Posted by: theoptimisticconservative | January 10, 2012

Ears of Tin: The silly, if important, “Bain” controversy and why it matters

What does it mean that almost everyone in the GOP race looks kind of icky in this Sudden Bain Eruption?  Gingrich, Perry, and Huntsman have all piled on with demagoguery about Romney and Bain, depicting Bain Capital as a soulless corporate predator, like the fictional company whose owner Richard Gere portrayed in Pretty Woman.  In one scene from that movie, Julia Roberts’ character, Vivian, asks Gere’s (Edward Lewis) about his business:

Vivian: So you don’t actually have a billion dollars, huh?

Edward:  No, I get some of it from banks, investors…

Vivian: And you don’t make anything and you don’t build anything.

Edward: No. No.

Vivian: So what do you do with the companies once you buy them?

Edward: I sell them.

Vivian: … You sell them.

Edward: Well, l… don’t sell the whole company; I break it up into pieces… and then I sell that off; it’s worth more than the whole.

Vivian: So it’s sort of like, um, stealing cars and selling ’em for the parts, right?

Edward: [ Exhales ] Yeah, sort of. But legal.

Edward Lewis could have added:  “… and I love being able to FIRE PEOPLE!!”  Or so the soundbite-driven understanding of all this would have it.

You’d think Romney’s opponents would know that much of the base they’re trying to appeal to hates demagoguery against business.  When a business isn’t profitable, there are good reasons why it’s better to repackage and repurpose its assets for more profitable use.  Unprofitable businesses aren’t made profitable by political bailouts; they are made dependent and unsustainable.  Businesses like Bain Capital ensure that resources are being put to the most profitable, job-creating uses, given the environment of regulation and taxes that businesses have to operate in.  There’s nothing wrong with the existence of such companies; indeed, they are a positive factor in a dynamic business climate.

But then, Romney is tin-eared himself on some significant things.  He did, in fact, say that he likes to be able to fire people if they’re not performing.  That is a stupid, politically insensitive way to word a valid requirement of a healthy economy.  People sometimes have to be fired, but it’s suspicious for someone to “like” being able to do it.  There is nothing more gratifying than an employee who does well, and in particular one who improves over time, while there is nothing that makes the average boss feel as terrible as having to fire one who simply can’t seem to measure up.

Why couldn’t Romney have said instead that businesses need to be able to fire non-performing employees, even though it’s never any fun to do that?  Apparently because that’s not the way he sees it.  His phrase about liking to be able to fire people is the one that came naturally to him.  It doesn’t mean he’s a cold-hearted jerk who loves to give people bad news, but it is a personality problem for him in political leadership.  ‘80s-era pop psychologists would have said that he is very “objective-oriented”: he resonates to the idea of the goal and the achievement, and gives short shrift to the people.

Republicans do want a better climate for business, but the more abstract, data-focused perspective of a Bain Capital graduate is not necessarily what they are looking for.  I don’t actually want a president who imagines he can boost the bottom line of US companies.  I want one who understands that government policies affect people, largely through the constraints they put on business.  And I want him to respect the rights and dignity of individual people, neither trying to bribe them with goodies nor trying to herd them into programs that he sees as financially smart.  I’m not looking for a president with an opinion on whether a whole bunch of things he isn’t in charge of can be profitable.

Bringing up Bain as an issue has also turned up the fact that Bain profited from a deal in the early 1990s involving a steel company that received a $44 million federal bailout for its pension plan.  While it is demagoguery to equate this with Bain itself receiving a federal bailout, it is still a problem for Romney.  Companies like Bain have been operating in the environment of government incentives, regulations, and bailouts for quite a while now, and Romney’s record is one of being comfortable with that.  (He endorsed the TARP bailout in 2008.)

More and more of the people are not comfortable with it.  It is well and good that Romney wants the government to get off business’s back, but it’s not OK to remove only some constraints while leaving others, and continuing to bail the whole mess out.

Sadly, Romney’s opponents have wasted a superb opportunity to talk about what they think is the proper relationship between business and government.  They have simply jumped on the demagoguery bandwagon, which frankly is cheap and annoying.  If I were crafting talking points, I would address the “liking to fire people” comment graciously – something along the lines of “I’m sure this is what Governor Romney meant to say” – and focus more on Romney’s comfort with the extent to which government regulates business, profits from regulating business, and bails business out so it can keep regulating and profiting.

