I need to share some reflections about Mitt Romney, "jobs creation," economic realities and the half truths from both sides, and then his likely brand of Presidential leadership, too. I just had to write about these things and send it to some folks. You drew a short straw.
On Presidents, "Jobs Creation" & Economic Realities
First, I've recieved a few e-mails from the Obama campaign countering Romney's claim to better qualifications to "create" jobs based on his experience as CEO of Bain Capital. But, while Romney's use of this campaign tactic, and the Obama camp's response, are both well within acceptable campaign bounderies, it all has much more to do with campaign issue creation than jobs creation. And both sides are dealing in half truths and suggestions that go beyond the realities. The simple truth about the limits of Presidential leadership in "jobs creation" would be much more informative and useful to voters, even if much less entertaining politics. Most of you know this, of course. But it is just another of those stupid, insulting and tortured bi-partisan treatments of an important issue, much like all the stupid opinions and comments made about the well-settled judicial review implications of Marbury vs. Madison. (And they even came from President Obama, who taught constitutional law. I was embarrassed for him and all of us.)
Let's begin with the simplest, clearest of facts. All businesses and businessmen are in business to make money. That is their primary goal, not "jobs creation". When they do it well, or are lucky enough, their businesses grow and they have to hire more people--and employment rises. But more important to employment levels is the economic environment within which businesses operate. When the economy is on the strong side of the cycle, businesses are more likely to make more money, grow, and therefore to hire more people. Jobs are "created", some might say. On the other hand, when the economy is on the downside of the cycle, when it is weaker, businesses are likely to make less money, contract, and some employees are fired or furloughed in order for the business to remain profitable and viable. Jobs are "killed" or "destroyed", in the vocabulary of some.
So, it's most often not about businessmen creating or destroying jobs; it's most often about the economy and, in turn, resulting business profitability and sustainability. In that way, it is the economy that ultimately drives the need for more or fewer employees--and there is little the businessmen and businesses can do to change that fact. They can only respond by adjusting to it--including adjusting the numbers and types of employees.
And government can only do so much to support the economy through monetary or fiscal policies that either help strengthen a weak economy or keep it from falling into disaster, or avoid overheating a healthy one. For example, under the right circumstances--like the recent financial crisis--and within workable longer-term debt limits, government economic stimulus can help (i.e., putting more spendable cash in more people's hands through higher government spending and, if taxes are not already too low, lowering taxes). Within those limited circumstances, government action can help avoid deep economic recession (or worse, depression) and prime the pump of recovery. But beyond that, a weaker economy must heal and strengthen itself--and that can take time. And even Presidents can't change that.
All businessmen understand that--or they should. Much of the campaign hype you hear is just so much political breast-beating and posturing trying to suggest that Presidents, other politicians or candidates for office know more and can do more to improve national employment levels. But it's just not true; they can't. They all have the best economists in the country to help them do what can be done to support or tweak the economy, or help keep it from economic contraction. President Obama's team, and notably Fed Chairman Ben Bernanke, have done an effective job of keeping us out of disaster and stabilizing the economy. But now, we appear to be at that point where only the economy itself can slowly build itself back to strength. (Of course, failure of remedial, collective action in the Eurozone may yet produce an international economic disaster that adversely affects the U.S. as well.)
Now, it's also true that Mr. Romney did not work for the kind of company that makes money by manufacturing and selling things or providing services to the public. His company, Bain Capital, is what is often called a "financial player." According to Wikipedia, Bain Capital is "a Boston-headquartered alternative asset management and financial services company that specializes in private equity, venture capital, credit and public market investments." That means they invest in or buy outright everything from start-up companies to blue-chip public companies. The companies they buy may be managed for some period of time, restructured, or reshaped, then resold at a profit. Sometimes they will buy a few companies in the same or related businesses, restructure and repackage them, and sell them as a new, integrated business.
