“That fellow’s rich – worth a quarter billion dollars they say. And his father was a multimillionaire too – ran a major auto company. So he must know something. He must know lots of things. Let’s make him president.”
Okay, no one says it that way, really. But one must assume that Republican strategists are sure that all voters think this way, and advise their specific candidate appropriately, based on that assumption, that rich folks are rich because they’re smarter than scummy ordinary folks. And there’s always the line your candidate can use when his opponent claims to be a man of the people, one of them, a man who understands their concerns and will address those concerns. And it’s a devastating line. So, you think this or that is the right thing to do, but if you’re so smart, how come you’re not rich? That’ll stop them dead in their tracks. Every voter will pause and consider that, and that man of the people will look foolish. At least that’s the theory.
And it’s an interesting theory, based on the assumption that most Americans reside somewhere between nagging insecurity and barely subconscious self-loathing – although those also might be the names of two new slash-rock groups. But really, you can depend on our collective tendency to admire the ruthless and superior rich, who get exactly what they want, when they want it. And we envy the goodies they’ve amassed – we watch shows about their houses and cars and jets and all the rest. That’s what ordinary folks have those MasterCards and Visas for, maxed out in order to approximate at least a tiny sliver of that lifestyle, to stave off the despair of the flat everydayness of just getting by, well enough, before being forgotten entirely, forgotten by a few other equally forgettable persons who also might as well not have lived at all. No one finds ordinary persons awesome. Everyone finds rich folks awesome. At least they do in a massive consumer-capitalist society. What man wouldn’t shoot his dog and sell his kids to be Donald Trump, and what woman would not give everything to spend one wild hour in his arms?
No, wait – bad example. But the principle holds – insecure and perpetually panicked Americans can be relied upon to look upon the cool and masterful absurdly rich with awe and envy – except when they don’t. And that’s where the politics get tricky. Being rich is good. It sells. Being an asshole doesn’t.
And that’s where Mitt Romney must, as they say, tread a fine line. He is the ultimate businessman. He’s made hundreds of millions of dollars with his firm, Bain Capital, that specialized in leveraged buyouts – borrowing money from a firm to take over that same firm, and then disassembling it and selling its parts for far more than the intact firm was ever worth, and walking away with a gigantic profit. It’s the ultimate in outside management consulting, and clever and tricky and damned profitable, and you have to be really smart to make that model work, again and again and again. He was that smart. That made him rich.
But the problem is deciding whether that made him an asshole. Many scummy ordinary people got hurt – they lost their jobs and their pensions and just about everything. But in macroeconomic terms no one got hurt – weak firms shed useless divisions and consolidated and survived, and those that weren’t going to survive were disassembled and sold for spare parts, so at least some value was salvaged in those cases. And all that would seem to be for the good. That is how efficient capitalism is supposed to work. And efficient capitalism made America great – the land of abundance and fun and opportunity and so on. It’s just that sometimes individual people lose, and get hurt badly, and almost always a very few get very, very wealthy. But there is the greater good, and that’s the system, like it or not.
And the day after the New Hampshire primary, where Romney won again, this inherent conflict came up again, as Greg Sargent explains here – on NBC that morning, Matt Lauer asked Mitt Romney whether Americans with “questions about the distribution of wealth and power in this country” are necessarily motivated by, in Romney’s word, “envy.” Lauer seemed to assume that Romney really didn’t mean to use that exact word, somehow claiming everyone was attacking the awesome Mitt Romney just because they were jealous of his awesomeness. So Lauer offered an alternative – “Is it about jealousy, or fairness?”
But Romney didn’t take the offered escape road – “You know, I think it’s about envy. I think it’s about class warfare.”
And Steve Benen comments:
Plenty of Americans just want to have a conversation about rising income inequality, poverty, an unjust tax system, and wealth that’s increasingly concentrated at the top. For the likely Republican presidential nominee, those questions aren’t just wrong – they’re the result of “envy.”
