thepoliblog

A Scam Artist as President?

Mitt Romney, photographed by Gage Skidmore, 7 October 2011

Legal but unethical.  That describes how Bain Capital operated under Willard “Mitt” Romney, according to an article in The New Yorker.  (Unfortunately, although I remember the article vividly, I have not been able to locate my printed copy, nor a web link to it.  So I cannot cite the article’s author and date.  If you have that information, please provide it to me in a comment.)

Under Romney, Bain Capital used a bait and switch scam to reduce the price it paid when buying companies.

When a company that wished to be bought requested bids, Bain Capital submitted a generous bid.  That shut the other bidders out of the next stage of negotiation, which now involved only Bain Capital and the seller.  Bain capital then found many excuses for reducing its bid, knowing full well that the seller would find it difficult to invite back any of the previously rejected bidders.

This tactic is a type of scam.  It is similar to the tactics of the least ethical used car dealers.

This bait and switch tactic is also similar in flavor to the etch-a-sketch strategy that Romney’s campaign envisioned.

Under Romney, Bain Capital systematically used another legal but unethical trick.  It loaded a acquired company with debt, then used the borrowed money to fund a big payout to itself, and then discarded the indebted company.  Bain Capital was like a spider discarding its prey after sucking it dry.  In an article by John Cassidy (see the section in that article that is entitled “Can you give me an example in which Bain Capital made a lot of money from a company that failed?”), Cassidy reminds us of what Bain Capital did to Armco Steel Corp. and GS Industries.  It is a disheartening read.  Bain’s maneuvers produced success for Bain Capital, but undeserved pain for the employees of Armco Steel Corp. and the other parts of GS Industries.  This and similar gaming of the system is not the kind of ethics and business experience that will be needed for energizing the US economy and job market, nor for reducing the national deficit.

As Louis Menand pointed out in an article in the NewYorker, “… a firm like Bain is concerned exclusively with buying low and selling high. Any other outcome it might pursue at the expense of that concern cheats its investors. This is why talk of job creation or job destruction in the companies Bain invested in is beside the point. Bain was not about jobs.”

But Wiley Willard is not all bad.  As pointed out by Steven Pearlstein, Romney is sympathetic, humane and helpful to those he knows personally, regardless of their economic class.  (An exception is Romney’s comically and needlessly strict rulemaking for his own family.)  But he is heartless and unsympathetic to those he does not know personally, even when their situation is the same as those who he has helped.

Combine those qualities with the fact that both Romney and Ryan make promises they cannot fulfill about reducing the national debt: an many have pointed out in detail, even though their plans are sketchy, they cannot achieve what they promise without raising tax revenues.  Wishful, magical thinking won’t work.

Finally, A remarkable article by Steven Pearlstein points out that Romney is a manager, not a leader.

Romney is often held up as being successful in business, and that is supposed to show that he will be able to fix the economy.  But a lot of his success – and Bain’s success – came from gaming the system, not from doing anything constructive.  Romney’s stratagems and self-serving ethics are not what are needed for fixing the economy.  To fix the economy and create jobs we need to put more money in the pockets of those with immediate unfilled needs, who will spend it immediately.  The economy would not get much of a boost if we instead further increase the wealth of those whose needs are neither immediate nor pressing, as Romney wants to do, in his delusion that the wealthy are the engine of the economy.  Romney’s business experience is of the wrong kind, especially for our present problems.

The Republican Party claims that Obama has had plenty of time to fix the problems that he inherited, but that he hasn’t done so.  (Those problems were created by the Republican Party’s loosening of regulations, by the way.)   The Republican Party’s claim is hypocritical, in two ways.  First, Obama’s stimulus package was a huge success.  The recession would have been far worse without it.  And second, Obama couldn’t do more than that, because the Republicans in Congress adopted – and publically announced – a policy of sabotaging as many of Obama’s initiatives as they could.  They hoped that by limiting Obama’s achievements they would prevent him from being re-elected.  They tied his hands and then sneered that he didn’t accomplish much.  Their sabotage harmed the country as well as Obama.  If you don’t have a job, this tactic by the Republican Party harmed you.  The Republican Party does not deserve to get away with its unpatriotic, partisan sabotage.