Off and Out With Mitt Romney

In better America, Romney would be running for president on the strength of his major achievement as governor of Massachusetts: a health reform that was identical in all important respects to health reform enacted by President Obama. Massachusetts reform is working pretty well and has overwhelming popular support. In reality, however, Mr. Romney is doing no such thing, bitterly denouncing the Supreme Court for upholding the constitutionality of his own health care plan. His case for becoming president relies, instead, on his claim that, having been a successful businessman, he knows how to create jobs. This, in turn, means that however much the Romney campaign may wish otherwise, the nature of that business career is fair game. How did Romney make all that money? Was it in ways suggesting that what was good for Bain Capital, the private equity firm that made him rich, would also be good for America? And the answer is no. (source: Paul Krugman – NYTimes – 06/07/2012)

The truth is that even if Mr. Romney had been a classic captain of industry, a present-day Andrew Carnegie, his career wouldn’t have prepared him to manage economy. A country is not a company (despite globalization, America still sells 86% of what it makes to itself), and tools of macroeconomic policy, interest rates, tax rates, spending programs, have no counterparts on a corporate organization chart. Did I mention Herbert Hoover actually was a great businessman in the classic mold? In any case, however, Romney wasn’t that kind of businessman. Bain didn’t build businesses; it bought and sold them. Sometimes its takeovers led to new hiring; often they led to layoffs, wage cuts and lost benefits. On some occasions, Bain made a profit even as its takeover target was driven out of business. None of this sounds like kind of record that should reassure American workers looking for an economic savior. And then there’s business about outsourcing. Two weeks ago, Washington Post reported Bain had invested in companies whose specialty was helping companies move jobs overseas. The Romney campaign went ballistic, demanding, unsuccessfully, The Post retract the report on the basis of an unconvincing “fact sheet” consisting largely of executive testimonials. What was more interesting was campaign’s insistence that the Post had misled readers by failing to distinguish between “offshoring”, moving jobs abroad, and “outsourcing,” which simply means having an external contractor perform services that could have been performed in-house. Now, if Romney campaign believed in its own alleged free-market principles, it would have defended right of corporations to do whatever maximizes their profits, even if that means shipping jobs overseas. Instead, however, campaign effectively conceded that offshoring is bad but insisted outsourcing is O.K. as long as contractor is another American firm. That is, a very dubious assertion.

Consider one of Romney’s most famous remarks: “Corporations are people, my friend”. When audience jeered, he elaborated: “Everything corporations earn ultimately goes to people. Where do you think it goes? Whose pockets? People’s pockets”. This is undoubtedly true, once you take into account the pockets of, say, partners at Bain Capital (who, I hasten to add, are, indeed, people). But one of main points of outsourcing is to ensure that as little as possible of what corporations earn goes into the pockets of people who actually work for those corporations. Why, for example, do many large companies now outsource cleaning and security to outside contractors? Surely the answer is, in large part, that outside contractors can hire cheap labor that isn’t represented by union and can’t participate in the company health and retirement plans. And, sure enough, recent academic research finds that outsourced janitors and guards receive substantially lower wages and worse benefits than their in-house counterparts. Just to be clear, outsourcing is only one source of huge disconnect between a tiny elite and ordinary American workers, a disconnect that has been growing for more than 30 years. And Bain, in turn, was only one player in the growth of outsourcing. So Mitt Romney didn’t personally, single-handedly, destroy middle-class society we used to have. He was, however, an enthusiastic and well remunerated participant in the process of destruction; if Bain got involved with your company, one way or another, odds were pretty good that even if your job survived you ended up with lower pay, diminished benefits. In short, what was good for Bain Capital definitely wasn’t good for America. As I said at the beginning, Barack Obama campaign has every right to point that out.


Acerca de ignaciocovelo
Consultor Internacional

One Response to Off and Out With Mitt Romney

  1. Professor Uziel Nogueira says: Prof Krugman’s piece shows how arguments of political economy get lost in the murky world of real politics. Implicitly, he poses the old question of whether the US economic model is good for America. As PK put it, ” what was good for Bain Capital — the private equity firm that made Romney rich — would also be good for America? The political issue of the 99% versus the 1% of the last two years. The way the issue is framed by PK, it appears that voters have a REAL CHOICE in the next presidential election. Is that so? Obama defending the interests of the 99% while Romney defending the interest of the 1%, or his own financial interests. In fact, Obama is not pledging to change the way American based transnational corporations operate. GE and Apple will continue to move job overseas whether the next Pres is Obama or Romney. Meanwhile, social problems haven’t been solved in America for the last 30 years. The choice between Obama and Romney is NOT a real choice as far as economic policy is concerned. It is a paper or plastic choice, as George Carlin used to say. Both candidates defend the current business model, dominated by US based transnational companies. Creating jobs in the US and distributing income is not in the job description of any successful CEO. Both candidates lack a credible and viable solution to solve the economic and social problems affecting the US society.


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