And then that interview got stranger:
LAUER: Are there no fair questions about the distribution of wealth without it being seen as envy, though?
ROMNEY: I think it is fine to talk about those things in quiet rooms and discussions about tax policy and the like. But the president has made it part of his campaign rally.
I see. So, Americans are allowed to ask questions about inequality, so long as we’re not too loud about it. Let’s just stick to quiet rooms – perhaps Romney can loan us one from one of his mansions – where we can be told to stop being envious.
Romney was twice given a chance to nod in the direction of saying that concerns about these problems have at least some legitimacy to them, that they are about something more than mere envy or class warfare, and that they are deserving of a public debate. And this is the answer he gave.
Benen says we’re getting a closer look at Romney’s ideology, and at this point Benen thinks it’s looking rather twisted:
Remember, just last week, he argued that families who slip into poverty are, in his mind, “still middle class.” This is also the guy who takes a rather callous approach to firing people.
Romney is doing very well with wealthy voters. Why anyone else might vote for him remains to be seen.
Well, one must not underestimate the nagging insecurity and barely subconscious self-loathing of the American voter. All they have is envy to keep them going, or just to keep them from existential despair. At least that is what Romney seems to assume. If he says people are picking on him just because he’s rich, and they’re just jealous, then voters will rally to him. He’s their hero after all, or should be. As least that’s the theory.
But he’s not really dumb enough to believe that, or to believe that particular theory holds in the current economic wasteland we have around us. So he has long had a secondary position, on why we all should see him as an awesome hero worthy of envy. Five months ago Mitt Romney began boasting about having created “tens of thousands of jobs” at what his critics call his vulture-capital fund:
When I was at Bain Capital, we invested in about 100 different companies. Not all of them worked…. But I’m very proud of the fact that I learned about how you can be successful with an enterprise, why we lose jobs, how we gain jobs and overall, in those 100 businesses we invested in, tens of thousands of jobs, net-net, were created.
In the real economy, some businesses succeed and some fail. That’s how that works and you try and encourage the more successful and fortunately for many people, tens of thousands of jobs, actually over a hundred thousands of jobs were created by the investments that we were able to help make.
He seemed to settle on the 100,000 figure and that became the standard for Romney and his supporters, but it’s been definitively debunked. Yes, many say that number has no basis in reality and that’s odd. In a research piece in the Washington Post, Glenn Kessler gives all his jobs claims so far Three Pinocchio’s – and maybe that makes Romney look slick and untrustworthy. So there’s a new number the day after the New Hampshire primary:
People here in the state know that in the work that I had, we started a number of businesses, invested in many others, and that over all created tens of thousands jobs, so I’m pretty proud of that record.
Steve Benen, who has been following these shifting numbers, has this comment:
So, over the course of a few months, Romney went from five-figure job growth, to six-figure, and then back to five-figure. Anyone who finds the former governor’s line persuasive isn’t paying close enough attention.
Why is Romney proving to be so incoherent on what’s supposed to be his top issue? After all… this is supposed to be the raison d’être of his entire campaign: elect him president, the argument goes, because he created so many jobs in the private sector. If this is his top selling point, why can’t Romney keep his own story straight? What’s with all the fuzzy math?
The answer is, Romney is trying to turn his private-equity firm into something it’s not. Bain Capital and its executives weren’t in the job-creating business – its purpose was to make money for its investors, not grow businesses and create jobs.
Benen has no problem with wealth creation. That’s nice, and a good thing. But that’s not what Romney wants us to consider just so totally awesome. And in that Glenn Kessler item, Kessler points out that the Bain prospectus “never mentions ‘jobs,’ ‘job,’ or ’employees.'” And Ezra Klein adds this – “Those simply aren’t the objective. Sometimes, in fact, they’re collateral damage.”
Again, this is just how private-equity firms work. It’s a feature, not a bug. But Romney wants to repackage reality in a way voters might find more appealing, since the truth doesn’t quite work. The result is a series boasts that completely fall apart under scrutiny.
