Billionaire Nicolas Berggruen has put together a bipartisan 14-member committee of wealthy corporate executives and political operators to construct a package of constitutional reforms designed to break the current political gridlock and make government more responsive and efficient.
The lofty goals of the Think Long Committee and its founder Nicolas Berggruen are noble and appear to be well-intentioned but the composition of the committee and, its process for deliberations are ill-equipped and poorly suited to complete the tasks at hand by its mid-2011 deadline for the production of a reform package.
Berggruen has pledged $20 million of his estimated $2.2 billion fortune to finance the committee’s work, qualify the proposals for the ballot, and run a campaign in support of the measures.
As will be examined more closely in this analysis, 11 of the 14 committee members fall into one of two cohorts—successful business executive or experienced political operator. These members are highly unlikely to challenge the political status quo and propose bold reforms.
The creation of the so-called “Think Long Committee,” which was announced in late October, does include three members who do not fit either the corporate executive or political operator mold and could be pivotal in the creation of the eventual package that is presented.
Perhaps most significantly, the committee is charged with presenting “structural and constitutional changes” but its membership does not include any members with a significant background and expertise in constitutional and structural reform.
The committee also lacks a grassroots component that represents John Q. Public and has announced no plans to hold any of its meetings in public. Furthermore, the committee has not disclosed any intention to solicit citizen input in the creation of its proposals but has noted that public input will be solicited once the proposals are made public. But the proposals will be largely constructed behind closed doors without input from policymakers, outside experts, or the public.
The committee has begun meeting and is planning to submit its package of proposals for public review by mid-2011, according to Berggruen in an interview with the Sacramento Bee editorial board.
This brief analysis seeks to examine the goals and limitations of the Think Long Committee, its primary funder Nicolas Berggruen, and its 14-members.
Who is Nicolas Berggruen?
Nicolas Berggruen, 49, is the son of a world-renowned Picasso collector from Berlin and is worth an estimated $2.2 billion, according to Forbes Magazine. “His business interests range from hydro-and wind power in Turkey to Spanish Media and his most recent acquisition, German retailer Karstadt,” according to Forbes.
Berggruen founded Berggruen Holding, Inc. in 1984 to act as an investment advisor to a Berggruen family trust that has made more than 100 control and non-control investments in businesses since its inception, both public and private and focusing on building long-term value. Also in 1988, he co-founded Alpha Investment Management, a hedge fund management company that was sold to Safra Bank in 2004, according to the Nicolas Berggruen Institute.
Prior to founding Berggruen Holdings, Inc. he served as an analyst on the real estate side of the family-held investment firm Bass Brothers Enterprises, and was an associate of Jacobson and Co., Inc., a leverage buyout company, according to the Nicolas Berggruen Institute.
Berggruen Holdings has operations in the U.S., Europe, and Asia, as well as real estate and financial investments globally, according to the Nicolas Berggruen Institute. Berggruen now devotes much of his time to the Nicolas Berggruen Institute, which is an independent, non-partisan think tank that encourages the study and design of systems of good governance suited for the 21st century.
According to Annenberg digital news, Berggruen is an unmarried German born in Paris, France, who is based in New York City, although he spends much of his time traveling around the world in his private jet. He has donated to Democratic candidates such as President Barack Obama and Sen. Charles Schumer, and he invests in liberal causes such as green energy companies, tech firms, and urban development. His family’s wealth came through collecting art, a practice that he has continued.
“He is a nomad who relishes the outdoors, loves working off of his Blackberry and lives mainly in hotel rooms,” states a report by the Annenberg digital news. The Wall Street Journal reports that Berggruen reads the works of Confucius and French philosophers Sarte and Camus.
Berggruen studied in Paris at l’Ecole Alsacienne before attending Le Rosey in Switzerland. He obtained a Bachelor of Science in Finance and International Business from New York University in 1981.
What Are the Goals of the Think Long Committee?
There is a limited amount of public information about of public opinion articles about the intentions of the Think Long Committee but the committee’s website, op-eds authored by Berggruen and quotes by Berggruen and committee members provide a glimpse of what Berggruen’s intentions are for the committee.
According to the Think Long Section of the Nicolas Berggruen Institute website, “the Think Long Committee for California aims to offer a comprehensive approach for repairing and renovating California’s broken system of governance while proposing policies and institutions vital for the state’s long term future.”
“It will make its recommendations to the Legislature and newly elected Governor and, as necessary, take issues to the public through ballot initiatives,” states the website.
