A WINGTIP IN THE FACE FOREVER
His column doesn't have the visibility of an infinitely reproducible Cory Booker video clip, but David Brooks, Mitt Romney's principal voice on the New York Times op-ed page, is not exactly an ideal surrogate. Here's what he published today as a paean to the glories of private equity, and a rebuke to that evil socialist Obama:
Research from around the world clearly confirms that companies that have been acquired by private equity firms are more productive than comparable firms.
This process involves a great deal of churn and creative destruction. It does not, on net, lead to fewer jobs. A giant study by economists from the University of Chicago, Harvard, the University of Maryland and the Census Bureau found that when private equity firms acquire a company, jobs are lost in old operations. Jobs are created in new, promising operations. The overall effect on employment is modest.
Oh boy -- private equity is a zero-sum game! And it doesn't really increase employment! Gosh, where do we sign up?
This is a potential problem from Romney -- his side sings the job-creating praises of his work at Bain, his opponents talk about job losses ... and folks like Brooks who purport to be objective observers in the middle say: well, actually, on balance we don't lose jobs or gain jobs as a result of private equity. The winners win, the losers lose. The real winners, of course, are the people (like Romney) who work the levers.
For ordinary Americans, this is supposed to be an improvement on the status quo how exactly?
But to Brooks -- he of the newly purchased $4 million house -- this actually should be enticing to ordinary Americans:
Forty years ago, corporate America was bloated, sluggish and losing ground to competitors in Japan and beyond. But then something astonishing happened. Financiers, private equity firms and bare-knuckled corporate executives initiated a series of reforms and transformations.
The process was brutal and involved streamlining and layoffs. But, at the end of it, American businesses emerged leaner, quicker and more efficient....
The implicit argument of the Republican campaign is that Mitt Romney has the experience to extend this transformation into government....
In a country that desperately wants change, I have no idea why a party would not compete to be the party of change and transformation...
Yes, I simply can't imagine why a party wouldn't want to identify itself with a "brutal" process that "involved streamlining and layoffs" and has an "overall effect on employment" that's "modest." It's baffling!
And Brooks knows just where Mitt's going to look for efficiencies if he's president:
While American companies operate in radically different ways than they did 40 years ago, the sheltered, government-dominated sectors of the economy -- especially education, health care and the welfare state -- operate in astonishingly similar ways.
The implicit argument of the Republican campaign is that Mitt Romney has the experience to extend this transformation into government.
Um, how would that work exactly? Are capitalists going to buy underperforming schools, fire the teachers, sell the buildings and football stadiums at a profit, and outsource the 3 R's to Mexico?
10 comments:
"Are capitalists going to buy underperforming schools, fire the teachers, sell the buildings and football stadiums at a profit, and outsource the 3 R's to Mexico?"
Pretty much, yeh. Or rent the facilities back from the buyers (at a tidy private profit to their cronies who bought the stuff) and staff the bare minimum with minimum wage drones who'll be grateful for a paycheck, any paycheck, while the children of the elite go to the pricey private schools their Job Creator parents can afford.
That is, rent the facilities out to the municipalities required to provide a free public education (for the interim when laws requiring that are still on the books).
The overall effect on employment is modest.
Maybe, maybe not. That is, maybe, if all you're looking at is (jobs gained) - (jobs lost) you get a very small number. But a) the jobs gained don't necessarily go to the same people whose jobs were lost; b) new jobs don't necessarily pay the same as the lost jobs; c) short-term jobs are not the same as long-term jobs; and d) any break in employment is a major disruption.
So you can look at the net and feel pretty good about it, but if you look at what really matters--the turnover--I guarantee it's a much uglier story.
I'm pretty sick of the business is the same as government line. Business is laser focused on profit, and that focus becomes even more intense the larger the company. But government, ideally, should break even. Taking in just enough to cover expenditures. Not to mention that defense, education, regulatory and other agencies should NEVER be run for profit!
Erik
http://eaprince.blogspot.com
"This process involves a great deal of churn and creative destruction."
The 'churning' is in the stomachs of employees as they hear their company is looking to be bought out.
There's a lot of "creative" things in deals like this.
"Creative" ways to sway and bribe the companies owners and local/state politicians.
Then "creative" ways to break-up the company into chunks that CAN make money, and those they don't think can, or don't want to work to pursue.
"Creative" ways to finance the deal.
And most important - "creative" ways to circumvent regulations, and "creative" ways to avoid local, state, and federal taxes.
The "destruction" is easy.
-Rampant unemployment.
-The break-up of families.
-"Destruction" of towns and counties, even states.
-Lower wages - so less tax income for towns, counties, and states.
-More people reliant on dwindling social services, paid for by the towns, counties, and states.
And, ultimately, the "destruction" of the middle class, the "American Dream," and the nation.
"Vulture Capitalism" may be a bad term, because REAL vulture's circle the dying, and don't start feasting until the bodies dead.
May I suggest "Cannibal Capitalism?"
They strip the body of meat for themselves, and leave the skeleton to fend for itself.
Ooops, the last line should read:
"May I suggest "Cannibal Capitalism?"
They kill and strip the bodies of meat for themselves, and leave unwanted parts and the skeletons to fend for themselves."
Forty years ago ... let's see, 2012 minus 40 equals (how does this thing work?) ... oh yes, 1972, I remember it well. The Republican was re-elected by a huge margin. Then it turned out he was a crook and people got all bent out of shape about it. Then a buncha Ay-rabs started claiming that just because our oil was under their sand they should get paid for it, and everything went south, churning inflation and unemployment well up into double digits.
What universe is Brooks trying to describe? Because it ain't the one I used to live in (and still do).
Pete,
The DC Villager and PunTWIT universe.
Or, as I prefer to call them, "The Villager Idjit's."
This is righteous.
Great title, by the way.
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