Eric Cantor and The Curse of 'Short-Termism' in Politics and Business

National Journal

By Ron Fournier

June 15, 2015

Eric Cantor and The Curse of 'Short-Termism' in Politics and Business

Eric Cantor worked with short-term thinkers in Congress. Got beat by short-term thinkers in 2014. And took a job in investment banking that handsomely rewards short-term thinking. The former House majority leader now is speaking out against "short-termism," urging political and business leaders to break their addiction to immediate gratification.

In an interview at his Moelis & Co. office on Pennsylvania Avenue, the former Virginia lawmaker said his stunning defeat a year ago gave him time to reflect on his career, on Congress, and on the nation's future. It gave him pause. "People feel very disaffected right now," he told me, "They feel like they can't make a difference."

Cantor blamed the nation's leaders for failing to adapt to social and technological change, for refusing to think beyond Election Day and quarterly reports, and for ignoring how their harsh words and actions poison future actions. He didn't spare himself or his party. Cantor's challenge to leaders everywhere: "Up your game."

Here's a lightly edited transcript of our conversation.

Why don't we just start with the definition: When you talk about short-termism in politics and business, what are you talking about?

Well, I don't know if I can be as succinct in my answer but I'll just give you a sense in what I'm saying. Short-termism is basically political expediency. It is not being willing to go home to constituents and explain to them the reason you need to affect a change—to essentially reduce the fear of that change so that it is less than the fear of the status quo.

[A better approach] is the ability to … sort of realize that long-term goals are important to make sense of what you're doing. If you remind folks at home, and take the necessary time and energy to explain what it is you're doing so it all sort of begins to make sense to people, you don't necessarily have to give in to this expectancy, and you don't have to give in to those who seem to be the majority. [They are actually] the vocal minority, but it is so easy of a sound bite for them, because they just want to get angry at something.

So what's the definition of short-termism in business?

In business, where I've seen the analogy is … to take a short-term view of quarterly reports. To look at the 10-Qs that come out on a quarterly basis from publically traded companies, versus trying to look long term as to what your return on capital or return on investment is. You've seen it play out in many instances. I hate to generalize, but I will say that many of those that are in the activist game are looking at balance sheets that are heavily laden with cash, and perhaps accusations are being leveled at management that they aren't being aggressive enough in terms of investment posture.

I'm not saying categorically that all of those in this activist role are necessarily wrong because I'm for vetting of ideas. I just think, on the whole, you've seen a tremendous amount of activity on the part of capital flowing into funds. I'm not so sure that all the boards of directors and that all the corporate management are doing something wrong. There's a lot of information that doesn't flow necessarily, but it's incumbent upon the management and their boards to be able to get out and tell the narrative about long term—what is the mission that they're about, what is their fiduciary duty to shareholders in connection with that mission, and presenting and offering yield to the shareholders?

Why do you think it is so hard for leaders in politics and business to do just that?

Because I think that telling the narrative, not yielding to the quick temptations to satisfy for the short run, is hard. It is really hard. It's not always so easy to effect [a long-term] mission when you have a very active and split government, divided government. It is much easier to get into the row and to accentuate disagreement because it is just easier, people get more excited about it and they get more passionate about it. But in the long run, we'd be much better off if we can say five years from now, that there's a higher standard of living, that you've spread wealth throughout more sectors of our economy, and there's more opportunity for everybody.

Are there cultural reasons why it is harder in both disciplines to lead beyond the short term?

This is interesting. Ron, I don't know, obviously I've been around forever, but I don't know if it has ever been easier than this. I will say the number of outlets—the number of places where people can express their opinion online, social media, the rest—it does lend itself to what I call a cacophony of noise. Sometimes the debate is not always informed. When people feel empowered to express themselves, in and of itself, that's a good thing. But when they say things that then can influence others … based on a lack of clear information, it becomes more difficult.

Fifteen years ago, if you wanted to understand or effect political debate or political campaign, there were about a dozen political reporters and two dozen editors you could put your hands on. The gatekeepers. Now there's 300 million of Americans with a platform, and no gatekeepers. Is the hard part really understanding which part of that noise really matters?

Yes. And to leaders, I say, "up your game"—in terms of being able to convince more people and to get to them in a more effective way. I saw that as an elected official, as a politician, and I see it now sort of in the corporate arena, where management and boards are having to go out defend their mission—tell their story and why their vision for the company is best in terms of shareholder return as well as affecting the mission for the company.

Wagging his finger, Cantor complained that a vocal minority of outside critics challenge company leaders with an eye to short-term bottom lines.

It is just more difficult to be thoughtful in today's environment because it is just the rapidity of the information flow, and the desire for one to develop an opinion is just that much greater and quicker.

Tell me how this short-termism plays out in the immigration issue.

