Posted on 01/13/2012 5:12:50 AM PST by SeekAndFind
Barry Bennett is the Leni Riefenstahl of the blistering attack documentary. The political operative’s half-hour anti–Bain Capital film, endorsed by the increasingly unhinged Newt Gingrich and aired by his super PAC, is anti-market agitprop worthy of Michael Moore. If the Academy gave an award for tendentiousness, Bennett would be a sure-fire nominee.
Yet his production is at times affecting and effective. Put aside its dishonesties and over-the-top insinuations about the Mitt Romney–run private-equity firm (it raised seed money from Latin America!). The film captures a conflict of visions. From below, from the workers at Bain-acquired firms that went bust, the vision is about family, community, and security. From above, it is about efficiency and profit.
Defenders of Bain and Romney himself use the famous phrase of the great economist Joseph Schumpeter, “creative destruction,” to describe the firm’s work. The former employees interviewed by Bennett are a reminder that, for all the glories of the first half of that formulation, the second half can be hell. But what’s the alternative to this Schumpeterian churn?
One worker laments, “I just wish they’d left us alone.” In a free economy, though, no one leaves you alone. Competitors, domestic and foreign, are all around. The way things have always been done is a formula, sooner or later, for obsolescence.
The Wall Street Journal did an analysis of Bain’s record during Romney’s tenure from 1984 to 1999. It found that of 77 businesses Bain invested in, 22 percent eventually filed for bankruptcy reorganization or shut down. That seems high, except Bain’s investments “focused on smaller and sometimes troubled companies that Bain hoped to fix or build.” This wasn’t so much “vulture capitalism,” in the words of the always-subtle Rick Perry, as “turnaround capitalism.”
Gingrich, speaking with the purity of someone whose own business model depended on being a peculiarly well-compensated historian, has fastened on a Reuters article about Bain’s handling of a Kansas City, Mo., steel mill. According to Reuters, Bain took on the mill despite “obvious” risks, including out-of-date equipment and formidable competition.
After Bain’s $8 million takeover, the mill announced plans for a $98 million modernization. It merged with another operation “to form one of the largest mini-mill steel producers in the U.S.” Bain re-invested another $16.5 million. When an industry competitor tried to buy the new steel company, Bain declined. These weren’t the acts of a scavenger picking at a carcass.
Still, it didn’t end well, as Reuters relates. Management performed poorly. Cheap imports from Asia drove down prices. Energy costs rose. The financial crisis in Asia diminished demand. A unionized work force hampered its productivity. Are we to believe that if Mitt Romney had simply been a nicer guy, it would have worked out differently?
Bain made money on the deal anyway, since the doomed steel company took on debt to pay dividends. But Bain clearly didn’t want to bankrupt its own enterprise. It did want to get a return as soon as possible. Otherwise, why bother taking on such a tenuous proposition? This thinking certainly doesn’t shock the conscience of all the institutional investors in private equity — the public pension plans, the charities, the university endowments — who get on board expecting precisely such returns.
Firms like Bain revived an American business world that in the late 1970s and early 1980s had grown “sloppy,” “complacent,” and “lazy,” in the words of Bain executives who spoke to New York magazine. Their rise disrupted the old corporate culture and drove a productivity revolution. They serve the same purpose today. This doesn’t justify every sharp practice, or the motives involved. Through the wonders of the invisible hand, though, the restless quest for profit is the source of our wealth and dynamism.
That may not be a comfortable or simple case to make in a political campaign. Mitt Romney, portrayed as a cross between Gordon Gekko and Snidely Whiplash, now has no choice but to make it.
― Rich Lowry is the editor of National Review
And therein is the problem. Instant return is like buying a winning scratch-off ticket, not growing a company. Taking on debt to pay dividends?
This article is so obviously an attack on Newt Gingrich.
How exactly did Bain exact enormous profit from this steel mill caper? How did it earn something like 100 million plus when we’re told by Lowry that it was inefficient, uncompetitive, and saddled with debt?
