The right eloquence needs no bell to call the people together and no constable to keep them. ~ Emerson

Friday, January 13, 2012

Vultures In Quiet Rooms

Romney Won’t Convince Voters He Isn’t One by Refusing to Talk About It

Republican Presidential candidate Mitt Romney scored a striking precedent by co-winning the Iowa Caucuses and then winning the New Hampshire Primary by a substantial margin. Romney’s fellow candidates continue looking for barbs to jab at him and the somewhat hapless Rick Perry seems to have found one that sticks. It has to do with Romney’s tenure as CEO at the venture capital firm Bain Capital.

“I understand the difference between venture capitalism and vulture capitalism,” Perry told a crowd in South Carolina. “I happen to think companies like Bain Capital could have come in and helped these companies if they were truly venture capitalists, but they're not. They're vulture capitalists . . . They’re vultures that are sitting out there on the tree limb waiting for the company to get sick, and then they swoop in, they eat the carcass, they leave with that and they leave the skeleton.”

Vulture Capitalists – watercolor
by Canadian-born artist and
illustrator Anita Kunz, 2001
Newt Gingrich, still holding a vendetta against Romney attack ads that sank his chances in Iowa, was quick to agree. “I think there’s a real difference between people who believed in the free market and people who go around, take financial advantage, loot companies, leave behind broken families, broken towns, people on unemployment.” A super PAC backing Gingrich plans to spend $3.4 million in South Carolina airing a documentary that rips Romney as “more ruthless than Wall Street.”

Romney’s initial reaction to such criticisms has been to condemn them as unfair to him personally but also for placing “free enterprise on trial.” Other conservatives are equally uncomfortable with the larger implications behind this line of attack against Romney and jumped to his defense. “It is bad enough for Barack Obama to blame folks in business for causing problems in this country,” bemoaned Rick Santorum. “It’s one other thing for Republicans to join him.”

“That is the miracle of free-market capitalism,” explains Washington Post conservative columnist Jennifer Rubin. “The pursuit of profits – by creating real value – benefits the rest of society through better products and services . . . and jobs and higher incomes.” Her colleague Kathleen Parker asks, “Since when in a free, capitalist nation is it a sin to buy a company and turn a profit?”

It is true that some of the criticisms against Romney on this score have been over-the-top and even dishonest. In particular, the much cited Romney quote, “I like being able to fire people” was taken completely out of context. The candidate was clearly not expressing his economic/business preferences but rather advocating choice in selecting healthcare providers. The Obama campaign will come to rue any attempts to make mileage out of this quote in the general election.

However, Romney has also been over-the-top at times about his business acumen, particularly as a job creator. During his 2008 candidacy, Romney tended to focus on his tenure as Governor of Massachusetts. However, that period of Romney’s career is verboten in 2012 because it invites unwanted comparisons between Obamacare and Romneycare. Therefore, Romney has chosen to stress his private sector experience, including his time at Bain, this time around.

By doing so, Romney “invited voters to look at what he did there and determine if they believe it was both (a) admirable and (b) germane to the Presidency,” as Jonathan Last points out in the Weekly Standard.

The presumption that experience as a CEO translates to Presidential competency is questionable. Robert Samuelson of the Washington Post believes “Romney better understands – and identifies with – business” than President Obama.” However, he concedes, “Whether this becomes a political advantage is unclear.” New York Times columnist David Brooks concurs. “If you look back over history . . . there’s little correlation between business success and political success.”

Brooks’s colleague, Paul Krugman, attempts to define the crucial difference. “Even giant corporations sell the great bulk of what they produce to other people, not to their own employees – whereas even small countries sell most of what they produce to themselves.”

While Romney misleads by portraying himself at Bain as some superhuman job creator, his critics equally overstep categorizing him as a job-killing vulture. “Private equity doesn’t consciously strive to create jobs,” admits Samuelson. “But it’s also true that employment practices at companies backed by private equity don’t differ dramatically from other similar non-private-equity-owned companies.”

