Former Governor Deval Patrick does not believe that all the answers to social problems can be found in one place. For him, only a collaborative approach across sectors can address the biggest challenges that men and women face in our society. After his career as Governor of the commonwealth of Massachusetts, he joined the private sector. Now a Managing Director at the multi-asset alternative investment firm Bain Capital, with over $75 billion in assets he heads a new investment platform focused on social impact.
Deval is convinced that business can make an enormous contribution to society and create positive social impact. And that’s what we are about to find out in this latest interview.
Deval, who pushes you to keep going?
My sixth grade and ninth grade teachers and the old ladies in church growing up on the South Side of Chicago.
What would you do differently from the time you held office?
More sentencing reform and more reduction of the property tax.
Where do you see yourself in ten years?
Gardening and beekeeping in the Berkshires, rereading the classics, and solving as many problems as possible.
When you hang out with your friends, what do you do?
Talk about the future.
Why do you wake up in the morning?
To shape the future, mine, my family’s and my friends’.
Deval, you’re a talented politician with deep roots in law, advocacy and business, but upon leaving office in 2015, you pursued a role in the private sector. Why was this the appropriate next step for you?
First of all, though we don’t have term limits for governor in Massachusetts, I have one named Diane and she was ready for us to return to private life. Second, having spent most of my professional life in the private sector, it was a natural next step and easy transition for me. I knew many of the team at Bain Capital and have been warmly welcomed there. And impact investing, the burgeoning field that is my focus now, allows me to bring a sense of mission to my work, which is very important to me.
You were introduced to impact investing through social impact bonds while Governor and proceeded to introduce two of the first social impact bonds in the country prior to leaving office. What sparked your interest? As a visionary, what does a society rich in impact investing look like?
I believe strongly in the power and importance of innovation, in both the private and public sectors. Creating an environment for successful innovation requires increasing one’s tolerance for failure. But politics punishes failure — so it turns out that as much as people say they want innovation in government it is surprisingly difficult to do. Social impact bonds are a great tool for innovating in government, for experimenting with new solutions to public problems, putting private capital rather than tax dollars at risk. If the solutions work, the investor gets paid a return from the public savings. Proven solutions that can save tax dollars can then be scaled. What’s not to like?
Impact investing is a natural extension of this approach in the private sector. As I see it, it’s a way to encourage and support businesses with mission oriented leadership to consider all the consequences of their commercial decisions. And our approach aims not to compromise returns. Indeed, we think it’s important to show at scale that you don’t have to trade returns for positive impact. As we do, we raise important questions in the market generally about what constitutes long term value. And the more the focus shifts to long term value and away from short term, quarter-by-quarter gain, in my view, the better off we will all be.
Under your leadership, Massachusetts implemented universal health care coverage to virtually every citizen in the Commonwealth. You make it look easy! Why was this initiative so successful? Why is there an ongoing debate about the benefits of health care coverage in the United States when we’ve seen the potential for success through an efficient model?
Health care reform is hard and it was and remains hard in Massachusetts. It seems to me that we should start with the values choice, that universal access to quality care is good. There is a host of reasons and studies to support this. Using a private insurance model is the way we (and later President Obama) chose to proceed. We had an advantage, however, that the President did not: a large coalition of policy makers, legislators from both parties, business and labor leaders, medical and health care experts, patient advocates and others came together to invent our health care reform, and then stuck together to refine it as we went along. We learned and adjusted as we moved forward. That’s critical.
The next big frontier, for Massachusetts as well as the Nation, is cost control. Reform is not the cause of cost escalation. There are reasons having to do with the model for care delivery (sick care versus wellness), the role of private insurance and government subsidy, and competition that have much more to do with that. Those are problems of our collective creation and therefore can be solved by society collectively — but only after the values question is resolved. For Massachusetts, that question was resolved. We believe universal health care is a social good.
While working in the Clinton administration under the Civil Rights Division in the mid-nineties, you handled several racially motivated crime cases, including the string of black church fires in the South. Twenty years ago, you saw the depths of racial division across the country and dedicated a part of your career to overcoming racial prejudice. Where are we today? How can we move forward?
There is no doubt that as a nation America has made enormous progress toward racial justice, much of it in my lifetime. At the same time, we have work to do, work on better relations between communities and the police, on housing, school and other forms of social segregation, on voting rights, and basic human understanding. And there is a renewed awareness of many of these and other issues, which is critically important. We don’t have the best leadership for healing and reconciliation today, in my view, but I still believe that the number of big-hearted, well-intentioned Americans vastly outnumbers the haters.
With so many ideas, you must be planning to run for President in 2020…?
It’s way too early for such talk. I have fulfilling and demanding work in front of me right now and I am focused on that.
Pelosi or Schumer?
Boston or Chicago?
Adventurous or cautious?
Public sector or private sector?
Accepting mistakes or arguing your case?