But here's the rub: in addition to the changes in employment dictated by economic conditions, financial players like Bain often "restructure" the companies they acquire to make them as profitable as possible in the shorter term. And that often includes reducing the number of employees to the short-term minimum, or having the company take on debt to pay dividends or management fees to them. Then they sell the company, arguably weakened but appearing profitable, for more profit. In that way, they often reduce employment, not increase it; and often, they weaken companies rather than make them stronger. To be sure, that's not always true--many times these acquired companies have grown and employment has increased under Bain management, but that's not so often the case. Regardless, that's just what they do, and how they make money. And Bain has done a good job of making money on the vast, majority of it's deals and investments. It's altogether perfectly legitimate, and many would argue it plays a healthy role in reshaping and sustaining many of those businesses.
So, it's hard to see how any of that should suggest that Mitt Romney doesn't understand about economic cycles and how businesses grow or contract in those cycles--or that he doesn't understand about the economy and other business factors affecting employment levels. Quite the contrary, it suggests he likely understands it as well or better than most businessmen, politicians and political candidates.
However, what economic policies he might actually embrace as President would likely have more to do with his ideological or philosophical bent and--most importantly--what course and positions will most likely get him elected as a Republican. And improving employment levels is especially important to voters these days, so it will likely enjoy his full attention. But a very ideological Republican Congress that he is inextricably tied to will likely have more to say about all that than him--and they are embracing the Ryan budget proposal that would phase-out or dramatically reduce social welfare programs, social security and Medicare programs in the U.S., and over time privatize them as much as possible. Not a good approach--not for providing public goods and social services, not for societal welfare and strength, nor for productivity, consumption-spending and the economy generally, not from my perspective, anyway. And a lot of jobs would likely be lost under those proposals, both in government and the private sector.
Therefore, on the subject of jobs, Romney can only continue a course of misdirection, obfuscation, and half truths. And the President will continue to play along with the "jobs-creation" ruse, satisfied to argue over who will do a better job at something that, ex officio and given the economic realities, they can only influence in the positive or remedial sense to the same limited extent. Of course, if unwisely informed, they can also take actions that make worse an already weak economy. That's what happened in the Great Depression, that is what has been going on with Germany's austerity prescriptions in the Eurozone, and that is likely what would happen if the Republicans actually were to pass something like the Ryan budget. Surely, you say, they must understand the potential for significant long-term societal and economic damage. But then, we are talking about ideological true believers, aren't we.
On Mitt Romney as Presidential Leader
So I would ignore all the puffing and posturing about Romney's prior work life and pay more attention to what he is likely to do, and why. The Obama camp would still try to bring you back to the way he managed Bain Capital to make money as the best indicator of the approach and values he would bring to Presidential leadership, and what his views about economic and employment policies might be. But these are very different mandates, the CEO of Bain and the President of the United States, and don't we have evidence that Romney surely does recognize and adapt easily to a different mandate? Don't we have his very different orientation to his public service as Governor of Massachusetts? And the judgment on his performance during his tenure there was mostly that of a good and effective moderate governor. And I heard little complaint about his economic views or approach to employment-related policy positions. But, he was governor of a generally progressive state and represented a more moderate Republican party. In fact, the real problem is that he is more than flexible and resilient; he is all too capable of managing a complete change in orientation and agenda. He adapts frighteningly well to an easily redefined political identity and mandate, and allows that mandate to redefine his goals and success, as well. And he has a long record of success.
As our President, one who will represent and be dependent on a dominant and stridently ideological Republican Congress, I fear the worst in leadership from Mr. Romney. As we have observed, he has proved very much an unabashed and unapologetic political chameleon, and he will likely take any position he feels necessary to appease those who control his election and agenda--and that begins with those Republican leaders in Congress. He appears to be perfectly okay with becoming that kind of leader, really more a proxy for Congressional Republican leadership. It's just about becoming President, winning in that sense, and then succeeding in his new political identity and mandate. It is very difficult for me to trust or respect that so readily changable aspect of his political identity, or to expect much of anything in the vein of independent or moderate leadership from him.
And that's the evolving feature of the Mitt Romney resume that should concern you--doing whatever he was hired to do, becoming whatever changed political identity he feels he needs to be associated with, and doing it very successfully. And that's been true whether it's making lots of money for Bain or representing a moderate Republican party and more progressive agenda in Massachusetts. And if elected President, it will likely also be true in fulfilling his mandate to successfully advance the agenda of a throwback Republican Congress that appears the antithesis and the ideological enemy of anything progressive. This analysis may well comfort the most conservative or ideological of today's Republicans, but it frightens the hell out of me.
