For my write-up today on The Real Romney, by Michael Kranish and Scott Helman, I’ll quote and comment on two passages. They concern Bain Capital.
On pages 162-163, Kranish and Helman state:
“Though Bain Capital surely helped expand some companies that had created jobs, the layoffs and closures at other firms would lead Romney’s political opponents to say that he had amassed a fortune in part by putting people out of work. The lucrative deals that made Romney wealthy could exact a cost. Maximizing financial return to investors could mean slashing jobs, closing plants, and moving production overseas…Marc Wolpow, a former Bain partner who worked with Romney on many deals, said the discussion at buyout companies typically does not focus on whether jobs will be created. ‘It’s the opposite, what jobs we can cut,’ Wolpow said, ‘because you had to document how you were going to create value. Eliminating redundancy, or the elimination of people, is a very valid way. Businesses will die if you don’t do that. I think the way Mitt would explain it is, if we didn’t buy these businesses and impose efficiencies on them, the market would have done it with disastrous consequences.'”
On pages 177-178, we read about a time when Bain Capital became an issue when Romney was running for Senate against Ted Kennedy:
“For months, Kennedy researchers had been quietly mining Romney’s business record for political vulnerabilities. One recent deal caught their eye. A company called Ampad Corporation, which Romney’s firm, Bain Capital, had acquired in 1992, had just purchased a paper products plant in Marion, Indiana, from SCM Office Supplies. The day Ampad bought the factory, SCM fired the workers. Many were rehired, but at lesser wages and reduced benefits. The notice that workers received upon returning from their July Fourth weekend made clear that the layoffs were integral to the deal. It read, ‘The assets of SCM Office Supplies Inc. are being sold to Ampad Corporation. Therefore as of 3:00 p.m. today…your employment will end.”
Mitt Romney has denied that he had anything to do with certain incidents of outsourcing or what happened at Ampad. At the same time, he has defended creative destruction. I’ll be reading his defense of that when I get into his book, No Apology.
Capitalism is about efficiency. But does it create a significant number of jobs that can provide people with a fairly-decent standard of living? People have argued that there is currently a race to the bottom—-that free trade has replaced manufacturing jobs with retail. But some have contended that there are still good jobs that free trade has created—-it’s just that people need training and education for them.
Can efficiency and productivity coincide with treating workers well—-with allowing them to keep their jobs, with good wages and benefits? Some have argued that unions have resulted in greater productivity, not less. At the same time, unions somewhat lose their bargaining power when a company can go overseas and employ people for lower wages.
Do we really need efficiency and a great deal of productivity? I doubt that we’d want to be like Communist Russia, where a lack of efficiency clearly had a negative impact on people. But what was wrong with the days when mom-and-pop stores ran the show in the U.S., before the more efficient and productive big companies came in and replaced them? Was that so horrible? I’m not sure if we can go back to that, for, nowadays, people are used to buying a bunch of stuff from Wal-Mart at cheap prices. I just wonder, though, if we can have our cake and eat it too.