“Mired in deficits and political gridlock, California today is a louder echo of the country at large. Nearly 90% of Californians consider their government broken. Dissatisfaction of the citizenry has never been higher. Meanwhile, decisive and unified leadership elsewhere in today’s world, notably in China, is building for the future the way California did 50 years ago,” states the website.
“With huge reserves, a focus on education and energy efficient infrastructure, including laying a network of the world’s fastest trains to link 80% of the population, China is even taking the lead in solar and other clean technologies that were once the province of California,” according to the website.
“The Nicolas Berggruen Institute (NBI) is deeply concerned with where California and America as a whole will be two decades from now if we don’t find a way for democratic societies to break out of the gridlock that is leading us from an era of promise to a trajectory of demise. If California in its bellwether role can show the way back to good governance, it will be a powerful example for the rest of the country,” according to the NBI website.
“From the NBI perspective, good governance involves the responsive, efficient delivery of services to the public by a fiscally responsible government. Above all, it means politics conducted in a spirit of pragmatism that does not sacrifice the long term to short-term special interest. To that end, the NBI envisions establishing a non-partisan “Think Long Committee for California” of eminent Californians—not more than 10 or 15 people—that can apply their experience, stature and knowledge toward the goal of getting the state back to governability,” according to the NBI website.
“The recommendations of the Committee will be presented to the next governor and the legislative leadership, or, as necessary, taken to the public in ballot initiatives. Nicolas Berggruen will provide $20 million in funds to finance the endeavor. Unlike any other reform efforts, this fund will not support a single candidacy or a single issue but only those structural and constitutional changes that will break the present gridlock, make government more responsive and efficient while at the same time putting in place the incentives and institutions vital for California’s long-term future,” according to the NBI website.
According to the Sacramento Bee, the Think Long Committee plans to “produce a series of proposals for public review in mid-2011. The committee will consider changes to the initiative process, term limits, the tax structure and more.”
Berggruen Believes China’s Economic Model Shows There is Much Room for Improvement in California and United States
In his opinion articles, Berggruen contrasts the political gridlock and lack of long term vision in America with China’s long-term economic planning.
In a May article in Forbes Magazine, Berggruen began with the question: “Are Western democracies becoming ungovernable while an authoritarian regime like China’s races boldly and decisively into the future?”
Berggruen writes that California’s current governance crisis is “only a louder echo of the crisis of governance in America as a whole.” “Fifty years ago, when China was barely beyond the throes of its peasant revolution, California was looking boldly to its future. It laid the foundation for becoming the world’s eighth-largest economy by building a world-class university system, many thousands of miles of freeways and canals bringing water from the north to the parch south. Millions migrated from around the world to partake of the “golden dream,” Berggruen wrote.
“Even today the California governor’s office has been actively promoting the construction of the first bullet train in America and negotiating with Chinese authorities to finance and build the system for the state, since China has both the money and technology the U.S. lacks,” Berggruen wrote.
Berggruen goes on to write that “93% of Californians consider their state government broken, mired in debt and political gridlock…with a $20 billion deficit and no revenue options, California is factually bankrupt.”
Berggruen acknowledges that China has serious problems and America has great strengths, and developing and mature economies have different dynamics, “but it does suggest that governance matters when it comes to whether a state or nation advances or regresses.”
“While China’s unified leadership is highly proactive as it builds its long-term future, politics in the United State by contrast is short-term, reactive and mired by a bitter partisanship that hinders a bold response to key challenges,” Berggruen wrote.
“While China desperately needs more democracy to curb abuses and corruption, it is also true that the democracies must develop a great capacity for decisive action and long-term policy-making free from the paralyzing special interest pressures of the moment.”
“Above all, like America as a whole, California must return to the spirit of compromise and long-term thinking that once paved the path to prosperity and quality of life,” Berggruen concludes.
Berggruen Expresses Support for Specific Structural Reforms
Berggruen says he supports adopting open primaries to mitigate extremism in politics, modifying term limits, and requiring initiatives to identify a funding source for new spending. He continues to support a “budget cap with a rainy-day fund to avoid drastic cuts in cyclical downturns” and keeping down borrowing costs for education and infrastructure. The open primary has already been enacted, and the term limit modification and rainy-day fund reform will be on the 2012 ballot for consideration by voters.
Berggruen goes on to support reforming “public pension to keep liabilities in line with fiscal reality” and bringing “government closer to the people by devolving budget power to cities, counties and special districts that deliver taxpayer services.” He writes that the state should “impose sunset laws and regular performance and productivity reviews for all government programs” and “create a revolving fund for higher education to ensure tuition remains affordable and quality institutions like the University of California remain accessible.”
