playing golf all the time .
He played golf every day in his retirement and when he hears the word that his but baby standard oil has been broken up , he says three words of brilliant advice to the priest buy standard oil .
And it's for that exact reason that you said that standard oil became chevron and exxon and Mobil and BP , all these powerful companies that if you had had stock in all of them back in 1911 when this happened , you would have made them in .
But what about if we look at today's monopolies ? You know , one of my big concerns is , you know , you have Google with 90% of the search market , 90% of the search market . You have Amazon with an enormous control of the retail market , particularly books and things like that .
You have these gigantic , what I would almost call zaibatsu that now also own studios , also own newspapers . Is there a role for government to push back against this , because it doesn't seem to have done very much ?
There is a role , but I think we also have to be careful about assuming that just because something is , it will always be . So Microsoft was incredibly dominant in the software space , and that is no longer the case . The technology moved on and things changed .
Now Microsoft is a successful company again , but not because of the old business model space and that is no longer the case . The technology moved on and things changed . Now Microsoft is a successful company again , but not because of the old business model it had , where Bill Gates was very sharp elbowed .
We think of him as this kind of avuncular philanthropist , but that's not who he was when he was actually a business executive . So there's constant change in the market and sometimes government is the cause of the stratification because of what we were talking about the barriers to entry .
So yes , it is true that government can play a role in limiting monopolistic power and behavior , but at the same time we have to be careful that government doesn't entrench monopolies through its regulatory apparatus .
Well , and what do you do in a world where markets are in transition , like what we have today ? Right , we're looking at a , at a economy that's really changing because technology is driving that change . Ai is a huge driver in it , but we don't know really yet how it's going to emerge . What , what happens in , in , in , in eras like that ?
Well , I can speak as a former regulator . I was the deputy secretary of HHS under Bush and I was also a senior White House aide , so I have a lot of experience here . One of the things is you have to be careful when things are moving quickly and you don't know what's going to happen .
If you impose some boom standard right now and then this is what the standard is going to be forever . The technology can overtake it . I was very involved in health IT , health information technology the kind of technology that doctors use to take electronic medical records and I worked for Secretary Mike Leavitt , who had read a lot about this .
He read the books about the railroad and how the government imposed certain standards on gauges , and what he was insistent upon is we should have rules of the road , but we can't dictate what the technology should be . And then the Obama administration comes in .
They spend something like 30 to $40 billion on electronic medical records , and the regulations for what these should look like come out pretty much the day that the iPad appeared , and so they could have just spent the 30 , $40 billion buying an iPad for every medical practice in America , and it would have been more efficient . But you can't know in advance .
You're going to be saddled with unintended consequences , no matter what happens . Yeah , your time in the White House is really interesting to us . What did you observe in terms of just the kind of close personal relationships that get formed between CEOs and top heads of departments and POTUS himself ?
Yeah , I saw a lot of big name CEOs coming in and out of the White House . I see Bill Gates waiting there to speak to the president . I had one meeting that I was sort of in charge of when I was in my role at the Domestic Policy Council , of snack and fast food companies , because President Bush had an obesity initiative . He was trying to reduce obesity .
It didn't actually work . So we have all these snack and fast food companies in the White House sitting around a big table in the Roosevelt Room , and one of the people there was Andrew Neary , who is the CEO of PepsiCo , and Karl Rove , who's a very friendly guy .
He walks into the room and he sees these CEOs sitting around there waiting for the president and he sees they don't have drinks in front of them and he says get these people some drinks . So some intern runs down to the White House mess and brings a whole mess of drinks and the White House mess has an exclusive contract with the Coca-Cola company .
No PepsiCo products . Oh , that must have gone over well . So these sodas are being distributed to the tech CEOs and there's no way Ingenuity is going to be photographed with a Coca-Cola product in front of her . So Carl is again very smart . He realizes what's going on and he says get this woman a Pepsi product .
And so some intern starts running around the White House trying to find a Pepsi product and somewhere in a desk drawer he finds a dusty , room temperature Diet Mountain Dew . And a desk drawer he finds a dusty , room temperature diet Mountain Dew . And they present this to Injunuri and she puts it in front of her gamely . But I noticed she never took a sip .
