The Anti-American Business Model of Mitt Romney

Tom Hamburger, reporting in the Washington Post, tells how Mitt Romney earned his millions. He did it pushing the sharp end of the job exporting business model that's destroyed our jobs base in the last few decades. He continues to earn millions a year from his anti-working-man investments in Bain Capital. Tom Hamburger:

"Mitt Romney’s financial company, Bain Capital, invested in a series of firms that specialized in relocating jobs done by American workers to new facilities in low-wage countries like China and India.

"During the nearly 15 years that Romney was actively involved in running Bain, a private equity firm that he founded, it owned companies that were pioneers in the practice of shipping work from the United States to overseas call centers and factories making computer components, according to filings with the Securities and Exchange Commission."

Hamburger's carefully reported article describes Romney's harshly anti-American business model. He made his pile by impoverishing and unemploying thousands of American workers, and, perhaps more importantly, by showing other business leaders how to do it. What other business leaders hesitated to do, Romney did. If other businesses were too patriotic to ship American jobs overseas, Romney and his like would beat them by doing so. A very cynical kind of leadership. A race to the bottom, toward the ultimate business model based upon fearful, impoverished workers with no rights and no voice.

Worse still, once Romney has earned his millions where do those millions go to live? He carefully shields them from taxation that might build roads and schools here in the U.S., hiding them in secretive offshore banks in the Cayman Islands, the Bahamas and Switzerland, as reported in the August Vanity Fair magazine. Not only has he offshored American jobs, he has offshored the wealth he earned by breaking down the American industrial base.

"To give but one example, there is a Bermuda-based entity called Sankaty High Yield Asset Investors Ltd., which has been described in securities filings as “a Bermuda corporation wholly owned by W. Mitt Romney.” It could be that Sankaty is an old vehicle with little importance, but Romney appears to have treated it rather carefully. He set it up in 1997, then transferred it to his wife’s newly created blind trust on January 1, 2003, the day before he was inaugurated as Massachusetts’s governor. The director and president of this entity is R. Bradford Malt, the trustee of the blind trust and Romney’s personal lawyer. Romney failed to list this entity on several financial disclosures, even though such a closely held entity would not qualify as an “excepted investment fund” that would not need to be on his disclosure forms. He finally included it on his 2010 tax return. Even after examining that return, we have no idea what is in this company, but it could be valuable, meaning that it is possible Romney’s wealth is even greater than previous estimates. While the Romneys’ spokespeople insist that the couple has paid all the taxes required by law, investments in tax havens such as Bermuda raise many questions, because they are in “jurisdictions where there is virtually no tax and virtually no compliance,” as one Miami-based offshore lawyer put it.

"That’s not the only money Romney has in tax havens. Because of his retirement deal with Bain Capital, his finances are still deeply entangled with the private-equity firm that he founded and spun off from Bain and Co. in 1984. Though he left the firm in 1999, Romney has continued to receive large payments from it—in early June he revealed more than $2 million in new Bain income. The firm today has at least 138 funds organized in the Cayman Islands, and Romney himself has personal interests in at least 12, worth as much as $30 million, hidden behind controversial confidentiality disclaimers."

The Looting of American Creativity

From Forbes, an important piece about how the captains of our biggest industrial corporations have been looting our creative capacity and pocketing whatever they can take.

You should call it looting. It's the sort of thing we used to read about when mobsters bought a company and hollowed it out before dumping it, but now it's the model used by big capital management companies. (It sounds a lot like how Mitt Romney got rich: by selling off parts of companies he acquired, laying off masses of employees, and pocketing the cash.)

Such single-minded (you might say narrow-minded or short-sighted) pursuit of profits is a loser's game. It's not sustainable, not responsible. (Remember when American business used to be responsible?) In the cases cited here, where capacity is sold off overseas, it's certainly not very patriotic, even if the tycoons involved do wear a flag lapel pin. What's the word I'm looking for? What's the opposite of creative? Sure: destructive. That's the preferred model of the last thirty years in American businessthink. You could write a vampire movie using this business model.

Creative assets have been invented and developed in the U.S. often with large taxpayer investment, collective genius harnessed and supported by universities and government scientific grants. But in many cases the things Americans helped create are no longer American; they've been offshored to evade societal obligations. Obligations that responsible Americans used to be proud to shoulder. And the infrastructure and educational system that nurtured the creativity is left to rot because the profiteers refuse to pay back into the creative cycle. They've looted the creative infrastructure, offshoring our American genius to evade taxes. As if the American genius was theirs to take. What happens to the inventors once their creativity has been mined and sold away? The huge dividends from this process have been pocketed by a very narrow class.

We are taught by the media to distrust migrants, but the multinational corporate model is a migrant too, a much less helpful version, a more dangerous version, without nationality, without any sense of responsibility or loyalty or conscience. Without any wish to be American unless it profits them and doesn't tax them. Here's an interesting 2007 article from investigative journalist Lucy Komisar about how Merck and other companies do their offshore shuffle.

First they came for the blue collar jobs, and I said nothing. Then they came for the white collar jobs... What mid-century cautionary tale am I reminded of here? This warning article was published six years ago by the Economic Policy Institute. Did we listen?

But (and are we surprised?) offshoring doesn't fulfill the promises it makes, as this 2007 article from CIO magazine demonstrates.

"Sixty percent of companies that send their operations offshore fail to meet their operation performance expectations, and more than a third (34 percent) fail to mee their savings expectations, according to a new study from global management consulting firm A. T. Kearney."

Feed the Rich

Where did all the tax cut money go? It went into very few pockets and from there to emerging markets where it is busy creating low-wage jobs and a future of non-American economic power. Why would those tax cuts create jobs here when the big plan was to ship the work somewhere cheaper, someplace without the nuisance safety regulations, and workers' rights and benefits? In another era this strategy would have been called UnAmerican, but it's hard to call a party unAmerican when they are wrapped in the flag.

You can read Krugman every week, or Joseph Stiglitz every once in a while, to get a sharp mature assessment of the GOP bullshit. But sometimes it's interesting to go at the b.s. one talking point at a time, like economist Brad DeLong does, and see how quickly the right wing arguments fall apart. And they do. Sadly, it takes a brain and a bit of patient thought to see how fragile the GOP material is.

The GOP arguments fall apart because they are saying one thing while carefully planning something completely different. At moments of contradiction you will usually see John Boehner burst into tears, which is a helpful distraction. The Republicans have their game plan and it doesn't do most of us any good. It wasn't meant to.

Their strategy is to make sure the economy screws most of us over and hands the fruits of that screwing over to the handful of people up top. The plan is to streamline the narrowest possible delivery of wealth. Efficiency for the very few. This is the economy they want. This is the economy they planned. An overseas economy of underpaid, eager, frightened people with no rights. A Dickensian economy, a Scrooge economy. If it makes Americans angry the Republicans are assuming that most will blame Obama. To make sure of that, there is talk radio and Fox"News".