Perhaps Berggruen’s most original idea is that he advocates for the creation of a “Long-Term California Council” that would be “a sort of regents for the state as a whole—that checks the short-term political impulses of the elected legislature and keeps the state focused on the challenges of the future: smart growth, smart energy grid, green jobs, information technology, biomedical innovation, pacific trade.”
“The key challenge for reform in democracies today, as these suggested reforms illustrate, is finding a way to be responsive to the electorate while not sacrificing the long-term general interest to constituency politics of the moment. California has long been the bellwether for the rest of America. If we can rebalance the system there, it bodes well for the rest of the nation, and indeed, for the idea of democracy itself in a world in transition,” Berggruen concludes.
In another Forbes report, Berggruen is said to support “longer term limits, a broader tax base and decentralizing power from Sacramento to local government.”
“The way I put it is that this country, in the past election, fought yesterday’s war…California is already ahead; they’re fighting the next war. The next war is actual reforms. And that’s what our work is,” Berggruen told a Forbes reporter.
Berggruen is also creating a global committee “The NBI 21st Century Council” to shadow the G20 and “address global challenges.” Thus far, members include British Parliament member Chris Patten, former Brazilian President Fernando Henrique Cardoso, former Spanish Prime Minister Felipe Gonzalez, former German Chancellor Gerhard Schroeder, and former Pakistani Prime Minister Shaukat Aziz, according to Forbes Magazine.
Think Long Committee Members Provide Insight on Direction of Committee
Think Long Committee member and former California Governor Gray Davis told the Sacramento Bee that the group plans to meet four or five times in the next several months.
“Our goal is not to reinvent the wheel and insist that every idea is original, but we’ll pick two or three and get Sacramento on track,” Davis said.
“Nick’s pledge of $20 million is what makes this group different,” Davis said. Other groups such as the foundation-backed California Forward and business-backed Bay Area Council have pursued structural reform measures but have not succeeded at placing any measures on the ballot.
Davis said the $20 million should be seen more as seed money than the maximum because other members of the group or outside supporters may be willing to contribute more, Davis told the Bee. The Think Long Committee also includes some billionaires such as Google CEO Eric Schmidt and Philanthropist Eli Broad who could possibly contribute to the effort or help raise money.
In a recent interview with the Sacramento Bee Editorial Board, Berggruen said he believes the reform effort will take years, noting “luckily we are still reasonably energetic, and so we will be at this for years.”
Berggruen said he sees the Thing Long Committee building upon proposals advanced by other groups committed to fixing the state. He said he plans to work closely with California Forward by joining forces with the group on public education and outreach efforts in the coming year, according to the Sacramento Bee report.
“California Forward was really an effort founded by a number of foundations which was really a research effort which went very deep in terms of what are the key things that California needs…What they were not set up to do, in my mind, was really to be action oriented,” Berggruen said in his interview with the Bee.
“If more money’s needed…I’ll put in more money,” Berggruen said about his $20 million commitment.
Berggruen told the Bee that the Think Long Committee has started divvying up the work among several-subcommittees in hopes of advancing initial proposals in the next six months. He said a task force on tax reform will be chaired by Willie Brown and Gerald Parsky, a Republican who chaired the Commission on the 21st Century Economy, according to the Bee report.
The group’s “long term” task force, which will focus on proposals concerning global competition, investment in infrastructure and changes to the state budget process will be led by Eric Schmidt and Laura D’Andrea Tyson, former chair of President Bill Clinton’s Council of Economic Advisors, Berggruen told the Bee.
An Introduction to the Think Long Committee Members
Eleven of the 14 Think Long Committee members fall into one of two cohorts—successful business executive or experienced political operator.
In addition to Berggruen, four of the committee members are billionaires, including Terry Semel, CEO of Windsor Media, Eric Schmidt, CEO of Google, Eli Broad, a Los Angeles developer and philanthropist, and David Bonderman, a partner at TGP Capital.
The remaining business executive—rounding out the category of the five committee members who are successful business executives—is Gerald Parsky, a partner at Aurora Capital Group, who is a multimillionaire.
The six experienced political operatives include:
-George P. Shultz, currently a distinguished fellow at Stanford University’s Hoover Institution and a former U.S. Secretary of State.
-Condoleezza Rice, Stanford University professor and former U.S. Secretary of State.
-Robert Hertzberg, former Speaker of the California Assembly and co-chair of California Forward.
-Gray Davis, former California Governor.
-Willie Brown, former Speaker of the California Assembly and former Mayor of San Francisco
-Matt Fong, former California State Treasurer and businessman.