One last thought.  In contrast to the bloviation-fest precipitated by the Bain Eruption, consider the cool dispatch and intelligence with which the candidates knocked down the idiotic social-issue questions posed by Stephanopoulos and Sawyer in the debate on Saturday night.  The candidates were ready to talk about those issues – irrelevant as they were – with principled specifics.

On the matter of business and government, however, it’s been all big-government complacency on one side, and all mindless demagoguery on the other.  Not a hint of a principled argument about the free market and the appropriate role of government, from the perspective of either a man-and-the-state theory, or a regulation-vs.-the-market theory.

Nothing has made clear like the last 40 months that there is no longer an American consensus on these matters.  The Obama camp knows exactly where it stands.  But the GOP candidates aren’t internally motivated and prepared to make specific cases about it, as they are about social issues.  Yet that’s what the voters are waiting to hear.

J.E. Dyer’s articles have appeared at Hot Air’s Green Room, Commentary’s “contentions,Patheos, and The Weekly Standard online.


Responses

  1. Though I have not broken up companies to sell off viable portions, I have participated in similar activity (though not analogous) in the past.

    During the early 1980’s I went to work for a contractor specializing in the dismantling of idle manufacturing plants. The first project that I was able to obtain was Diamond Crystal’s Jefferson Island, LA salt mill. This was above the mine which had been flooded when a barge mounted drilling rig had drilled too close to an abandoned mine shaft (also too close to the edge of the salt dome).

    What I do now, and have been doing for quite a few years now, is buying/brokering plants and equipment from chemical plants and refineries which have been shutdown permanently. Mostly the individual process equipment items are sold off to 2nd and 3rd tier manufacturers (normally private companies) where they can be put into service and cut costs while being ready for use months ahead of something bought new.

    Occasionally, there are one or two people whose first job was at this location, have risen up through the ranks and remain hired by myself or a dismantlement contractor to help with specifications, manuals, blueprints, etc… They usually have been involved with plant maintenance at the foreman or superintendent level. It breaks about 50/50 of those who take it bad emotionally to see something they cared for taken apart as opposed to those who see that “Darwin” exists in the free market. It is far worse for those who are say in their 50’s and not another job on the horizon than those who will retire or be transferred after the project has been completed and everything brought down to grade (ground) level.

    One thing that those in my field NEVER do, and that is to say anything that may belittle (real or imagined) the plant, site, company OR most importantly it’s employees.

  2. As I sit here in the quiet, having just gotten back from the 5 hour round trip to Newport News to drop son #2 off at CNU, I had more than a chance to hear Limbaugh and Hannity going at Gingrich and the anti-Romney’s for their comments regarding Bain Capital, and the Mittster’s cleary tin-tongue, to go with that ear.

    1. Bain Capital is what is basically understood by the general public to be a corporate raider. Most regular everyday folks really don’t understand how it all works behind the scenes, but they do understand when they see a small mob of crows picking the carcass of some squirrel who had the untimely nerve to cross the street in front of the speeding Caddie. Everybody knows the carrion are important in the grander scheme of the food chain, but the squirrel was way cuter and didn’t eat dead festering things in the street.

    2. That is the general perception, the reality is that Bain’s existence is a tad more complicated than being a turkey vulture looking for a fresh road kill. Bain and its other Raider ilk… do business by looking for marginal or distressed companies. They leverage (borrow) large amounts of cash to buy up controlling interest in the companies (some times a bit at a time, and often by very “interesting” methods.) The methods used can be friendly and they can also be quite hostile. Suffice it to say the health of the company is largely a business judgement that might or might not be arguable either way.

    The end result is that the purchased company has assets that interested the Raider, and those interests are largely centered on “flipping” the piece for coin, preferably as much coin as is possible. That is all well and good, sometimes and even often Corporate Carrion serves a very capitalist purpose of clearing up the dead stuff… and making what works healthy and successful.

    SOMETIMES. Real research should be done on the end results of raider operations, but my guess is that the successful crumbs never equal the entire concept… some to the good, but most to the bad.

    And that’s what makes most regular work-a-day Joes more than a little pissed off about the whole concept. Somebody swoops in, buys what is a marginally performing company (at least one from which they receive a paycheck…), scares lots of people, makes lots of promises, and then the ax starts dropping the first day of new operations. I lived through lots of “corporate take overs” and was unemployed five tense weeks as the result of a completely unwanted and eventually failed takeover. I can tell you that it isn’t particularly pretty, and the sight of people begging for their jobs/livelihoods is pretty off putting.

