Tag Archives: Bain

Vulture Capitalism described by Capitalists

Think Progress put this out a couple of days ago. I agree that the election should be about what companies like Bain Capital and CEOs like Romney are doing to the American Dream. It is not pretty.

Here are the top 10 comments about Bain from Romney’s Republican rivals:

1. “The idea that you’ve got private equity companies that come in and take companies apart so they can make profits and have people lose their jobs, that’s not what the Republican Party’s about.” — Rick Perry [New York Times, 1/12/12]

2. “The Bain model is to go in at a very low price, borrow an immense amount of money, pay Bain an immense amount of money and leave. I’ll let you decide if that’s really good capitalism. I think that’s exploitation.” — Newt Gingrich [New York Times, 1/17/12]

3. “Instead of trying to work with them to try to find a way to keep the jobs and to get them back on their feet, it’s all about how much money can we make, how quick can we make it, and then get out of town and find the next carcass to feed upon” — Rick Perry [National Journal, 1/10/12]

4. “We find it pretty hard to justify rich people figuring out clever legal ways to loot a company, leaving behind 1,700 families without a job.” — Newt Gingrich [Globe and Mail, 1/9/12]

5. “Now, I have no doubt Mitt Romney was worried about pink slips — whether he was going to have enough of them to hand out because his company, Bain Capital, of all the jobs that they killed” — Rick Perry [New York Times, 1/9/12]

6) “He claims he created 100,000 jobs. The Washington Post, two days ago, reported in their fact check column that he gets three Pinocchios. Now, a Pinocchio is what you get from The Post if you’re not telling the truth.” — Newt Gingrich [1/13/12, NBC News]

7. “There is something inherently wrong when getting rich off failure and sticking it to someone else is how you do your business, and I happen to think that’s indefensible” — Rick Perry [National Journal, 1/10/12]

8. “If Governor Romney would like to give back all the money he’s earned from bankrupting companies and laying off employees over his years, then I would be glad to then listen to him” — Newt Gingrich [Mediaite, 12/14/11]

9. “If you’re a victim of Bain Capital’s downsizing, it’s the ultimate insult for Mitt Romney to come to South Carolina and tell you he feels your pain, because he caused it.” — Rick Perry [New York Times, 1/8/12]

10. “They’re vultures that sitting out there on the tree limb waiting for the company to get sick and then they swoop in, they eat the carcass. They leave with that and they leave the skeleton” — Rick Perry [National Journal, 1/10/12]

Thanks for doing the research Think Progress.

 

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Star Wars Ghetto

George Lucas is tired of his homeowners association. Some of the members have a problem with the film making studio he wanted to build (in addition to other studio space but part of the original plan). Fearing a legal hot mess, Lucas has ditched the idea for a film studio and decided to donate the land to a local non-profit that would use the land to develop affordable housing.

Some neighbors feel that Lucas is encouraging poor people to move into the neighborhood for spite. Lucas denies it.

Whether this is the high dollar version of a neighborly spat or simply a generous gift to society is difficult to judge, but the end result is that lower income people get housing and those same people get the advantages of living in a beautiful natural setting. Some of the neighbors aren’t very happy. This from the New York Times:

“It’s inciting class warfare,” said Carolyn Lenert, head of the North San Rafael Coalition of Residents. …

Whatever Mr. Lucas’s intentions, his announcement has unsettled a county whose famously liberal politics often sits uncomfortably with the issue of low-cost housing and where battles have been fought over such construction before…

In a telling fact, a family of four with an annual income of $88,800 can qualify for housing assistance in Marin,

This quarrel raises the old question: which comes first poverty or crime? Are those even the causes or effects that should be measured? What psychological studies show is the greater the inequality, the greater the loss of trust and sense of unfairness, the more unhappiness. A psychological science study finds this conclusion  “Americans are happier when national wealth is distributed more evenly than when it is distributed unevenly.

“If the ultimate goal of society is to make its citizens happy,” they add, “then it is desirable to consider policies that produce more income equality, fairness, and general trust.”

So, back to Marin county, we find a beautiful and wealthy portion of the country that are sympathetic to progressive causes, but have a NIMBY attitude (Not in my backyard). From the NYPost piece, one neighbor wrote to another, ” You’re going to bring drug dealers, all this crime and lowlife in here.” Are their fears founded?