They had to either:
1. Take the borrowed money for their fees
and/or
2. Fake the value of the company and sell it to an unsuspecting purchaser.
3. And they had to be absolved from responsibility for any debts by the bankrupt company via government action, legal loopholes, or tax-payer assumption of that debt.
All of the above are unethical, and if others aren’t illegal then they should be.
Romney is a vulture capitalist.
Newt deserves great credit for pointing out Romney’s weaknesses BEFORE he becomes the standard bearer going up against Obama.
Corporations are creatures of the state—they are arbitrary legal constructs that are effectively treated as something like persons under the law, without the direct tangible accountability possessed by real humans. All of which just promotes inordinate moral hazard to free-market processes.
That means that 60 out of 77 remained viable companies and of the 17 that filed Chapter 11, for reorganization only 2 Filed Chapter 7 {went down and out} so the other 15 came back, albeit, restructured and probably after some people lost their jobs.
Does anyone even know of a person that hasn't had more than one job in their entire life?
Either they quit, get fired, the company gets bought, goes out of business, whatever, it's part of life.
Newt Gingrich and Rick Perry should be ashamed of themselves for bean-counting Bain Capital’s record on job creation. Any investment firm operating over decades of rapid employment growth will be able to show that the companies it bought added jobs over time. That’s what the academic studies on private equity show in any event, as Jordan Weissmann reports at The Atlantic. More relevant is the alternative. We’ve been there, done that, and don’t want to do it again. Corporate America in the 1950s and 1960s coasted on the postwar monopoly enjoyed by American companies after the destruction of European and Japanese industries. Detroit in the late 1960s had African-American neighborhoods stretching for miles with well-kept single-family homes and manicured lawns; by the end of the 1970s it had turned into a moonscape. The rust belt still hasn’t recovered from the laziness of American capital a generation ago.
Private equity takes money from institutional investors who otherwise would passively invest in public securities, and gives them the chance to exercise direct ownership of companies whose management fails to exploit their potential. It creates competition where no competition existed before.
>> The political operative’s half-hour anti–Bain Capital film, endorsed by the increasingly unhinged Newt Gingrich and aired by his super PAC, is anti-market agitprop worthy of Michael Moore.
It’s a real tough challenge to guess who Lowry backs, isn’t it?
Dear rich lowry;
eff off.
It’s a real tough challenge to guess who Lowry backs, isn’t it?
No, actually I can’t guess. Are you saying that anyone who disagrees with Gingrich’s anti-capitalist, pro-OWS propaganda automatically must being supporting a particular candidate?
>> Are you saying that
DID I say that, idiot? Piss up a rope.
Bain was the stockholder. Bain's people decided how much of a dividend that they would pay their stockholder (i.e., themselves). They borrowed money to pay themselves dividends even though the company was not making any money.
They apparently borrowed more than their own investment since they made money on the deal. Then after they pushed the company into unrecoverable debt, they then sent the company into the bankruptcy court and screwed all the bond holders. On top of everything else, they screwed the taxpayers out of 37 million dollars in subsidies, tax breaks and infrastructure.
And Rich Lowery doesn't think this is VULTURE CAPITALISM?
Bain Capital should have been forced to pay the bondholders from their paid out dividends, but they managed to manipulate the laws to their advantage. They ran a "risk free" Capital company because they were shielded from the failures of their subordinate corporations while at the same time looting them for the principle corporation's benefit. This is unethical and should be illegal.
This is the business model of Bain Capital and Mitt Romney.
It is pretty much the business model that Obama used when he took over GM and Chrysler. Screw the bond holders, screw the taxpayers.
“After Bain’s $8 million takeover, the mill announced plans for a $98 million modernization. It merged with another operation ‘to form one of the largest mini-mill steel producers in the U.S.’ Bain re-invested another $16.5 million.”
Very nice how Mr. Lowry elides over the fact that in between the initial $8 million investment and the later $16.5 million investment, Bain took $36 million in debt-financed “dividends” and millions more in management fees.
Great work, if you can get it.