The three “wild card” members that defy being classified into either of the above two categories include Laura Tyson, a professor at the Haas School of business at UC Berkeley, Maria Elena Durazo, executive secretary-treasurer of the Los Angeles County Federation of Labor, and Antonia Hernandez, CEO of the California Community Foundation.
The following summary seeks to provide a brief background of each committee member to help the reader for purposes of assessing how each committee member may contribute to the construction of the Think Long Committee’s reform package.
Here is an introduction to the three “wild card” members:
Laura Tyson (DOB: June 28, 1947): Tyson is an American economist, former chair of the U.S. President’s Council of Economic Advisers during the Clinton Administration from 1993-1995, and the President’s National Economic Advisor between 1995 and 1996. She is currently a professor of business administration and economics at the Haas School of Business at UC Berkeley, according to the Nicolas Berggruen Institute.
Tyson has published a wide array of books and articles on industrial competitiveness and trade on the economies of Central Europe and their transition to market systems. Tyson writes regularly about domestic and international economic policy matters in the Washington Post, the New York Times and other nationally and internationally syndicated newspapers and magazines. She is a member of the boards of directors of the Brookings Institution, Peter G. Peterson Institute of International Economics, Morgan Stanley, AT&T Inc., Eastman Kodak and CB Richard Ellis, according to NBI.
Antonia Hernandez (DOB: May 30, 1948): Hernandez is currently the CEO of the California Community Foundation, a charitable foundation that serves underserved communities in the Los Angeles area. Hernandez also has served as Director of the Local Initiatives Support Corporation since January 2007 and has been a director of Golden West Financial Corp. since 1995.
Prior to joining the California Community Foundation as president and CEO in February 2004, Hernandez served as president and general counsel of the Mexican American Legal Defense and Educational Fund (MALDEF), a national nonprofit litigation and advocacy organization, according to NBI.
“An expert in philanthropy, civil rights and immigration issues, Hernandez began her legal career as a staff attorney with the Los Angeles Center for Law and Justice and worked as counsel to the United States Senate Committee on the Judiciary before joining MALDEF in 1981 as a regional counsel in Washington, D.C.,” according to the California Community Foundation.
Maria Elena Durazo (DOB: unavailable): Durazo is currently the executive secretary-treasurer of the Los Angeles County Federation of Labor, AFL-CIO. She is the widow of the late Miguel Contreras, who formerly held the same position.
Prior to leading the federation, Durazo was the elected president of the hotel workers union UNITE-HERE local 11, and built it into one of the most active unions in Los Angeles County, according to NBI. She became the first Latina elected to the executive board of HERE International Union in 1996 and eventually in 2004 she became executive vice president of UNITE-HERE International.
She currently serves as chair of the Los Angeles Alliance for a New Economy, Mayor Antonio Villargaigosa’s appointee to the Los Angeles Economy and Jobs Committee, and as a member of the board of directors for LA Inc., and the California League of Conservation Voters.
Here is an introduction to the political operator members of the Think Long Committee:
Robert Hertzberg (DOB: November 19, 1954): Hertzberg is a lawyer, businessman and community activist who served in the California Legislature from 1999-2002, including as Speaker of the California Assembly from April 2000 to February 2002.
Hertzberg is currently the co-chair of the California Forward organization and is reported to have played a role in the selection of the Think Long Committee members. He is also a partner with Mayer Brown LLP, a global law firm, a position in which he focuses on strategic government affairs.
Hertzberg lost a close race for Mayor of Los Angeles in 2005.
Hertzberg has developed an expertise in renewable energy ventures. Upon retiring from the State Assembly due to term limits in 2002, Hertzberg co-founded Solar Integrated Technology in South Central Los Angeles, with two partners. In 2006, Hertzberg and his longtime friend, Edward J. Stevenson, formed a new renewable energy venture in the United Kingdom called Renewable Capital LLP, an investment firm in London to help finance alternative energy ventures.
Fortune Magazine called Hertzberg “the most contrarian guy in the renewable energy business” for his dedication to promoting his products in the poorest areas of the world, including South Asia and Sub-Saharan Africa. The Los Angeles Times has named Hertzberg as “One of the Most Influential People in Southern California.”
Hertzberg is a board member of the Los Angeles World Affairs Council, the Center for Governmental Studies, the Rose Institute of State and Local Government, and the California Center for Regional Leadership. He is also a member of the Council on Foreign Relations, the Assembly International Relations Foundation, the executive committee of the Los Angeles County Economic Development Corporation, the executive committee of the Los Angeles Area Chamber of Commerce, the Homeland Security Advisory Council and the Board of Counselors for the University of Southern California School of Public Policy, according to NBI.
