For most of us, to understand capitalism is to appreciate risks. Someone takes a chance, makes an investment, and if the enterprise thrives, the investor benefits. The reward comes with the payoff -- if you're smart, work hard, and make good choices, you'll be compensated accordingly.
But to understand Mitt Romney, one must realize how much this guy hates risks. About a month ago, the New York Times had an interesting report on how Bain Capital created a business model in which they made millions whether their investment prospered or collapsed. It was "difficult," the report noted, "for the firm and its executives to ever really lose."
As it turns out, the risk aversion goes even deeper. Ezra Klein explained yesterday that Romney was initially reluctant to run Bain, but agreed when Bain eliminated the possibility of failure.
As Michael Kranish and Scott Helman, authors of "The Real Romney," describe it, Romney "explained to Bain that he didn't want to risk his position, earnings and reputation on an experiment. He found the offer appealing but didn't want to make the decision in a 'light or flippant manner.' So Bain sweetened the pot. He guaranteed that if the experiment failed Romney would get his old job and salary back, plus any raises he would have earned during his absence. Still, Romney worried about the impact on his reputation if he proved unable to do the job. Again the pot was sweetened. Bain promised that, if necessary, he would craft a cover story saying that Romney's return to Bain & Co. was needed because of his value as a consultant. 'So,' Bain explained, 'there was no professional or financial risk.' This time Romney said yes."
Romney managed, in other words, that most unusual of career transitions: a move entirely without risk.
And Romney's departure from Bain fits into the same model -- he kinda sorta "left" the firm, but made it easy to come back if other opportunities didn't work out. After all, he remained Bain's CEO, chairman, president, and sole stockholder until his "retroactive resignation."
What's more, while he was at Bain, as Bloomberg reported this week, Romney's business model was built around ensuring that he "privatized the gains and socialized the losses."
Why does this matter? For a couple of reasons, actually.
For one thing, it tells us a bit about Romney's personality.
But more importantly, there's a policy significance -- as Ezra explained, Romney's "arguing that the tax code needs to do more to reward risk taking and the safety net needs to make it more difficult for those who don't take risks."
And yet, Romney’s life and career show a man who did not have to take many risks, and perhaps wouldn’t have used his talents to nearly the extent that he has if not for the fact that he was able to rely on three expansive of safety nets: that of family, personal and corporate wealth. [...]
There’s little in Romney’s finances to back up the contention that the rich are insufficiently rewarded for the risks they take, and there is much in his history to support the idea and that safety nets have a role to play in empowering people — even wealthy people who don’t run the risk of economic ruin — to take on risk. But Romney’s policies seems to reflect the inverse of these lessons.... There is a sense in the United States that the rich play by different rules than the poor or the middle class — rules that make it easier for them to get even richer. Romney’s history shows he has been aggressive in taking advantage of those rules, which is fine. But his proposed policies would make it even easier for the rich to stay rich and even more difficult for the poor to scrape by, which is not fine.
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Your show pointed out how Twitt has over a million dollars in his IRA account,, illegally deferring taxes.... The Daily Show had a nice bit on a $77,000 deduction for his horsey..
I, too, saw the The Daily Show item. I thought Jon Stewart summarized the Romney issue pretty well.
Daily show....lol, the lefts idea of real news reporting goes to show you just how libtared they are....
This is a great start Benen, but I don't see how Rachel can cover this in short form journalism.
The asymmetry in the cost benefit equation goes to the heart of distinguishing good equity capital activities, and bad ones. It goes to the heart of good banking- good Wall Street financing of new economic activity to power middle class prosperity, and bad Wall Street street financing. Whether Wall Street's risks were good risks or bad risks, it didn't matter. Either the Wall Street firm would get extreme wealth out of a deal or at worse they would make more modest wealth and take a momentary public relations hit, and a negligible fine.
Striking this balance is older than the code of Hammurabi. The kings solution to the problem of information asymmetry (between the buyer and the builder of a home who knew that he could skimp on creating a proper foundation) was to put the builder to death if the home he built collapsed and killed the owner.