    So Just like a buzzard, Bain serves a purpose, but its results are always nasty looking, and gut wrenching to the average person.

    3. The point that Rush and Hannity are missing is that Raider operations are not always quite so capitalistic or noble. Nor are they always successful for the left over/rump companies… Ask Chrysler how that Daimler deal worked out, then the next move, too. You could ask the former employees at least 15 small to mid sized companies that a certain Long Island raider software company purchased and gutted how they feel now, or if anything survived.

    But what is most upsetting to the general public is the tremendous amount of money made on those raids. Few if any of those dollars ended up in share holder hands, few if any of that profit was plowed back into the remaining companies, and very little was done for most of the folks who were “no longer necessary”. I knew people who were five year employees of one takeover target, who received their notices by having the building locked, a note taped to the door, and a promise that their personal belongings would arrive at their last known address along with their last paycheck and 2 weeks severance.

    What Newt, Rick Perry, Rick Santorum… and others of the Conservative world are saying is that those sorts of actions actually have consequences, and one of the consequences is that people get hurt, often gravely. That sort of hurt and resentment is a resource to the class-warfare rhetoric and tactics practiced by the Democrats.

    It is a warning that Romney won’t have a “cake walk” and is the OWS/Obama Campaign strategy to get Obambi re-elected in November. They are also warning that this nation loves capitalism and the free market only so much.

    When a corporation’s flag is the Jolly Roger, it’s probably not going to be too popular with the merchantman’s crews.

    Just a thought. We need to be aware that lots of the things that we like and believe are good and useful, a significant portion of the electorate thinks is flat out evil. That is a tall order to get over, and to dismiss those feelings is political and economic suicide.

    r/TMF

    • I was in retail for many years. Went up the chain. Endured several take overs in the early to mid 80’s.
      I did not control my life or career.
      In 1988 I finally found the guts to quit. Turned in my car, wad of credit and flight cards. Dumped my nice briefcases. Said goodbye to Corp types above and below.
      I was terrified for a year. Started a small business with nothing.
      There have been good times, great times, so so times and really bad times. They were my times. No one has ever walked through my door with an ultimatum, pink slip,pay cut, or promotion.
      I could never go back.
      Once the fear and joy of independence takes hold, it is like a drug.
      Corporate raiders are just the un-popular messengers. They are amoral. Just like true economic freedom. It makes economic sense or its doesn’t.

  3. This is a superbly OCesque. Indeed, it is at least as accurate in its appreciation and lucid in its insight of the American political scene and the Republican field as anything OC has written in the last 5 years.

    OC’s is absolutely correct that this is what the sort of argument she suggests is what the voters are waiting for (Romney just said “Overwhelming Military Superiority – Yippy!! Go Romney!!!!! – but I digress) and much polling data indicates that they are most receptive to such an argument, perhaps more so than they have been for at least 30 years. It is precisely the absence of someone able and willing to make such an argument with clarity, force, coherence and conviction and the fact the country is in so perilous a condition and so desperately in need of the implementation of policies consistent with these precepts that is so frustrating and frightening.

  4. The problem is that I don’t find Romney (fundamentally a Wealthy Wall Street Liberal Democrat masquerading as a Republican) persuasive at all. He’s an executive summary, talking points guy who speaks really fast, doesn’t believe a word of it, and doesn’t particularly care what you think anyway.

    1. He failed miserably as Governor of Massachusetts. His re-elect numbers were scraping the bottom of Boston Harbor.

    2. He is craven. He began running for President half way through that failed term, and took the decision to lie about why he wasn’t running again (political self-preservation) because if he had lost, he’d have been toast for higher office.

    3. He is an unprincipled, rudderless, weathercock who swerves into the wind to suit whoever has the biggest paycheck for him.

    If the Establishment GOP succeeds in nominating Willard, I refuse to vote for him. Not only that, but his probable Nixonian Presidency will be so liberal, feckless, and disappointing that it will finally kill off the current iteration of the Republican Party.

    A Romney administration will be “no change”, and a Liberal nightmare… The election of 2016 will shape up to be a race between the Democrats and whatever Neo-Tory party forms to rule over the rubble pile.

    r/TMF (*note to the world… this is my opinion, not necessarily the opinion of the most gracious hostess of this site.)

