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Why Sun Co-Founder Scott McNealy Supports The Romney-Ryan Ticket

BY Sarah Lai Stirland | Thursday, August 16 2012

As the co-founder and former chief executive officer of Sun Microsystems, Scott McNealy led a company for 22 years that shaped the Internet and Silicon Valley as we know it today. Though Sun ultimately wasn't able to transition quickly enough to adapt to the changing trends in technology as an independent company, this was the company that pioneered much of the Internet's infrastructure, and the slogan it became known for, "the network is the computer," was prophetic.

Today, McNealy is the chairman and co-founder of Wayin, a mobile phone and Web app that enables users to post and participate in poll questions on their social networks. For the end user, the service is meant to be a fun way to engage with sports events, politics, and anything else. For businesses and politicians, the ultimate goal is to build a channel to gauge consumer and voter sentiment.

He's also a bundler, advocate for and former classmate of Mitt Romney, part of a vocal minority of supporters the Republican presidential candidate has in Silicon Valley.

McNealy made some time early Wednesday morning to talk to techPresident about his support for Romney before heading off to caddy for one of his sons in a golf tournament at Pebble Beach. He didn't mince words while outlining why, in his view, Romney makes sense as the candidate for the technology industry.

Below is our edited and condensed Q&A.

Could you tell us why you support Mitt Romney?

First of all, I’m a libertarian in my views, in the sense that I think government should be as small as possible. That’s sort of how the framers of our Constitution set it up.

I’m not a real believer in government’s ability to prosecute anything that they do effectively, efficiently and properly. It’s all done with huge inefficiency, corruption, and crony activities with a lot of collateral damage.

I’m not an anarchist by any sense of the word. We need Defense, Justice and State. We need those departments, but why do we need a $40 billion farm bill? Why are we bailing out the farmers? Why bail out the auto industry? I believe in antitrust, but I don’t believe in bailouts.

I am very liberal on social issues, but I don’t believe we can have personal liberty, which is what that means, without having economic liberty. We have economic tyranny when you add in Obamacare, we have about 50 percent of the U.S. GDP in the public sector.* That means that you have a tyrannical and overregulating, and politicized economy, not a market economy, not the invisible hand.

You have Harry Reid and the czars of the Obama administration driving where our economy goes for political gain, not for the good of industry. And you have what I call trickle-up poverty big time in America today. So part of me is ‘Anybody but Obama,’ and another part of me is that I’ve known Mitt Romney forever. We were one of the largest employers in Massachusetts when he was Governor there.

I spoke at Bain & Company when he was there. I knew him when he was at the Olympics. I’ve known him forever, and I’ve supported him as a political candidate forever.

He and I both went to Cranbrook High School in Michigan. My Dad worked for George Romney at American Motors. My Dad eventually became vice chairman of American Motors, and was hired in in the George Romney era.

Wow, I had no idea you had all these connections.

Yeah, we both grew up in Michigan, and we’re both Midwestern boys. He’s got five boys, I only have four. We’re strangely both married to our first wives. There are just a lot of connections there. I’m not Mormon.

Are you religious?

I’m spiritual if not religious.

You’ve got all these connections to Romney, and you seem to have retained the original Silicon Valley libertarian outlook. I have to ask, because there are so many Ron Paul supporters out there, what do you think of Ron Paul?

I think he has a lot of good ideas, but I’m not an isolationist. As I tell my boys, you’re a sixth grader, and you’re in a fourth grader school yard, and a fourth grader is beating up on a second grader. Do you stand back and watch the fourth grader pummel the second grader, or do you at great personal cost to you and maybe getting thrown out of school for a little while, do you step in and break up the fight?

That’s always a tough call. When do you engage, and when do you not? I think Ron Paul is on the side of “I’m not going to engage.” I think if you drive the right economic system, the U.S. has the opportunity to maintain its leadership position. I don’t know how you just isolate yourself. It’s really hard to isolate your citizens from the rest of the world. You can’t put a big bubble around our citizens. They’re going to be traveling around the world, and you can’t keep your borders 100% safe and secure, so what happens in the world around you does affect the economic and physical well being of your people, and I think Ron Paul is too much of an isolationist for me. But he has a lot of good ideas on fiscal responsibility.