How we balance the cost benefit asymmetry for Wall Street and Bain firms is the key policy question for Obama, and one I am pretty sure he will lay out after the conventions. The reason why is that he needs a mandate, and this has to be not just an Obama plank, but a party plank that all congressional representatives will be able to use as a cudgel against the Teavangelicals candidates who are pretenders to the mantel of presenting economic change. The hook to independents is that it is Bain and the big Wall Street firms who are socialists because they are dependent socializing their losses, and on a bought and paid for government that perpetuates this "all gain and no pain" (at least for them) business model.
MSNBC can do some advance work preparing an foundational understanding for the public of this economic phenomena of asymmetry in the cost benefit analysis of financiers. Then the footsoldiers of this election will have some arguments that are less easy to pigeonhole as "socialist", and get a door slammed in their face.
Because if you look at the counters to the trolls on this forum, politically motivated folks on the left are playing the game Limbaugh plays. If we do that, we will only get doors slammed in our face, both at the grass roots and on Nov. 3rd.
John ... One thing she could do in a segment or two is show how often Bain's ventures relied on the government in various ways. That could include being the main customer for one of its firm's products, taking over pension liabilities after a fake "bankruptcy" (caused by Bain spiriting away a firm's cash and other assets), providing infrastructure one of its businesses needed, giving it tax exemptions, or giving cash grants in lieu of loans.
It won't take long to show that Bain and Romney had a lot of public help in generating those hefty profits.
Corporate socialism extends a lot farther than Wall Street and the banks. There are oil and gas companies, defense contracts for projects that the military wants cancelled but Congress is resisting, student loans until Obama took it away from the banks, Big Pharma and other medical companies, the tax rates on fund managers income, etc. It is not difficult to let voters see that socialism is more than individuals who get welfare and other benefits. Put down some numbers on this corporate socialism and the public opinion will follow. It is not necessary to jump up and down and yell to make the point. When you put a price tag on it, people get the point.
@mpguy
Wait a sec....back up!!....what did you say????.......that can't be right!!!!!!!!
The government provided - to Bain's ventures - "... infrastructure one of its businesses needed,..."
We have listened to Romney and the Republicans whine(!!) for days(!!) that businesses don't need any help from anyone - especially the government - for infrastructure!!!!
And now you are stating that Bain specifically asked for help --- from the government --- for infrastructure?!?!?!!?!?
Why - that would just be ... uh ... well ... HYPOCRISY!!!!!!!!!!
Mike, you left out big agriculture.
I think this is the twist that Obama could very well add to Teddy Roosevelt's Osawatomie pitch to the American people. The fact is that what commentators like Larry Kudlow, and Michael Medved are defending is a socialist system.
Romney is primed to present the election about what kind of economic system we have: capitalism or socialism.
Obama will welcome that debate, and will weave corporate ownership and their sense of entitlement and dependence on the socialization of their losses when Corporations screw up.
The trouble is that we have allowed folks like Limbaugh to define what is left. Obama is the only sane choice this election, but he is hardly left. We need more guests like Vanden Heuvel on yesterday's Ed show that point out that Obama buys into the free trader philosophy. In 2008 he swore he would rejig NAFTA like agreements. It is apparent that he has reneged on that promise, as can be seen in policy regarding the Trans Pacific Partnership agreement. After pausing the negotiation tack taken by the Bush white house, Obama went right ahead supporting Bush's labor hostile policies towards trade. EG; "Nafta on Steroids" article at the Nation.
Obama does not get a pass from the true left on outsourcing. If he wants to support real insourcing he needs to explain the economic teeth of his proposals. Fine, if he wants to adhere to the Chicago school of economics, he can do that. The game theory involved is to introduce into the dynamic system of economics a new rule that addresses the externality which businesses do not feel.
The externality is that they all depend on strong US consumer purchasing power. None of them feel a reduction in their profits when they attack salaries or cut US jobs. One way is to tax a corporation if their payment in payroll is not proportionate to their revenues.
Take Zinga- the company that makes games like Farmville for phones and tablets. They have about 2000 employees and bring in over 1 billion per year. That works out to 500K per employee, and they don't have a lot of overhead.
