The business background of Republican U.S. Senate candidate Mike McFadden often gets rounded off to “financier,” and it’s just wrong.
Financiers control or deal in large chunks of money, and the only large chunk McFadden has managed is his own, earned in a merger-and-acquisition advisory career in Minneapolis.
McFadden maybe shouldn’t complain, though, as he’s still doing better than Republican gubernatorial candidate and retired private equity executive Scott Honour.
Just try Googling “Minnesota Mitt” to see how the progressive group Alliance for a Better Minnesota tied Honour to former Massachusetts governor and retired private equity executive Mitt Romney, a financier who did not come particularly close to winning the presidency in 2012.
Both of these Minnesotans clearly hoped to turn their successful careers into electoral assets, but the recent record in Minnesota reflects that a business background isn’t always valuable.
There are some businesspeople who probably shouldn’t even think about a run for office. Imagine the biography in campaign materials for a candidate with a background as a payday or subprime car lender. Even an opposing campaign’s greenest summer intern could turn this candidate into Mr. Potter, the iconic villain of the enduringly popular 1946 film “It’s a Wonderful Life.”
A group not much more viable politically than payday lenders is hedge fund managers. It’s not just a Wall Street job — a half-dozen hedge fund firms in the Twin Cities come to mind.
Based upon what most people can read, however, a hedge fund manager is wildly overpaid. They are probably up to something no good, too, like trying to take over a local company (William Ackman and Target), trafficking in insider information (SAC Capital) or cajoling government officials into investigating a pesky company that won’t go out of business on its own (Ackman, again, and Herbalife).
Also clearly on the liability side is a career in private equity, something Scott Honour did for the Gores Group before retiring in 2012.
A private equity firm invests in businesses and generally makes money only if the value of the businesses increases. So far that sounds pretty harmless, but as the Romney campaign found out, it was not that hard to recast private equity managers’ efforts to increase the profitability of a business, the real work they do, as nothing more than cost-cutting. You know, just a rich guy getting richer by firing working people.
Then there is the tax structure of their industry. Partners in private equity have made most of their money through what’s essentially a cut of the profits. The thing is, the tax code has treated those profits as a capital gain, taxed at a far lower rate than the ordinary income a plumber may earn, even though the private equity partner didn’t personally invest capital.
It may seem like a technical tax issue, but if private equity’s tax rate gets batted around in a campaign enough, it’ll start to look to many voters like a tax loophole so big two Cadillacs can drive through it.
Not everyone who tries to jump from business into politics comes with a finance background, of course, with public relations serving as the platform of Tom Horner’s Independence Party run for governor in the last election.
Horner was hardly a novice in politics, but public relations was how the media routinely defined him. Selling yourself as an advocate for businesses is not a bad story with voters, so in this field the trick seems to be having no former clients with controversies so hot that they get dragged into the campaign.
More firmly on the asset side of the balance sheet are careers such as community banking, the lender for small business and the growth of the middle class, and real estate development, the background of 2006 gubernatorial candidate Kelly Doran.
When critics have lined up to oppose a project, developers get described as “greedy real estate developers,” but aside from borrowed money what fuels their careers is optimism.
Developers look at an industrial brownfield and think opportunity. They know there’s something better that can be built on that corner lot. Something better can always be built.
Entrepreneurial optimism is the quality that makes small-business backgrounds of all kinds so attractive in politics, and why this year U.S. Senate candidate Chris Dahlberg, who is actually a lawyer, claims credit as a small-business owner.