    • Not so Optimistic, are we TMF? I don’t think your fears are entirely unfounded but I do think there is reason to believe the reality will be quite dramatically better than what Barry has to offer. In foreign policy almost certainly so. Economically at least meaningfully.

      That said, I hear very little from Romney to make think that he has either the inclination or capability to do anything remotely resembling what’s required at this point in time. Perhaps with a sufficient R majority in Congress and the reality of the current stringent economic imperatives he’ll go more Ryanesque than we can plausibly anticipate today but I wouldn’t want to let my Optimism get the best of me here.

      • I leave the optimism to certain dear old pen pals who seem to feel that there is a pony in there somewhere…

        What I really find ironic in all of the self-referencing importance from the Mittster is that his vaunted experience at Bain capital doesn’t seem to have included any particular not of loyalty.

        Evidently Bain is way happier giving wads of corporate raider profits to the Obummer campaign.

        As has been noted several places before by others: Obummer is standing on the gas to go over the cliff to Mao’s Marxist Utopia at 100mph. Romney is less of a led foot and is proposing we just glide over at a stately 80.

        The facts remain that Santorum basically tied Mittens in Iowa and evidence of 20 miscounted votes might still toss the primary to Rick. Also, Mittens for all the money and time that he spend earned 6 fewer votes than 2008.

        In New Hampshire, a state in which Mitt owns one of his embarrassing number of John Kerry influenced homes…Willard didn’t even crack the 40% mark… last I saw it was like 36%. Which means he really didn’t win New Hampshire either.

        The primaries will continue to be ugly until after the first Super Tuesday gets things sorted out. The Republican Convention is going to make 1964 look pretty pedestrian.

        And if it’s Romney I just leave the Presidential line blank in November.

        r/TMF

    • I cannot disagree with your general verdict on Lord Romneycare of Kolub.

      However, I am rather more optimistic. He is certainly a two-faced flip-flopper, and when the issue becomes one of winning over the American people rather than winning over a party which has lurched far to the right of the general electorate he will predictly flip-flop right back to the centre from whence he emerged. The general election will then be a battle between two centrists with largely similar policies on most important matters.Romneycare’s problem in the actual presidental election (probably fatal) will be whether the electorate can trust the Presidency to someone who is has no actual principles. Probably not.

      But, there is no question that, principles or no principles, he by far the most electable of the sad shower of GOP primary candidates. Most of the rest of them are a million miles to the right of the general electorate and have expressed views on various topics which are weird and off-centre in the eyes of a majority of their fellow Americans.

      • Saying what voters want to hear is what politics is all about, changing the narrative isn’t “flip-flopping”, it’s appealing to constituents. Polilticos don’t change their presentation unless it’s required. B. Hussein Obama told us all about his plan to bring the troops home, they just moved to Kuwait while Afghanistan perks right along. Guantanamo Bay was supposed to be closed immediately but 171 detainees are still held there without trial. It’s gotten to the point where an American must read foreign news media in order to learn what’s happening in the US, because the analysis of changing rhetoric is limited to one side of the argument.

  5. To suggest that the Mitt has met the Moment would be excessive. Of the current field Santorum would seem to be by far the best choice but if Mitt really does appear “inevitable” after South Carolina or Florida there will still be an opportunity and some pressure for someone else to get in. There will be something of “Operational Pause” between Florida and Super Tuesday and at least a very real chance for a bloodbath at the Convention if things don’t “sort themselves out” in a more appropriate fashion. It would all be very entertaining if there wasn’t so much at stake.

  6. I understood Mitt’s soundbite about liking the ability to fire people to be uttered in the context of having the ability to choose his health insurer, and the providers of other services — not that he enjoys pink-slipping the employees of his companies. If you go to a restaurant and get bad food and bad service, you could loosely be said to “fire” the restaurant by never going back. If, however, government mandated that you get your food from a monopoly restaurant or a government-run single provider, you have to take whatever dreck they are serving up. For liberals, however, choice is only good if an unborn baby dies in the process.

    You could probably make the point that Bain Capital performs a useful service, but making money with a corporate vulture may not be the best background to turn around our economy and create jobs where people produce goods or services that are valued in their own right. We are hoping to see less carrion by the side of the road.

  7. iF Mitt hadn’t been enthusiastic at the MassCare signing, with the Dems behind him grinning like they caught a Christmas goose, and being one of the originators of the RGGI carbon capture scheme, he wouldn’t have this kind of trouble.

