Attacking Romney for Bain

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Rick Perry was calm, yesterday, but his words were Old Testament wrath. This was not the capitalism he had been defending all his life.

He spoke derisively of the way companies like Romney’s Bain conducted the asset acquisition that had cost thousands of workers their jobs, in many cases throwing entire families into a poverty they had never thought possible.

They’re vultures that are sitting out there on the tree limb, waiting for the company to get sick, and then they sweep in, they eat the carcass, they leave with that, and they leave the skeleton.

vultures, madmikesamerica.com, bain, gingrich, perry

The day before, like a prophet crying in the wilderness, Newt Gingrich made the road straight in preparation of the sort of capitalism he knew. He spoke on Fox News.

I’m for capitalism. I’m for honest entrepreneurs investing, I’m for people creating businesses. Now, Callista and I have created four small businesses in the last decade, I get it. But I’m not for looting.

Bain often engaged in leveraged buyouts that had both candidates breathing fire. That’s where a division is made between the assets and liabilities of a company. The assets are sold off, sometimes for millions in quick profit. The liabilities are left to languish. Bills are unmet, obligations are cashed in for pennies on the dollar, workers are left pounding the pavement. As long as Bain did not carry the cost, and they didn’t, they could ignore it, living happily on the other side of the ledger.

Both Gingrich and Perry spoke movingly, and with a sort of primal, barely restrained fury, about the real life costs that the GOP frontrunner had generated in his mad rush to financial glory.

From Newt:

There’s a company in The Wall Street Journal today that Bain put $30 million into, took $180 million out of and the company went bankrupt. And if you have to asked yourself, you know, was a six to one return really necessary, what if they only take $120 million out, will the company still be there with 1,700 families still have a job?

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.

From Perry:

Instead of trying to work with them to find a way to keep the jobs and to get them back on their feet, it’s all about how much money can we make, how quick can we make it, and then get out of town and find the next carcass to feed upon.

As conservatism struggles to find the Adam Smith supply and demand roots from whence it sprang, conservatives, at least some of them, pine for a free enterprise that does not acquire wealth by destroying homes and families, that does not make profits by throwing folks into poverty.

Romney does not share the simple Smallville virtues, the Andy of Mayberry care for others. His ruthlessness forced real people to the ground. It was an outrage.

Here’s the problem with the rage.

Adam Smith, followed by generations of conservative advocates, never envisioned a capitalism powered by a concern for others. His vision never even depended on the virtue of its participants. The entire idea of unfettered capitalism was that unregulated individuals, all operating in their own interests, would create a world that benefits people in general. The selfish, power hungry, megalomaniac pushes for greater profits. He lowers prices, finding inefficiencies to root out, thus benefiting investors and customers. All that benefit is a predictable inadvertence: a happy, foreseeable accident.

The is the definition of Adam Smith’s invisible hand.

In fact, the minor leader, the one person brain trust of the Congressional wing of the Republican Party, Paul Ryan, is an avid follower of the late Ayn Rand. She not only denigrated unselfishness, she wrote a book about it, devoted herself to the cause. Selfishness was a virtue.

Mitt Romney followed that imperative. He had no moral obligation beyond following the law, refraining from personal dishonesty, and making a profit. To follow any other motive would have been the equivalent of corporate theft. He is right, while defending himself, to point out that his fellow conservative Republicans are arguing against the foundations of capitalism. They are. They argue against the flow of capitalism Newt directly sponsored while Perry whooped and hollered his support from Texas sidelines.

Mitt Romney is the creation of contemporary conservatism.
Newt Gingrich is his father.
Rick Perry is his uncle.

The moral obligation in business, beyond profits and a minimal sense of primal ethics, is to follow the law. That gives us the way to channel the unquestionably powerful force of human greed. A more realistic approach for Perry, a more honest approach for Gingrich, would be to stop attacking Romney, or anyone else playing successfully by the rules, and attack the game itself. If you don’t like the low blows, the jabs, the fouls, then make them violations and then enforce the rules.

The invisible hand of Adam Smith sometimes hurts countless people in ways Perry and Gingrich, in their eloquence, are now bringing to the American view. Sometimes the invisible hand works best if joined by a very visible hand.

We already require employers to do some things they would not otherwise do. They pay unemployment compensation, they contribute a portion of social security. They have safety standards, a 40 hour week. If workers should be treated more fairly, or consumers protected, or communities safeguarded, that is the path to follow.

If Perry and Gingrich want to modify the playing field: to make the ruthless jab to the throat and the kick to the kneecap violations against a well considered rule, the debate will become reasonable and constructive. How can we regulate productively while not endangering the entrepreneurial spirit?

Answering that question in a meaningful way will put conservatives like Gingrich and Perry, and conservatism itself, on the side of history, on the side of ordinary people. In fact, there is already a word for conservatives who embrace that sort of thoughtful concern.

We know them as “liberals.”

You can also see this article at FairAndUNbalanced.com

About Post Author

Burr Deming

Burr is a husband, father, and computer programmer, who writes and records from St. Louis. On Sundays, he sings in a praise band at the local Methodist Church. On Saturdays, weather permitting, he mows the lawn under the supervision of his wife. He can be found at FairAndUNbalanced.com
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Joe Hagstrom
12 years ago

If I could add to your fine post, “leverage” is borrowing. Mitt, while decrying government borrowing, used borrowing to fabulously enrich himself.

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