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(make sure you scroll down for the magazine cover) Romney: The Corporate 'Person' And The One Percent Joe Conason For Mitt Romney, the fundamental argument underpinning his presidential candidacy is his experience as a top executive at Bain Capital, the huge Boston-based private equity firm. That is especially true now because he must disown his most important achievement as Massachusetts governor -- health care reform -- in order to assuage the Tea Party extremists in his own party. But what does his business career tell us about the economic policies that might be pursued by the Republican front-runner -- and about his worldview? Much could have been gleaned from the career history of George W. Bush, if only voters had paid closer attention to the unflattering reports of his experience as oilman and baseball team owner that accumulated in 1999 and 2000. As the stories behind Romney's success unfold in the coming campaign, the answer is likely to be that Bain Capital has prospered during the past quarter-century promoting a harsher brand of enterprise -- one that ruins communities, impoverishes workers, and exports American jobs, all in the name of shareholder "value." -snip- Of course in the strictest sense he was right: The management, shareholders, and workers of every corporation are indeed human beings, and it is to those human beings that the money earned by corporations, after taxes, is paid. But as Wallace-Wells discovers, Romney and company have done much to change how those earnings are apportioned, encouraging massive increases in the amount appropriated by management and huge reductions in wages and benefits paid to workers. Creating incentives for managers to maximize stock prices -- which would explode their own compensation -- simultaneously undermined old-fashioned corporate responsibility toward employees, communities, and the nation as a whole. The deepest implication of the consultant creed that Romney represents is an ugly Darwinism -- or so Wallace-Wells suggests.
But as consultants, there was only so much that Romney and the Bain crowd could do to change any corporation. Wanting to put their theories into practice, and sensing that big profits could ensue, they formed Bain Capital, whose record in corporate takeovers and turnarounds became the envy of the industry -- and the ruin of thousands of workers and their families unlucky enough to become collateral damage. The improved efficiency and productivity of private enterprise over the past two decades certainly were not without benefit to society, in lower prices, better technology and even, for a while, higher employment. But the perfect "alignment" of incentives between corporate managers and shareholders, without any regulatory brakes, led to worsening economic inequality, executive recklessness, stock manipulation, and a laser-like focus on the short term -- in short, all of the ills that underlie American economic decline. Those same incentives have been trained on the political system to ensure decisions that benefit those same overpaid, seemingly sociopathic bankers and investors -- now known as the "one percent." They could scarcely hope for a more sympathetic candidate than the man from Bain. http://www.nationalmemo.com/article/romney-corporate-person-and-one-percent The New York Magazine article referred to by Joe Conason is this - Here is the cover & article:  The Romney Economy
At Bain Capital, Romney remade one American business after another, overhauling management and directing vast sums of money to the top of the labor pyramid. The results made him a fortune. They also changed the world we live in.By Benjamin Wallace-Wells -snip- In his quick, casual reply—corporations are people—Romney had seemed to give something away, though it wasn’t immediately clear what. The press chose to play the episode as a “gaffe,” as ABC’s Jake Tapper described it, a moment in which the weakness in Romney’s political pitch, the gap between his own privileged experience of the world and that of working-class voters, had been exposed. MSNBC, in a spate of giddy incredulity, seemed to keep the clip on loop for a week. But Romney’s own campaign managers did not try to obscure the episode at the state fair, to say he had been misunderstood or to secret it away. Instead they promoted it, as an advertisement of principle, and made the confrontation the centerpiece of a solicitation to supporters. A few days later, Romney’s communication director, Gail Gitcho, told the press that the exchange had raised $25,000 within 24 hours. The incident, in retrospect, did less to peg Romney as a creature of privilege than it did to reveal something deeper. For Romney, the corporation has long been an object of a certain idealism. It is something he has spent much of his adult life—first as a management-strategy consultant, then as CEO of the private-equity firm Bain Capital—working to perfect, to strip of its inefficiencies until it might function as a perfectly frictionless economic unit. The political genuflection to businessmen is so gauzy and generic that praise for a candidate’s private-sector acumen can often sound phony. But Mitt Romney is the real thing. He was, by any measure, an astonishingly successful businessman, one who spent his career explaining how business might operate better, and who leveraged his own mind into a personal fortune worth as much as $250 million. But much more significantly, Romney was also a business revolutionary. Our economy went through a remarkable shift during the eighties as Wall Street reclaimed control of American business and sought to remake it in its own image. Romney developed one of the tools that made this possible, pioneering the use of takeovers to change the way a business functioned, remaking it in the name of efficiency. “Whatever you think of his politics, you have to give him credit,” says Steven Kaplan, a professor of finance and entrepreneurship at the University of Chicago. “He came up with a model that was very successful and very innovative and that now everybody uses.”
The protests going on at Zuccotti Park now have raised the question of whether that transition was worth it. What emerged from that long decade of change was a system that is more productive, nimble, and efficient than the one it replaced; it is also less equal, less stable, and more brutal. These evolutions were not inevitable. They were the result, in part, of particular innovations developed by a few businessmen beginning a quarter century ago. Now one of them has a good chance of becoming president.
http://nymag.com/news/politics/mitt-romney-2011-10/ |
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