  8. Bain and others like them are financiers – not capitalists – and what they do happens due to the aspects of the tax code that favorable treat debt over capital. And they are numerous.

    Bain and others likethem primarily target a company, make a purchase with highly leverged funding, and essentially foisting the cost of the purchase on the purchased company. Then comes the cutting to conserve cash, as well as the starving of the firm for funds to finance product plans and equipment. Bain doesn’t run much of anything. It reads financial models and uses debt financing to extract a cash stream back to Bain until it “flips” the business. Some companies are more thoughtful than others. In some cases it may be what the business needed, in others maybe Bain and those like them are just looking for cash. BK which has been in the news lately as a Bain prodigy was done no favors by Bain. Most of the quotes suggest product development pretty much ceased to exist. In the meantime McDonalds is way out in front.

    There is little capitalist activity in a Bain model takeover.

  9. Well, the dastardly critics who said that Lord Mitt Romneycare had no interaction with ordinary Americans have been proven completely wrong.

    We now see that he had lots of interaction.

    He asset-stripped their workplaces and then sacked them.

    And he enjoyed doing it.

    I have no doubt he would agree with JED’s argument that by doing so he has increased the sum total of American happiness.

    (p.s. I wonder how many of the American jobs destroyed by the zero-sum wealth-creation transactions of Bain are now being done by Chinese and other foreigners?)

    Yuk!

    • As did Obama – he stripped assets from bondholders and shareholders and the taxpatyer – gave it to the unions. Laid off a bunch of workers closed plants, and coerced the firms to make investments in technology for which their is no return or profitable market.

      At least Mitt used his and bankers money, not the public purse, and actually hoped to flip the business as a solvent ongoing business as opposed to a company whose major product investment self ignites.

      Paulite t – you should be a Romney fan. It costs you less.

      • Gee, and I had thought that Obama had saved GM with tax-payers money, and then after the money had been repaid and the jobs secured, returned the company to the GM shareholders and management.

        What a waste of our money. We would all be far better off driving down to the dole-office in Chinese cars. (Which would have been what would have happened if GM had fallen into the hands of Bain or some similar outfit)

        • Although Mitt compared his activities with Bain to Obama’s takeover of GM, there is one difference. Mitt dismembered his companies with private capital; Obama used the force of government. Re-Volting, if you asked me.

          • Definitely. Ordinary Americans will resent forever being denied their constitutional right to have half the US motor industry closed down.

            • Since the troops returned home from the Spanish-American war, over 2500 different car manufacturers have gone out of business. Showrooms no longer feature the likes of the Auburn, Cord, Hudson, Rambler, Studebaker, DeSoto and scores of others. It’s called creative destruction. The bursting bubble of 2007 was an ideal opportunity to cleanse the economy of malinvestment and poorly run companies. Instead, the “progressive” element insisted on a return to the status quo ante, propping up failing manufacturing paradigms and a re-inflation of housing prices. We are fortunate to be eye-witnesses to colossal and disastrous government interference that will haunt generations to come.

              • And don’t forget that Bankruptcy reorganization has been done successfully many times without an actual government takeover.

                What is even more disturbing than GM is the recent Bankruptcy filing of Hostess Brands, the purveyors of Twinkies, Hostess Cupcakes and Wonder Bread. If you can’t make money selling sugary, high calorie treats to Americans, this economy is really in bad shape. Maybe Michelle Obama can step in to save Hostess. (Oh, wait. She was trying to put them out of business.)

        • GM and Chrysler will fail in the long run. The present (and privious) administration’s actions mirror the British efforts to save their bloated, over priced, under productive automotive sector 30 years ago. It was and will be a total failure.
          The bailout was and is a way to find a softer landing for a
          democratic fund raising and voting ally.
          The GM bondholders will never see a dime of their investment. Bondholders include ordinary folks, teachers and municipal union funds, etc. etc. The taxpayers have not been fully repaid and never will be repaid fully.
          I have purchased Chevrolet and GM trucks for my company for 30 years. As our trucks age out, I am replacing them with Isuzu and Toyota trucks. I assure you, I am not alone. The backlash against Govt Motors is quiet, but happening. The Japanese brands are a better value, last longer, and the dealers are much more responsive in many ways.
          I admire Ford Motor Company, but their prices are not competitive. I do not feel like subsidising the UAW. They will be joining the United Steel Workers in a decade.