The question is when the government prosecutes everything so poorly, why would you want them in education? Why would you want them in the insurance business, and why would you want them in the healthcare business? And why do you want them in the farm subsidy business? And why would you want them in redistribution?

I’m not a believer in significant redistribution. I’m a believer in a safety net. But I’m also a believer that we ought to make the biological parents responsible for the actions and liabilities of their offspring.

I don’t want to get too off topic on the subject of healthcare policy, but my one question is: As you know, the US is reported to spend more on healthcare than any other country, and it’s not particularly efficient. I think Obamacare is an effort to address that. Can you comment on that?

Again, I think the whole thing is a mess, and that’s because there’s too much government regulation. The same as financial regulations. You put up a sign up that says swim at your own risk: we assign personal responsibility for those who are buying financial products, instead of asking the government to supervise that. They have no clue as to what’s going on, and the bankers are always going to outsmart them. So you have to just say: ‘Buyer beware.’

The same is true for healthcare, and this is going to sound so terrible and horrible, but you know what? It’s not the government’s job to keep you healthy. It’s not a right. You know a right is something that you can give to someone without taking from anyone. You can’t give healthcare, or a home, or insurance or food to anyone without taking from someone.

Everybody is aghast at the fact that here in Palo Alto we have a 60 percent increase in burglaries in the last six months. The Palo Alto police department said that that was due to unlocked doors and windows. I think it’s due to robbers. And I think the reason we have more robbers is because we have trickle-up poverty. And the guy who just robbed Steve Jobs’ house went to San Jose State and got a degree. College graduates are now turning to burglary.

So what is trickle-up poverty, exactly?

That’s when the government dominates the GDP, and doesn’t create jobs, but creates make-work. It’s when you have public sector and private sector unions driving the wages so high that the cost of goods and services so high that you have inherent unemployment.

We’re in an about 18% real unemployment figure* when you count underemployed, people who have stopped working, and the classic unemployment.

If I was running a public company, and I said that unemployment was 8.1 percent when the true numbers were like 15%-18%, I’d get arrested and thrown in jail for perjury and fraud.

It would just be an incredible lack of responsibility, but the government gets away with coming up with their own numbers and their own scorecard. As the government becomes more and more redistributionist and regulatory, economic growth sputters.

The housing bubble is another example. Barney Frank and all the bozos who created Fannie Mae and Freddie Mac created a huge housing bubble, which we’re now going to be paying for for another decade easily. And all of this just creates economic stall. That doesn’t hurt the top 25% in America. It clobbers the bottom 50%, an then you end up with this massive unemployment.

So it sounds as if Paul Ryan is your man.

Paul Ryan is awesome, but by the way give credit to the guy who was able to recruit him to be his vice president. All the credit in the world for all the great people who work for him goes to Mitt Romney. He’s the guy who could attract and assemble the team.

Compare Paul Ryan to Joe Biden. Joe Biden is probably the most embarrassing official in the history of democracy. He’s a one-person gaffe machine. They have hidden him for the entire term of this administration. Imagine a Republican VP with his history of quotes, including the latest one where he told a largely African American audience that Romney and his gang are going to put them back in chains. Imagine that race-baiting comment coming out of a Republican. It’s staggering.

It’s unbelievable what the mainstream media has let the current administration get away with. Look at all of the czars in the current administration. We have single digit percentage of people with private sector experience in the current administration. It is the lowest percentage of real-world experience in the current administration in recorded time. Romney will bring real-world experience to the administration.

I understand that you’ve held fundraisers in the past for Romney.

I have.

How many have you done this cycle, or attended?

Oh several. I’m part of the Northern California finance committee for the Romney campaign.

Can you say how much you’ve raised for him?

I have no idea, honestly, I’ve never looked. Not enough.

