Anti-Bain Attacks are Counterproductive
Many of us on the “right side” of the issues are criticizing two Republican presidential candidates for their attacks on Mitt Romney and his private-equity firm Bain Capital.
We expect critiques of capitalism from the simple-minded and agenda-driven Democrats, not from Republicans. Because we know that capitalism, with all of its imperfections, is the only system that actually produces and distributes wealth throughout society i.e., that creates a middle class. Meanwhile socialism only appropriates and distributes existing wealth and thwarts the creation of new wealth, impeding the creation of a middle class.
That is why there is no middle class in communist nations. The great mass of people under communism are pretty much equal – equally poor, that is.
The attacks on Romney from Newt Gingrich and Rick Perry, whose presidential campaigns are suffering (Gingrich) or are on life support (Perry), are meant to resonate in South Carolina, the next state on the GOP primary calendar and a place hit hard by the economic downturn.
Perry called Romney’s work “vulture capitalism” while Gingrich said in the New Hampshire debate three days before the primary: “I’m very much for free enterprise. .?.?. I’m not nearly as enamored of a Wall Street model where you can flip companies, you can go in and have leveraged buyouts, you can basically take out all the money, leaving behind the workers”, referring to Bain Capital.
And this is yet another example of Newt Gingrich harming his chance at the presidential nomination. He just keeps compounding his errors.
The Wall Street Journal called the attacks “crude and damaging caricatures of modern business and capitalism” and that Gingrich and Perry “sound like Michael Moore,” the anti-capitalist filmmaker and propagandist.
And the attacks are having the reverse effect by actually rallying some conservatives around Romney, people who were never warm to the Massachusetts governor in the first place.
So what is going on here?
First these attacks represent angry Republicans seriously and stupidly violating in the worst way Ronald Reagan’s 11th Commandment – Thou shalt not speak ill of a fellow Republican. Or, in this case, of the Republican agenda. But more disturbingly it is giving ammunition to the Democrats for their campaign against Romney.
And it also shows that Republicans are not even united behind the agenda of capitalist growth that is needed to solve our national economic crisis. Because this crisis was caused by socialism in the first place – by the pollution of our entire financial system with bad paper from trillions in loans that banks were forced to make by the government to low-income Americans.
Think ‘subprime crisis’. That was code language for “bad loans to poor people”, remember? Those two words were all over the news until the Media Left decided they were harmful to the Democrat agenda.
And the housing bubble? It was largely created by one man in the government – federal reserve chairman Alan Greenspan – setting interest rates far too low and spurring an artificial housing boom. We capitalists always warn over and over never to let the government set prices (in this case, the “price” of loan money).
Fuel was added to the debate over Bain Capital when Rush Limbaugh highlighted a Romney comment from January 11 about Romney’s work at Bain, in which some companies were downsized and workers were fired to save the rest of the company.
In his comment Romney compared his work at Bain to Obama’s bailout of General Motors and Chrysler in which hundreds of auto dealerships across the nation were closed and tens of thousands of jobs were lost. According to wikipedia.org:
‘On July 10, 2009, GM reported 88,000 U.S. employees, and announced plans to reduce its U.S. workforce to 68,000 by the end of 2009 after filing for bankruptcy.’
Limbaugh said that Romney shot himself in the foot by comparing his own work to Obama’s, by comparing capitalism to socialism. But Romney in fact made a very good point in this emerging debate. Because now we pro-capitalist lapdogs can say that those critical of Bain should also be critical of Obama for doing the exact same thing.
And then we can go on to explain our preference for the Bain/capitalist way by pointing out that Bain ultimately turned failing companies around and created stable firms that can move forward on their own without taxpayer support, while Bain also is said to have created 100,000 net plus jobs even after job cuts at ailing companies are accounted for.
Meanwhile, before he became president, Obama created zero jobs. And since he took office Obama has destroyed millions of American jobs through Democrat policies. And with the bailout of GM and Chrysler, Obama created two government-dependent companies that still owe the taxpayers billions, will never pay it back, and that may very well come back for more government loans.
Don’t think that this auto bailout is over. It’s not. They never are once the government gets involved. Next time GM or Chrysler face any trouble, they may very well end up at the government trough again.
Because the Obama bailout went easy on the unions and did not demand company-wide union renegotiations, while wiping out all private bondholders in GM and Chrysler and ultimately turning much of their investments over to the unions. This is pure wealth-transfer socialism and undermines the core concept on which all growth is based – private investment.
And why did GM and Chrysler need to be bailed out in the first place?
Because of their massive and unsustainable union obligations, that’s why. So in the bailout, you, the taxpayer, bailed out the unions. And then the bailout was structured to help the unions a second time.
So now we have General Motors wasting billions making the Electric Car That Nobody Wants under orders from the government and its environmentalist cronies; union labor costs remain artificially high and will continue to be a drag on GM and Chrysler over the long run; while even Ford, the only one of the Big Three that did not take a bailout, is moving more operations overseas to escape the American unions, taxes, mandates and enviro regs that all come from the Obama Left.
Meanwhile non-union ‘transplant’ car companies in the American South like Toyota and BMW are thriving with sustainable wage bases and perfectly happy workers who do not even want unions.
It is always important to remember when debating economics to talk about The Big Picture. You can always find instances and anecdotes where a private capitalist firm has failed or has been badly managed, or can be portrayed as imperfect as is being done with Bain. It is an ongoing liberal tactic to use anecdotes to make their case.
But in the overall scheme, it is always significant to point to the higher living standards in capitalist nations, and the more opportunities that are available in capitalist economies compared to socialism. That is why millions of Europeans have moved to America even in the last 50 years, while few Americans have moved to Nanny State Europe.
Why aren’t Euro economies thriving? Aren’t they practicing utopian socialism?
Yes they are. And they are failing because their socialistic economies have been suffering while being buoyed only by the economic engine of the planet – the decreasingly capitalistic United States of America. And with the American financial crisis rooted in the subprime crisis, the weakness of Euro socialism is now exposed. But you will never find any reference to that fact in the Media Left or in the Democrat party.
Meanwhile Democrats and their big-government agenda are today continuing to thwart the creation of wealth in America as they have for many decades, just as Europe has had as much as twice the unemployment of America in the postwar period.
Indeed it is their left-wing agenda that, in The Big Picture, is the agenda of job cuts, despair and lack of opportunity.
Please visit my blog at www.nikitas3.com for more conservative insights.