If I opened a lemonade stand and paid some kid in the neighborhood 5 cents anhour to sell lemonade, I toocould call myself a "job creator". Sure, the guy that sells me the lemons,sugar and plastic cups is making a profit. But what good am I doing for theeconomy as a whole, and what kind of jobs would I creating?
But by its very nature, our economic system of capitalism and free marketsisn't about creating jobs, it's about creating money. Jobs are just sometimesthe by-product.
Banks gamble with derivatives and speculate in the commodities market to make profits,not to create low-paying bank teller jobs.
Manufacturers automate and robotize whenever possible to cut payroll costs,and technology and computers (called innovation), allow companies to producemore with less. Whenever possible, not only are their products exported, buttheir factories are exported as well to take advantage of low labor costsoverseas.
Just since the beginning of the "Bush Years" alone, the UnitedStates lost most of it's better paying jobs in manufacturing. Over 52,000factories had closed, but for almost 30 years before that, outsourcing becamecommon practice as many companies had union employees with collective bargainingagreements that negotiated wages to help keep up with the rising costs of living.
And if a factory wasn't outsourced to foreign soil, companies like Boeing movedto places like South Carolina. As Governor Nikki Haleysays: "We don’t have unions in South Carolina because we don’t need unions in South Carolina.
And when a company downsizes, if often means that hours are cut to denyfull-time benefits, while many times employees are required to take on extraduties, creating "higher productivity".
The fast food, service, and retail industries (e.g. McDonalds, Dominos,Staples, and Wal-Mart) improve our lives in some ways in thematter of convenience and lower prices, but in many ways they do not. They propagate a vastnumber of low-paying jobs, both here and abroad, that reduces our standard ofliving and reduces our overall tax-base.
The research and redevelopment that takes place in our universities andgovernment research facilities, are funded primarily by the taxpayers. CorporateR&D has become a much smaller share of their expenditures, but private companiesgreatly profit from the gains made by taxpayer-paid research and development(government jobs).
Bloomberg's Business Week has called "private equity" a re-branding ofthe corporate raider (leveraged buyout firms) of the 1980s. Among the most common investment strategies in private equity are: leveraged buyouts, venture capital, growth capital, distressed investments and mezzanine capital.
In a typical leveraged buyout transaction, a private equity firm buys a majority control of an existingcompany. There is a distinct difference from a venture capital or growth capitalinvestment, in which the investors invest in young or emerging companies(like Staples in the 1986), and rarely obtain majority control.
Besides his other "investments", Mitt Romney's Bain Capital usedventure capital to finance companies such Staples. The 100,000 jobs hetakes credit for were all the low-paying jobs at Staples and the Sports Authority;but Mitt shouldn't take credit for that, Staples founder Thomas G. Stembergcan take credit if you don't take into consideration their employeerelations.
By the end of 2011, Staples had about 89,000 employees. And BainCapital was only one of many private equity firms that invested in SportsAuthority, now a private company.
The Gartner Group (information technology research) formerly Saatchi &Saatchi, a London-based advertising agency, was acquired in 1990 with funding from Bain Capital and Dun & Bradstreet. In 2001 the name was simplified toGartner.
Mitt Romney's recent ad regarding Steel Dynamics implies that BainCapital was a "lone white knight". But in truth, there were eight financiers. Even more telling, the state and local government pumped in $37 million — twice as much as Bain Capital did. Then, five years later, Bain sold its stake and walked off with an $85 million profit, courtesy of this "government largesse."
SUCCESS!Bain Capital bought Wesley Jessen Vision Care for $6 million in 1994. It had been a division of Schering Plough and was not profitable. Bain Capital and a new CEO turned it around and sold it to Ciba Geigy for over $300 million in 2001.Today, the company is part of Ciba Vision.
But Mitt Romney, as a private equity manager, wasn't about creating jobs, butprofits. He didn't innovate and do anything to make the human condition of theeconomy as a whole any better for the common good. His "investments"sometimes produced the by-product of low-paying jobs in companies like Staples;but his efforts also produced many other low-paying jobs in foreign countries.The jobs that weren't outsourced or lost to downsizing were"re-created" to pay much less without healthcare and pension plans..
Mister Romney, like all corporate raiders, specialized in buying financiallytroubled companies (many on the verge of bankruptcy), breaking them up, andselling them off in smaller parts at a price that's worth more than the whole company, for profit.The workers bore the brunt of the cost with lost pensions, lost benefits, andlower wages -- if they weren't laid off.