          • The Japanese auto-industry is 100% unionized. So whatever the problems of its US counterpart, unionized employees can’t be the only cause. My guess is that because the rewards provided by the financial services sector are so disproportionate, too many of our very bright graduates are going into hedge-funds and outfits like Bain rather than engineering, design, and manufacturing industry generally. It is no co-incidence that Germany, a nation that puts a much higher value on engineering innovation than we do can produce autos which are so much better than anything produced by our own auto industry. This saddens me.

            • The Japanese can make money in America with American labor — but their labor is not unionized in any of their facilities, so far as I know. There was a joint GM-Toyota plant in California that was union but they had to close it down as economically unviable.

              • Given that most Japanese cars in this country were not assembled here but were made in Japan with unionized labour and imported, I think it rather proves my point.

                The other problem is that our auto industry seems to lag behind the Japanese and Western Europeans in innovation. We are failing to attract our best and brightest into manufacturing industry. I am not one of those who is blase about the decline of our country as a manufactured goods. I accept that we will never compete with teh Chinese in mass-produced non-innovative products, but we have also lost our lead in a raft of new and vital technologies. We are behind the europeans, not only in auto technology, but in nuclear power, power transmission and management, and some aerospace and communications technologies. I don’t believe that income from asset-transactions is a substitute for the real wealth creation derived from development of the technologies of the future.

                Bain, not Mormonism, will sink Romney in the general election.

            • Japanes plants in the US are 100% non union.

  10. Listening to Rush.. at least as long as I can stand it… Looks like Rush has chosen. And while he won’t “endorse” it sounds pretty much like El Rushbo is going in the tank for The Mittster…

    As expensively bought razor-thin “victories” trickle by. Expect Romney to be sounding a harder line… of course by Labor Day, he’ll be awarding himself the Samuel Gompers Plaque of Excellence….

    No Rush, you should have picked one of the “real” conservatives in the race and started boosting him (or her). The phony “healthy competition” angle has destroyed the majority Conservative side election year after election year, since the Establishment just divides and conquers. And then equivocates, loses its limited courage, and loses to the Democrat in the general election.

    But like I said, this might be a Nixon year, and we know what a great president Tricky Dickie was.

    The scientist gimmick with the Nuclear Clock whatis just chopped a few minutes off the clock. We are closer to nuclear war, in their opinion.

    Well we need a clock like that, where midnight signifies the end of the Republic…. It’s just ticking faster and faster like a cheap wind up running fast.

    The Dems are going to destroy Romney, they have been planning to since 2009. The Establishment and the Conservative media just walked right into the trap.

    r/TMF

  11. Real conservative? Where. I haven’t seen one. Romney isn’t, neither is Perry, Gingrich, not even Santorum. Paul is a crank who gets closest with his limited govt push, but whose foreign policy views will get us all killed.

    Rush was also blasting Romney today as well – so I think Rush feels the same whipsaw we all feel. No one excites us. And as much as we dislke Obama, it helps to be motivated to vote FOR somebody, not just against someone else.

    • The problem is that your idea of a “real” conservative wouldn’t have a prayer of being elected.

      • The fact is that there is something in excess of a 60% majority which supports generally conservative economic policies (not to mention adequate defense funding and a much more robust foreign policy than practiced by this administration).

        The American people are much better able to decide how to live their lives, have policy views far superior to most Democrats (and many Republicans). It is only in the realm of “politics” as evidenced by Obama’s stratasheric approval ratings that they seem to have much less of a clue.

        <it

        • That said and the education and media propoganda notwithstanding the right “real conservative” could blow the doors of this abusrd and thoroughly contempible presidency but it remains to be seen wether such is currently in the race or will enter.

    • Well, one can only be so picky. Santorum’s record on economic issues is far from flawless but he is even in this realm a sufficiently “real” conservative and it would be impratical in the extream to demand something better.

  12. “Bain” is an old english term for poison. I wonder if this choice of name was a snide cynical joke on the part of Lord Romneycare?

  13. Well, I definitely didn’t hear Rush shilling for Romney today. He was — rightly, I think — taking the other candidates to task for their mindless-populist demagoguery against Bain Capital.

