Presidential candidate Mitt Romney refuses to release his income tax records beyond the last two years and he will not talk about his dealings when he was at Bain Capital. Yet, he claims to have created “100,000″ jobs through the process of “creative destruction.” Given this claim, it’s worth emphasizing that, for a private equity firm to make money and provide high yield returns to its investors and partners, the number one enemy of such an organization is labor. If you keep that one fact in mind, then you can understand why Romney doesn’t like to talk about his history at Bain and his absurd claim to have created “100,000 jobs.” Anyone running a private equity firm that did not reduce labor costs in the new company, sometimes by firing workers and hiring them back at reduced wages, would himself be fired or voted out by the company partners. With that in mind, it’s a little easier to see that what counts for job creation by Romney, takes place for example, when a retirement fund that made profits through Bain investments goes out and hires someone or takes on a retiree for benefits. And since Bain is a private company, they have no obligation to make their actions and investments known to the public, which suits Romney just fine.
While Romney tries to make a case that he was a job creator at Bain, others have done enough homework to show that this was not the case, and a recent article in City Pages by Pete Kotz provides a good summary of Romney’s record as a “job creator.” Just reading that article alone will help you understand why candidate Romney doesn’t want to talk about his history at Bain Capital. Texas Governor Rick Perry, former Presidential candidate, claimed that Mitt Romney practiced “vulture capitalism” at Bain, but author Pete Kotz has a more accurate description of Romney’s role at Bain as an “American Parasite.” Private equity firms take perfectly healthy striving companies and destroy them by saddling them with excessive debt and management fees. Indeed, Romney parasitized healthy manufacturing companies many of which went bankrupt. Given the stories that Kotz describes, we can only imagine how many manufacturing jobs would have stayed here in America, if we had made it illegal to have “leveraged buyouts” back in the early days of the Reagan Presidency, when this activity first got underway. But, unchecked, the leveraged buyout contributed to the destruction of manufacturing in America.
When Romney ran against Ted Kennedy for his Senate seat in 1994, early in the campaign, it seemed like he might be successful. But then Kennedy learned of Bain Capital’s purchase of a company called “AMPAD” (American Pad and Paper) in 1992 and how Bain had loaded the company with debt and management fees and laid off workers. Kennedy ran television ads of interviews with workers who had lost their jobs at AMPAD and won re-election rather handily. So here’s a good question for Romney: how many more manufacturing jobs would exist in America today if there had been no leveraged buyouts and no private equity firms? The man who believes that corporations are people should have no trouble responding to this form of interrogation, yet he wants to avoid the discussion altogether. Leveraged buyouts evolved into private equity firms and contributed to the predatory reach of business and finance. Private equity firms–the destroyer of labor. If somehow we could rewrite the Old Testament, that line should be in there somewhere and Moses should be asked to deal with it. As for Romney and his Bain Capital experience, will the mainstream media cooperate with Romney and let him remain silent on his doubtful past as a job creator? I am betting that the Occupy movement has now raised income inequality in American consciousness, such that Romney will not be able to dodge the fact that his actions at Bain contributed to the pathological state of our income distribution and the silly boring state of our politics, where trivial topics rule the airwaves. Romney is betting that people won’t give a damn and he can throw enough advertising at the problem to distract voters from thinking his job creation history. But, Romney made his fortune destroying businesses in ways that should have been illegal; we need to help fan the flames of the Occupy Movement to return our country to economic sanity. We need to rebuild America and force our financial institutions to play a role in financing that task, or form new banks and force them to do it. Had we broken free from the rescue of our banks and created new ones, with restrictions on how they could use the money, we would already be seeing signs of solid recovery and not the anemic one we are in now where people at the top are thinking about debt, rather than thinking about jobs.