The point is that they are pumping much more money from the US consumer purchasing power river than they are returning. Note I am not saying they can't have a profit- it is a river not a lake. But if they pump at too high a rate, the river dries up.
And that is where we stand today. Companies like Zinga could have twice as many games employing twice as many employees. In such a case, their tax would remain the same. If they chose to fire employees, they are taking more than their fair share from the public resource- pumping the river dry, so the government confiscates the excess "water" from the corporation in the form of higher taxes. Government returns the money in the form of public programs.
If corporations do not wish to have their excess confiscated, they can play by the rules.
Same principle for foreign trade agreements. So there are practical "capitalist" rationales and mechanism for addressing the market failure of de capitalization of the middle class caused by outsourcing and automation.
The Rendell's and the Clinton's of the Dem Party are entitled to their opinions, but as far as I am concerned, they are on the far right of the party, virtual Bush-lites and the true counterpoint to their positions are hardly every even whispered on MSNBC. And what this means is that it moves the commentary to the Right.
I am very much in favor of using the tax code to stop corporations from benefiting from our laws when they outsource. However, I am also concerned that the law and trade agreements have a big defect in trade because the Chinese are stealing the tech without compensating the US. Trade agreements are doing a lot of damage because we are not using reciprocity with other countries and we are granting waivers to some countries. But getting the needed changes will be next to impossible because both parties are bought off by business and special interests, more specifically, the Senate. Tax laws are the best engine to drive changes despite our bad trade agreements.
One of the biggest issues in the business community is the trillion dollars plus in foreign profits that are sitting overseas but would like to bring back to the US. Corporations are looking for a tax holiday like Clinton had to bring back those profits. But the problem was that the money that came back went into executive compensation and shareholder dividends. The holiday did nothing for our labor market. The head of Apple has met with top Congress critters and he, as well as other business leaders, were pushing for another tax holiday. That is where a carefully crafted tax law with conditions will work. But business does not want conditions attached.
The Fed reports that corporations are sitting on 2 trillion in cash. While businesses need working cash for payroll and other uses, this is historically a huge number. It is unclear to me that bringing an additional 1 trillion onto their domestic balance sheets is going to influence the reasoning that leads them to conclude they should not invest the money.
While the GOP likes to talk about uncertainty due to regulations and high corporate taxes, economists on both sides agree that it would be a poor decision for businesses to hire and build if they don't see consumer demand for their product. So they sit on their cash. Romney can give tax holidays and zero corporate taxes and no regulations, and it will not change that simple fact.
We need recognition of the fact that US consumer purchasing power is a public resource more vital that others like water, fish and wildlife. There is general acceptance that government must regulate over exploitation of these resources in order to preserve continued access to those them.
If it were not possible to profit from sale of products in the US if the company did not provide a middle class jobs proportionate to its revenues, then they would have a powerful incentive to invest some of the trillions in cash they are sitting on.
This doesn't hurt any company's competitiveness because all companies have the identical constraint. It also does not micromanage. How the companies choose to allocate those middle class jobs is up to them.
There's much to attack Romney on, but this seems a bit thin. The complaint seems to be that he succeeded in negotiating a superb deal for himself with Bain. All that shows is that his negotiating in that deal served him very well.
Sorry, but this one reads like trying to make a story out of not much. The story here should be the factual basis of the claim (in the second quote) that risk takers are rewarded enough in the current system - the rest is simply blather.
If you think that was "good" negotiating all I can think of is you're some little thirtysomething who is a good product of the age you grew up in. And don't take that as a compliment.
You stay classy, TC.
Then you need to go read this:
http://www.bloomberg.com/news/2012-07-15/romney-s-bain-yielded-private-gains-socialized-losses.html
Romney lives in a world where he can always engineer a situation in which he wins no matter what he does or what happens. A world where adverse consequences are outsourced to the little people and that's as it should be.
It's the same mentality that brought us the financial meltdown, and people being paid bonuses for engineering it and federal bailouts to avert the consequences for them (and, to be fair, dampen them for the rest of us). A would where outright fraud can routinely be a part of setting key interest rates, free of any fear of consequences. A world where it's totally okay to engineer transactions that are designed to fail and damage investors just so you can take out a huge bet against them in the credit default swap markets.
