Wilbur Ross & Joe Lonsdale: Bankrupt Industries to Bureaucratic Battlegrounds

Wilbur Ross, the "King of Bankruptcy" turned Commerce Secretary, joined venture capitalist Joe Lonsdale for a frank discussion on restructuring America's assets—from steel mills to government agencies. The event coincided with the release of Ross's new book, "Risks and Returns: Creating Success in Business and Life," copies of which were distributed to attendees.

The Bankruptcy Whisperer

Ross's career in distressed assets reveals a sobering truth: failing companies often share a common flaw—a loser's mentality. "They'll blame the union, lawyers, politicians—anything but themselves," Ross quipped. This mindset, more than market forces, often seals a company's fate.

But external factors aren't blameless. Ross pointed to Mike Milken's junk bond revolution as a double-edged sword. While it injected capital into markets, it also set the stage for spectacular collapses. "Anytime you put a lot of leverage on things, you know some won't make the cut," Ross noted, in a refreshing admission that even financial innovations have downsides.

From Wall Street to Washington

Why would a billionaire trade yacht life for the bureaucratic quagmire of D.C.? Ross's answer was surprisingly candid: "The US government is the most over-leveraged and under-managed situation." It's a statement that should give pause to both fiscal hawks and big government advocates.

Ross's time in the Trump administration was marked by battles on two fronts: China and the regulatory state. On China, Ross didn't mince words: "WTO rules led to China's GDP rocket ship." It's a stark reminder that well-intentioned policies can have monumental unintended consequences.

The regulatory fight was equally contentious. Ross's anecdote about needing a permit for a porta-potty on an oil well site perfectly encapsulates the absurdity of over-regulation. It's easy to laugh, but such bureaucratic overreach has real economic costs.

The Education Crisis

In a surprising twist, Ross identified education as America's most pressing crisis. "How are you going to stay the number one country in the world if you're 30th in the quality of education?" he asked. It's a question that transcends partisan lines and demands urgent attention.

Ross's example of a Los Angeles school system banning math teaching as "racist" is so outrageous it seems almost unbelievable. Yet it perfectly illustrates how misguided social justice efforts can actively harm the very communities they aim to help.

Looking Ahead

Despite his concerns, Ross remains cautiously optimistic about America's future, citing the country's entrepreneurial spirit. However, his optimism comes with a caveat: "My worry is we'll run out of those [innovative] people before we can afford to."

Key Takeaways:

- Corporate failure often stems from internal mindset issues, not just external pressures
- Over-leveraging, while potentially beneficial, carries significant risks
- Government inefficiency rivals that of the most mismanaged corporations
- Regulatory overreach stifles economic growth in ways both large and small
- The decline in educational standards poses a serious threat to America's global competitiveness
- Entrepreneurial spirit remains America's greatest asset, but it's not an inexhaustible resource

Ross's insights offer a sobering look at the challenges facing American industry and governance. While his solutions may not appeal to everyone, his diagnosis of the problems demands serious consideration from across the political spectrum.