On Presidents, "Jobs Creation" & Economic Realities
First, I've recieved a few e-mails from the Obama campaign countering Romney's claim to better qualifications to "create" jobs based on his experience as CEO of Bain Capital. But, while Romney's use of this campaign tactic, and the Obama camp's response, are both well within acceptable campaign bounderies, it all has much more to do with campaign issue creation than jobs creation. And both sides are dealing in half truths and suggestions that go beyond the realities. The simple truth about the limits of Presidential leadership in "jobs creation" would be much more informative and useful to voters, even if much less entertaining politics. Most of you know this, of course. But it is just another of those stupid, insulting and tortured bi-partisan treatments of an important issue, much like all the stupid opinions and comments made about the well-settled judicial review implications of Marbury vs. Madison. (And they even came from President Obama, who taught constitutional law. I was embarrassed for him and all of us.)
Let's begin with the simplest, clearest of facts. All businesses and businessmen are in business to make money. That is their primary goal, not "jobs creation". When they do it well, or are lucky enough, their businesses grow and they have to hire more people--and employment rises. But more important to employment levels is the economic environment within which businesses operate. When the economy is on the strong side of the cycle, businesses are more likely to make more money, grow, and therefore to hire more people. Jobs are "created", some might say. On the other hand, when the economy is on the downside of the cycle, when it is weaker, businesses are likely to make less money, contract, and some employees are fired or furloughed in order for the business to remain profitable and viable. Jobs are "killed" or "destroyed", in the vocabulary of some.
So, it's most often not about businessmen creating or destroying jobs; it's most often about the economy and, in turn, resulting business profitability and sustainability. In that way, it is the economy that ultimately drives the need for more or fewer employees--and there is little the businessmen and businesses can do to change that fact. They can only respond by adjusting to it--including adjusting the numbers and types of employees.
And government can only do so much to support the economy through monetary or fiscal policies that either help strengthen a weak economy or keep it from falling into disaster, or avoid overheating a healthy one. For example, under the right circumstances--like the recent financial crisis--and within workable longer-term debt limits, government economic stimulus can help (i.e., putting more spendable cash in more people's hands through higher government spending and, if taxes are not already too low, lowering taxes). Within those limited circumstances, government action can help avoid deep economic recession (or worse, depression) and prime the pump of recovery. But beyond that, a weaker economy must heal and strengthen itself--and that can take time. And even Presidents can't change that.
All businessmen understand that--or they should. Much of the campaign hype you hear is just so much political breast-beating and posturing trying to suggest that Presidents, other politicians or candidates for office know more and can do more to improve national employment levels. But it's just not true; they can't. They all have the best economists in the country to help them do what can be done to support or tweak the economy, or help keep it from economic contraction. President Obama's team, and notably Fed Chairman Ben Bernanke, have done an effective job of keeping us out of disaster and stabilizing the economy. But now, we appear to be at that point where only the economy itself can slowly build itself back to strength. (Of course, failure of remedial, collective action in the Eurozone may yet produce an international economic disaster that adversely affects the U.S. as well.)
Now, it's also true that Mr. Romney did not work for the kind of company that makes money by manufacturing and selling things or providing services to the public. His company, Bain Capital, is what is often called a "financial player." According to Wikipedia, Bain Capital is "a Boston-headquartered alternative asset management and financial services company that specializes in private equity, venture capital, credit and public market investments." That means they invest in or buy outright everything from start-up companies to blue-chip public companies. The companies they buy may be managed for some period of time, restructured, or reshaped, then resold at a profit. Sometimes they will buy a few companies in the same or related businesses, restructure and repackage them, and sell them as a new, integrated business.
But here's the rub: in addition to the changes in employment dictated by economic conditions, financial players like Bain often "restructure" the companies they acquire to make them as profitable as possible in the shorter term. And that often includes reducing the number of employees to the short-term minimum, or having the company take on debt to pay dividends or management fees to them. Then they sell the company, arguably weakened but appearing profitable, for more profit. In that way, they often reduce employment, not increase it; and often, they weaken companies rather than make them stronger. To be sure, that's not always true--many times these acquired companies have grown and employment has increased under Bain management, but that's not so often the case. Regardless, that's just what they do, and how they make money. And Bain has done a good job of making money on the vast, majority of it's deals and investments. It's altogether perfectly legitimate, and many would argue it plays a healthy role in reshaping and sustaining many of those businesses.