When everyone is poor, it’s harder to notice how exactly poor you are, when most are poor but a few are very rich, it’s easy to see how poor you are. When 40 hours of labor is not enough to afford the basic necessities, but another person can work fewer hours and live a life of opulence beyond most citizens wildest dreams, a question of fairness is bound to be asked.

That seems to be the staying meme of this election, “What is fair?

A grown, working man in poverty looks at another grown, working, man with wealth and does not trust the system that rewards only one of them so richly for hard work. The game feels fixed and most Americans do not have the time or background to pursue the injustice (because they have to work so hard to stay right where they’re at). The lower income man distrusts the rich man for being suspect of gaming the system while breaking his back. The rich man doesn’t trust the poor man and suspects laziness, jealousy, and low morals. At some point, figuratively “stickin’ it to the man” might sound like fun to the working class. The security industry lets us know that there is no shortage of mistrust on the end of the wealthy either.

High disparity in income makes for an unhappy society. This is exacerbated when family and life sustaining jobs are very few and far between. When someone can find a job, the job may not suit them, may injure them, they may perform poorly, they may hate – in fact that describes lots of the part time, temporary, and off the books work that is constituting much of the work that goes on in America today.  To actually find a job you are well suited for, prepared for, are paid a livable wage for, that has benefits, and can afford a middle class lifestyle is like finding a needle in a haystack. It used to be that most of the people I knew had those type of jobs, now, most of the people I know do not have those type of jobs.

For all of the cries of “social engineering” from “free marketers”, they must have missed the memo: Our society has been engineered, the corporations and their legion won. Bain Capital is a prime example. Companies like Bain have changed our society to one where most Americans can no longer afford the dream.

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Democracy Infusion Needed – Stat

Democracy is in peril. This election season is different than those before it. We now have Citizens United, which is a game changer. While citizens are still allowed to vote (at least most of them), the information by which we learn about the candidates and issues is hopelessly compromised. In this country of capital worship, the election most often goes to the highest bidder. In turn this makes the average schmoe feel like their vote is a joke – why should they even disrupt their day? Democracy is a dead man walking.

The Citizens United ruling is so much of an issue, our democracy is shifting to shareholders. The owners of corporations have more and more power over the rest of us, and now they can decide whether or not they want to pull the puppet strings of our pseudo-democracy. The shareholders of Bank of America and 3M will vote on a referendum whether or not to use the company money to wade into the fray of politics. The difference between their corporate democracy and our “We the People” democracy, is that their main mission is to make money, ours is to secure “life, liberty, and the pursuit of happiness while providing for the common defense and promoting the general welfare.”

Our best bet is that the threat of boycott for a political misstep will cause shareholders to eschew political meddlings. Our democracy is at the mercy of the corporations. Continue reading

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A 1%er’s Opinion

The 1% – are they really that much different than the rest of us? Income disparity is obviously a huge issue in this country but at least one 1%er feels proud, justified, and like everyone else – especially art history majors – are doing it wrong. Edward Conrad -a Bain Capital retiree – is not just a 1%er but an .1%er, his wealth is estimated to be in the hundreds of millions and he is ready to evangelize his theory of economics in his soon-to-be-published new book, ““Unintended Consequences: Why Everything You’ve Been Told About the Economy Is Wrong”. He sat down with Adam Davidson at the New York Times to explain. From the article:

In a competitive market, all that’s left are the truly hard puzzles. And they require extraordinary resources. While we often hear about the greatest successes — penicillin, the iPhone — we rarely hear about the countless failures and the people and companies who financed them.

A central problem with the U.S. economy, he told me, is finding a way to get more people to look for solutions despite these terrible odds of success. Conard’s solution is simple. Society benefits if the successful risk takers get a lot of money.

Conrad sees tons of solution to problems and not enough investors willing to take risks like he did and does:

“It’s not like the current payoff is motivating everybody to take risks,” he said. “We need twice as many people. When I look around, I see a world of unrealized opportunities for improvements, an abundance of talented people able to take the risks necessary to make improvements but a shortage of people and investors willing to take those risks. That doesn’t indicate to me that risk takers, as a whole, are overpaid. Quite the opposite.” The wealth concentrated at the top should be twice as large, he said. That way, the art-history majors would feel compelled to try to join them.

Conrad tries to give cover to 1%ers, claiming that they are benefactors for rest of us – measuring in dollars. He claims that for every $1 invested by a risk taker, the public reaps up to $20 in returns! He uses the example of the tapered in part of the soda can at the top and how it saves everyone so much money:

“It saves a fraction of a penny on every can,” he said. “There are a lot of soda cans in the world. That means the economy can produce more cans with the same amount of resources. It makes every American who buys a soda can a little bit richer because their paycheck buys more.”