Willie Brown Jr. (DOB: March 20, 1934): Brown served over thirty years in the California State Assembly, spending 15 years as its Speaker, and then served as Mayor of San Francisco.
According to the New York Times, Brown became one of the country’s most powerful state legislators. He nicknamed himself the “Ayatollah of the Assembly.” His long tenure and powerful position in the Assembly were used as the focal point of California’s initiative campaign to limit the terms of state legislators, which passed in 1990.
Brown has a reputation for his ability to manage people and is also a prolific fundraiser. The New York Times reports that Brown estimates that he raised close to $75 million to help elect and reelect state Democrats. Critics, including the San Francisco Chronicle, have raised ethical concerns about political patronage during Brown’s tenure as Mayor of San Francisco.
Since leaving office, Brown has written a daily newspaper column for the San Francisco Chronicle, hosted a daily radio program in San Francisco, and is a regular commentator on the national cable news network MSNBC.
Gray Davis (DOB: December 26, 1942): Davis served as California’s 37th Governor from 1999 until being recalled in 2003. Davis also served as California Controller and Lt. Governor. Davis currently serves as counsel in the Los Angeles law office of Loeb and Loeb, where he provides strategic advice to clients on numerous matters.
Davis is a former California State Assemblyman and served as executive secretary and chief of staff to Governor Edmund G. “Jerry” Brown Jr. from 1975 to 1981.
During his time as Governor, Davis made education his top priority and California spent $8 billion more than was required under Proposition 98 during his first term. Also as Governor, Davis signed the first law in the nation to reduce global warming and greenhouse gases and was the first to establish the nation’s most ambitious commitment to renewable energy by creating the statewide Renewable Portfolio Standard, according to NBI.
Davis began his tenure as Governor with strong approval ratings, but those ratings declined as voters blamed Davis for the California electric crisis and the California budget crisis that followed the dot-com bubble bust.
Condoleezza Rice (DOB: November 14, 1954): Rice is a Stanford University professor and former U.S. Secretary of State. Rice served as Secretary of State in the Bush Administration from 2005 to 2009 and was President Bush’s National Security Advisor during his first term, according to NBI.
Prior to joining the Bush Administration, Rice was a professor of political science at Stanford University where she served as Provost from 1993 to 1999. Rice also served as the Soviet and East European Affairs Advisor to President George H.W. Bush during the dissolution of the Soviet Union and the German reunification, according to NBI.
In March 2009, Rice returned to Stanford University as a political science professor and the Thomas Barbara Stephenson Senior Fellow on Public Policy at the Hoover Institution. In September 2010, Rice became a faculty member of the Stanford Graduate School of Business and a director of its Global Center for Business and the Economy, according to Stanford University.
Rice has served as a member of the boards of directors for the Chevron Corporation, the Charles Schwab Corporation, the William and Flora Hewlett Foundation, the University of Norte Dame, Hewlett Packard, the Carnegie Corporation, and the Rand Corporation, among others, according to Stanford University.
George P. Shultz (DOB: December 13, 1920): Shultz currently serves as a distinguished fellow at Stanford University’s Hoover Institution and is a former U.S. Secretary of State. Shultz is a labor and economics specialist, educator, author, businessman and international negotiator who has served under three U.S. presidents.
He served as the U.S. Secretary of Labor from 1969 to 1970, as the U.S. Secretary of the Treasury from 1972 to 1974, and U.S. Secretary of State from 1982 to 1989. Prior to entering politics, Shultz was a professor of economics at MIT and the University of Chicago, serving as Dean of the University of Chicago Graduate School of Business from 1962 to 1969.
Shultz was an advisor for George W. Bush’s presidential campaign during the 2000 election, and senior member of the so-called “Vulcans,” a group of policy mentors for Bush who also included Dick Cheney, Paul Wolfowitz and Condoleezza Rice.
Shultz was chairman of the California Governor’s Council of Economic Advisors under Governor Schwarzenegger, advisory council chair of the Precourt Institute for Energy Efficiency at Stanford University, chair of the MIT Energy Initiative External Advisory Board, and chair of the Energy Task Force at Hoover Institution, according to Stanford University.
Matthew Kipling Fong (DOB: November 20, 1953): Fong, a Republican and fiscal conservative, is a businessman and former California State Treasurer.
In 1991, California Governor Pete Wilson appointed Fong to the State Board of Equalization and he served as its vice chairman. He was elected California State Treasurer for a four year term beginning in 1995. In 1998, Fong unsuccessfully challenged incumbent California Senator Barbara Boxer.
Fong is currently an attorney for the international law firm of Sheppard, Mullin, Richter and Hampton, according to NBI.