And Klein puts it nicely:
Romney invited the electorate to judge his economic chops by judging his success at something he wasn’t trying to do and that isn’t relevant to the policies he would pass as president. The more energy he invests in this narrative, the larger his eventual losses will be.
Well, maybe – but Romney has everyone bamboozled so far. Consider some of Andrew Sullivan’s readers:
I am getting somewhat annoyed at this latest meme, whereby Romney is supposedly a bad guy for working for Bain consulting because part of his job was advising companies on how to fire people. Now, granted, Romney doesn’t embrace this because he is, time and again, a coward, so he throws math around that implies he was actually helping SAVE jobs. He wasn’t. But that’s okay – and someone should call out Gingrich for painting Romney as some callous corporate monster when he was, in fact, helping companies succeed in the marketplace. Aren’t we mature enough as a country to acknowledge that sometimes companies need to let employees go in order help their bottom line?
Of course Romney advised on how to fire people. Of course he took no joy in it. That was his job and he did it very well. So what?
It’s a forest-and-trees thing. Some trees must die so the forest lives on, healthy. And another writes this:
His job was to produce return on investment for his shareholders. He did that at an incredibly high level in a highly competitive market. Obama had no achievements that were even remotely close to this coming into office. Not even in the same realm. In addition, he is able to produce no similar metrics for his own policies, just anecdotes. Spare the comments about preventing a depression. You always ignore how much better the stimulus could have been had it not been a giveaway to cronies and special interests. The country was behind the stimulus. He chose his political cronies. It didn’t work as well as a result. That’s why I’m mad about it, not that it happened.
There is a lot to attack about Romney. I’m going to vote for Paul in my primary. The irony is that the sheer ignorance about economics and free enterprise that could compel someone to view Romney’s time at Bain as a negative is a key factor for why someone like Paul can’t win. People either lack any real economic knowledge (thank you public education system – where it is almost impossible to fire people, by the way) and/or they are so consumed with populist envy that they dislike anyone who achieves more than they do.
You can see how this is working out. Life is hard. People get hurt, bad – but it’s all for the greater good. Folks should stop whining and be in awe of the masters of capitalism that keep our awesome system humming along, and getting more awesome all the time.
In the National Review, Avik Roy is more nuanced:
It is true that the money that leveraged-buyout (LBO) firms draw out of an acquired company – in the form of dividends and management fees – will always look bad in a situation where the turnaround fails. It will be up to Romney to defend this practice. But it’s important to remember that LBO firms have every incentive to avoid letting their investments fail: After all, they stand to make far more money if their turnarounds succeed.
And David Frum carries that forward:
The fact is, presidents (being politicians) get into much more trouble because they hesitate to fire than because they over-enjoy it. Donald Rumsfeld lasted for years after it became apparent that his management of the Iraq War was failing. President Obama won’t take action against Eric Holder, not after he bollixed the trial of Khalid Sheikh Muhammad, who has to date faced neither the promised civilian trial nor the substituted military commission. It was son George W. who had to carry the message to White House Chief of Staff John Sununu that he must go, because President George H. W. Bush could not bear to do it. For 13 miserable years, Franklin Roosevelt flinched from firing an incompetent and obnoxious White House cook.
But one of Sullivan’s readers doesn’t buy that:
Frum’s examples in his argument about the virtue of firing people or the danger of not firing people is not analogous to the mass (and not-so-mass) layoffs after a leveraged buyout or corporate merger. People get fired not because they are incompetent but because other employees can do those jobs, or simply to reduce overhead. The competence or incompetence of the laid off is often not even weighed before the decision is made. You can’t compare the decisions a president makes on keeping or firing appointees and staff to that.
I’ll go further and say that often the laid-off employees had no responsibility for the financial difficulties of the company. Those things are determined by the business plan, strategic decisions made by management, etc. Not the competence of someone in the accounting department.