Corporate raiders such as Carl Icahn, T. Boone Pickens, Kirk Kerkorian, Michael Milken,(and Gordon Gekko and "Larry the Liquidator") bought a large number of sharesgiving them significant voting rights to enact measures such as replacing top executives, downsizing operations,and liquidating the company.
Companies have used a variety of strategies to thwart the efforts of corporateraiders that include shareholders’ rights plans (poison pills), super-majorityvoting, dramatic increases of the amount of debt on the company’s balance sheet,"golden parachutes", and strategic mergers with a "white knight."
The threat of the corporate raid would sometimes lead to the practice of "greenmail", where a corporate raider or other party would acquire a significant stake in the stock of a company and receive an"incentive payment" (effectively a bribe) from the company in order to avoid pursuing a hostile takeover of the company. Greenmail represented a transfer payment from a company's existing shareholders to a third party investor(like Bain Capital) and provided no value to existing shareholders butgreatly benefited existing managers (like Mitt Romney).
Corporate raiders like Mitt Romney cause large economic disruption and create unemployment as factories are sold off and closed.While he might have made money (whether the company failed or succeeded) he justmademoney, so therefore he is considered "successful", while the companymay have went bankrupt.
Bain Capital invested in Stage Stores in 1988 (family apparel, shoes, etc) when the company was young. Stage went public in 1996 with 9,606 employees. Bain realized $184 million from the investment. The company went into chapter 11 bankruptcy in 2000.
Bain Capital bought Dade from Baxter in 1994. BainCapital took Dade public in 1996 and cashed out $216 million. Dade went bankrupt in 2002.
DDI Corp produced circuit boards for the telecom business. It went public with 1,800 employees in 1999. The company’s business declined and it went into chapter 11 bankruptcy.
American Pad & Paper (Ampad) was a manufacturer and marketer of paper-based office products. In 1992, Bain Capital acquired Ampad fromMead. It went public in 1996, but declined soon thereafter, going into chapter 11 in 1999.
And of all those people who were laid off - - while he himself might not havebeen physicallyin the office at Bain Capital since 1999, these days his friends, his philosophy,and his money still works there. And since Mitt Romney "retired", eventhough someof these companies may have come back, it was with no thanks to Mitt & Co.
NewYork Times - "Mr. Romney never really left Bain. In what would be the final deal of his private equity career, he negotiated a retirement agreement with his former partners that has paid him a share of Bain’s profits ever since, bringing the Romney family millions of dollars in income eachyear."
But Section83 of the U.S. Tax Code suggests that the granting of a stake in a firm'sfuture profits in "carried interest" must be in connection with theperformance of services. What service does Mitt continue to offer Bain?
And Mitt Romney pays only a 15% tax rate on his take, not the higher incometax bracket of 35%, or that of a firefighter, teacher, or someone in law enforcementwho typically pay a 25% tax rate...those "high-priced governmentemployees" earning an average middle-class income of $50,000 a year.
And Mitt pays ZERO in Social Security and Medicare taxes on that"investment income" as well.
And what about all those off-shore banks accounts?
After I made a profit on my lemonade stand, I laid off that kid, tookmy cash, and built an elevator for my car. Just like me, if Mitt Romany iselected, he'll take lemons and make lemonade for himself and all his pals, thenlay us all off. It will do nothing for our economy or tax base as a whole, butwill only enrich the top 1% more than they already are.
And what about hisdog? I hope Mitt treats the rest of his family better.
My other posts about the King of Bain:
- Mitt Romney's Mormonism & Gay Marriage
- Why Mitt Romney May be Mentally Unstable. No, really!
- Can I call Mitt Romney's pal Edward Conard an @sshole?
- Ann Romney Needs to get a REAL Job!
- How many jobs did Mitt Romney create last year?
- Mitt Romney Connected to $8.5 billion Ponzi Scheme
- Mitt and Ann Romney are Full of Horse Manure!
- Mitt Romney: Lobbyists, Special Tax Rates & Tax Evasion
- A vote for Mitt Romney is a vote for George W. Bush
- Tax rates under Clinton, Bush, Obama & Romney
- Mitt Romney: Mister 15% and Platinum Parachutes
- Efficiency expert Mitt Romney: "You're expendable."
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