Friday, January 13, 2012

Mitt's Bain Pain

Mitt’s Bain Pain

New Hampshire is now in the books.  Put it into the fairly big win column for the “Massachusetts Moderate.”

Nice little state; excellent place to visit, green and pleasant, but now it’s time to move on, pack up the SUV, stow away a few trinkets and mail a postcard, and head South before the winter sets in.

What did we learn in New Hampshire?  Well, old rocker Ron Paul still has a rabid fan base. Perry continues to show that Texas beef doesn’t travel well (maybe pack in dry ice before shipping?)  Huntsman is bright, articulate, experienced, handsome, and completely without any chance of getting the nomination.  Santorum’s “Faith and Family” needs a larger congregation. Newt is really, really mad (I’m not sure this is a new revelation.)  And Mitt, on top of running a very effective ground game, is a vulture capitalist who stripped assets from vulnerable companies, threw people out of work, looted their pensions, and had the Sherriff of Nottingham evict them from their modest (but dignified) homes and lives.

Who would have thought that the general election campaign would have started this early? Typical Lib-Dem criticism, running down free enterprise.  Class warfare.  Regrettable, but what can you expect from a foreign-born unbeliever in American Exceptionalism who wants to install European-style socialism and make us eat Brussels’s Sprouts?  For breakfast, with organic skim milk.

Even more diabolically, in a remarkable act of political ventriloquism, those nasty words all appeared to emanate from the mouths of Newt, Rick, and Sarah (Sarah, oh, no, not Sarah!!!) No wonder Stephen King sets his novels in New England; a cold, creepy place of long shadows, colonial-era graveyards, and fading towns filled with closed factories and the odd Kenyan shaman.

There’s a point in most of the horror genre where someone (usually a clever child or astute teen) starts to put the pieces together.  Our appealing hero/heroine shows great presence of mind and pluck, and mobilizes the town to fight off evil.  Since this is story about the GOP, that role is apparently has been taken by the Editorial Board of the Wall Street Journal and Karl Rove, with the financial community serving as the town-folk, which, admittedly, is a little less romantic, but someone has to expose the truth.

The facts are actually pretty straightforward.  Mitt was a principal in Bain Capital.  Bain looked for undervalued assets, bought them, financially restructured them, loaded them with debt, paid itself handsomely, sometimes fixed them up and made them more efficient and profitable, and at other times engaged in “creative destruction” that used the mulch of the deceased to grow something new and more profitable.  Bain was successful and Mitt played an important role in that success. Both made a great deal of money.

Well, as we say here in New York, “it’s a business.”  It’s fair to ask, what type of business?  The economist Saskia Sassen has been critical of the emergence of an “extractive” economy in the US, where a few people control large assets and liquidate them without providing collateral benefits to the community.  At least some of what Bain did is exactly that.  They found an undervalued asset and extracted as much out of it as they could before liquidation. 

But our economy is productive when we do more than extract-it’s productive when we add value.  You can add value by inventing and selling an iPhone, you can add value by digging it out of the ground and selling it, and you can add value by rearranging the relationships of assets and people and capital.  It’s simply a question of what the collateral effects are.  Mitt famously said corporations are people, but, in truth, corporations have no immortal soul-they exist to make profits, and to the extent those profits benefit the communities they do business in is collateral to their existence.  Also collateral is the negative impact of plant closings and insolvent pensions.

So, are Newt, Rick and Sarah right?  Is Mitt a vulture, preying on the carcasses of weak companies and, having engorged himself, leaving their bleached bones by the side of the road?  Or, is that characterization what Mitt calls “the politics of envy.”

The answer is not relevant as it relates to the efficacy of a business model.  But it is relevant to the politics of 2012, and has real repercussions for the country afterwards.  What would a Romney Presidency look like?

The conservative columnist David Brooks sometimes talks about “communitarian conservatism” one that is not just reflective of conservative social and economic values, but also contains a moral and economic safety net rooted in community.  The community enforces a code of behavior, but also supports and protects.

That is not what Bain did, and it’s not Bain’s job to do it.  But Bain isn’t running for President, Mitt is.  And Mitt, for all his talk about his fealty to conservative values and his love of Ronald Reagan, is basing his candidacy on his private sector experience and managerial skills.  It’s institutions, and not people, that are his strong point. Ironically, for all the flag-waving, he’s exactly the type of person who would fit well with the EU’s technocratic leadership.

Which leaves us with an uncomfortable question, and one having very little to do with the “politics of envy.”  We aren’t picking a CEO; we are picking a President.  If Mitt’s our man, are we getting a “communitarian conservative” or one who is detached from ordinary people-the same ordinary people most likely to be the collateral damage of “creative destruction.” 

Since none of us (except maybe Mitt) know the answer to that question, I guess we head off to South Carolina, where the climate is balmy, the Palmetto Bugs large, and the politics often scorching hot.