The intensity of the pushback against criticisms of Romney’s time at Bain derives from recognition by Republicans that this charge could come to haunt their likely nominee. Conservative blogger Erick Erickson at RedState acknowledges far-left liberals are not the only ones who view venture capitalism as a colossus of greed “There are, frankly, a lot of Republican primary voters who view it that way too.” The Wall Street Journal’s Fred Barnes calls the attacks “an explosive issue . . . the greatest threat to [Romney’s] quest for the Presidency.”

Free markets are, by their nature, messy things. There will always be room in their margins for venture capital firms, like Bain, to perform necessary and useful cleanup. The key term here is “margins.” In the recent past, such firms have moved out of the margins to become center stage players. They generate vast amounts of wealth not by creating products (and value) but often by gaming around the rules under which markets operate – rules often put in place by the federal government they claim to want to shrink and whose regulations they wish to curtail.

As E.J. Dionne observes in the Washington Post, “Capitalists of Romney’s sort never want to acknowledge how much their ability to make money depends on what government does.”

In many ways, Romney is lucky to have this issue raised now and by his fellow conservatives. It should blunt the force of the charge when Democrats raise it again in the general election. However, this assumes he uses the opportunity to develop a politically viable defense. His initial efforts at condemning critics as anti-capitalist are unimpressive.

During an interview on NBC’s Today Show, host Matt Lauer challenged Romney whether he genuinely felt any questioning of Wall Street and financial institutions, as well as the growing U.S. wealth gap, were out of bound. What about basic fairness?, Lauer questioned. Romney refused to budge. “You know, I think it is about envy. I think it’s about class warfare,” he replied. “I think it’s fine to talk about those things in quiet rooms and tax policy and the like. But the President made it part of his campaign rally.”

Quiet rooms?

During the height of the Iraq War and its counter-protests, many argued that dissenters should get off the streets and into quiet rooms. They insisted that criticizing the war was tantamount to a lack of patriotism, dishonoring the troops, and providing aid and comfort to terrorists. The latest mantra from conservatives seems to be that calling bad capitalist practices into question is synonymous to questioning capitalism. It is the politics of fear and jingoism all over again.  Personally, I do not think Romney is a vulture. Romney’s practices at Bain bother me far less than his current contention that they are not legitimate topics for discussion and raising them is essentially un-American in nature.

Perry has backed off the term “vulture.” However, he refuses to concede the matter as a non-topic. He told FOX News, “This process is about winnowing out individuals and testing whether or not they're a flawed candidate or not. And I will tell you when people can point to where you made a quick profit and kicked people out of their jobs, that is an issue that has got to be addressed.” Gingrich adds, “Criticizing specific actions in specific places is not being anti-free-enterprise. And raising questions about that is not wrong.”

As Romney’s defenders point out, capitalism is not a pretty thing sometime. Neither is democracy, for that matter. So what is the harm in discussing them frankly? American exceptionalism holds little value if gained by sweeping its limitations and weaknesses under a rug or by hiding its vultures in quiet rooms.

1 comment:

Woolley said...

Well, another great piece by The Bell. What Bain did was to maximize their gain at whatever cost to the company and the community it took to make money for themselves. This is nothing more than looting. Anyone who agreed to let them come in was likely part of the grease job. A hostile takeover usually happens to publicly traded companies where a Gekko type identifies low stock prices relative to book value or liquidation value. This type of business activity was very common in the 80s and 90s. Many fortunes were made by investors poring over balance sheets looking for undervalued assets relative to market caps. In California, one company was Pacific Lumber in Mendocino County. They held vast tracts of land with giant redwoods on them which had never been harvested because the owners just could not bring themselves to cut down these gorgeous cathedrals of nature. Well, a man with tons of dough bought them up for a song and then started cutting down trees. Old growth trees that were hundreds of years old. People started tying themselves to giant redwoods, sat in tree tops for months and protested them in town. It was really quite disgusting. That is how I view what Romney did to get rich. Rape and pillage with no other motive than personal gain. Is it capitalism? Sure is. So was slavery.