The Bain of Mitt’s Existence

By Emily Theroux
When Rick Perry was still in the running for the GOP Republican nomination, he called folks like Mitt Romney “vulture capitalists.”

The Mittster (half Mitt, half monster) made short work of Perry, as he later did of both Newt Gingrich and Rick Santorum, by bombarding unfortunate primary states with brutal attack ads.

It’s quite true that Romney, as has often been said of him, lacks a certain basic empathy for other human beings, at least those to whom he is not related by blood or marriage. But as intensely repellent as I find Mitt Romney, even I thought that perhaps Perry was going about half a mile too far down one of those winding Texas roads when he compared Mitt with what we used to call a “turkey buzzard” in North Florida.

Then the Obama campaign released a powerful two-minute warning to those who believe that Romney’s “business credentials” are going to help him skip across the finish line in November. It came in the form of a new campaign ad featuring former steelworkers still bitterly angry that the jobs many of them had held down for 35 years had been callously slashed after Mitt the Ripper’s private equity firm, Bain Capital, announced to investors that they were going to Kansas City in 1993 to start hacking the dead wood from their newest “acquisition,” GST Steel.

“[Bain Capital] borrowed millions to modernize the facility, but it also used the borrowed funds to pay itself back for its initial investment in GST,” said Dave Helling of The Kansas City Star. “In 2001 – two years after Romney left Bain Capital – GST Steel declared bankruptcy, leaving more than 700 people out of work. … Obama supporters said Romney’s departure did not absolve him of responsibility for GST’s demise or its workers’ troubles, which included reduced health and pension benefits.”

“You load something up with debt – debt you know is going to cause it to fail – and you’re able to walk away from the misery you caused so many people,” Helling quoted David Foster, who negotiated for GST’s unionized workers, as saying. “That to me is all I need to know about the value statement of this particular candidate.”

“I am Mitt Romney, Destroyer of Livelihoods”
Romney is staking his entire campaign on his potential appeal to independent voters as a highly successful free-market business pioneer who “created tens of thousands of jobs” during his 15-year tenure as CEO of Bain. The conceit he wishes to project, however, relies on the willingness of the public to view him favorably as “Mitt Romney, Job Creator,” rather than “Mitt Romney, Destroyer of Livelihoods.” He’s happy to boast about Bain’s “success record” at bringing fledgling start-ups like Staples up to speed or nursing moribund companies like KB Toys and Totes, the umbrella company (which later merged with Isotoner), back to life, yet he has never been too keen on fessing up to the downside of the private equity racket. The tools in the raider’s toolkit include “roll-ups” (which force one or more firms in the same industry to merge in order to cut jobs, as Romney did with a company called Ampak in 1992), “drive-by-deals” (investing in a start-up with the goal of a quick exit strategy), and “buy, strip, and flip” (buying out a target firm, usually with a leveraged buyout, stripping most of the equity, and getting out quickly).

“I never thought of what I do for a living as ‘job creation,'” said Marc B. Walpow, a former managing partner at Bain. “The primary goal of private equity is to create wealth for your investors.”

That blunt reaction, from a business partner who knew Romney well, puts what such firms actually do in relatively matter-of-fact terms. Equity capitalism is by nature an opportunistic business model that oozed into the nasty little crevices left behind by Reaganomics’ “trickle-down” theory, after it failed utterly to dribble a scrap of anything down to the middle and lower classes. The faucets of opportunity ran bone-dry in working-class neighborhoods that bore the brunt of recession, decreasing tax revenues, and increasing unemployment, while fountains of obscene wealth were being showered on those who had already climbed the ladder (or were born on its top rung).

Returning to full employment in this country by creating the kinds of stable jobs that once paid a living wage – and provided much-needed benefits as well as a social safety net for retirees – is no longer even compatible with the interests of this new, radical brand of capitalism. Downsizing the workforce, outsourcing jobs, allowing the infrastructure to crumble, and drastically cutting spending on social programs are a sign of the times and the wave of the future. The jobs that Romney so heartlessly eliminated are not coming back – and don’t expect him to feel any compunction about it. Empathy is simply not in his vocabulary.