And the fact that it isn't working that way for him in this campaign is why he's flailing and throwing a hundred million dollar advertising tantrum a fifty foot two year old who can't have a piece of candy before dinner.
Yeah, that's just what I'm looking for in a chief executive, because every crisis that hits POTUS's desk is totally within his control.
Hi Steve,
I agree that Bain's actions, whilst under Romney's ownership, are an indictment of his business morality. However, that's not the crux of this piece. We are supposed to read this piece and say "Romney took no personal risk when he was head-hunted for the running of Bain" - but why should he? He has been approached to run a company and is therefore entitled to get the best deal he can for himself.
The actions of Bain, violating the duty of care to employees etc, are not the same issue, as Romney was not morally obliged to take risk starting his new position. Romney's personal deal didn't damage the company, nor is there any reason to suppose it lead to the loss of jobs at companies purchased by Bain. Hence why I said this was "thin" - there's so much more substantial stuff to attack Romney with, without basically saying "he should have taken the first offer when approached for a new job". Basically, a business desperately wanted someone, that person said "I'll do it for better terms", and the business gave him those highly-desirable terms. It's a non-event of a story.
The meat of any story here would be to show, in detail, that the risk/reward gap that Romney paints is a fantasy - the rest is padding.
But why shouldn't he take the risk? The success or failure of Bain Capital was on his shoulders. If it failed, he should be the one to take the fall for it. Who among us has the ability to negotiate a sweet deal like that? I'd say close to none.
Any other business entrepreneur takes the entire risk on himself. If his/her business fails, he/she takes the loss. Romney was able to negotiate a deal where there was no risk to him. Hardly an equal opportunity in comparison to almost all others.
Opps...lol
http://www.washingtontimes.com/blog/watercooler/2012/jul/18/picket-obama-bundler-bain-opens-obama-camp-more-cr/
Hi Cathy,
Romney wasn't applying for a job. He was asked to take on a new role - so I see no reason he should take a risk in doing so. The company approaching him could simply have said "okay, we'll find someone else". Romney said "I'll do it for this" and was told "Okay". If people are to be criticised, then surely you'd criticise those who agreed to Romney's terms?
If someone offered you a new job which had a high level of risk attached, you might also turn it down - even if the rewards were potentially good. If the same company came back and said "okay, we'll make sure there is no risk of you being worse off than you now are" - would you still turn down the job? I certainly wouldn't wish to call you immoral or suspicious if you did.
Sorry..."if you did take the job."
For one thing, it tells us a bit about Romney's personality.
Like the fact he's a cowardly little rich sh*thead who was coddled and spoiled his entire life. No wonder he's rotten now.
God, I hate this worthless PoS worse than I hated Little Georgie. As much as I hated Nixon (for different reasons through, compared to the first two, Nixon was a giant of achievement).
The fact that he is unwilling to take risks, combined with the fact that he immediately caves to anyone who complains about him from the right, indicates that he has no ability for leadership, and apparently no values that he considers worth standing for. Not a good thing in a president.
Wow, ARodney, that sums up Der Mittster in a nutshell!
Too bad that so many Americans will fall for the old "Heads I win, tails you lose!"
Aw come on. I can see him taking a risk. I can envision him at a bungee jump getting ready for the plunge uh-first do you mind signing this here waiver? Hey! Where you going?
This is EXACTLY what the election is about. And keeping the right from further eroding the situation.
We, out in the country of the 'great unwashed' call this gaming the system. And THAT is what we object to. When I invest, sometimes I win and sometimes I lose. THAT is risk.
Privatizing the gains and socializing the losses is exactly what we went through with the housing bubble/mortgage crisis. From the banks' perspective, it was exactly the right way to do business.
