The investment bank’s network reaches the White House, again.
Consider just this very partial list: Henry Fowler, Robert Rubin, and Hank Paulson, former US Treasury secretaries. Mark Carney, governor of the Bank of England. Mario Draghi, European Central Bank president. Malcolm Turnbull, prime minister of Australia. Bill Dudley, president of the New York Federal Reserve bank. Romano Prodi, former Italian prime minister. Josh Bolten, former White House chief of staff. Robert Zoellick, former president of the World Bank.
Before or after these men had their turn with the levers of power, they worked for Goldman Sachs. No other company can boast such an alumni network with anywhere near this level of influence on world affairs. It seems the pattern will be not be broken under a Trump administration. The president-elect has tapped Steven Mnuchin, a former partner at the investment bank, to be his Treasury secretary.
Put aside, for a moment, the political implications of Mr Trump’s choice. There are good reasons why Goldman has the network it does, and there are reasons to be glad a Goldmanite will be in the cabinet. It is very hard to succeed at Goldman. Those who do tend to be hard working and competent, and to have a good understanding of financial markets.
Goldman Sachs is also, in a broad sense, moderate. Its alumni take roles in parties of the right and left. Its economists tend to be Keynesian and respectable. Goldman people take care to understand how the system works, and try to keep it working. Doing anything else would be a serious obstacle to profit. All of these characteristics make them useful to the executive branch.
Mr Mnuchin is not, it must be said, a Goldmanite of anywhere near the rank of Mr Rubin or Mr Paulson, who were co-chair and chief executive of the firm, respectively. Mr Mnuchin rose to chief information officer before striking out on his own as an investor in banks and films. But he is a natural choice for Mr Trump, who in selecting deputies has overwhelmingly favoured people he trusts and who were vocal supporters of his campaign — starting with his strategist Stephen Bannon, another Goldman alumnus. Mr Trump is a property developer and reality TV star. A New York banker turned movie producer fits perfectly.
The president-elect’s opponents on the left argue that Mr Trump’s embrace of Mr Mnuchin and assorted other billionaires is a betrayal of the working-class voters who gave him the presidency. On the campaign trail Mr Trump took aim at hedge funds and bankers “getting away with murder” and criticised Hillary Clinton for giving speeches for Goldman Sachs. His actions make nonsense of his rhetoric.
This liberal indignation fundamentally misunderstands the Trump phenomenon. If working class Trump voters had a problem with billionaires, or with the president-elect’s casual approach to facts, they would not have voted as they did.
They heard Mr Trump’s fundamental promise on growth and jobs, and his withering disdain for the niceties of the liberal elite. That was enough. That his tough talk about the financial elite was empty posturing will cost him nothing politically.
That does not mean Mr Trump and Mr Mnuchin will have a free ride. They will have to deliver the growth and the jobs. Although they will be handed a US economy in rude health, the goals they set out remain ambitious. The Goldman reputation for hard work and competence will be tested. If things go wrong this time, though, the world’s most powerful professional network will, without any doubt, have another chance in the next administration.
By FT View