I'll give the example of my [June 2014 Republican] primary. It was an issue, I wouldn't say dispositive, but it certainly was one that accentuated the detractors of mine on both the right and the left. On the right, where I blame the short-termism for the problem: I took a position to say I didn't agree with the comprehensive approach that [President Obama] was taking and the Senate bill that came over, but I did feel we needed to try to make some progress on it. My sort of strategy was to very much effect incremental change and little by little you could really see some progress grow and have more people vest in the process. So that's why I said, "Let's start with H1Bs. Let's start with the kids." And the kids was the one that really took off and lit a fire under the right because what they accused me of was being for amnesty. And … if you're for anything allowing those who are here that are undocumented or illegal, you are for amnesty as far as the right is concerned.

[T]his country of ours has never said we're going to hold kids liable for illegal acts of their parents. The illegal act that was committed was either staying beyond one's authorized ability to do so with a visa or coming into the country illegally. Many of these kids were brought here when they were minors and came because their parents brought them here. [W]hy shouldn't we just say "Alright. You've schooled here, you've grown up in the neighborhoods." Certainly we should provide a path to citizenship for those kids. And, wow!

With a puff of his cheeks, Cantor made the sound of a bomb exploding. His political career blew up.

Why do you call that short-termism and not absolutism?

Because think of the political expediency that you're taking advantage of. You can go home and find any group of people who can turn on one of the channels, and see the hysteria and just get angry. It is a very short-term emotion. [It] makes you feel good right now, but in the long run, it doesn't solve any problem. It doesn't solve anything. So I think that it is just short-term: You can become lauded and a hero online with a lot of fans saying "Yea, go get them," and I think it just breeds more contempt and inability to get something done and solve a problem.

What's the lesson here? You already talked before how a CEO or political leader can get in front of things and explain the long-term benefit. What could you, other leaders in your party, and leaders in the other party, do better going forward?

I don't think you can give up. I don't think there's a silver bullet. Both political as well as in the business arena, you've just got to dedicate yourself to marshalling resources and [not] give up, in terms of trying to elicit the opinion of those who have influence. To say, "Stop. We can actually think long term."

Let's play it out again on immigration. Marco Rubio did that pretty aggressively for several weeks, making the rounds of influential conservative talk radio shows to promote immigration reform. He didn't run away from it—until he did.

I don't want to say anything disparaging about him. But just take the instance of being a leader out there and taking a position: You can't back off of it …

Listen, credit to Marco for going out there and putting his plan out there, but I know things sort of evolved. If we could have seen a way towards getting on the page of incremental progress—I mean look [at] the president: He's got on his side a long-term goal of reforming immigration, but yet was unwilling to compromise and say, "Let's do it one step at a time" and to get behind us when we initially had made the gesture. And then in the end, there was "We'll take anything," but the problem at that point was people on my side, the Republican side, were afraid it'd become a Trojan horse.

It was a trust issue.

Yes. Because you didn't have any trust. I think maybe that that's the secret ingredient that was missing. You got to have some trust ….

That's what's been missing, the second part. This administration has had an inability to manage this town. I believe in separate but equal branches. However, we know the engine of all policy offense comes from the White House. The ability to navigate and manage this town has just not been there. If they had that [trust] in the beginning, I think things could've worked out differently.

Looking back on it, when did you give into short-termism?

Let me think about that.

Chuckling, he changes the subject to his successful efforts to shift funding to the National Institute of Health, despite concerns within his own party.

As the wealthiest country in the world, certainly we want to strive for curing disease, saving lives. So the NIH—we're going to take a long-term [argument] for those fiscal hawks who don't want to do anything but reduce the deficit. And I said we have to take a longer-term view—that if we're curing disease, ultimately [that means] less outlays for treatment, because you can get rid of the disease, and we ought to have faith in the long term we can do that. And that was the sort of the message, the narrative I wanted to play.

I got a lot of pushback on both sides: Number one, from my own side, because … many people said, "All we want to do is pay off the deficit. It's that important. We're going to lose our country if we don't do it." So that was a lot of a message. And I said, "Look, I think long term, we'd be much better off as a country if you cured disease and helped treat people and increase their quality of life versus trying to pay off [short-term deficits]." That was a very difficult argument to make …

And the other side, on the Democratic side, they were unwilling to even begin to work with me on it because they had viewed the sequestration as doing more damage to the NIH than what they said was such a little amount to go towards research. They weren't about to allow that political hit to be taken away against Republicans.

They wanted it as a wedge.

Yes. And talking about expediency. Very expedient. Go home, gain some credit, you going after those big, bad, nasty Republicans. Very expedient …. Just unbelievable. But again, that's long term; this [NIH bill] is a no-brainer. Just a no-brainer. And that's what you're up against. And that's a great example of political expediency in short-termism: People just decide "Hey, give this to me now. I'll be satisfied with that," rather than taking a step back and say we can have a much greater good later.