How do you sell Romney in Silicon Valley? Obama’s outraised him in Silicon Valley this cycle.

California has obviously been a very liberal state for a very long time. We have a secondary issue here, which is Sacramento, Jerry Brown and the bandits there. They’ve bankrupted the state. They’re well ahead of the U.S. in heading across the fiscal cliff. That’s why I started Wayin in Colorado, and not California.

We’re at 11 or so percent income tax, and Jerry is pushing this Fall to push that to 13 percent, plus the local cities are literally going bankrupt, and they’re all raising their sales taxes internally. So the effective tax rate in California is approaching 15 percent.

When you add in property taxes, sales taxes, registration fees, all the rest of it, it is crushing, and we’re still operating at massive deficits, and the education system is pretty near rock bottom. So the whole idea that trickle up poverty, and the current policies of running deficits, crony capitalism and all the rest of it is really starting to aggravate people who want to get their jobs done out here in Silicon Valley.

There’s a huge, huge change from what I’ve seen four years ago, and people are tired of the hope and change. They want someone who’s been in the private sector who understands how jobs get created, and where revenues come from.

I call taxpayers national economic heroes. There’s a lot of national economic heroes here in Silicon Valley who are a little bit disappointed at the way that the money is being spent, and the way the money is being overspent. There are a lot of people who are tired of the Solyndras.

Another great one is the political bankruptcy work done by the Administration on the auto industry. Instead of having a judicial bankruptcy hearing with the auto industry, we had a political one, where a czar was appointed, who massively advantaged the union, the UAW union as opposed to the bondholders. That’s third world country kind of stuff.

So it sounds like the answer to the question of how you sell Romney in Silicon Valley is …

You don’t have to. His support is stunning. The amount of money raised is spectacular. The world is definitely and decidedly different than it was four years ago.

I think one of the things that the media has tended to forget is that in 2010 during the mid-term elections, it turned out to be a massive landslide towards the right, towards fiscally conservative [policies.] It was a fiscal, conservative tilt, monumental landslide shift to the conservative right. There’s been total amnesia in the media about what happened two years ago.

And then there was very interesting test of are we going to let unions drive pensions through the roof. And if you even watched the news on the evening of the Wisconsin votes, people were saying that it was a nailbiter, too close-to-call, but all of a sudden within five minutes it’s a landslide.

So the world is calling this a nail-biter for President. I’m a little skeptical of that. I obviously hang around the wrong people. Even here in California, the national economic heroes are fed up.

Unfortunately half of the country doesn’t pay income tax. We have more people voting for a living than working for a living.

Can you tell me a bit about starting Wayin in Colorado as opposed to California?

Oh absolutely. Less regulation, lower cost of housing. Lower taxes. The state isn’t bankrupt. The labor laws are far better. There are smart people everywhere. The work ethic is outstanding out there. Better skiing. There’s just so much out there that is spectacular. It’s got a great airport, it’s right in the center of the country.

It’s a much safer place to go start a company in my view.

You can find all the talent you need out there?

There’s no geography in the world where you can find all the talent that you need – especially in Silicon Valley, especially with all these overvalued companies paying all these ridiculous stock options and salaries and free lunches for people and driving their salaries up.

We can effectively hire two for the price of one in Colorado, and the job-hopping is far lower.

So you’ve given up on Silicon Valley in terms of business?

That’s an overstatement. I’m helping out a lot of companies here in Silicon Valley. I’m doing consulting and all the rest of it. You don’t give up on it, but I’m encouraging all my children to learn Mandarin. If there’s not a change in voter sentiment, we’re not going to be the economic power that we used to be. I think we’re in deep trouble right now.

Some notes from your editors:
*The Annenberg Public Policy Center's calls the claim, which Romney himself made on the campaign trail, "patently false and misleading." Its Web page provides more details.

*The so-called "real unemployment rate" is a far more inclusive definition of unemployment and underemployment, and averages to about 15 percent in the U.S. from third quarter 2011 to second quarter 2012. Seeking Alpha, a widely read finance and investment site, observes it was 17 percent in June.