Oh , that's funny . That's funny , Is it ? Is there some ? I mean , we have an unusual situation . There's always been this gap between the experience of a politician and that of a business person . Now we have a president who's a business person . Any speculation about how that changes things , or does it change things ?
Well , we saw his first term , so it's kind of a model for what might happen in the second term . Yeah , he wants to run government like a business , but it's not so easy to do . Government is different . In the Power and the Money .
I kind of did a study of a lot of CEOs who went to work in Washington as cabinet secretaries and it often doesn't work out well . Think about Rex Tillerson getting fired by tweet while he's on the toilet in Africa suffering from a stomach virus .
Think about poor Andy Puzder , who is up for secretary of labor and all these ugly stories come out from his divorce proceedings . He didn't do anything illegal , but the stories were sorted and it didn't sound so good for him . So he didn't even get the job .
So he has to give up all kinds of financial relationships , he gives up his role as the head of the company and he also doesn't get the job in the end . So it's very hard to say I'm going to be a business executive and then I'm going to go into government . Jack Welch , I think , was the smartest about this .
He knew 10 different presidents and one of the ideas of the Power of the Money is to look at CEOs who knew multiple presidents . So Jack Welch , I think , was at the top of the list , knowing 10 presidents .
And they would always say Jack , join my cabinet , jack come into the government . And Welch would never do it . What is it , you know ? What does the permanent bureaucracy think of all of this ?
That's a good question .
You know , do they just ? Is it just ? Oh , they come and go . I mean , what is the ? Is there a cynicism about it ? How do they view this whole process ?
Well , I think they have that cynicism about all political appointees that you come and go and I'm going to be here and your administration is going to be around for a few years , but I'm going to be around for 30 or 40 years . So there is that arrogance . I don't think it's explicit , but it's implicit .
Then with the business leaders , they just don't like them . They think that who are these business people to tell us what to do ?
We know how to regulate and that's what we do . So I think there , for the Bush administration , for both Bush administrations , or the Obama administration for that matter Do you think that has pretty much run its course ? Do you think it's going to be easier for Trump to to find people who want to serve and and do you think the cynicism level will go down ?
Yeah , this is a terrific question because I worked in the Bush administration , as I said earlier , and I have a lot of friends who are eligible for jobs in the Trump administration . Some of them worked in the Trump administration and for the most part , their careers did not benefit as a result .
You work in these administration jobs which are very difficult and are relatively low pay to serve your country , to help an administration you believe in , but also you think there will be some career value to it .
And it was actually a career negative for way too many people in the Trump administration , and that was because of the , I think , the hysteria of the anti-Trump movement and this sense of trying to criminalize all kinds of behavior you disagree with . So the question is will that happen again in this next Trump administration ?
A lot of people will be wary of entering to begin with because they saw what happened in the first time . But there's also the sense that maybe now Trump is normalized within the Republican Party . Look , I remember when Ronald Reagan was seen as the crazy and the Bushies were seen as the normies . So now maybe Trump is the normal .
He's been the head of the party for 11 years and so if you are a business executive and you want to deal with Republicans , you have to deal with Trump Republicans , and that includes hiring them after they leave government .
And , by the way , congratulations to you for being named a senior fellow at the Reagan Institute . That is quite an accomplishment .
Oh , great Thanks . I'm a big fan of Ronald Reagan and , to the extent that we're going to be having a conversation about where the conservative movement goes next , I think the Ronald Reagan Institute is a great platform from which to do it Well , and how are you planning to follow up on the work that you've done here ?
What kinds of things are you going to be studying , going forward ?
Well , it's a great question and I don't yet know what my next book is , but I do have a model , a template and for all my books . I've written five books on the presidency . They are all about presidents and blank , and the blank is something that nobody has studied before .
So it's something that's new , covers cross presidents and also speaks to our current moment . That's why I wanted to write this book right now , because CEOs and presidents are so in the news and I thought it was the right time to look at this .
So I think I need to spend a little time seeing what the second Trump administration is like , seeing what the key issues are , and then maybe I can come up with my presidents and blank for the next go round .
Well , I was just wondering , you know , if we could just go back a little bit to our friend Elon Musk what kind of role could he be playing ? I mean , he's such a huge factor in the economy it's not like he's just another stock guy . He's , I would say , the most important entrepreneur in the world at this stage what kind of role could he play ?