Cantor shifts the conversation to the unique attributes of young Americans, the so-called millennial generation.

They really are… a generation that's looking for something much bigger than themselves, and to be a part of something. That concept is very long-term. What is their purpose? What is their life about? What are they here for? And if they can see political leaders sort of meet them halfway to that end—to your point, establishing a very important gradient of trust and then real dialogue—you'd have so much ability to dialogue and engage today. They're prone to doing that. There's a great potential, with all the disruption that we talk about. The disruption economically. The disruption through technology …. You're at the point that it's the right time for a leader like that. But it is complicated, [and it's] going to take someone very driven and very inspiring to try and slug through the rote responses on the part of everybody else.

How much of this, including the concept of a purpose-driven generation and the whole concept of short-termism, gelled in your mind after you left office?

The sharpness of it came into focus for me.

Was there a moment?

I have to believe it was in the period after I lost that reflection set in. You begin to reflect on things. I can remember being very frustrated over the course of the last several years and being unable to effectively communicate and convince my colleagues that we as a Republican Party, and as conservatives, have a real job to do and that is to show we care about people. Because there was so much leveled at us, and the immigration issue was extraordinary in allowing this to happen. As were some of the comments we made about the "makers" and the "takers" and all that stuff. My wife told me this a long time ago: Why don't you just start out, everything you say publically, start with the phrase, "I care because …" I care about somebody's health care and that's why we're doing this [policy]. Put the frame in place. Because ultimately that's everything a politician should be about.  [Y]ou want to improve somebody's lot in life and their opportunity in this country. I do think that there was frustration about the inability to do that.

What have you learned from reflection? How would it change the way you would lead, if you had the chance to do it again?

I have an opportunity to do it in the business arena now. I just think that a lot more attention needs to be placed on engagement. If this is your focus, if you've identified it, you better put everything into it. There's so much value-added distraction around this town.

You still have optimism that a leader can effect that kind of change?

I'm worried about where our country heads if they can't. Yes.

I wonder how much of this is on the leaders and how much of this is on the led. Is short-termism a bottom-up problem that starts with average people?

Well, leaders have to inspire …. People feel very disaffected right now. They feel like they can't make a difference. I also feel that the tone of the debate and the discussion [affects the public mood]—that leaders should try and distinguish themselves as outside the attack mode that is so present on that screen. It is very tempting to get angry, throw something at the screen, online or up on the TV. And instead, I think leaders need to take a step back and try to see how [they] can be constructive. I think very much it is needed right now. The whole temperament of the country needs it. How much can you be at 10 decibels, or whatever you would call constant attack mode?

[We] cannot exist at hyper-yelling mode. You just can't. No human being is going to want it. So why do we allow it? Just [cut] the hyperbole. Just tone it down a little bit.

Turning to the presidential race, I tell Cantor that candidates in both parties seem determined to expand and exploit negative partisanship—appealing to a minority of hard right and hard left voters in ways that ensure most Americans fall further from the political process. In particular, we discuss a Democratic strategy based more on on fear (of Republicans) than respect (of Hillary Clinton).

To me, that's very short-term thinking. It may affect [her] a victory or not. I'm just eternally optimistic though, that if you can work at it enough, [candidates can] inspire people. I hope things don't have to get any worse [before people feel good about politics again] and allow a leader to inspire them.

If both parties nominate a short-term thinker, Cantor said, one of them has to win—and will find governing hard after a divisive, depressing campaign.

There's a lot of people who will forgive and forget, but things you say, words you use, they have consequences. It is about being accountable for what you do and what you say and how you act.

There's got to be a time when you look back and realize "I probably did some short-term thinking. I took the easy way out."

Listen, you have to believe that. Listen, there was all kinds of gamesmanship going on.

He tells me a story about a harsh and unproductive attack on House Democrats—and winces.

Okay, it was fun. Then what?  It's like we were playing games. Like some juveniles.

Before wrapping up, we chat more about millennials and how technology is helping people form new types of communities, which could lead to a new type of politics—a bit more civil and a lot more productive. I ask Cantor if disconnected Americans will ever get angry enough to demand change—to "stop shrugging their shoulders," I said, "and start shaking their fists." He nods.

I do have hope. That's a dynamic we don't have much control over. Part of the rhetoric and the dialogue, part of the short-termism and the negativity is going to do something. It will cry out for a coming together.

That would require a new kind of leadership, wouldn't it? Something we don't see in Washington today.

Yes. Leaders should be thinking, "How can I help go build and be a part of this?" To me as a human being, that makes me much more fulfilled and much more positive than, "How am I going to wake up and screw someone's day? How am I going to wake up and appeal to the darker side?"

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