Most of his former colleagues probably can't fathom why Wall Street bankers make tens of millions of dollars in salaries and bonuses each year. How would he justify these fat pay days? "It's simple," he lectures, sounding very much like the Texas A&M economics professor that he was in the 1970s:
"In economics, we define labor exploitation as paying people less than their marginal value product. I recently told Ed Whitacre [former CEO of AT&T, who retired with a $158 million pay package] he was probably the most exploited worker in American history because he took Southwestern Bell, which was the smallest of the former Bell companies, and he turned it into the dominant phone company on earth. His severance package should have been billions."
Mr. Gramm says that today there is "a lucrative premium for talent. When we were all hunters and gatherers, and you were better with a bow and arrow than I was, there were limits on how much more game you could kill than me. Today, CEO decisions about whether to acquire or not acquire a company, to shut down one part of the company or not shut it down, get into a market, get out of a market, where those decisions mean billions of dollars, is it surprising that people are willing to pay tremendous amounts of money for people who make those decisions right?"
As for government regulation, he's still the same after all these years:
Mr. Gramm's biggest worry about Wall Street is that, in the wake of the Enron scandal and now the subprime meltdown, the regulatory pendulum has swung too far toward more government meddling – which could put America's financial-market supremacy at risk.
"It used to be that it was a sign of your importance in the world to be listed on the big board," he warns. "Now many of the largest IPOs in the world are occurring on other markets. In the six years that I have been a banker, I have seen decisions made to open functions in London rather than New York because of a better regulatory climate. Every American should worry a lot about this. We have benefited enormously from New York being the financial capital of the world because we had a more efficient regulatory structure than other nations did."
He fingers the U.S. corporate income tax as another competitiveness killer: "We can't possibly compete with a 35% corporate tax rate that is so punitive that if a company opens a plant in Ireland it costs them a billion dollars less than in the U.S. over 10 years because of the difference in corporate taxes." Mr. Gramm urged Mr. McCain to add a corporate income tax cut (to 25%) as part of his economic package.
"Why is America the richest country in the world?" he asks. "It's not because our people are more brilliant; it's because we have a better free-market system. Why has Texas created 1.6 million jobs in the last 10 years whereas Michigan has lost 300,000 jobs and Ohio has lost 100,000 jobs? Because governance matters, taxes matter, regulation matters. Our opponents in this campaign are so dogmatic in their goal of having more government because they love the power it brings to them that they're willing to let it impose costs on the working people that they say they want to help. I am not."
The past versus the future:
Mr. Gramm made his own quest for the presidency in 1996. But despite raising plenty of money, he didn't make it very far. That was partly because he never had Ronald Reagan's sunny demeanor, and Mr. Gramm puts it this way: "I'm too ugly to be president."
....So have I been speaking with the next Treasury secretary? Almost certainly, yes, if Mr. McCain wins in November.
"I don't feel any burning desire to do it," Mr. Gramm tells me. "Look, I had a great career and I quit when I was at the top of my game. I'm not eager to come back." Then he chuckles and says only half-jokingly, "I know a lot of people on the left, who would hate like hell to see me come back."