Here is an introduction to the business executive members of the Think Long Committee:
Gerald Parsky (Born: 1943): Parsky is a partner and the chairman at Aurora Capital Group which is a Los Angeles based investment firm that he founded in 1991. The firm specializes in the acquisition of companies. Parsky has a long history as a Republican operator and fundraiser and most recently served as the chair of the Committee on the 21st Century Economy for Governor Arnold Schwarzenegger. That committee completed an examination of the state’s tax system and recommended a series of changes.
He is also an advisor at Jacobson Partners, according to Bloomberg.com. Parsky also serves on the investment committee of Aurora Resurgence, a Los Angeles based private equity firm that invests in the debt and equity securities of struggling middle market companies, according to Bloomberg.com.
According to a report by the San Francisco Chronicle, Parksy “began making his connections in the 1970s, when he served as an assistant U.S. Treasury secretary for international trade under Presidents Richard Nixon and Gerald Ford. While in Washington, Parsky befriended William Simon, then the Treasury Secretary, and future President George Bush, who at the time was chairman of the Republican Party,” states the report.
Upon leaving Washington, Parsky spent 13 years at the Los Angeles law firm of Gibson, Dunn & Crutcher where he was a senior partner and member of the executive and management committees.
“In 1986, he set up an investment house with Simon, his former boss and mentor at Treasury,” which was a partnership called WSGP. The partnership was successful for a time but Simon quit in a bitter dispute. In 1991, Parsky renamed the firm Aurora Partners and “he became a multimillionaire, buying a San Diego estate and commuting to Los Angeles in a private aircraft,” according to the San Francisco Chronicle.
Then Parksy and his firm got more involved in GOP politics by making large political donations, including $75,000 to Governor Pete Wilson, $400,000 to various GOP soft money committees, and lesser amounts to a long list of other Republicans, including $10,000 to Texas Governor George W. Bush’s 1998 re-election campaign, according to the San Francisco Chronicle.
“He brought in far more as a party fund-raiser. According to published reports, as chair of the San Diego host committee, he raised $11 million to underwrite the 1996 GOP convention,” according to the Chronicle. “In 1998, when Bush announced his California campaign team for his presidential run, he put Parsky in charge,” according to the Chronicle.
He was appointed to a 12-year term as a Regent of the University of California by Governor Pete Wilson and was elected to serve as its chairman.
Eric Schmidt (DOB: April 27, 1955): Eric Schmidt is an engineer and chairman/CEO of Google. Since joining Google in 2001, Schmidt has helped grow the company from a Silicon Valley startup to a global enterprise, according to Google.
Schmidt is a member of President Obama’s Council of Advisors on Science and Technology and chairs the board of the New America Foundation, according to Google.
Schmidt has become a billionaire based on stock options received from Google and is currently ranked the 48th richest American on the Forbes 400 with an estimated wealth of $5.45 billion. He has also started a foundation called the Eric Schmidt Family Foundation that seeks to address issues of sustainability and the responsible use of natural resources.
Prior to joining Google, Schmidt was the Chairman and CEO of Novell and Chief Technology Officer at Sun Microsystems Inc., where he led the development of Java, Sun’s platform-independent programming technology. Earlier in his career, Schmidt was a member of the research staff at Xerox Palo Alto and held positions at Bell Laboratories and Zilog. He obtained a Ph.D. in computer science from the University of California, Berkeley, according to Google.
Terry Semel (DOB: February 24, 1943): Terry Semel is a business executive and the former chairman and CEO of Yahoo Incorporated. Prior to joining Yahoo in 2001, Semel spent 24 years at Warner Brothers, where he served as chairman and co-chief executive officer.
From the late 1970s to the late 1990s, he and his co-chair and co-CEO at Warner Brothers Robert Daly “were known as one of the most powerful duos in Hollywood, and were responsible for turning Warner Brothers from a successful movie studio into an entertainment giant,” according to the Encyclopedia of World Biography.
In 2001, Semel was granted stock options with an SEC fair value of over $110 million as a bonus for joining Yahoo. After joining Yahoo, Semel spearheaded a string of mergers and a creative organization to put Yahoo back in the game by 1994. Between 2003 and 2006 he netted an estimated $450 million as a result of exercising stock options and selling stock, and another $350 million in 2007. In June 2007, Semel resigned as CEO due in part to pressure from shareholders’ dissatisfaction over the amount of his stock options and performance.
David Bonderman (DOB: November 27, 1942): David Bonderman is a founding partner of TPG Capital, a private equity and venture capital firm, which was formerly Texas Pacific Group.