It might be hard to get excited about milligrams of aluminum, but Conard says that we live longer, healthier and richer lives because of countless microimprovements like that one.

Conrad has a point that there are limitless potential “improvements” and investments, but he doesn’t measure anything except in terms of the market. He may be an admitted devotee to “The Market” as God/moral guidance as was described in Monday’s post, True Religion of the Free Market, his characterizations certainly fit into that pattern. He does not consider for a second that soda is not healthy and that consuming more creates more problems, or that creating more cans adds to the waste stream. In fact, these are the trickle down jobs he would likely point to in that scenario – more work for dentists! more work for nutritionists! more diet pills and programs can be sold! more psychologists will be hired to help people deal with obesity!, more XXL clothes to be made! more doctors will be needed for the host of issues that addiction to high fructose corn syrup can create.

Conrad acts self righteous about the fact that folks like he are willing to take risks that benefit society and society owes the 1%ers even more. He does not mention the costs to society for all of the industriousness of business. He doesn’t recognize that the rest of us have no choice but to assume the health, financial, environmental, and security risks that are created by industry.

Conrad even applied a market based formula to choosing his wife complete with evaluating demographic data, calculating probabilities in geography, calibrating the quality of women available, selecting and ending up with your best statistical probability.

The author notes that Conrad has a mean streak at times even during the interview. He disparages the table of twenty-something strangers that were socializing at a cafe at 2:30pm:

“What are they doing, sitting here, having a coffee at 2:30?” he asked. “I’m sure those guys are college-educated.” Conard, who occasionally flashed a mean streak during our talks, started calling the group “art-history majors,” his derisive term for pretty much anyone who was lucky enough to be born with the talent and opportunity to join the risk-taking, innovation-hunting mechanism but who chose instead a less competitive life.

He is also irritated with Warren Buffet and sees his charitable contributions as arrogant and meddlesome in his view of proper economics:

During one conversation, he expressed anger over the praise that Warren Buffett has received for pledging billions of his fortune to charity. It was no sacrifice, Conard argued; Buffett still has plenty left over to lead his normal quality of life. By taking billions out of productive investment, he was depriving the middle class of the potential of its 20-to-1 benefits. If anyone was sacrificing, it was those people. “Quit taking a victory lap,” he said, referring to Buffett. “That money was for the middle class.”

Many more interesting tidbits like this sprinkle the article. It is assumed that he wants to help his former Bain Capital partner with his election campaign, but some of the statements are so outrageous that he may do just the opposite by affiliating himself. Take this gem:

“God didn’t create the universe so that talented people would be happy,” he said. “It’s not beautiful. It’s hard work. It’s responsibility and deadlines, working till 11 o’clock at night when you want to watch your baby and be with your wife. It’s not serenity and beauty.”

What Conrad does not figure into any of his equations is humanity. He seems to have very little empathy and obviously puts making money as a top priority. He doesn’t seem to understand that people are not obligated to create wealth for others – those “art history majors” have every right to do what they enjoy, and building community with a group of friends not only has value in the warm fuzzy category, but it could even be argued that it builds security – financial or otherwise. When you’re down and out, who will lend you a hand, come help you with car troubles, or give you a ride to work. Conrad doesn’t recognize the value of community at all. Perhaps because his community – Bain Capital – endorses a community of like minds that are focused on money over time with friends, family, serenity, beauty, love, caring, discovery, health or peace. Like other financial “conservatives” (what does that even mean anymore?) Conrad is supremely obedient to the value of authority and his authority is “The Market”.

In my personal opinion, I feel a bit sad for Conrad. I wonder if he’s seen joy in a child’s eyes after discovering something, or if he can enjoy a simple walk in the woods? Does he ever go dancing with his friends, offer a shoulder to cry on, or have one offered to him if he needed it? Making and modifying widgets will eventually fill this planet with garbage (if they’re not biodegradable), production is not always the answer to prosperity and value is not inherent simply because large dollar figures are being exchanged.  I’ll close with this quote from Adam Davidson, Conrad’s interviewer after spending some time with him:

This constant calculation — even of the incalculable — can be both fascinating and absurd. The world Conard describes too often feels grim and soulless, one in which art and romance and the nonrenumerative satisfactions of a simpler life are invisible. And that, I realized, really is Conard’s world.

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