What in tarnation is going on? Since when did people in finance get defended in any real significant way?
Private equity, investment banking, and hedge funds were universally loathed in 2009 for collectively throwing us off a cliff economically in 2008, and (begrudgingly) the government had to, and was somehow able to, grab a hold of the ledge with one hand and start pulling us back up, with TARP and then the Stimulus. And now we’re going to elect someone from their ranks?
Republicans were furious at the financial services industry. That anger is part of the roots of the Tea Party. Democrats were similarly upset. Soon, Goldman Sachs executives were brought in front of Congress, as Jamie Dimon of JPMorgan Chase is about to be for his firm’s recent blunder.
And now, Mitt Romney, one of the stars of that holy trinity of financial subsectors (or is it holey because of the ethical gaps in their practices?) has a 50-50 shot at being president. I just can’t see voters enthusiastically embracing Romney’s particular business background as well-suited for the post. The current occupant agrees: ” ‘There may be value in that kind of experience, but it’s not in the White House,’ Mr. Obama told supporters at the Iowa State Fairgrounds on Thursday night.”
I will concede that private equity work is different from that of I-bankers and hedge fund types. Some of that is in good ways. The latter two mostly toss around money on equities, slice it up in derivatives like they are playing Fruit Ninja, or mess with real estate in creative ways that lack the aesthetic appeal of a handsome renovation. They can make tons of money for their firms, or lose tons of other peoples. At its best, private equity can make firms tons of money, turn around companies, and create jobs. At its worst, it can makes firms tons of money, bankrupt companies, and lay off thousands.
We all stand up for the free market (or should). That does not mean that a successful run in a specific part of that market deems one worthy for the presidency.
And, by the way, making money is fine. It’s how you make it. Actors make it hand over fist over fake boob and we don’t hate them. Robert Downey Jr. is in the process of making $50 million from the Avengers; I’m just jealous.
Romney made his hundreds of millions by checking the pulse of companies and defibrillating them in order to get the profits flowing as fast as he could.
Romney was a management consultant for the better part of a decade, after which he offshot from the consulting firm Bain & Co. to start the private equity company Bain Capital. Correct me if I’m wrong, but the short version of the difference is that in the former you log loads of billable hours while making recommendations to companies, whereas in the latter you directly invest your money in the companies and implement your recommendations; you then reap the profits.
It’s not that he is innately a mean-spirited bean counter, but his thirty years in management consulting and private equity have trained Romney to examine balance sheets and organizational charts too unemotionally. The culture of self-interest is hard to shake off.
It’s also not that the firms are anti-job creation, it’s more that jobs are an occasional by-product of this work. You’re squeezing a lime to get the most juice for your margarita. If you think you can make a better juicer without spending too much more, maybe you’ll do it. (This is admittedly not an apt metaphor for a sober Mormon.)
Bain Capital’s goal is unlike that of Facebook, expressed in its IPO filing with the SEC: ”we don’t build services to make money; we make money to build better services.” Now, I don’t love everything about Facebook, but that is an admirable sentiment. Bain and other leading private equity firms are pretty much the opposite: “We don’t make money to assist troubled companies; we invest in troubled companies to make more money.”
Did his work even create that many jobs? The 10,000 he used to say somehow became 100,000. Who knows? One thing that is not disputed: as governor, his state was 47th in the nation in job creation. Doesn’t that serve as proof that his brand of business experience doesn’t translate well into creating jobs as a government executive?
Romney’s foray in private equity is not a partisan issue. He’s heard it on both sides. Republican candidates attacked him for this work in the primary and it left a mark. Newark mayor Cory Booker set off the debate again on Meet the Press last week, though the topic was already roaring back.
Any time a surrogate says something inartful and appears to puncture a hole in his/her side’s argument or philosophy (see Rosen, Hilary), it’s news, because it knocks the wind out of their candidate’s sails, and gives their opponent a chance to sew doubt, to say the surrogate, and by extension the candidate, was caught in a lie.
Romney’s time at Bain is undoubtedly fair game. And Booker regrets how this went down. He chose a poor example to make a different argument. What he was really getting at is that he does not like negative ads and wedge issues. As Slate’s John Dickerson rationalizes it:
“But Booker picked the wrong target. Mitt Romney has argued repeatedly that his career at Bain—more so than almost anything else—gives him special insight into how to turn around the U.S. economy. It’s well within bounds to put that career under a microscope to assess the truth of his claims.”
“It stands to reason that anyone who has been in a senior executive post should have some skill making decisions, and that is the central attribute required of a president. But in business you don’t have to deal with politicians as much as you do in the presidency, and you don’t have to coddle interest groups nearly as much, either. The more relevant portion of Romney’s career should perhaps be his tenure as governor of Massachusetts, where he tried to apply those business practices to government. His jobs record there is more lackluster than the success he had in private business.”
President Obama was asked about the dust-up soon afterwards, at his NATO press conference. Off-the-cuff, he articulated almost perfectly why the Bain issue is appropriate to discuss. The president was probably expecting some question on the topic, so had some idea what he might say. Nonetheless, his 5-minute reply seems to dismantle Romney’s entire argument that he would make a good president. You should absolutely watch it, either below or at this crisper video link:
If you notice, Romney never really articulates what specifically this business background contains that makes him a good pick for the job. He simply says he has great experience, names concepts he says Obama cannot possibly understand (but clearly POTUS does), and goes on to criticize the president.
Halperin: So when the President says he wants to focus a lot of the election and debate on your career at Bain Capital, do you welcome that?
Romney: Well of course, I’d like to also focus on his record. What is it that he’s done as the President of the United States over the last four years? And the American people are interested in, not so much in the history of where I was at Bain Capital, or that I have understanding of the private sector.
Romney’s work at the two Bains makes me think of House of Lies, Showtime’s decidedly so-so freshman skein (gotta throw in some of that Variety language when you can) about top-tier management consultant Marty Kaan played by Don Cheadle, shilling bullshit for a living as he plants IEDs (E for economic here) in companies to amplify his already-1% lifestyle.
All Marty’s team (aka “The Pod”) does in the show is look for angles to work for a pitch to make money for themselves. They joke incessantly amongst themselves about not caring about the organizations; they just want to be in a position to earn more and more from them for their services.
Romney may be as smart as Marty Kaan, but he’s not nearly as smooth. While his practices are on par with Kaan’s, what came to me in writing about all of these issues (and an opportune airing on Comedy Central), is that Romney hews more to a different character in the recent corporo-filmic pantheon: Bill Lumbergh from Office Space. Romney is LUMBERGH!
Think about it: he’s apathetic, out-of-touch, expressionless, emotionally vapid and unaware, and passive aggressive in his approach to confrontation. Dang, they even look alike. I don’t understand why anyone with that perfect combination of traits would ever leave a profession he is perfectly suited for! But they are not ones we value in presidents.