CNBC's John Harwood reports that President-elect Donald Trump is set to pick Goldman Sachs COO Gary Cohn as the director of the National Economic Council, December 9, 2016
Members of Pres.-elect Trump’s growing economic team have offered conflicting narratives about their careers—or shaded aspects of their biographies to paint Horatio Alger stories that support their political views but don’t gibe with their actual lives—according to accounts of their backgrounds reviewed by TFN.
Trump has said he picks millionaires and billionaires to run his economic team because, “I want people that made a fortune because now they are negotiating [for] you.” He points to their accumulation of wealth as evidence of their ability to make the economy work for average Americans.
Gary Cohn, for instance—Trump’s choice to head the National Economic Council—is routinely said to have risen from humble origins as an electrician’s son to become the president of Goldman Sachs. But public records show his origins are not as humble as they have been described, and accounts he has given over the years show that he has offered conflicting explanations—including dyslexia—for his success.
How Cohn and others got their start has been largely unexamined—or flat-out mischaracterized. In fact, the economic climbs of Cohn and other nominees have been shorter than advertised. And the stories of their success cast doubt on both their explanations for it and its relevance to their new jobs.
At a benefit last year for Teach for America, Cohn explained both how he achieved success—and how he sees other Americans achieving it, too:
“Income inequality—everyone likes talking about it. No one likes dealing with it. Really, the only way to deal with poverty/income inequality and some of the unjust conditions we have in this country is through education. Education really is the key to success."
There is slim evidence, however, that education really was the key to Cohn’s success.
Current profiles of Cohn almost universally characterize him as “an electrician’s son,” suggesting education elevated him from working-class, blue-collar circumstances. However, reports about his family—from previous decades and from local media in his home state of Ohio—paint a different portrait.
Cohn’s father, Victor, may well have been an electrician when Gary was born in 1960, but author Malcolm Gladwell’s 2013 book says, “His family was in the electrical contracting business,” suggesting Victor was less worker than manager or even business owner. Gladwell also says Cohn’s grandfather had his own plumbing supplies business.
Whatever Victor’s exact position, the family had enough money to send Gary to at least one private school, despite Gary’s self-professed “horrible” academic record. In 1977, while Gary was still in high school, Victor founded his own real-estate company, according to a 1997 article in Crain’s Cleveland Business. Even as a “horrible” student, Cohn was admitted to American University, where he achieved what Gladwell describes as “middling” academic success. By this time, Vic was president of the Board of Trustees of Hillel at Kent State University, and Gary’s grandmother had enough money to lend young Gary $10,000.
On Friday, The Washington Post, echoing the rags-to-riches version of Cohn’s bio, wrote that, “After graduation, he took a job selling window frames and aluminum siding.”
Speaking to business-school students seven years ago, Cohn himself shared details that put the story in a somewhat different light:
“I moved back home and started having a great time enjoying my life, until that one, early Monday morning at 6:30 a.m. when my father walked into my room and turned on my lights. I had been in bed for about an hour, I think, and [he] said, ‘What are you going to do with the rest of your life.’ I ironically told him, ‘You’re looking at it.’ That did not go over very well in my house. So, I went through what I consider to be the formality of trying to go out and seek a career and seek a job. I ended up luckily landing a job with a division of the United States Steel in Cleveland. Not a job that I had any aspirations for, not a job that I really wanted, but I had to appease my father and I had to go out and get a job.”
Cohn says that he got the job on July 1 of the year he graduated. He doesn’t say how he “luckily” got the job, or whether his father used his real-estate connections to get his son a window-frame and aluminum-siding job—with no experience, right out of college—in a month when the state’s jobless rate was at 12.7% and climbing.
“By Thanksgiving,” Cohn continues, “I had found a way into the financial markets, by pure drive and perseverance.” What Cohn describes to students as “pure drive and perseverance,” he portrays differently to others.
Cohn told Gladwell he lied his way into finance by pitching himself to a Wall Street executive in a cab. "I lied to him all the way to the airport. When he said, 'Do you know what an option is?' I said, 'Of course I do, I know everything, I can do anything for you.'”
Before Cohn showed up for the job interview, he read a book about options trading. What Gladwell doesn’t say is that Cohn is lying about his lie.
Cohn doesn’t tell the students he lied in that cab. Here’s how he finished the cab story for them:
“He literally went through and grilled me on my knowledge of financial markets, grilled me on my knowledge of certain aspects and I think I moderately passed.”
