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Friday, January 13, 2012

The Bain treatment: Should the president serve the owners of America, or the citizens?

by John MacBeath Watkins

Mitt Romney is running for president on the grounds that what America needs is his business experience. Presumably, this means he intends to subject us to the same treatment Bain gave the companies it took over -- loading us up with debt to pay exorbitant management fees, laying off workers and sending jobs overseas.

The debt part of the equation hasn't been explored much yet, nor has Bain's practice of seeking government subsidies for the companies it was bleeding dry.

But the larger problem is with the comparison to a corporation. In a corporation, most of the ownership does not belong to the workers. As a result, the owners' interests don't coincide with those of the workers, and layoffs, outsourcing, etc. serve the owners at the employees' expense.

So if we think about America as a corporation, we have to ask, who does Mitt Romney think owns this country, its citizens or its investors?

The investors include China, Japan, and other countries, and those wealthy enough to have substantial savings to invest. In 2007, the top 1% of the population owned 42.7 percent of the nation's financial wealth, the next 19% controlled 50.3%, and the bottom 80% controlled 7%, according to this source: http://www2.ucsc.edu/whorulesamerica/power/wealth.html

 And aside from the treasury and the Social Security Trust Fund, the largest single owner of our public debt is China, with 8%. Of course, the government doesn't own most of the country, which is why the distribution of wealth matters so much.

So if it is the owners Mr. Romney wishes to serve, the bottom 80% of the population can expect to get screwed. Or, perhaps more accurately, his policies will reflect the fact that he doesn't care if they get screwed, as long as the owners of capital get theirs. That was his history with Bain, and if we are to believe that his experience at Bain shows him the way to manage the economy, that's what we can expect of his administration.

But suppose we look at it another way. The Pacific Northwest used to have a large number of co-op plywood mills. They served the members of the co-op.

These mills did have their own problems, of course, like wanting to take home more of the money the mill made so they could spend it, rather than investing in the mill, and not wanting new members of the co-op who would dilute their ownership and therefore their wealth. They often hired non-co-op workers at an hourly rate, who could be fired or laid off easily. They were to a co-op what guest workers are to a nation.

And the wish to take home more of the money the mill generated instead of investing has a parallel in wanting to have lower taxes rather than investing in roads and bridges, schools and airports.

We have, in fact, under-invested in public infrastructure for many years, in part because of the two-Santa dynamic introduced to our politics in the 1970s.

There are perils associated with governing America as a co-op, but they are nothing like as daunting as those associated with governing this country as a corporation. The Bain treatment would leave 80% of us out in the cold, and serve the 1% more than anyone.

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