Robert Reich: The Bain of Capitalism
The Bain of Capitalism
Tuesday, January 10, 2012
Its one thing to criticize Mitt Romney for being a businessman with the wrong values. Its quite another to accuse him and his former company, Bain Capital, of doing bad things. If what Bain Capital did under Romney was bad for society, the burden shifts to Romneys critics to propose laws that would prevent Bain and other companies from doing such bad things in the future.
Dont hold your breath.
Newt Gingrich says Bain under Romney carried out clever legal ways to loot a company. Gingrich calls it the Wall Street model where you can basically take out all the money, leaving behind the workers, and charges that if someone comes in, takes all the money out of your company and then leaves you bankrupt while they go off with millions, thats not traditional capitalism.
Where has Newt been for the last thirty years? Leveraged buyouts became part of traditional capitalism in the 1980s when enterprising financiers began borrowing piles of money, often at high interest rates, to buy up the stock of ongoing companies they believe undervalued. Theyd back the loans with the company assets, then typically sell off divisions and slim payrolls, and resell the company to the public at a higher share price pocketing the gains. ...............(more)
The complete piece is at: http://robertreich.org/post/15627255844
Laelth
(32,017 posts)That's why liberalism works. A well-regulated capitalism, constrained by government to insure that all people (and not just a few) benefit from it, is the desired object of liberal policies and liberal politics. FDR's liberalism created the richest nation in the history of the planet. Why one would want to dismantle that is beyond me.
-Laelth
PETRUS
(3,678 posts)But US prosperity during the cold-war era was not necessarily good news for others. When articulating state department policy, George Kennan observed that the US had 6% of the world's population but 50% of the world's wealth and that the aim was to keep it that way. He went on to write that this meant the US couldn't afford to be concerned about things like democracy and human rights. While the excesses of capitalism were mitigated for those fortunate enough to live within our borders, economic predation was rampant on the world stage - and backed by the government.
It's also worth stopping to consider that FDR-style liberalism seems to have had a short run - the hard right fought against it and started winning sometime in the 1970s. At this point, I'm wondering if all we did was remove half of a metastatic tumor.
(I'm not trying to pick on you, I appreciate your contributions here and on many other threads.)
Laelth
(32,017 posts)And I appreciate your contributions here and elsewhere.
That liberalism has fallen into disrepute among the American political caste is beyond dispute, as I have suggested here: http://laelth.blogspot.com/2010/12/kissing-butt-and-taking-names-obamas.html
I have argued elsewhere that liberalism has only been tried as a political strategy during a couple of brief periods in American history. That argument is here: http://laelth.blogspot.com/2011/01/turning-american-ship-of-state.html
Whether it is ethical for the United States to be rich while the rest of the world seems to be comparatively poor is a good question, a just question, one that ought to be asked, but I remain of the opinion that liberalism offers us the best path toward a sane capitalism that widely distributes wealth among the people and can constrain capitalism sufficiently to allow it to function well for a large number of people.
btw, thanks for the thoughtful response.
-Laelth
JDPriestly
(57,936 posts)predatory loans and derivatives, Wall Street is trying to buy out the public sector by leveraging it with tax funds.
This is the part of the article that I am relating to the privatization craze that has bankrupted our government.
Leveraged buyouts became part of traditional capitalism in the 1980s when enterprising financiers began borrowing piles of money, often at high interest rates, to buy up the stock of ongoing companies they believe undervalued. Theyd back the loans with the company assets, then typically sell off divisions and slim payrolls, and resell the company to the public at a higher share price pocketing the gains. ...............(more)
http://robertreich.org/post/15627255844 (as in the OP)
Private companies running charter schools, purchasing interstate highways, servicing military personnel overseas, performing police and fire services, administering parks, handling the sales of US Savings Bonds, managing the food stamp program, you name it. Private businesses are taking government functions over and the taxpayers are paying the private businesses to take them over. Of course, private business guts out all the easy money jobs, the economic value. The US Post Office is a good example of this. Private companies are doing that part of the work of the Post Office that is profitable and leaving the public service, non-profitable part for the taxpayers to pay for. Private companies suck up the profits. The Post Office is forced to go broke.
And think about charter schools. They take the profitable students -- the ones who will succeed and send the loser students back to the public schools. That is the equivalent in terms of education of downsizing parts of a business that don't make enough money.
What is being done sort of the opposite of socialism. Rather than government taking over traditionally private sector business activities, the private sector is taking over traditionally governmental, public economic activities. Reagan and Bush I fostered it in the private sector and started it in the public one. Clinton continued it in a half-hearted, sneaky way, and then Bush II really ran rampant with it at the level of government.
Obama --- just coasting along with it.
Public/private partnerships and government contracts -- my eye. That's not capitalism. It's something else, but not capitalism.