“Capitalism Comes Under Fire in Republican Primary Campaign”, says the National Journal – and sadly – they’re right.
The Democrats started it, and now Republican rivals are piling on. Mitt Romney is suddenly playing defense about his career as a venture capitalist–and in a Republican primary campaign, of all things.
The attacks on Romney’s Bain Capital career from fellow Republicans may be coming too late in the game to knock him off his path toward the nomination. They may also be ineffective in a party that lionizes capitalism and the business sector that propels it.
Republican candidates for the presidential nomination are doing themselves, their party and their country a disservice in their attempts to derail future President Mitt Romneys path to the nomination. Jon Huntsman, Rick Perry and especially Newt Gingrich (who has flip flopped on his pledge to not run negative ads) and his PACs have all hammered Romney on his very reputable work at Bain Capital, a large investment firm.
The issue of criticism is that Romney was a destroyer of lives because his company, Bain, fired people when it invested in them. Well no shit it did. A legitimate criticism would be if Bane gutted and crushed companies, stomping on the little guy while padding their fat wallets and using the money to snort coke off of strippers ass cracks. That is exactly the claim (minus the last part), of course, being made by 1 expected culprit (MoveOn.org) and one not so expected culprit: Newt Gingrich.
The Wall Street Journal delves into the numbers of the Bain record and things come out pretty exact to how Romney has described when asked about it:
Mr. Romney has told potential voters how at Bain he helped launch or rebuild companies such as Staples Inc., Domino’s Pizza Inc. and Sports Authority Inc., creating more than 100,000 jobs.
His rivals have sought to turn his Bain tenure against him. Rick Perry has run an ad saying Mr. Romney “made millions buying companies and laying off workers.” Newt Gingrich has said Mr. Romney should “give back all the money he’s earned from bankrupting companies and laying off employees over his years at Bain.”
Mr. Gingrich laced into Mr. Romney at this weekend’s debates, and a group associated with the former House Speaker plans to release a 28-minute documentary blistering Mr. Romney’s Bain tenure. Meanwhile, on ABC on Sunday, Obama strategist David Axelrod criticized Mr. Romney as “a corporate raider.”
Mr. Romney describes job losses and bankruptcies as an inevitable byproduct of the capitalist system, and has said that in some cases, eliminating some jobs may save the rest of the company. In response to Mr. Gingrich, Mr. Romney said: “Doesn’t he understand how the economy works? In the real economy, some businesses succeed and some fail.”
Asked in an interview about Bain’s bankruptcy and failure rate, Mr. Romney said that in buyout deals, “our orientation was by and large to acquire businesses that were out of favor and in some cases in trouble.” He added that Bain wasn’t the type of firm that stripped companies and fired workers, but instead, “our approach was to try to build a business. We were not always successful.”
I give MoveOn a pass cuz that’s their job: to smear Republicans as evil money hungry heartless crooks. But WTF is Gingrich’s excuse for this bullshit?
This is a stupid and losing issue for all who attempt it because what you’re essentially doing is attacking Mitt Romney for having the audacity to believe in and take a chance on investing his money into struggling companies and doing a kickass job at it (Bain has a 3 to 1 record of succeeding in rescuing said struggling companies).
James Pethokoukis reminds the GOP field how capitalism works:
Of course, Romney and Bain weren’t in the game to create jobs. They were in it to make money for their investors and themselves. Then again, the same would go for Bill Gates, Steve Jobs, Michael Dell, Warren Buffett, and just about every other successful entrepreneur and investor you could name. But that is the miracle of free-market capitalism. The pursuit of profits by creating value benefits the rest of society through higher incomes, more jobs, and better products and services. This isn’t “destructive creation”—like, say, crippling U.S. fossil fuel production before “clean energy” sources are viable—but “creative destruction” where innovation and efficiency sweep away the old and replace it with a more productive and wealthier society.
This is one my favorite examples is one that Pethokoukis also shares as one of his:
Through this constant roiling of the status quo, creative destruction provides a powerful force for making societies wealthier. It does so by making scarce resources more productive. The telephone industry employed 421,000 switchboard operators in 1970, when Americans made 9.8 billion long-distance calls. With advances in switching technology over the next three decades, the telecommunications sector could reduce the number of operators to 156,000 but still ring up 106 billion calls. An average operator handled only 64 calls a day in 1970. By 2000, that figure had increased to 1,861, a staggering gain in productivity. If they had to handle today’s volume of calls with 1970s technology, the telephone companies would need more than 4.5 million operators, or 3 percent of the labor force. Without the productivity gains, a long-distance call would cost six times as much.
Pethokoukis notes: “Romney’s career as a free-market capitalist? No apologies necessary.” – which is fun because “No Apologies” is also the name of Romneys book.
REMINDER: Crony Capitalism = Bad. Traditional American Capitalism = The best system on the planet.
Like I said – Shame on Huntsman and Perry for jumping on this issue too, but Gingrich is the most damaged in putting all his chips on this “stupid” attack line:
And finally, there is Sheldon Adelson, longtime friend of Gingrich an major donor to Republican causes. Did he intend his $5 million for the super PAC to be used to attack capitalism? Somehow I get the sense this was not what he had in mind.