Mr. Lowry’s omission rises to the level of journalistic dishonesty.
“vulture capitalist” Seriously? 22% of the companies Bain managed folded. Others such as Staples are a resounding success. Thats “vulture capitalism”? Do we need to use the language of the progressives to defeat the flip-flopper Romney?
Tlozo, I know you know this, but an unethical or criminal enterprise cannot be criminal all the time in everything it does or everyone will notice. In other words, the "good" deals provide COVER for the unethical deals.
A 22% bankruptcy rate is not good at all, but it is low enough to escape scrutiny AND the 78% positive deals provide cover.
Also, don't you think Obama's claim to have created/saved millions of jobs should be weighed against all the jobs lost? Should he be allowed to say "I created 2 million jobs" when we know that he lost 4 million during the same time period? Wouldn't that be a -2 million?
The same with Romney. Any jobs gained must have jobs lost subtracted.
Vulture Capitalist? You bet. Romney is the poster boy for vulture capitalism. And he won't release his financial disclosure form because he doesn't want know how much he has hidden overseas, in shelters, or part of special programs at low tax rates.
Lame answer, but I expected no better.
I am willing to bet that Bain Capital made money on every one of those companies by borrowing heavily against them to pay themselves dividends knowing full well that they were just robbing Peter to pay themselves. If they didn't know these businesses were doomed, then they have no business being in the business.
This is indeed the VULTURE CAPITALISM model. If you were a bond holder you wouldn't be defending this practice.
Indeed.
Nor is the Rino Establishment recognizing how much of their base is middle and lower class social conservatives drawn to conservatism, not because of it's fiscal identity, but because of its appearance as the defender of wholesome culture and opportunity. These are the little people taking the hit from our so-called heroes of republicanism.
These are the masses that win elections for Republicans, who vote for national security hawks, for lower taxes, and for pro-life, pro-God, pro-gun and pro-family policies. We don't vote to be among the trod upon, the grifted, and the lied to.
But, these are also the people who like Fletcher in Josie Wales will say, "Don't piss down my back and tell me it's raining, Senator."
Rebellion is brewing. Rebellion against the Rino Establishment will come first, and traitors are always treated worse than announced enemies.
Cripes, Lowry really takes the award on this one.
First, he invokes Godwin’s law, with the mention of Leni Riefenstahl. WTF does a Nazi film maker have to do with a US campaign ad in 2012? Nothing - either in style or content. NR is going full-bore, pulling out all the stops for Romney. In next week’s mast editorial, I expect that they’ll accuse Gingrich of being a cat molester, Paul of dropping LSD at Dead shows in the 60’s and Huntsman of having multiple wives.
But let’s put Lowry’s (and NR’s) insane zeal for Romney aside for just a moment. We’ll get back to it, I promise.
The director of the film, Jason Killian Meath, was actually a consultant to the Romney campaign in 2008. Does anyone at NR mention that? No. Do they mention that Barry Bennett funded the movie out of his own pocket? No. Do they mention that Sheldon Adelson is a hard-core capitalist in his own right? You can look up and down the Vegas Strip and see what Adelson has brought to that town - unlike Romney, Adelson can actually make the claim that he’s created 100K jobs in Vegas. The Nevada Policy Research Institute, a free market think tank on NV issues with whom I’m pretty familiar, thinks rather highly of Adelson. So do a lot of residents of Vegas and Nevada. So do a lot of us who were in the computer industry. COMDEX was Adelson’s idea, it was his idea to have it in Vegas, and it was THE computer trade show through the 80’s and 90’s. It was a huge boost to the computer, networking and PC industry. COMDEX helped a lot of small computer companies expose their products to the market in ways that enabled faster growth than print advertising in that day.
So this super-PAC that is backing Gingrich isn’t coming from some socialist swamp.
Does Lowry mention that Bennett got most or all of this from a GOP primary opposition research brief on Romney from 2008?
No.
Let’s let that hang in the air for a sec: this information was dug up on Romney in the 2008 cycle by other Republican candidates.
