California Elections : Ed Zschau: Candidate Defies Political Mold : GOP Senate Hopeful Is Neither a Liberal Nor Conservative but a 'New Libertarian'

By KEITH LOVE

May 5, 1986 12 AM PT

Times Political Writer

Some of Ed Zschau’s admirers say he’s a conservative. His critics say he’s a liberal.

But in fact, this entrepreneur-turned-politician is neither. By his own admission, Zschau, a two-term Republican congressman from the Silicon Valley, falls into a group described in recent writings as “the new libertarians.”

The new libertarians, writes Thomas Moore in Fortune magazine, “are neither consistent liberals nor consistent conservatives; they oppose government intervention in both the economy and personal lives. The major political parties are listening to them.”

Candidate for Senate

Zschau, a candidate for the Republican U. S. Senate nomination, hopes GOP voters will have done more than listen by the time they go to the polls on June 3.

“I believe in free enterprise,” Zschau said in a recent interview. “I believe in government doing only the things it needs to do and not telling people how to live their lives. I believe in tolerance for individuality and in the encouragement of creativity. If you have rigid controls then you don’t have entrepreneurship.”

In other words, he doesn’t want the federal government regulating businesses or telling women they can’t get abortions.

A former high-tech executive, Zschau, 46, belongs to the young managerial class profiled in “The New Competitors,” a book by Harvard Business School Professor D. Quinn Mills.

“Overwhelmingly, this generation of managers wants to be measured by the most objective and performance-related standards,” writes Mills, who said in an interview that Zschau fits perfectly what he was trying to describe.

Zschau tells his campaign volunteers: “People will elect me if they find out who I am and what I have done.”

What He’s Done

He wants the voters to learn that he was a popular professor at Stanford Business School; that he started a computer memory disk company in his living room, which now has sales in the hundreds of millions; and that he became a hero to the business community when he helped persuade a Democratic-controlled Congress to cut the capital gains tax rate in 1978.

In turn, Zschau knows he does not fit the traditional California conservative mold and hopes Republican voters will not be turned off by his opposition to President Reagan on key issues--a fact that his rivals point out at candidate forums.

Zschau’s congressional voting record reveals his “new libertarian” independence.

Sometimes he is more fiscally conservative than Reagan:

He opposed the President on the Clinch River Breeder Reactor and the Sgt. York anti-aircraft gun because he thought they were a waste of money. He voted against the Administration’s recent farm bill because it retains federal support programs.

And sometimes he is more liberal than Reagan:

Opposes MX Missile

Like Democratic Sen. Alan Cranston and other liberals, Zschau opposes the MX missile. He also would not spend as much money on the Strategic Defense Initiative as Reagan wants. And he voted for a nuclear arms freeze.

Zschau’s associates say his desire to spend less on defense has more to do with his business background than with any pacifist urges. A major concern of the American Electronic Assn., which Zschau once headed, is that the high-tech industry will become too dependent on defense projects and risk huge swings in prosperity.

His critics say Zschau changes his positions too much.

Originally opposed to arming the Nicaraguan contras , he decided to support the idea this year because he said the Sandinista government was becoming too dependent on the Soviet Union.

In 1984 Zschau proposed a one-year, 5% surtax to help reduce the deficit, but now says he would back any Reagan veto of a tax increase “because I have learned that raising taxes is the easy way out in Congress.”

High-tech businessman Peter Olson, who has known Zschau since the 1960s, explained him this way: “Ed is an information gatherer. He will change his mind based on new information.”

No Cocktail Parties

Zschau has also declared his independence in another way since he entered Congress in 1983. He refuses to go to the cocktail parties and receptions that are a staple of the Capitol Hill life.

“When I got here my staff wanted to know which cocktail receptions I wanted to go to and I told them none,” Zschau recalls. “I don’t believe you can show me how they help you do this job.”

So he goes home to his wife, Jo, and daughter Cameron, who attends high school near their home in Bethesda, Md. Another daughter, Liz, is a student at University of the Pacific and son Ed Jr. is a senior at Princeton.

If the children have homework problems, the head of the house can also be a tutor. By the time he was in high school in Omaha, Neb., Zschau’s teachers often turned the math and science classes over to him. He went to Princeton because his idol, Albert Einstein, once taught there. He majored in math and philosophy and then got masters and Ph.D. degrees in business at Stanford.

His Ph.D. thesis was entitled, “A Primal Decomposition Algorithm for Linear Programming.” Asked to put that into apples and oranges, Zschau explained that it was an examination of how a company with many divisions could allocate resources most efficiently.

“But if you are asking me if any company found it useful,” Zschau said with his boyish grin, “the answer is definitely no.”

Win or lose, Zschau has attracted attention in the Republican Senate race.

Breaks Into Song

For one thing, he often surprises meetings with volunteers and contributors by breaking into song. It’s a technique he adopted when he was trying to help business students understand complex theories. When he lobbied Congress on capital gains taxes in 1978, he recorded “The Old Risk Capital Blues” and sent cassettes to every congressman.

Now he sings that Republicans “will be dancin’ when I beat Alan Cranston” in November.

More seriously, Zschau has gotten a lot of attention in the Senate race by raising the most money--$2 million by the end of April--and by attracting supporters with a style that former associates say was the key to his success before he entered politics in 1982.

“Ed’s greatest strength is his ability to motivate people,” said James Patterson, a high-tech executive who used to work at System Industries, the company Zschau founded in 1969.

“We had some tough times at System Industries,” Patterson said, “and the only thing that kept us together was Ed’s enthusiasm and drive. He was just a tremendous guy to work for.”

Olson, who taught at Stanford with Zschau and helped him found his company, said, “Ed was hands-down the most popular professor in the Stanford Business School. He had a way of getting students interested in a subject. A lot of them had a mental block about math, for example, and they shied away from a subject like quantitative analysis. But again and again Ed helped them overcome that block.”

Corporate Supporters

In the Senate campaign, Zschau has attracted a blue-ribbon list of California corporate leaders, many of whom are helping him raise money for the television ads that are the key to building his name recognition around the state. The early support of venture capitalists enabled Zschau to enter the race with $1 million.

The business support explains one area where Zschau has not been so independent as a congressman, according to Democratic Rep. Howard Berman of Studio City, who serves with Zschau on the Foreign Affairs Committee.

“On every crucial issue he takes the business community’s position,” said Berman. “He has not shown any independence from the legislative agenda of the Fortune 500.”

In the campaign, Zschau spends most of his time meeting with groups of potential donors. Never a newsmaker or familiar face in Republican circles before the Senate race, Zschau is trying to become known to voters almost exclusively through television commercials. He rarely shows up for the dozens of candidate forums sponsored by civic groups around the state.

Still, when the conservative California Republican Assembly held its annual convention in Fresno last month, Zschau spent two days working the delegates, even though he knew he would get few of their votes when they endorsed.

That impressed Barbara Rathbun, the group’s outgoing president, who said: “I won’t vote for Ed Zschau in the primary because we just disagree on some basic issues. But I found him personally charming and if he wins the nomination, I’m with him.”