I mean it's hard to think what policy could come that wouldn't affect his business , Right ?
Not only most important entrepreneur in the world , but also maybe most important celebrity . There's long been this talk about how the Democrats dominate the celebrities . They've got Beyonce and Cardi B .
Well , the Republicans have Elon Musk , and I think he was effective on the campaign trail , and so I think we have to rethink what celebrity is , especially in this disaggregated world where , look , all of us grew up in a time when everybody knew what happened on All in the Family or on Happy Days , but that's no longer the case .
There's no one TV show that everybody watches . I mean , the New York Times might want you to think that everybody is watching Breaking Bad or Curb your Enthusiasm , but those are really niche shows and they're not watched by the bulk of the American people . But everyone knows Elon Musk .
So I think the very celebrity nature of the CEOs gives them an ability to help an administration just from the reflected glory of who they are and their celebrity status .
I don't know if you've had a chance to read Isaacson's biography of- .
I sure did . Cited in Power and the Money too .
One of the things that came out is his maniacal focus on process improvement .
Yeah .
And which , as a business school professor myself , is a topic near and dear to my heart .
Well , it's sort of like like I saw at your Honda or the people at Toyota , right yeah .
Right , well , but the thing that's interesting here is that Trump has offered to provide that kind of guidance to redesign government processes . God knows government processes need to be need to be redesigned in order to become more efficient . Government has screwed up a lot of applications of technology that would have been really fantastic because it's just too big .
Do you think that he actually has a shot at making an impact in that regard ?
It's a terrific question , and I myself have been wrestling with it , because government is not like business . One thing that really came out in that Isaacson book and I really seized on that same piece that you mentioned was he could go to the assembly line and say this is wrong , why are you doing it this way ?
And they say , well , we've done it this way before . And he'll say stop .
But in government , when you say we've done it this way before , it's usually because there's a congressional directive or some regulation , something written in law , that makes you do it that way , that inefficient way , and so I think what might be a first step would be to have some kind of report that triages what's going on and sees what is congressionally mandated
, what is there by regulation , what is there by habit , and approach all of those things differently . Now that Trump has won the Senate and Congress , there's a chance that he could go after some of those inefficiencies that are there through legislation as well as go after the ones in regulation .
But the first one should be the ones that are just there by force of habit , and that's where I would start .
So if we want to kill something , we just create a study group . So that sounds to me like there's really no hope of ever making this happen .
I don't know , I'm being a little facetious here I mean the Grace Commission brought out a lot of interesting and important ideas , that some were adopted Well , and I hope I really do hope that we can get some focus on it , because I think the country needs to be retooled .
Yes , and you know , we're kind of operating on a 20th century , maybe even arguably , a 19th century industrial model of how government should work .
And we're not in that anymore . Well , you see it with FEMA , you see it with the putting the charging stations out . I mean billions of dollars . Meanwhile Elon Musk goes and makes tens of thousands of them on his own . We certainly saw that inefficiency . I had an experience the other day .
I was flying from Charleston , south Carolina , back home , and had to go through Denver . My flight was late because there weren't enough air traffic controllers over the Kansas City airspace . I mean , I'm saying who is running this country ?
And that happened because they didn't have enough people . Yeah , they didn't have enough controllers .
They didn't have enough controllers . I mean , you sit there and you say these are airplanes , like it really matters if it screws up , and and I think that this is , I think part of this whole disillusion with the government is that people feel the government is inefficient and has to be somehow changed .
Um , you know , whereas you you think about it and I think you touch on this during World War II . You know , ford may have been a son of a bitch , but boy when he turned into making planes , he was pretty amazing .
Well , and the idea that you would have that's a really interesting point when you have a McNamara in the world right whose job it is to redesign the logistical support systems , there is a case where the government has an imperative to make itself more efficient to be able to meet a external threat .
Short of that , are you going to have that same kind of success in redesigning systems ?
Short answer is no . It is emergencies or external threats that lead to the biggest redesigns . But I'm going to put in a word to defend FEMA .
I worked in the White House during Katrina and FEMA really did not do a very good job there , and I've done a bit of a study of FEMA , and FEMA has reformed its systems because it recognized it wasn't doing the job .
