Just because you're rich doesn't mean you're smart

One of the most astounding things I've read about the election, in its aftermath, was this CBS article, reporting that the Romney campaign, as well as Romney himself and Paul Ryan, were serenely confident, verging on certain, of winning the election.  This gives me an amusing mental picture of Romney as Mister Magoo, heading for his own personal (not fiscal) cliff with complete unawareness of the fate that was actually awaiting him.

The underlying issue was the "skewing" or "unskewing" phenomenon that has gotten much attention on-line.  Most of the pollsters' likely voters models showed, say, 6 or 7 percent more self-described Democrats than Republicans.  This was partly about whether some Tea Party Republican types had started self-reporting as independents out of unease about their party but were still likely to vote Republican, and mostly about demographics, and in particular whether there would be a 2008-style electorate or a 2004 and 2010-style electorate at the polls on November 6.  Obviously, underlying demographic trends provided some support for expecting 2008-plus, but there was a line of argument about how poor and young and minority people don't vote as much, etcetera, that could lead to 2004 / 2010-style.  So it's not inherently a question as to which the answer just had to be one way or the other.

But here's where the amazing stupidity sets in.  A lot of expert pollsters were thinking about this issue and dealing with it in one way or another.  The Nate Silver approach reflected assuming that on average these experts, who were researching it seriously and had credibility stakes in getting it right, might get it about right rather than erring systematically in one direction or the other.  It's a bit like the efficient market hypothesis (the weak version, holding that, even if the market isn't omniscient, I know I'm not smarter than it is).

But the Mister Magoo-style clowns who were running the Romney campaign - the leader of whom was named Mitt Romney - serenely decided: Oh no, we don't need to worry about that.  We know better than everyone else, and don't need to concern ourselves with what the experts think.  We just know that we will have a 2010-style electorate.  So what if an avalanche of empirical data, produced under a range of assumptions, shows that we are 90% likely to lose?  We know that we are 100% likely to win, because we just know what electorate we'll have (the one we want), we just know that independents will break for us (even though this had been empirically refuted prior to the election), etcetera.

So they went to Pennsylvania in the final days, not as a desperate throw of the dice, but to make the tide they saw coming even greater.  And Romney rope-a-doped the last debate not just to make himself an Etch-a-Sketch moderate, but also because, why take any chances on blowing it when you're sitting on a sure thing?

What sort of a person would make this mistake when he has every reason of self-interest to try to get it right?  (OK, it's true that boosting your own confidence may help you perform well at the end - but you do need to make strategic and tactical choices, and also to set up your own expectations appropriately.)

Being smug, arrogant, and entitled will certainly help you to get this wrong.  And having, as I suspect Romney does, a belief that worldly success mirrors personal desert, and that because you are so deserving of course you will get everything you want, helps as well.

But it also helps, in making this mistake, to be a stupid person.  As in: Not bright.  Not astute.  Not thoughtful.  Not mentally flexible.

I have never, when hearing Romney speak, or in reading what he said, had the thought: This is an intelligent person talking.  You don't have to agree with someone in order to view them as intelligent.  No liberal ever questioned Richard Nixon's intelligence.  Few conservatives have ever doubted Bill Clinton's.  But even when Romney is not uttering deliberately lame and simplistic talking points (as a strategy choice), to me, he has just always sounded stupid, simplistic, and ignorant.  (Including, of course, in his infamous "47 percent" talk.)  How can you be in public life for almost 20 years and still appear to know so little about both domestic and foreign policy?  (Paul Ryan, by contrast, certainly knows how to discuss the issues in his areas, and only sounded similarly out of his depth when discussing foreign policy, which he obviously hasn't studied.)

OK, but there's always the response: If Romney isn't smart, how did he get so rich at Bain?  (The flip side of the old gibe that academics may ask themselves late at night: "If you're so smart, why aren't you rich?")

The answer, I think, is that even a monkey could have made money in the way that Bain did, at the time Romney was there  In an era of easy credit and rising asset prices, you can't lose by buying a bunch of businesses, leveraging them to the hilt, squeezing out of a lot of cash, and then either selling or defaulting.  It's just like the idiots who made money for a while by playing games with subprime loans, and who couldn't lose so long as home equity values kept increasing.

In the private equity world, there certainly are a lot of people who got rich because they were smart.  But they actually had to do clever things, such as picking winners (which Bain stopped doing early on, because they decided, no doubt with good reason, that it was too hard).

Imagine having such a man as president - and making, for example, tough foreign policy calls.  It would be a chilling thought even if one believes, as I do not, that he would have acted in good faith rather than purely with an eye to personal (and mainly short-term) political advantage.