And Sullivan posts other views:
It’s very nice that Bain produced $2.5 billion in gains for their investors and that the company made great profits and high returns. But that’s not what Romney is running on; he’s declaring, again and again, that he’s an experienced JOB CREATOR, that he knows how to create jobs, and that in his time at Bain he created jobs. If he wants to run on how much money he made for his investors, then I agree that there’s no real reason to attack him for that – he did a hard job very well by that metric. But as long as he insists that he also helped people who were not investors in Bain Capital, and takes credit for creating jobs, it’s perfectly legitimate to look at the job-creation record. Especially since the supporting evidence his campaign provided is so laughable.
Another writes this:
Everyone knows layoffs, bankruptcies and turnover are part of life. We deal with it on a regular basis. No one begrudges the local businessman who has to let an employee go because of tough times. The problem … is that there is a difference between accepting that layoffs and firings are a part of life and admiring the people who do the firing, especially when those people don’t even run the businesses.
The reason Romney’s work at Bain is such a liability is that he is the guy who was brought in to do the firing. He didn’t build new businesses, he didn’t create jobs in the way a guy who opens up a local hardware store creates jobs, and he cashed in whether or not the business actually succeeded. Americans believe in fairness. Success is supposed to be earned through hard work and playing by the rules. To those of us who aren’t of the finance world, there’s something inherently unfair about an investor making a massive profit even as the business he invested in fails. It makes us feel like the game is rigged. That’s Romney’s Bain problem.
If Romney thinks he has a Bain problem now, just wait until this summer. The most anticipated summer film, and what will likely be the biggest film of the year, is The Dark Knight Rises. And the sociopathic villain is … Bane.
That’s amusing, but as this Bain issue continues, we will be told, again and again, that capitalism is all about creative destruction, so we must celebrate that creative destruction – and we should actually celebrate the jobs that were lost as much as those that were gained, if any were. What you find awesome and just who you should envy is what’s at stake here.
But see Matthew Yglesias:
What I think is that in a market economy creative destruction happens, and that has terrible consequences for the lives of people who are adversely affected by circumstances beyond their control. My mother was a graphic designer in the days when copy and paste were not metaphors. The development of desktop publishing software radically degraded the value of the human capital she’d acquired over the first 30+ years of her life. That kind of thing happens to people all the time. Perfectly hardworking and conscientious people are buffeted by shocks beyond their control. New technologies can harm your earnings power in unexpected ways. Policy developments in other countries or jurisdictions (what happens to Las Vegas if California broadly legalizes casino gambling) can harm your earnings power in unexpected ways. Weird secondary shocks hit you – the decline of Kodak has been bad for all kinds of people who never worked there, but simply participated in a local economy of which Kodak was a key lynchpin – in unexpected ways.
It’s not feasible to create an environment in which these shocks never happen, but it’s crucial both ethically and pragmatically to try to create an environment in which these shocks are endurable.
So Yglesias suggests this:
a) Fiscal and monetary policy to stabilize the macroeconomy to ensure that people who lose jobs can get new ones, even if the full value of their previous human capital can’t always be recouped, and b) Provision of social services so that people and their families can gain access to quality medical care, education, transportation, public safety, and a dignified retirement even if their incomes fluctuate in undesirable ways.
Yglesias is just a real-world kind of guy:
The message of creative destruction, when you understand it, is that the idea that “a rising tide lifts all boats” is a cruel lie. Growth is broadly beneficial over the long-term but individual human beings live out their lives on finite time scales and many individual people suffer from even generally positive economic trends.
And that’s the issue here. Who should you admire, and really who should you envy – the rich man who advances generally positive economic trends, no matter who gets hurt, or the man of the people, who was never rich nor will be, but protects individuals, and friends, and family, who can never do him any economic good? That may be the real choice here. And the Republicans have made their best guess at which you will choose.
And we’ll see how that works out in November.