dagblog - Comments for "Romney and Bain"

You may be too young to

Peter Schwartz — Wed, 18 Jan 2012 19:00:58 +0000

In reply to Totally. What worries me is

You may be too young to remember this, but back in the 50s and early 60s--and maybe before that--the culture was all abuzz about "labor saving devices" for the home.

Things like washing machines, dishwashers, and even things like cake mixes would save us all a lot of time we could put to better use.

There was a lot of populist futurism surrounding these inventions in which wise heads painted pictures of then-far-off years like 2001 when robots would have taken over almost all our chores--at least around the house--but even at work.

The Jetsons pretty much captures this idea, and you'll notice that 1950s furniture has a Jetsons feels to it. Lots of ovals.

But the serious part was that, in the future, machines would take over the dreary parts of life and free us to do more of the fun and enriching parts. Who would not want that?

In a way, a lot of this has come true. However, the piece that was left out of this picture was that when a machine took over your job, you would be left without income. You wouldn't have more time to read Thoreau; you'd be spending all your time competing against the machine, and the Chinese, etc.

And if you still had a job and were vastly more productive because you'd learned to use all the new-fangled devices, you wouldn't benefit financially from your increased output; only the owners of these devices would. You would get paid the same, or even less.

After all, who is more skilled and therefore more valuable? The person who knows how to bake a cake from scratch...or the person who dumps the Betty Crocker mix into a bowl, adds an egg, and pops it into the oven? You have to pay the first person more because not everyone has the skill to do what she does. But an idiot can make a labor-saving Betty Crocker cake.

When the ads for dishwashers touted their "labor-saving" benefits, there was a hidden and ominous message in them that 99% of us never picked up.

Totally. What worries me is

Michael Maiello — Tue, 17 Jan 2012 22:18:52 +0000

In reply to In the end, conservatives

Totally. What worries me is that I also believe that most employers, who make money from their employees, have an incentive to never pay them enough that they can go to the beach as well (at least, not while they're young and useful.) They pay you enough to make you not leave to work elsewhere, but never so much as to give you the choice between working or not. The conversation I would like to have, but that does not fit into our current politics, would be about whether or not freedom from the obligation to work should be a goal of society. I think it should be.

In the end, conservatives

Peter Schwartz — Tue, 17 Jan 2012 09:56:19 +0000

In reply to I love your analysis and the

In the end, conservatives don't believe that labor makes business possible. They believe only in owners and executives.

I think the idea or ideal is to put labor in a position where it has nowhere else to go. After all, unlike people with serious money, these folks have to work every day to support themselves and their families. They can't just sit on the beach.

(One conversation I have pretty regularly with old high school chums who've "made it" is this: They say that if they're taxed or regulated too highly, it just won't be "worth it" for them to work. They'll just sit on the beach. No working person has this option.)

Execs know they need labor, but they don't want labor knowing it or feeling their power. And they know that, as individuals, labor doesn't have much power or many options. Most people are easily replaced, especially in a market like this.

This may be less true in the trades. Machinists may not be that easy to replace. But how hard is it to replace a Wal*Mart "associate"? (Don't answer that.) But imagine all of them striking at once?

Wow. See, there's a bunch of

Michael Maiello — Sat, 14 Jan 2012 17:52:13 +0000

In reply to Destor, did you see this

Wow. See, there's a bunch of reasons why management might want to cut employees in on a share of the profits, not the least of which is that management are employees, too, so they're cutting themselves in.

A private equity investors does not want other people to have a cut, if it can be avoided. Their job is to increase profitability and to lay claim to every cent of it. That last part gets lost. But it has nothing at all to do with job creation.

Thanks Destor. By the way,

erica20 — Sat, 14 Jan 2012 16:57:27 +0000

In reply to Thank you, Erica. Good

Thanks Destor. By the way, they were both really good pieces.

Destor, did you see this

NCD — Sat, 14 Jan 2012 15:37:23 +0000

In reply to I love your analysis and the

Destor, did you see this McClatchy piece on GS Steel?

MYRTLE BEACH, S.C. — Boston-based Bain Capital LLC more than doubled its money on GS Industries Inc. — the former parent company of Georgetown Steel — under Mitt Romney's leadership in the 1990s, even as the steel manufacturer went on to cut more than 1,750 jobs, shuttered a division that had been around for 100 years and eventually sank into bankruptcy......Sanderson said Bain Capital replaced longtime managers who had built Georgetown Steel with bean counters looking for ways to cut costs. They demanded increasing financial performance with little idea of how the daily operations were run, he said.

"They were investors. They weren't steel mill operators," he said....Less than a year after taking a controlling interest in the Georgetown plant, Bain Capital cut the employees' profit-sharing plan twice - lowering the plan's hourly rate from $5.60 an hour to $1.25 per hour. Most of the workers didn't learn about the cuts until they received their paychecks. The profit-sharing checks eventually disappeared altogether...

It's pervasive not

NCD — Sat, 14 Jan 2012 15:32:49 +0000

In reply to It's off the thread but

It's pervasive not persuasive, and insider trading ONLY involves persons who own tens of thousands or millions of shares, and have exclusive communications over a period of time with top executives, not guys in bars. Legalizing insider trading would be a like legalizing robbing banks.

It's off the thread but

Flavius — Sat, 14 Jan 2012 13:27:52 +0000

In reply to I too worked for a company

It's off the thread but insider trading is so persuasive that I think it should be decriminalized.

It's impossible to prevent- visit the bar nearest the headquarters of any company and you can learn enough to invest in or short it. Prosecuting the occasional target merely misleads ordinary investors into thinking they have full information. They don't.

Before you take a position in any equity you should be required to sign an acknowledgement that you understand that you only possess inadequate information per se and compared to that of insiders.

I love your analysis and the

Michael Maiello — Sat, 14 Jan 2012 00:42:46 +0000

In reply to But more jobs and higher

I love your analysis and the discussion you and NCD had. I tried to get at this when I said that workers in a private equity deal are an asset, not deal participants. Republicans try to make it out as if the workers participate too, because they get to keep their jobs if the deal is good. That's meager reward. It's like when conservatives tell unions that they better not make demands that puts the boss out of business. Duh. But the idea is for workers to get a fair share for... you know... making the business possible.

In the end, conservatives don't believe that labor makes business possible. They believe only in owners and executives. Any benefit to the rank and file is, as you say, a purely unintended consequence. If they take any delight in "creating jobs," it's only because being able to say so gives them outsized influence in society.

As for so-so companies in need of improvement... there's an analyst or consultant out there that can say that about any company. Smart owners don't get taken. Unless, as NCD says, they are greedy.

Thank you, Erica. Good

Michael Maiello — Sat, 14 Jan 2012 00:36:09 +0000

In reply to Maybe too even-handed. AEI

Thank you, Erica. Good points. I didn't get to read his points before I wrote mine and he didn't get to read mine either. So, he made the "business is business" argument and I responded to my assignment, which was to answer whether or not Romney's Bain record is fair game. I tried to twist the knife a little at the end, with the tax issue. :)

What I wrote here was, yes, a lot more passionate and maybe more persuasive. I'm glad I have places to do both. But, I do see your point and it's something I'm going to think a lot about.