Cohn moderately passed because he already knew what an option was. He knew because, as the Wall Street Journal reported in 2006, Cohn had done a college internship at the brokerage Shearson Loeb Roades. That’s why he borrowed money from his grandmother in college: To start trading with a $10,000 trade in gold. As a humble electrician's college boy.
Cohn acknowledges to Gladwell that he broke into finance due not to educational success, but to enduring so many educational failures—thanks to his childhood dyslexia—that he was comfortable taking the chance of bullsh*tting the Wall Street executive.
Despite having lectured business students that he made it, “by pure drive and perseverance,” he told Gladwell for his book about underdogs, “I wouldn’t be where I am today without my dyslexia. I never would have taken that chance.”
If Cohn made it to Wall Street with lies and other people’s money, his success once he got there seems to have followed a similar formula.
The Washington Post recounts how he ratcheted up Goldman Sachs’ risky behavior in the years leading up to the financial crisis:
“When [Cohn] took over the mortgage unit in 2000, it traded just $1 billion in securities a week.Three years later, the business was producing $50 billion in weekly trades, thanks to Mr. Cohn’s successful push to rev up risk-taking…”
A former Goldman Sachs executive singles out Cohn by name for the erosion of the firm’s “integrity” and “moral fiber,” and for selling clients advice that the firm knew to be sh*tty.
Fast forward to today, and having climbed to an annual salary of $22 million in 2014 on a ladder of lies and other people’s money from his humble start as the sh*tty-student son of an electrician/real-estate millionaire, Cohn’s public story now is that the keys to success are education, pure drive and perseverance.
Cohn is not an outlier when it comes to the credibility of his Horatio Alger narrative. Especially in areas of public policy dealing with economic issues, poverty, and job creation, Trump’s team consists primarily of people who have gotten their start without having to face all the challenges most Americans do. Almost no one has succeeded from the ground up.
Only Ben Carson appears clearly to have risen from anything less than solid, middle- or upper-middle-class circumstances through the power of education. And in Carson’s case, it’s not clear how he would have fared under Trump, without the government assistance his mother received in the 1960s when he was a child.
Some Trump nominees make little effort to gild their undeniably gilded childhoods. Treasury nominee Steve Mnuchin is the son of a Goldman Sachs partner. Education nominee Betsy DeVos is a millionaire’s daughter married to a billionaire’s son. Close advisor Jared Kushner, the son of a convicted real-estate millionaire, somehow scraped his way up to the position of top advisor to his president-elect father-in-law. Some, such as Transportation nominee Elaine Chao, carry a pedigree freighted with potential conflicts of interest; in her case, her father’s fleet of freighters.
Some personal stories remain murky. Commerce nominee Wilbur Ross is described by USA Today as, “The son of a lawyer and a school teacher, [who] grew up in North Bergen in New Jersey.” As TFN reported last month, Ross is the son of a judge, from an “affluent” family, who went to his father’s alma mater: Yale. Ross built his financial success on buying distressed companies and then extracting concessions from creditors and employees.
Then there is Andrew Puzder, Trump’s Labor nominee. Puzder cites his “working-class” background to support his arguments for eliminating measures that benefit the working class, such as minimum-wage laws and employer health insurance. Like Cohn, Puzder also extols the value of education and talks about the odd jobs he worked to afford his.
In a TFN exclusive last month, however, we reported that Puzder has also given conflicting versions of his curriculum vitae—variously saying he worked his way through college and law school by cutting lawns, or that he spent three years marching on Washington and going to concerts. Puzder also during this period—as a working-class family man struggling to feed his family--somehow managed to sock away $10,000 by 1975.
Puzder eventually joined a law firm and did work for the company that owns Carl’s, Jr., and Hardee’s. Puzder became CEO without ever having started a business or grown one. His success at boosting Carl’s, Jr., was due to his ad campaign showing young women in bikinis eating his hamburgers. He cut costs by pursuing automation to eliminate jobs.
Linda McMahon—Trump’s head of the Small Business Administration—started the WWE with her husband, Vince, whose father and grandfather created and grew the family wrestling dynasty first.
Whether Trump’s nominees owe their success to inheritance or genes that gave them dyslexia, none of them has started a small company and built it from the ground up to employ thousands of people. Few of them have worked at—let alone started—companies that manufactured actual products.
Their experience is primarily not in job creation, but in wealth creation, whether they have been Goldman Sachs executives getting taxpayers to underwrite risky deals or fast-food magnates replacing workers with robots. Regardless of the stories about their humble origins, most of Trump’s team owe their financial success not to creating companies and jobs, but to starting off well-off and creating additional wealth for themselves by extracting it from existing resources—American workers, and the American taxpayer.
Cross-posted with permission of the author.
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