What is good for business is not always good for society. So, running our country like a business would not necessarily be best for our citizens. And a CEO-type who can't see the difference would not be a good choice for president. QED
You guys keep picking your low hanging fruit...... Obama is a fraud.
http://www.wnd.com/2012/07/arpaio-obama-probe-finds-national-security-threat/
http://www.youtube.com/watch?feature=player_embedded&v=6M7Rp_Ghv6k
Citing wnd.com and an article from wnd.com with Arpaio in it is truly disgusting.
You are really lowering the bar for trolls on this site, timmy.
Perhaps you would be more comfortable at HuffPo or Fox or even wnd.
Trolls are held to a higher standard here.
Opps...lol
http://www.washingtontimes.com/blog/watercooler/2012/jul/18/picket-obama-bundler-bain-opens-obama-camp-more-cr/
What about M. Obama's words Donna?
OK, how about the AP and yahoo news then Donna?
http://news.yahoo.com/arpaio-obama-birth-record-definitely-fraudulent-010211250.html?_esi=1
President Obama was born in Honolulu and his birth certificate is valid," Joshua A. Wisch, a special assistant to Hawaii's attorney general, said in a statement. "Regarding the latest allegations from a sheriff in Arizona, they are untrue, misinformed, and misconstrue Hawaii law."
Wisch also said that "not only are Hawaii's vital records some of the best managed, but they also have some of the strongest restrictions on access to prevent identity theft and fraud."
Obama released a copy of his long-form birth certificate in an attempt to quell citizenship questions.
Courts have rebuffed lawsuits over the issue.
Whatever, Timmy. Your citations all say that Arpaio CLAIMS that the birth record is fraudulent.
And he bases that on the penciled-in numbers indicating those fields were left blank at the time someone penciled in the numbers. Now, why would they use pencil unless they intended to fill in the fields later? And of course, none of those fields have anything to do with when and where Obama was born.
Grasping at straws. If you really believe this Arizona sheriff found something that Hillary Clinton and John McCain's people didn't (not to mention the USSC) then you are truly delusional.
But I'll give you this, Timmy. You made me look.
Timmy, dear troll Timmy,
Your posts mean absolutely nothing and, honestly, you should be embarrassed for yourself.
Now I know that paid trolls have got to earn their pay checks and all, I mean, every one has to make a living, but for God's sake, go back to your boss and get some better talking points.
Preferably ones that 1) aren't old, 2) that make sense 3)could actually be plausible and 4) are truthful.
Perhaps you should hook up with skippy, the resident troll here. I wouldn't recommend shooter, though, he is almost as bad as you are.
Donna you always make me laugh. What I find funny is you and others here actually believe that someone would pay another person to post on a silly little blog site like this - where maybe 35 -40 people are on at any one time. What a waste of cash on this inconsequential site. I cannot even imagine what the purpose would be and what the pay would be. But if it were true I wonder if the "paid bloggers" (trolls) are included in the employment numbers.
effing hilarious. Made my day Donna. Thanks for the promo - like they say in Hollywood - any publicity is good publicity. You're gonna make me famous with all the times you mentions me. :)
Skippy, nothing about you makes me laugh.
And you post on this "inconsequential" "silly little blog" without getting paid every day, over and over again, so what does that say about you? That you are more "inconsequential" "silly" and "smaller" than this site and this blog.
And if timmy isn't getting paid...well...I guess he is just as pathetic as you are, skippy.
And you wish you were famous. But here you are, without the guts to use your real name, posting on an "inconsequential" "silly little blog" without getting paid, every day, over and over again.
And again, there is nothing funny about you. But you can go @!$%# yourself.
Donna...,
Oooh, snap!
Look, he's willing to risk a trade war with China or even a real one with Iran. Isn't that risk-taking enough for you?
No, that's not risk taking. That's cowardice, too. It comes from the "we're the greatest _______________" (fill in what ever you think appropriate... country, military, etc. ) philosophy without acknowledgement of the real risks. And remember, he and his 1% friends aren't fighting those wars; he's sending in the 'common people'.
He was a consultant--where did I hear that one before. Hey Newt tell me ,where.
Opps...lol
http://www.washingtontimes.com/blog/watercooler/2012/jul/18/picket-obama-bundler-bain-opens-obama-camp-more-cr/
You have the audacity to call out The Daily Show when you listen to the falsehoods from Breitbart.com? At least The Daily Show admits it's a comedy show.