If you look at video , footage that was a job , brownie , I think , is what I'm thinking .
Yeah , painful words for me , but if you look back at C-SPAN footage of George HW Bush going to a FEMA operations center in 1992 during Hurricane Andrew , which was a poor response by the government and helped lead to his defeat against Bill Clinton , that is a very low-tech operation where people are writing down on note cards where to go .
And if you go to FEMA operations center today , it's much more high-tech . It uses social media , it incorporates new technologies to address these crises much better . But again , fema is dealing with threats and crises and emergencies and so a HUD regulatory process is not going to improve the same way .
Do you think one place where maybe some new approaches may be on the border , because that seems to have been the you know . I mean , I think that has as much to do with Trump winning as anything else .
I totally agree with you on that . I mean , the other thing about that and it's a little off field is that Mayorkas , who is the Homeland Security Secretary , bragged for the first year of the Biden administration how we've gotten rid of 94 executive actions by Trump that made it harder for illegal immigrants to come in the country .
And then , three years later , the Biden administration is saying well , we've got to stop illegal immigrants from coming to the country . Well , why did you brag about getting rid of those executive orders ?
So yes , I think we do need a higher tech solution to the border issue , but the high tech solution matters , not a wit If you're just going to open the doors and say come on in , here's a piece of paper , show up in five years and then hopefully we'll regularize your process and your citizenship between now and then .
Well , you know , as we get to a close here , I'm going to put you on the spotlight here . Do you think that , given his CEO experience and given perhaps the assistance of Musk and some others , do you think that Trump will really be able to make a difference and actually live up to the idea of running government as a business ?
Or do you think it's all showmanship and personal narcissism ?
Well , there's two answers to this . Number one is all presidents make a difference . They all implement policies that shape our lives and shape how the government is . But is Trump going to completely transform government so that it's completely run like a business ? No , it's not possible and I'm not sure the American people want that .
Marshall , you want .
Yeah , I'm also wondering about is there a difference when I'm thinking about the Musk stuff and Musk being one of the largest defense contractors that we have , and space ?
of course .
And the strategic importance of space moving forward . Do we ? Is there a difference in the relationship between business and the government when it comes to dealing with defense , or is it still pretty much the same set of rules ?
No , it's different with defense . There's a whole bunch of different procurement rules and there's again just necessity and emergency here , so but I do think that our defense procurement has to be improved .
There have been some interesting articles in the Wall Street Journal about how new , smaller high-tech firms are doing things that Lockheed Martin or North of Grumman can't even imagine , and so I do think , with the world of AI and bots and drones , I think we do have to rethink how we're going about things as a way , from just the massive aircraft carriers , which
are kind of basically just missile targets , by the way , something very important for us here in Southern California , because that's one of our you know , one of our strengths is the aerospace world .
And we have a lot of these little startups that are coming up .
You know , I want to follow up on what you were just asking before and putting him on the spot . So if you look at the this election , I think a lot of people voted for Trump because they said you know what ? Somebody has got to do something differently . Right , I can't afford to eat anymore . I can't afford to get a house anymore . I can't .
There's so many pieces of the American dream that are just been put away from me . Obviously , in order to be able to make any kind of meaningful government change , there have to be wholesale changes . Do you think in the relationship between government and business ? Do you think it's going to happen ?
Do you think that the relationship between businesses and government will go to a new level during this administration and actually be able to deliver on the promises that Trump made ?
Well , no candidate , except maybe James Knoxville , fulfills all their campaign promises . But I think Trump in some ways is more capable of carrying out some of his disruptive changes because in some ways he just doesn't care if he gets press criticism or internal criticism . Trump's motivating factor is press . He doesn't care if it's negative or positive .
There's downsides to that . There's upsides to that . So I think he has some potential to do those kinds of things , but I wouldn't overly bet on government being this sleek , efficient operation after four years of Trump too .
Well , let's , let's hope that at least we see some positive change .
Oh , that would be a change . That would be a change in itself .
It would be great to to avoid the the headlong rush back to feudalism Right and and with that I just want to say thank you very much , debbie . This has been a really interesting conversation and , uh , we wish you well in your new assignment at the Reagan Institute and thank you for being a guest on the feudal future podcast . Thank you .
Thanks for having me . It was a great conversation .