In 2010, Bonderman was listed on the Forbes 400 list as the 221st wealthiest American with a net worth of approximately $1.8 billion. Prior to forming TPG in 1992, he was a partner in the law firm of Arnold and Porter in Washington, D.C. where he specialized in corporate, securities, bankruptcy, and antitrust litigation.
He has previously served on the boards of directors of Washington Mutual, Inc., American Savings Bank, and Burger King Holdings Inc. Bondermann met co-founder James Coulter while working for billionaire Robert Bass. He once worked for the U.S. Justice Department and also sits on the boards of the Grand Canyon Trust, Wilderness Society, American Himalayan Foundation and other environmental groups, according to Forbes Magazine.
Eli Broad (DOB: June 6, 1933): Broad is a philanthropist and art collector who lives in Los Angeles. In 2009, Broad was ranked 93rd on the Forbes List for richest billionaires with a net worth of $5.2 billion.
Broad founded two Fortune 500 companies, including KB Home and SunAmerica, Inc. but is not devoting his time, energy and resources to philanthropy with his wife of 54 years Edythe. Broad got his start in homebuilding by building Kaufman and Broad homebuilding and then bought a life insurance company in 1971, SunAmerica, that was eventually transformed into a retirement savings empire, according to the Broad Foundation.
“With the merger of SunAmerica into AIG in 1999—at the sales price of $18 billion—Eli Broad stepped down as CEO and turned his attention to full-time philanthropy,” according to the Broad Foundation. The Broad Foundation is focused on “venture philanthropy,” according to the Broad Foundation.
Today, the Broad Foundations, which include the Eli and Edythe Broad Foundation and the Broad Art Foundation, have assets of $2.1 billion. “Their mission is to advance entrepreneurship for the public good in education, science and the arts,” according to the Broad Foundation. In 2007, Eli Broad received the Carnegie Medal of Philanthropy.
Most Think Long Committee Members Are Wedded to Status Quo and Unlikely to Produce Reforms that Challenge the Political Status Quo
The history of constitutional reform in California and other states proves that meaningful constitutional reform challenges the status quo and is inevitably opposed by the political status quo. (Source: State Constitutions for the Twenty-First Century: The Politics of State Constitutional Reform)
As reviewed above, the Think Long Committee, on the other hand, is composed largely of members who either have benefited or currently benefit from the political status quo. There are some exceptions to this rule such as Maria Elena Durazo, Antonia Hernandez, and Laura Tyson.
Former political leaders such as Gray Davis, Willie Brown, Matt Fong, Condoleezza Rice, Bob Hertzberg, and George Schultz, are no longer in power but still have significant ties to the political establishment which is a general proponent of the status quo. Business executives and millionaires, such as David Bonderman, Gerald Parsky, Eric Schmidt, and Terry Semel, are also agents of the business community which supports the political status quo.
The success of the Think Long Committee to produce meaningful and lasting constitutional reforms will be a function of its willingness to challenge the political status quo.
Some existing political leaders may support some specific structural reforms, but as an institution, the Legislature and its political leaders would be highly unlikely to support a broad-based package of structural reforms. To illustrate, in the mid-1990s, the California Legislature failed to approve a single recommendation of the Constitutional Revision Commission formed by Governor Pete Wilson, although a few of those proposals were approved more recently.
“Particular interests with established legislative relationships and a stake in the constitutional status quo are likely to align with the legislature and against change,” wrote Gerald Benjamin, a political science professor at the State University of New York in his analysis of constitutional change in New York.
The political leadership for structural reform has always come from outside groups or new candidates that champion reform, typically a candidate for Governor, because the existing political establishment only seeks to promote the status quo. (Source: State Constitutions for the Twenty-First Century: The Politics of State Constitutional Reform)
The reason is that sweeping reform threatens the power of the existing political establishment. Nobody has more to lose than those already in control of the existing system.
Current political leaders have gained power by learning how to effectively manage the existing political system to their benefit. Structural reform threatens the very roots of the system that is responsible for their rise to power and currently maintains their power.
Reform Must Start with Reform of Political Institutions
California is suffering from a crisis in governance which results from the failure of its political institutions. The public has lost faith in the institutions of state government, namely the executive and legislative branches of government, to effectively govern the state and effectively respond to the desires of its citizens.
The failure of the state’s institutions to effectively govern has led to its inability to balance the state’s budget, and enact policies to reform several other areas of state government such as education finance, state-local finance, and health care, among others. Government is perceived by the public to be inefficient and unresponsive to its citizens.