The entire effort has the potential to put the final nail in Gingrich’s presidential campaign coffin and cement his reputation as the most reckless man in politics As Tim Pawlenty, a Romney supporter, said today on the topic of Bain, “It’s an old issue, and first of all, it’s the Democrats’ issue, it’s the issue that Barack Obama comes out after Mitt on. The Democrats have brought this out for years. For Newt or other Republicans to be attacking private enterprise in this way, I think, is really just embracing the Democrats’ message. It’s, unfortunately, not what Republicans should be doing.” But Gingrich is above his party. Remember, he’s Churchillian! (You may recall when there was push back on his first anti-Bain attack, Gingrich retreated, saying he should not have phrased his criticisms in that way.)
This is the Gingrich effect writ large: Creating havoc, blemishing careers and giving the Democrats plenty of laughs. Gingrich is likely to do poorly tomorrow as will Perry (making two rotten outings in a row for both of them). There is no appetite in the GOP for these candidates or their brand of anti-capitalistic pandering. The historian from Freddie Mac and the crony capitalist from Austin do not, we clearly see, embrace the Tea Party ethos. The referendum on this entire gambit should be swift. Whether it ultimately helps Romney or not, Gingrich is a reminder of the very worst in American politics.
Fun bonus? The New York Times reports that Newt Gingrich both invested in and worked on an advisory board for Forstmann Little — a competitor of Bain in the leveraged-buyout industry. So in other words: It’s okay for Newt but not for Romney. Nice. Fortune Mag reports the same:
Upon leaving Congress in 1999, the former Speaker joined private equity firm Forstmann Little & Co. as a member of its advisory board.
It is unclear how long Gingrich served on the advisory board, or how much he was paid. The campaign has not yet responded to a request for comment.
Forstmann Little was one of the world’s original leveraged buyout firms, although its founder — the late Teddy Forsmann — often railed against what he saw as over-leveraging by rival firms (presumably including Bain). It effectively began winding down operations in 2005, following a legal dispute with the State of Connecticut over failed investments in a pair of large communications companies. Forstmann Little lost the case at trial, but wasn’t required to pay any significant restitution (both deals were done within two years of Gingrich being named to the advisory board).
During Saturday night’s GOP primary debate in New Hampshire, Gingrich said: ”I’m not nearly as enamored of a Wall Street model where you can flip companies, you can go in and have leveraged buyouts, you can basically take out all the money, leaving behind the workers.”
In
NY Mag, Jonathan Chait says that it is a “myth” that Romney is a job creator, which is a poorly stated version of the reality. The truth is that Romney was responsible for creating thousands of jobs – a lot more than had to be done away with to save a company, for sure – however, guaranteeing any number of added jobs was not the business he was in because that is not what capitalism is or does.
On the other hand, bringing ourselves face-to-face with the very real victims of Romney’s business career explodes his fairy tale of having been a “job creator.” He was in the business of creating wealth, not jobs. Capitalism increases a society’s standard of living, but it does not increase its rate of employment. If your goal is simply to give every willing worker a job, then socialism is the system you want.
Since we want to increase our standard of living, we want capitalism. That wealth benefits the whole society over the long run, but in the short run it can destroy lives and communities — which, of course, is one justification for the role of government in siphoning off a portion of the limitless wealth generated by the Mitt Romneys of the world in order to alleviate social dislocation. But the thrust of Romney’s platform is that people like himself give too much already, and those left behind get too much. His self-presentation as a “job creator” is an attempt to paint over that ugly reality. Republicans must be furious that Gingrich, of all people, is helping expose it.
And finally: Jim Geraghty on how the virtues of firing people when the circumstances require it:
So, here we are, at the day first primary, and the main objection to Mitt Romney from Newt Gingrich and Rick Perry is that he fired a bunch of people? More than his liberal-softie sounding rhetoric in 1994 and 2002? More than his crusade to liberate us from the individual mandate of Obamacare in order to leave the states free to enact their own individual mandates? More than the fact that he’s won exactly one general election in his life, in a year that the left-of-center vote was divided?
Objections to private-sector layoffs from the party that wants to shrink government? How do we think all of those employees of the federal bureaucracy will get of the payroll? Mass alien abductions?
When you think about it, isn’t it possible that the layoffs enacted when Romney was at Bain constitute one of the boldest moves of his career? One of the times he’s been willing to do something unpopular because he thought it was right, and in the long-term interest of the institution he was managing, instead of following the polls and telling people what they wanted to hear?
Much of the focus came upon Romney’s comment that he likes being able to fire people who provide services to him, if he’s not happy with the quality of the service.
You know, the way you can’t with the Department of Motor Vehicles, or the way you can’t (or at least not without Herculean determination) with a crappy teacher at a public school. The way you can’t fire a tenured professor at a state university, whether or not he gives good value for his salary and benefits to those who pay his salary (the students and the taxpayers). The way we can’t take our business to some other government, without leaving the country.
