Saturday, January 14, 2012

Vulture Capitalism Redux

The anti-Romney "hit piece" I described in my previous post is apparently fact-challenged. FactCheck.org's lengthy analysis (via USA Today) has this in in its introduction:

Interspersed with appropriately eerie music, the video focuses on four Bain-financed companies and features heart-wrenching interviews with people who portray Romney and Bain as ruthless, quick-buck corporate raiders who reaped huge financial rewards at the expense of faithful employees.

OK, so one shouldn't generalize too much about Romney and Bain, in the way the the video does. Here's the very next paragraph:

But a closer look at the companies highlighted in the video reveals a murkier picture. The video often overstates, or outright distorts, Romney's culpability for job losses or bankruptcies. [Emphasis added.] [link]

It seems the video's most glaring error, according to FactCheck.org, is that it neglects to show that the businesses in question were harmed only after Romney's tenure as CEO. In other words, perhaps we can still think of Bain, if not Romney, as "ruthless, quick-buck corporate raiders."

Of course, I'm splitting hairs. The rest of FactCheck.org's analysis tells the complete story, and no, they don't suggest that we should think of either Romney or Bain as corpulent vultures. But I'll maintain that Romney is still pretty close to the ugly picture depicted in King of Bain. Why?

Reason #1
Even in examples in which the businesses went down after Romney's involvement, it was his involvement that began the destructive process--because that's simply how the leveraged-buyout game is played--such as the case with Ampad in Indiana. Read about that and the profitable private equity process generally in John Cassidy's "Rational Irrationality" in The New Yorker (1/13/12). It's also the case with GS Industries, Inc. in South Carolina, resulting in bankruptcy for the company and thousands of workers losing their jobs. Read about that at The Sacramento Bee (1/13/12). You'll see these and other examples listed by Andrew Sullivan here.


Bain's "success stories" are relatively few. "Romney's record at Bain Capital," according to FactCheck, "also includes some success stories (see Staples and Sports Authority, to name a few)...." [Emphasis added.] Romney and Bain still profited no matter what. It's the few bought-out companies that succeed that make up for the rest of the failures or near-failures. Again, I direct you to Cassidy at The New Yorker:

Most of the firms that Bain invested in didn't go bust. Some of them prospered mightily. In the private-equity game, a few big successes disguise a lot of mediocre investments, and even some duds....more than seventy per cent of Bain Capital's investment gains under Romney came from just ten of its investments, which turned out very well. [link]


Reason #2
FactCheck cannot verify Mitt Romney's boastful claim that he created 100,000 jobs while heading Bain Capital. Why? Because the Romney campaign either refuses to supply any facts to support the claim, or it points to the above-mentioned success stories as evidence enough:

When we [FactCheck] asked the Romney camp for support, spokesman Eric Fehrnstrom sent us a list of jobs added at three companies in which Bain had invested, saying these three examples alone created over 100,000 jobs: Staples, which had 89,000 employees as of Dec. 31, 2010; The Sports Authority, which had 15,000 employees as of July 2011; and Domino's, which has added 7,900 since 1999. 
That's hardly a rigorous analysis.... And does Romney deserve credit for all of those jobs? Bain was but one of several investors.... [link]

And note the years of the job figures Fehrnstrom provided: All long after Romney was CEO. So, if they can attribute those jobs "created" to Romney retroactively, so can we attribute the scorched earth left by Bain and depicted in King of Bain equally to Romney as well.

Reason #3
The man who would treat a human being this callously and dismissively is one cold son-of-a-bitch:


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