    JEM has a really good point, which is that the US tax code somewhat artificially incentivizes Bain’s methods (and of course the methods of other such companies). I don’t know that it’s necessary to demonize tax law or this condition, both of which can be favorable to small businesses. I would point out, on the other hand, that small businesses wouldn’t need the tax advantage for debt so much if they didn’t have to spend what they do on regulatory compliance, fees, and taxes.

    At any rate, there’s one sense in which Bain is a kind of profiteer on margin, like a day-trader — or, in a more complete sense, a property-flipper. Bain could also be seen as filling a role like a commodities speculator, who ensures constant demand for a commodity by risking investment in its futures, and takes a profit from doing that.

    Those who profit from margins over time are often demonized in populist theory. But there would be a lot more uncorrected “failure” in the economy if there were no such actors. Without oil speculators, for example, we would in fact experience shortages at the gas pump, and probably pay more for gasoline because we wouldn’t benefit from the fungibility of the commodity in a central market.

    Where I think most small-government conservatives have a problem is with government using taxpayer money to issue guarantees that make struggling businesses more attractive to business-flippers like Bain. If you want to make money off a failing business, you should do it without a safety net paid for by the taxpayers.

    It’s one thing for Romney to take the government guarantees as he finds them when he’s running a business. But now he’s running for president. I want to see a different perspective from him. I’m not interested in one that represents the “interests” of the taxpayers, as if we are silent partners in a joint business-government venture. I want to see a perspective that emphasizes the interests of liberty, minimal government, respect for the Constitution — a perspective that says “Government shouldn’t be doing this at all.” And I don’t.

  14. I notice with wry amusement that your exception to mindless populist demagoguery only applies when it relates to the people you hate. Your tolerance of MPD is infinite when it spouts from the orifaces of Fox hysterics, and the other off-center weirdos of the far-right. Your recent warming to Lord Romneycare of Kolub and Bain seems to have been prompted by your fatalistic realization that His Lordship is almost certain to be the general election choice of registered Republican voters.

    The US tax-code doesn’t “incentivize” asset-stripping and the other unsavoury activities of Bain and Co. The tax-code is strictly neutral as between these sort of activities, and wealth and job-creating economic activity. I would have thought that you would be four-square behind such a neutral stance. Or perhaps you would like the government to intervene to protect wealth-generating industries from the predations of people like Romney who paid themselves zillions from transactions that created zero net wealth? Face it, Romneys fortune came from asset and job-stripping. That is what predatory financiers do. It is essentially what got us into the present mess – financiers paying themselves mega-buck commissions and bonuses from transactions that created no net increase in wealth. As someone who spent his entire working life in the real productive economy I would welcome a rebalancing of the tax code to disincentivize the activities of people like Lord Romneycare.

    Incidentally, you seem to be completely confused between the economic value of insuring against risk, the risk inherent in most productive enterprise, and the sort of thing His Lordship and Co were up to.

    • “Asset stripping” is selling various parts of an enterprise individually because the parts are more valuable alone than in sum. In order to do this, the seller must own the enterprise, someone must have sold the business to the asset-stripper. If one has a nice bicycle, he is usually able to dismantle it and sell the various components for more in total than the complete bike is worth. Is this somehow immoral? Nobody owes anyone a job, jobs do not exist to provide employment and income. They exist to facilitate the production of goods. There are no longer braiders of buggy whips or milk maids or log drivers or slide rule manufacturers. At one time almost 90% of the US population was employed in agriculture. Would it have been right to subsidize the manufacture of slide rules that could no longer compete with electronic calculators? Or would it make more sense to dismantle the slide rule manufacturing facility and sell the production equipment to those that could use them in other businesses? And should the slide rule cutters, polishers and printers still be employed making a product that no one wants?

  15. How noble!

    Unfortunately, Lord Romneycare’s efforts were not directed towards deploying underutilized assets to more productive ends. It was solely directed towards realizing cash and redeploying it to his own bank account.

  16. Most Japanese cars sold in the US are made in North America:

    http://content.usatoday.com/communities/driveon/post/2011/12/seven-of-out-10-japanese-cars-made-in-the-usa/1

    • Yes and that business decision by the Japanese auto makers was largely a result of US government “protection” of the unions by high tariffs on completely manufactured automobiles. Parts don’t get the high tariff… and end up being cheaper to ship, anyway.

      So… Add low taxed major parts, some parts being sourced from US manufacturers (bumpers, lights, glass, bulbs, fuses… other injection molded plastic body parts…) then locate in a right to work state where you can pay assembly line workers a decent wage and comp package, but one that is economically viable… and viola!!!!

