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February 17, 2008
David Warsh, Proprietor


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On Dynasties

I have been reading David Landes’ Dynasties: Fortunes and Misfortunes of the World’s Great Family Businesses (2006).  This book is a coda to his The Wealth and Poverty of Nations:  Why Some are so Rich and Others So Poor (1999), part of his ongoing argument with his friend and neighbor Alfred Chandler Jr., exponent of managerial capitalism, who died last year. These are business stories – pithy, chatty, brilliant – about families whose present-day members are, in many cases, friends of Landes and his wife.

There is something distinctly old-timey about the book. (Landes, of Harvard University, is a historian, after all.) The Barings, the Rothschilds, the Morgans in banking; the Fords, Agnellis, Peugeots, Renaults and Citroëns in automobiles; the Rockefellers, Guggenheims, Schlumbergers and Wendels in natural resources – all are interesting cases whose adventures long ago entered the history books. The dynamic new dynasties are for the most part to be found in Asia. To his credit, Landes has a chapter on the Toyoda family, which, from a start in textile manufacturing in the nineteenth century, has built what soon will be the world’s largest automotive company, Toyota. But you get a better sense of who comes next from the next Forbes issue on the superrich. 

The world changed in the late 1970s. The entry of China into world markets, the collapse of the former Union of Soviet Socialist Republics and the reunification of Europe, the reorganization of the economies of Brazil, India and Mexico – all this has led to a colossal consolidation, from autos to steel to natural resources and communications.

 

The great new fortunes still seem to be made in the USA: Intel, Microsoft, Oracle, Berkshire Hathaway, Google, Bloomberg, the numerous cable and telecomm giants. Things happen so swiftly in new markets that generational considerations don’t seem to come into play, except as force of habit. These companies are run as if they were family firms, even if no child or grandchild successor is in sight.

Why are family firms so important in business? Landes enumerates and illustrates several virtues. Dynasties travel well.  They keep their secrets better. They understand the value of knowledge. They get away with more.  Summing up, he writes: 

In some ways, all dynasties are alike. They are structures of blood relationship, often reinforced by marriage ties and adoption. The essence of the relationship lies in the nature of paternal governance:  father, later grandfather, rests his authority on age, love, the habit of accepted power, the advantage of experience, the legal possession and control of assets. In dynasties that work well, these considerations make for a system of reciprocal trust, duty, habit, and affection transcending legal and even personal obligations, surpassing time and cultural environment, and surmounting generations. As we have seen, however, such systems don’t always work well, and can run into emotional difficulties. These emotional clashes seem to be almost unavoidable, gaining force from both success and failure (ya can’t win and can’t afford to lose!) and it is the family’s ability to deal with such clashes within the structure of the business that helps determines their success. 

Why, then, do dynasties fare so poorly in politics?  Perhaps for the very reason that they cannot deal with their problems internally, “within the structure of the business.”  Whenever in the past week I have thought I have read enough Landes, I have picked up Jacob Weisberg’s book, The Bush Tragedy. Weisberg’s book, which appeared last month, has been somewhat overlooked in the excitement surrounding the Democratic primaries. No surprise. Yet not only does it present the best interpretation yet of the past eight years.  It also is an excellent guide to meditation on the problems that can be expected to arise should Sen. Hillary Rodham Clinton somehow pull off a miracle and win the Democratic Party’s nomination.

 

Weisberg writes, “After a presidency that resembles a plane crash, we need to examine the political wreckage around us to try to understand what went wrong.” He takes apart what he describes as the “black box” of Bush family history and discovers complex tangle of admiration and resentment that can be summed up simply as intra-dynastic rivalry. Bush is a man “who has been driven since childhood to challenge, surpass and overcome his father.”

 

Much has been said before about various aspects of the Bush family dynasty, in good, solid books written along quite different lines, by the likes of Craig Unger and Kevin Phillips. But those books are nothing like this one.  The spine of Weisberg’s book is a shrewd and dispassionate account of the stresses that developed between the Walkers of St Louis, Mo., and the Connecticut Bushes in the course of five generations, and the profound distortions to which they led. Weisberg’s advantages include simplicity, familiarity, shoe-leather and an unerring sense of how families and friendship work – virtues much like those of David Landes. His analysis of Walker family/Bush family dynamics is new and superb.

For dramatic purposes, it culminates in George H.W. Bush snookering his Walker cousins out of ownership of the family’s summer house in Kennebunkport in the early 1970s through his smooth-talking of “Uncle Herbie’s” widow, thereby turning the family jewel into “a Yankee relic rather than a robber baron’s playground.” (The only disappointment here is that Weisberg doesn’t succeed in pinning down the bit of legerdemain by which George Herbert Walker acquired the swell little promontory known as “Walker’s Point” from the town in the first place.) Symbolically, the mechanism is established for the final act of the family tragedy – the unconscious defection of Bush’s son to the other side of the family. Weisberg writes: 

George W. Bush likes to say that he is his mother’s son.  But many of his most distinctive traits don’t seem to come from her or from his father. He is impatient, aggressive, often angry, and sometimes cruel. He’s a plunger, not a careful analyst or a patient builder. He lives to compete but can’t stand losing.  The man’s a Walker, through and through. 

Perhaps the Weisberg book will get some of the attention it deserves after the election, during those long two and a half months while we wait for Bush to leave office. It is destined to be a minor classic, I think; to remain the best book on the Bush years, much as David Maraniss’ First in his Class remains the best book about the Clinton presidency and Robert Timberlake’s The Nightingale’s Song remains the best account of the back-story of the Reagan years. So why mention it here?

 

For now, the important thing to recognize that the dynastic principle broke down precisely because George H.W. Bush couldn’t intervene to prevent his son from going off to war in Iraq at the crucial moment.  Politics is not like business.  Authority, the habit of accepted power, the advantages of experience, the legal possession and control of assets – none are worth much when power has been won at the ballot box. And that’s the point I took away from these two books on dynasty.

 

Many of the same rivalries and resentments are implicit in a marriage as between a father and his son.  It seems to me that they would render a second “plane crash presidency” all but inevitable should Sen. Clinton succeed in inheriting the White House. The Clintons and their supporters don’t want it framed this way, of course. They have sought with considerable success to rule it out of debate. When The New York Times last month took more than half a page to endorse Sen. Clinton, unconvincingly rejecting the dashing suitor in favor of the previously-arranged marriage, the dynasty issue never even came up. How’s that for ignoring the elephant in the room?

 

Even The Economist, normally perspicacious, missed the point last week when they wrote that “The Clintons have fought a leaden and nasty campaign; at present, the prospect of a ‘Billary presidency’ (even before you take into account the dynastic Bush-Clinton-Bush-Clinton aspect) is hardly enthralling.” The basic fact of the matter, though, is the point that Weisberg makes: the Bush experiment with succession was a disaster precisely because it was a dynasty.

 

Why would Americans want to do it again if they don’t have to? Mrs. Clinton is an excellent senator, but this is the USA, not Argentina.

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