So, it's hard to see how any of that should suggest that Mitt Romney doesn't understand about economic cycles and how businesses grow or contract in those cycles--or that he doesn't understand about the economy and other business factors affecting employment levels. Quite the contrary, it suggests he likely understands it as well or better than most businessmen, politicians and political candidates.
However, what economic policies he might actually embrace as President would likely have more to do with his ideological or philosophical bent and--most importantly--what course and positions will most likely get him elected as a Republican. And improving employment levels is especially important to voters these days, so it will likely enjoy his full attention. But a very ideological Republican Congress that he is inextricably tied to will likely have more to say about all that than him--and they are embracing the Ryan budget proposal that would phase-out or dramatically reduce social welfare programs, social security and Medicare programs in the U.S., and over time privatize them as much as possible. Not a good approach--not for providing public goods and social services, not for societal welfare and strength, nor for productivity, consumption-spending and the economy generally, not from my perspective, anyway. And a lot of jobs would likely be lost under those proposals, both in government and the private sector.
Therefore, on the subject of jobs, Romney can only continue a course of misdirection, obfuscation, and half truths. And the President will continue to play along with the "jobs-creation" ruse, satisfied to argue over who will do a better job at something that, ex officio and given the economic realities, they can only influence in the positive or remedial sense to the same limited extent. Of course, if unwisely informed, they can also take actions that make worse an already weak economy. That's what happened in the Great Depression, that is what has been going on with Germany's austerity prescriptions in the Eurozone, and that is likely what would happen if the Republicans actually were to pass something like the Ryan budget. Surely, you say, they must understand the potential for significant long-term societal and economic damage. But then, we are talking about ideological true believers, aren't we.
On Mitt Romney as Presidential Leader
So I would ignore all the puffing and posturing about Romney's prior work life and pay more attention to what he is likely to do, and why. The Obama camp would still try to bring you back to the way he managed Bain Capital to make money as the best indicator of the approach and values he would bring to Presidential leadership, and what his views about economic and employment policies might be. But these are very different mandates, the CEO of Bain and the President of the United States, and don't we have evidence that Romney surely does recognize and adapt easily to a different mandate? Don't we have his very different orientation to his public service as Governor of Massachusetts? And the judgment on his performance during his tenure there was mostly that of a good and effective moderate governor. And I heard little complaint about his economic views or approach to employment-related policy positions. But, he was governor of a generally progressive state and represented a more moderate Republican party. In fact, the real problem is that he is more than flexible and resilient; he is all too capable of managing a complete change in orientation and agenda. He adapts frighteningly well to an easily redefined political identity and mandate, and allows that mandate to redefine his goals and success, as well. And he has a long record of success.
As our President, one who will represent and be dependent on a dominant and stridently ideological Republican Congress, I fear the worst in leadership from Mr. Romney. As we have observed, he has proved very much an unabashed and unapologetic political chameleon, and he will likely take any position he feels necessary to appease those who control his election and agenda--and that begins with those Republican leaders in Congress. He appears to be perfectly okay with becoming that kind of leader, really more a proxy for Congressional Republican leadership. It's just about becoming President, winning in that sense, and then succeeding in his new political identity and mandate. It is very difficult for me to trust or respect that so readily changable aspect of his political identity, or to expect much of anything in the vein of independent or moderate leadership from him.
And that's the evolving feature of the Mitt Romney resume that should concern you--doing whatever he was hired to do, becoming whatever changed political identity he feels he needs to be associated with, and doing it very successfully. And that's been true whether it's making lots of money for Bain or representing a moderate Republican party and more progressive agenda in Massachusetts. And if elected President, it will likely also be true in fulfilling his mandate to successfully advance the agenda of a throwback Republican Congress that appears the antithesis and the ideological enemy of anything progressive. This analysis may well comfort the most conservative or ideological of today's Republicans, but it frightens the hell out of me.
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