Those on the right routinely show that they are devoid of conscience and incapable of shame.
Confused timmy? You see child The Daily Show is satire/comedy and proud of it. John Stewart has stated something to the effect that he respects those who report the news but he prefers comedy(parody?).
Now with the name FOX News you might expect real news from their station. Since they claim to be fair and balanced to boot you could expect an unbiased journalistic "style". Given that FOX is far more biased and far less balanced than , say a skinhead website or even a NAZI one I can appreciate how you might be confused as to what real news is.
Once again, Timmy posting the same things over and over again. Yawn.
I seldom advocate banning people. I'd just as soon let the right wing trolls make fools of themselves. In Timmy3's case, I'll make an exception. The duplicate postings get in the way of a discussion, rather than facilitating it.
Timmy3, you really need to get real. You quote " Bain Capital appear to be boomeranging back to Obama. According to Mike Flynn at Breitbart.com," This is the outfit that faked whores , lied to investigators, and prides itself in delusion ,and misinformation. As a troll, you are failing miserably. Turn off FOX, and find out what is actually going on in the World.
Mel...,
People like Tinny don't care what is going on in the real world.
Romney compares himself to Henry Ford and Steve Jobs. Okay. So let’s look at that abstract but singular manipulation of image. Ford and Jobs invented and held patents on products Americans bought, used and came to love, mass-produced-in-America automobiles (Ford) and everything Apple (Jobs). These led to plenitude. Romney didn’t invent but was a “pioneer” of outsourcing. Now there’s a product no American but Romney and his 1% backers could use. How do Americans benefit from Romney’s entrepreneurship? A few very select workers were allowed to build the scaffolding upon which Romney’s people stood to fire them. And then those bosses, those hangmen who made their victims build their metaphoric own gallows, profited from the closure of the company (and then invested those profits in secret accounts overseas to avoid paying taxes to help strengthen the America Romney says he loves so much).That is not a leader for an America struggling to crawl from the wreckage left by Republican-imposed policies. Henry Ford, by contrast, understood that his company depended on the American customer for growth. Without the customer, there is no growth for most companies (except Romney’s). So Henry Ford gave massive raises in wages to his Ford workers so that each one could afford to buy a Ford and participate in the growth of that industry. Compare that business leadership to Romney’s people telling their employees to build a scaffold because the boss needs to say a few words. We all know that President Obama, just like 99% of the rest of America, respects and depends on the entrepreneur and small business man and woman who hire Americans and enhance their lives. We are all proud when our companies prosper. President Obama like the rest of us depends on a healthy economy for his job. He is not the man who built the scaffold. He is trying, against the will and animus of the Republican party, to take the Romney scaffold apart and use the parts to build a foundation for the growth of the American middle class, the consumers who fuel the small businesses around our great country. Romney wants to fire Obama (he likes to fire people) and outsource America. Sure we need more Henry Fords and Steve Jobs and Thomas Edisons and Bill Gates, and even entrepreneurs who create financial products we can use to make our lives better. But we most certainly do not need a leader who believes the middle class is dependent on the cruel profiteering of a greedy financial manipulator who hides his past in secrecy and disdains openness and transparency. In that image lurks Thanatos.
First to Mr Sanford. Your planet is getting ready to leave the galaxy...
On Romneys new "foreign" attack: Foreign is definitely not at all strange to him...tell us about those Swiss accounts and Cayman Island accounts. Are they no longer "foreign" tax shelter countries? Why are your bucks there instead of in American investments? ...you could practice some job creation with all those tax breaks you got and want to hand out even more to your 2% cohorts. Ask THEM where the jobs are! This foreign thing is a childish cheap shot...not expected from a 1/4 billionaire..(that we know about)
If by some quirk of sleazy politics you get the CINC gig...we'll make every effort to out soure the Prez job. Excuse me, that's off-shore it. TaTa Willard.
BTW, Call Mark Sanford, maybe he can get you a seat on the spaceship,