The business world abounds in maxims – “There is no 'I' in teamwork”; “The customer is always right”; “The harder you work, the luckier you get” – but Peter Orszag and Citigroup have recently reminded us that the most dreary and indispensable among them may be “It’s not what you know, but who you know” and its corollary, “Who wants to know you.”
This is not to say that Peter Orszag doesn’t know a lot. Indeed, his career has been nothing if not precocious. By the end of his 20s, he was a special assistant for economic policy to President Clinton. By the end of his 30s, he was the director of the Congressional Budget Office. And three weeks to the day before he turned 40, he was named director of the powerful Office of Management and Budget (OMB) – essentially, the president's point person on spending.
That’s a pretty impressive record, especially when you consider that Mr. Orszag spent no more than five years in public service before he was tapped to head OMB. In between his civil service stints, he worked for the prestigious consulting firm McKinsey & Company, started and sold off his own consulting firm, co-authored several books and a raft of policy papers, taught at Berkeley, was a research professor at Georgetown, and served as the inaugural director of the Hamilton Project, the center-left economics group that serves as a think-tank within a think-tank at Brookings.
So Orszag is no slouch, which is why it is all the more disheartening that, just six months after resigning as the youngest member of President Obama's Cabinet, it appears that the best job available to him is one that calls more on his gift of gab than his truly remarkable brain.
Don’t take my word for it. Take Citigroup’s: “Dr. Orszag will be a member of the Senior Strategic Advisory Group, which includes some of Citi’s most senior and effective bankers focused exclusively on client relationships.”
The press release, which announced that Orszag’s official title will be “Vice Chairman in its Global Banking business,” gave no further details on the job, leading the New York Times’s Eric Dash to observe that Orszag’s “actual duties are murky at best.” This is a bit of drollery, for the “actual duties” are abundantly clear, so much so that the buoyant press release concluded on a slightly defensive note: “Consistent with applicable ethics rules, Dr. Orszag’s role at Citi will not involve contact with U.S. federal government officials.”
The fact that Citigroup has decided to hire Orszag for a job that involves a disproportionate amount of schmoozing reaffirms a destructive perception about how public policy is made. Namely, that too often neither reason nor ideas nor even ideology determines the finer points of public policy. Rather, it is whose call is taken, whose lunch invitation is accepted, who gets a seat at the table.
However, the decision says the same thing about the private sector, and arguably with even greater force. Think of it this way. For two years, Orszag is bound by law and executive order not to lobby the administration and, thereafter, by conscience as part of the “Ethics Pledge” he signed when he started at OMB. But Citi hired him anyway to join a group “focused exclusively on client relationships.” Citi's wager, it seems, is that Orszag’s persuasive power to individuals and entities beyond government is worth at least $2 million to $3 million, the annual salary news reports have estimated the company offered him.
That’s a lot of money to most people, but a drop in the bucket for Citi, which is counting on the fact that its high wealth clients and corporate customers will be delighted to “take lunch” at Le Bernardin with a former White House Budget Director, particularly if he’s picking up the tab. Indeed, if Orszag helps Citi cut a few deals or bring in some new business, this time next year his salary will look like a steal.
Orszag’s new job will call on him to use good stories and great charm to make Citigroup’s case. What it won’t require are the recondite skills of a policy wonk – the analytical dexterity, quantitative command, and cerebral expertise he has honed over two decades in government, academia, and the private sector. And this tells us something important about business. Namely, that the logic of big decisions is often less a matter of algorithm than alchemy. It’s the power of personality, not the recommendations of reason, that seals the deal.
This is a rather obvious point that perhaps only bears repeating to those who persist in believing that business is sober science altogether different from the perturbations of public policy. Were it so, the market would have priced the elite skill set of a Peter Orszag higher than the expected value of his “social capital.” It didn’t. Citi is paying Orszag for who he knows or, more to the point, who will want to know him.
What he knows – well, that’s just a bonus.