The primary goal of the Think Long Committee and other constitutional reform efforts must to be to reform the institutions of government so that they are better able to govern and respond to the needs of its citizens. This will inevitably require an examination of California’s institutions to produce significant structural and constitutional reforms.
Once reformed, such institutions would presumably be more able to enact policies that effectively respond to the state’s citizens and provide for the long-term economic health of the state.
According to its website, “The Think Long Committee for California aims to offer a comprehensive approach for repairing and renovating California’s broken system of governance while proposing policies and institutions vital for the state’s long term future.”
“Unlike any other reform efforts, this fund will not support a single candidacy or a single issue but only those structural and constitutional changes that will break the present gridlock, make government more responsive and efficient while at the same time putting in place the incentives and institutions vital for California’s long-term future,” according to the Nicolas Berggruen Institute (NBI) website.
The challenge of reform is made much more difficult because both California institutions and policies are in need of reform. Moreover, many policy decisions have been written into the California Constitution in recent decades, most notably Proposition 13 and Proposition 98. Thus, reform of California’s political institutions will be unsuccessful if it stops short of reforming the policies written into California Constitution which contribute to the gridlock in the state’s political institutions.
Most experts also agreed that some type of initiative reform is necessary to make it harder to permanently enact new policies that contribute to the dysfunction of the state’s political institutions.
This is an enormous undertaking and past experience in California and in other states has shown that such a “comprehensive” reform effort takes a significant amount of time and resources. Berggruen has acknowledged that he is committed over the long-term but given the enormity of the task at hand it is unlikely that the committee will produce “comprehensive” package by mid-2011.
Think Long Committee Puts “Cart Before the Horse” on Constitutional Reform
Institutional reform and policy reform are closely intertwined due to the nature of California Constitution and political history. A review of the 14-members of the Think Long Committee shows that the committee members were chosen for their knowledge of California’s political process and the policy outcomes that will make California competitive with other states and nations.
Unfortunately, the 14-member committee lacks the expertise in governance and constitutional issues necessary to produce a package of meaningful institutional reforms to accomplish the goals of the committee.
Effective institutional reform should be the first and foremost goal of the committee but the committee lacks experts on institutional reform that can help it accomplish this goal. Committee members do possess significant expertise and knowledge on many policy goals that would serve to improve the competitiveness of the California economy but this is a secondary goal that is dependent on effective institutional reform—effectively putting the “cart before the horse” on structural reform.
The committee only has one political science professor, Stanford University Professor and former Secretary of State Condoleezza Rice, and does not have any members who are trained experts in structural reform issues. The member with the most amount of experience in state structural reform issues is likely to be former Speaker of the California Assembly and co-chair of the California Forward effort, Robert Hertzberg.
It is difficult to believe that the committee does not have Bruce E. Cain or Roger G. Noll as a member given that they are likely the two most seasoned and most well-published experts on constitutional reform in California. Roger Noll, is professor of economics emeritus at Stanford University, and Bruce Cain, is a Heller Professor of Political Science at the University of California Berkeley. Both Noll and Cain were members of the California Constitutional Revision Commission that undertook a two-year study of revision to the California Constitution from May 1994 to June 1996.
Bill Hauck, president of the California Business Roundtable and chair of the Constitutional Revision Commission, was also not included as a member of the Think Long Committee.
Think Long Committee Process Will Prevent Adequate Study and Creation of Necessary Constitutional Reform Package
Think Long Committee members have been quoted in the press as saying that they will meet four or five times in the next several months to put together a reform package for public review by mid-2011.
Given that the committee held its first meeting in late October and is planning to release its proposals by mid-2011 or June 2011—that only gives the committee roughly eight months to construct its package of reforms. This is simply not enough time to put together a comprehensive package.
It would be one thing if the committee was planning to meet several times a month but the committee is only supposed to meet four or five times. In the mid-1990s the California Constitution Revision Commission held more than 30 public meetings over the course of two years.
We hope the findings of this analysis turn out to be incorrect and the Think Long Committee is able to produce a significant package of structural and constitutional reforms to improve the governance of California.
The goals of the committee and its founder Nicolas Berggruen are on point. Unfortunately, the committee was not set up in such a way that is likely to facilitate the accomplishment those goals.
The membership of the committee should include more independent experts with background and knowledge on structural reform issues and fewer members that are wedded to the existing status quo.
The process the committee uses to produce its package of reforms also leaves much to be desired and fails to provide a significant role for the public and outside experts to impact the development of the reform package.
If nothing else, the committee will likely provide a topic of discussion on reform issues that is healthy for the state of California to undertake. However, any serious “comprehensive” reform effort will require a dramatically different approach to developing its reforms.