      US manufactured (assembled) Japanese, Korean, and German Cars. Welcome to world car!

      BTW the new Volkswagen Passat was actually designed in the US and most of its parts are being manufactured here.. so much so that it will be considered an American made automobile.

      I just wish Volkswagen had bought up the remains of Chrysler after an orderly bankruptcy…

      Romney will be nominated. His VP will be McDonnell, and they will probably lose in November, and even if they survive the onslaught of the OWS/Axelrod engineered anti-Romney campaign… There is absolutely no guarantee as to how he would run things. My guess is a Nixon redo.

      r/TMF

    • Not made – assembled, JED. A very different thing. In fact much of what goes into vehicles made by US companies is manufactured abroad too (And to be fair, some VW components come from Brazil and Indonesia).

      The VW Passat was most certainly NOT designed here. All Passat models have been manufactured and marketed in Europe before coming onto the US market. VW designs all its models in-house in Germany. Sister companies (Skoda and SEAT) do bodywork design and produce clones of VW models in the Chech Republic and Spain using the VW floor-pans and mechanicals.

      • Oh yeah .. tell that to the Herndon, Virginia Volkswagen of America design team that spent months in Germany working with Volkswagen to make the Passat more agreeable to the US market…

        Tell that to the Volkswagen of America automobile plant workers in Chattanooga, Tennessee who will be building it, and the US supply chain that will be supplying the parts.

        Yup.. there will be quite a few coming from Germany… lots from Mexico, and other nations as well. But we won’t tell all of those American auto workers and managers that since obviously they really don’t have jobs…

        All automobiles are now world cars, all automobile manufacturers source parts and sub assemblies from all over the world.

        Chrysler builds cars in Ontario, and Mexico.. GM builds them all over the world.

        The ever notice that several Fords look suspiciously like Mazdas, including the Fiesta and the Mazda3 5 door look like long lost twins?

        The Edge… The Escape…

        [insert door slam, here…]

        • Oh, a US design studio did some work on making cosmetic changes to an established european model to bring it in line with US auto-market aesthetics.

          Ford owns Mazda, just like Renault owns Nissan and shares components and floor-pans. The relevant Mazda models are based, not on indiginous US Ford models, but on German-designed european models like the european Fiesta, and Mondeo. BMW, Mercedes, and Ford of Germany are fully unionized. However, the success of the German auto-industry is not due to unionization, it is due to hard work, organization, efficiency, and a society that values engineers and engineering. We (like our cousins, the Brits) have put too much value on the financiers, and have allowed our indiginous manufacturing industry to atrophy.

          We need to reappraise and regain our pre-eminence in engineering.

          • We are all engineers now. Duke’s Pratt School of Engineering (as reported Bloomberg News and other publications) reseached the claims of an engineering shortage compared to China and India.
            Engineering degrees in those countries have a very elastic meaning. 1 and 2 year “engineering degrees” are very common which include Auto Mechanics and softwear technicians and many other similar positions.
            If we include local community college “Engineering Degrees”, we are swamping the world with “Engineers”.
            The Duke study found the number 1 problem with 4 to 6 year engineering degreeded folks is (you guessed it) un-employment.
            If we double the number of engineer graduates from major schools, we can expand un-employment payments to subsidise them. And as we all know un-employment payments create wealth.

  17. Not so. We had constant difficulty trying to find indiginous engineers and CAD designers for an operation making delrin and torlon bearings. We had to recruit in Asia and elsewhere. The situation has worsened if anything since I retired in 2007.

    • Back up your comments with a fact you can prove Paul.” Not so” is not a convincing argument.
      Sounds like your company was too cheap to use a 1st class personnel agency.
      Simply because your company failed at basic personnel targets only means your company failed at basic personnel targets.

      • This company remains a niche leader and exporter of high-tech plastic and composite components. There is a US shortage in certain specializations in materials-engineering and metalurgy. In 2001 we were in the process of diversifying from injection moulding into more high-tech, higher value-added, products and processes. We had to bring in people with the necessary expertise from Korea, Italy, and France. The Korean is still here to my knowledge.

        The problem isn’t that this country hasn’t the people. It is that too few of our best and brightest are going into science and engineering because the rewards are so much better in finance and law.

        • Can you prove any of that Paul?????????

  18. Did Mitt Romney And Bain Plunder Howard Hughes?


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