Mitt Romney On “Creative Destruction,” Innovation, and Why No Apologies are Needed for American GreatnessPublished: April 15, 2010 in Knowledge@Emory
As part of the Dean’s Leadership Speaker Series at Emory University's Goizueta Business School, former Massachusetts governor and 2008 U.S. presidential candidate Mitt Romney recently sat down for an informal Q&A with Jeffrey Rosensweig, associate professor of finance and director of the school’s Global Perspectives Program. The conversation focused on topics covered in Romney’s bestselling book, No Apologies: The Case for American Greatness.
Asked by Rosensweig to discuss how he encouraged innovation and increased productivity while governor, Romney, who earned a joint MBA and JD degree from Harvard Business School and Harvard Law School, talked about the effect of “creative destruction.” Innovation—technological advances and the like—increases productivity and a nation’s wealth long term, but individuals and companies that stand to lose jobs or be phased out “resist innovation and change,” explains Romney. “So as governor or as president or a senator—anybody in political office—one of the best things you can do to raise productivity is to keep at bay those forces that try to stop productivity from rising. It is a constant effort.”
Romney, the former CEO of Bain & Company and co-founder of Bain Capital, a private equity investment firm, is aware of the financial and psychological effects of losing a job. He believes there are ways to help those affected by creative destruction to transition from an “industry that becomes outmoded” to a “new type of industry that is growing.” Responding with a quote by Thomas Jefferson, Rosensweig referred to individual states as the “laboratory of democracy,” and Romney expanded on that. When it comes to issues like job creation and health care, Romney believes states should craft unique solutions that work for them, and then share ideas with other states.
The two men discussed the success of “Romneycare,” the Massachusetts healthcare reform law enacted in 2006, while Romney was governor. As a result of the law, roughly 98 percent of people living in Massachusetts are now insured. While parts of U.S. President Barack Obama’s recently enacted healthcare plan are similar to the Bay State’s healthcare reforms, Romney disagrees with several aspects of the president’s plan. “I like a state approach better,” as opposed to a federal plan, he explains. He’s also critical of the plan’s ability to “tell insurance companies what should be in their policies.”
Given his history as an executive, Romney is somewhat baffled by the public’s recent penchant for bashing businesses and the executives that run them. “You don’t help the wage earner by attacking the wage payers,” he explains. While he concedes that some executive compensation packages are out of line and that it hasn’t helped endear Wall Street to the public, Romney doesn’t believe it’s the government’s job to mandate how individual companies compensate their executives. Yes, says Romney, there are some “bad actors out there,” but the vast majority of business leaders are “good people who are trying to do their very best for themselves, their employees, and their shareholders.” He considers the current scapegoating destructive.
In closing, Romney offers advice to current students. “Soak up as much learning as you can and always be looking for opportunities for gaps in the marketplace,” he says. “Every successful entrepreneur I have seen did not begin by sitting down with a piece of paper and saying, ‘I want to own my own company, what shall I do?’ Instead, they saw a need that wasn’t being met and said ‘Ah-ha, I will do that.’ America does not succeed by having the largest population or the lowest cost of energy; we succeed by having the most innovative people in the world.”
To view the full discussion between Romney and Professor Rosensweig, click here.
Photo: Mitt Romney, left, with Professor Jeff Rosensweig.