Criticizing Bain isn't attacking capitalism

Sunday May 27, 2012

The message from Mitt Romney and his supporters is that while it is fine for the Republican presidential candidate to campaign on the strengths of his career as a businessman it is hitting below the belt for President Obama and his supporters to campaign on the weaknesses of Mr. Romney’s career as a businessman. It seems that to attack Mr. Romney is equivalent to attacking free enterprise itself, which of course makes the attacker -- a socialist!

For further enlightenment on this subject we go to the Ayn Rand Institute, the right-wing think tank named after the Libertarian high priestess whose tomes like "The Fountainhead" and "Atlas Shrugged" are read eagerly by sophomore English majors. In a helpful email release entitled "How to Talk About Bain Capital," institute director Yaron Brook makes arguments his mentor would admire.

"The Obama administration’s attack on private equity is a direct attack on capitalism, the profit motive, and America," declares Mr. Brook. No, actually it is an attack on Mr. Romney, who as a presidential candidate is fair game for his actions as founder of the private equity firm. Outside of Cuba, no one is attacking capitalism and the profit motive anymore, but anyone who would dispute that capitalism creates inequities that must be addressed is either naive or an acolyte of Ayn Rand, in whose amoral and simplistic philosophy the poor, elderly and infirm were just obstacles to be trampled by her swaggering masters of the universe. (Not surprisingly, House budget chief Paul Ryan is a Rand worshipper.)

"We should all be happy for the existence and success of risk-takers like Bain Capital," offers Mr. Brook in reference to the firm where Mr. Romney made his mega-millions. "Bain Capital deserves every dollar of profit it earned in this fashion." Bain took no risk, however, when it took over KB Toys and bailed out with millions of dollars and profits for its chief executives, leaving behind a mortally wounded company. Bain was a "success" only in the narrowest sense of its own profits. The empty shell of KB’s corporate headquarters speaks only of failure to employees and the community.

Calling attention to the actions of Bain Capital may have been decisive in Senator Edward Kennedy’s victory over Romney in 1994 so it would be shocking if the Obama camp didn’t do likewise. Vice President Joe Biden has been emphasizing a couple of Bain purchases, one of a steel plant in Kansas City, GS Industries, Bain bought under Mr. Romney in 1993. It assumed a heavy debt load, which is traditional under Bain to assure high dividends, and went bankrupt in 2000. SCM office supplies of Marion, Indiana was known as Ampad when Bain bought it in 1994. It filed for bankruptcy in 2000, although Mr. Romney and other Bain executives claimed $100 million in profits. Fired Ampad workers who have brought attention to the company’s plight have been dismissed as "liberal activists" by the Romney campaign.

Former GOP presidential candidate Rick Perry described Mr. Romney as a "vulture capitalist." Yaron Brook writes of the "value and nobility of profit and wealth creation." Mr. Romney speaks of Bain successes like Staples, and opponents cite failures. All of this is fair, and ripe for discussion on the campaign trail. No discussion of capitalism can ignore, however, the reality that there are victims of free enterprise. One of a president’s duties is to stand up for them, and that is also a matter of discussion for this campaign.


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