Now, before someone here on FR accuses me of being in the tank for Newt, I need to get this out of the way. NONE of these candidates sit well with me. They all have problems as far as I’m concerned. Thad McCotter was the only guy I thought who “grokked” the financial melt-down and what needs to be done to defuse the financial thermonuclear weapon the TBTF banks have created with derivatives and leverage. Huntsman has said some things in this area that sound promising. Paul, as nutty as he might be. is the only guy who has mentioned the “T word” (trillion) in terms of how severe the federal budgets MUST be cut ASAP. Cain actually had real business experience and was a true DC outsider.
And on and on. They all have their little appeal, but they fall down quickly in oh so many other ways.
But of all of them, I have always been least impressed with Romney. And the more I researched and the more I learned, the less impressed I became, until sometime last autumn, I became convinced that he’s the only possible guy who could actually be worse for the country on spending and finance than Obama and Bush put together. As bad as Obama’s re-election might be politically (for domestic and foreign policy), Romney’s election could be much worse financially. His ties to Bain will mean that he is absolutely captured by Wall Street interests. All the TBTF banks have to do is figure out how to pitch the latest crisis as some threat to one or more of Bain’s positions and Romney’s judgement on bailouts or policy will be altered.
Does anyone think that Obama and his band of spin doctors don’t also have this information? Really? If anything, Romney should be thanking Gingrich for reminding him that he’s not going to get the office merely by buying it. He will have to do some work here and there, and not all of it will be able to be done by his step-n-fetchit’s.
As I’ve said time and time again: Romney is running in the national spotlight for a THIRD time now. If he were anything other than a dull-witted moron, he’d know that this subject was going to come up and he would have either gotten in front of it or had a slick response prepared for it.
He has neither. It means that Romney is either too stupid to be POTUS, or the charges against his behavior at Bain are not defensible.
Now, back to National Review. This is it. I’d long ago allowed my subscription to lapse, but this tripe is really the last straw. These pinkish toffs, these milquetoast Republicans, these effete snobs, pinky-in-the-air milky tea drinkers... need to be pulled out into the full light of day and exposed as the fools and poseurs they are. They’re not conservative, they’re mincing, silk pantywaist rent-seekers trading off the name and reputation of WFB, when in fact they were never worthy of carrying the damp laundry off his boat.
I remain strongly convinced that Romney will fail in his quest, for reasons I’ve previously written. He’s insufficiently conservative, the Bain history will continue to erupt and dog him, and he has a habit of saying truly epic nonsense (eg “Corporations are people”) that makes it absurdly easy to parody him. Falling down a flight of stairs takes more work than writing a parody of Mitt Romney. For a comedy writer, writing a parody of Romney will be like shooting fish in a bucket with a shotgun. There won’t be any sport in it whatsoever.
NR and their fellow silk pantywaist, back-bay Republicans sowed the wind in 2008 that put a candidate with no clue how to win in the top slot, then attacked the only reason true conservatives had to vote for that ticket when she didn’t fit their ideals of who should be running. The attacks were numerous, cowardly and petty, to say the least.
Now we have these same inbred chattering twits hyperventilating that their Harvard MBA/Law candidate is getting attacked by other Republicans who have better records in either business or politics, and they’re getting their very long, pointy noses bent out of joint about it. Such hyperbolic nonsense as “...is the Leni Riefenstahl of the blistering attack documentary...” from a supposedly serious “conservative” editor forever marks NR as being a highly unserious publication.
It’s time to clean house. We might as well start reconciling ourselves to the idea that no conservative will win the POTUS slot in 2012, that we need to redouble our efforts on the Congress (and especially the US Senate) as well as the state houses. Before the next cycle, these back-stabbing SOB’s who force such nonsensical ideas as Romney down upon us need to be exposed, humiliated and have their reputations destroyed before 2016 so that conservatives no longer need worry about back-stabbing SOB’s in our midst. It is high time they reap the whirlwind.
nice post...and don’t forget the Romney News Channel
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