Wednesday, April 18, 2012

The Failures Of Capitalist Mitt

We've all seen how...ugly...Mitt Romney is as a Presidential candidate, so it's no surprise this same EPIC FAIL! trope is to be found in a close examination of his career as a parasite capitalist:

In the midst of that 1994 campaign, one of Romney's companies, American Pad & Paper, bought a plant in Marion, Indiana. At the time, it was prosperous enough to be running three shifts.

Bain's first move was to fire all 258 workers, then invite them to reapply for their jobs at lower wages and a 50 percent cut in health care benefits.

"They came in and said, 'You're all fired,'" employee Randy Johnson told the Los Angeles Times. "'If you want to work for us, here's an application.' We had insurance until the end of the week. That was it. It was brutal."

But instead of reapplying, the workers went on strike. They also decided the good people of Massachusetts should know what kind of man wanted to be their senator. Suddenly, Indiana accents were showing up in Kennedy TV ads, offering tales of Romney's villainy. He was sketched as a corporate Lucifer, one who wouldn't blink at crushing little people if it meant prettying his portfolio.

Needless to say, this wasn't a proper leading man's role for a labor state like Massachusetts. Taking just 41 percent of the vote, Romney was pounded in the election. Meanwhile, the Marion plant closed just six months after Bain's purchase. The jobs were shipped to Mexico.

Curiously, Romney had been touting himself as a job creator and a savvy businessman, yet as Kotz points out, all Romney ever did was take already-profitable companies and blindly stab at making them more profitable.

In fairness to Romney, the article does point to a few successes he achieved in his tenure at Bain, but Romney created not one job at any company that he personally managed, and the firms he had been touting, like Staples, went on hiring sprees after Romney left to run the Salt Lake City Olympics in 1999.

Which, by the way, was rocked by an huge bribery scandal, but that was why Mitt was brought on board.

Mostly, the companies Bain purchased were uniformly more profitable afterwards...for Romney.

The devastation left in the wake of Bain under Romney is staggering: the Associated Press analyzed some 45 deals Romney was directly involved with in his first decade at Bain and found 4,000 workers laid off, but this figure does not take into account plant and store closings, and bankruptcies.

The Wall Street Journal did an even deeper analysis of 77 investments Bain made under Romney and discovered that one in three formerly profitable companies suffered financial troubles, and 20% ended up in bankruptcy court.

Armco Steel of Kansas City, MO, is illustrative here:

Romney purchased Armco with just $8 million down and borrowed the rest of the $75 million price tag. Then he issued bonds—basically IOUs—to borrow even more to pay himself and his investors $36 million.

Within a year, he'd already made four times his initial investment while barely lifting a finger. But he'd also run up a staggering $378 million in debt on GSI's tab.

[...]Yet the smartest guys in the room thought they could run the plant better than the people setting production records.

It would take a few more years of bleeding, but GSI eventually fell to bankruptcy.

The Kansas City mill closed for good; 750 people lost their jobs. Worse, Romney had shorted their pension fund by $44 million. The feds were forced to cover the difference, while workers saw their benefits slashed in bankruptcy court.

So as not to risk further copyright infringement, I urge you to click through and read the entire article. It is a primer on modern American economics.

What this all points out is what is summed up in Romney's infamous "Seamus" story: a man so obsessed with efficiency and profit that he can blindly and blitheringly ignore the human element, and will go about fixing what ain't broke.

In effect, what Romney has done is relive the Bush administration but writ large: taking a healthy situation (we were running a large surplus at the end of the Clinton years) and run it into the ground at the expense of the backbone of the nation (or company) while rewarding his pay-grade cronies.

Is this really what we want to go back to?