“Success” is measured by whoever is doing the measuring, and when they are doing it. A successful outcome in 1992 for Romney the businessman would have been manipulating the acquired company’s structure in such a configuration that it would “earn” the greatest possible amount of profit for investors, while a successful outcome in 2012 for Romney the candidate would be convincing independent voters that his true goal is creating thousands of well-paying jobs for unemployed workers. (A successful outcome for the former employees of failed companies like GST Steel and Ampac would have been convincing a stoic and unresponsive Romney, for the first time in his privileged life, to view workers, rather than corporations, as people.)

This breakthrough would require a level of heart and soul that Romney may not ultimately possess. Consider the following arresting fact, just for the sake of argument: An opinion piece in Sunday’s New York Times titled “Capitalists and Other Psychopaths” revealed the startling results of two recent psychological studies. The first demonstrated that 10 percent of people who work on Wall Street are “clinical psychopaths,” as opposed to only 1 percent of the general populace. The second study revealed that the rich are more likely to lie, cheat, and break the law.

People who are incapable of empathy or remorse, who make stuff up about their records and conceal wrongdoing they’ve engaged in throughout their lifetimes, people like the Enron Gang who commit accounting fraud, people who think (or know) they won’t get caught for tax evasion, people who participate in “toxic dumping, product safety violations, bid rigging, overbilling, and perjury” all fall under op-ed writer William Deresiewicz’s withering scrutiny.

No wonder Richard Cohen of The Washington Post said of Romney, “Lying isn’t a sin; it’s a business plan.” (And please note: neither Deresiewicz nor I called Mitt Romney a “psychopath.” His penchant for prevarication, however, has been widely observed and remarked upon by the press. Daniel Benen, formerly of Talking Points Memo and now writing for The Rachel Maddow Blog, has been keeping a weekly weblog recording the plethora of lies that Romney is caught telling every day – without even having access to all the ones he gets away with.)

‘What Do Psychopaths Want?’
But still it’s worth asking: What do psychopaths actually do? While there is no established psychiatric definition, certain personality characteristics predominate among people categorized as psychopathic:

1) Psychopaths have been observed to be almost entirely bereft of empathy and unable to appreciate other people’s experiences or motivations. (When Bain was in the process of shutting down a failed company, according to a former employee, Romney never suggested doing anything to save workers’ jobs. “It was very clinical,” he said. “Like a doctor. When the patient is dead, you just move on to the next patient.”)

2) Psychopaths tend to be intolerant, shallow, fearless, and unable to feel shame. (“I’m unemployed, too,” Mitt the Multimillionaire” told a group of jobless citizens; he failed to see why that statement wasn’t funny and might even be offensive. One former staffer said Romney had “a particular blind spot for people as people.”)

3) Psychopaths can be extremely anxious people. (“Mitt was always worried that things weren’t going to work out – he never took big risks,” said one of his colleagues. “Everything was very measurable. I think Mitt had a tremendous amount of insecurity and fear of failure.”)

4) Psychopaths can be pathological liars who frequenty exploit and manipulate other people. (“The president is planning on cutting $1 trillion out of military spending.” “We’ve got a president in office three years, and he does not have a jobs plan yet. I’ve got one out there already and I’m not even president, yet.” “I went off on my own. I didn’t inherit money from my parents.” Romney also said once “Obamacare” is implemented, “government at all levels” will “consume” 50 percent of the American economy.”)

5) Psychopaths can be impulsive and irresponsible, and often have a low tolerance for boredom. (“It is the opinion of some of Romney’s friends … that the repetitive business of campaigning simply bores him and that this boredom is responsible for the fairly sizable gap between the charismatic man they know in private and the battery-powered figure who often appears in public,” wrote Benjamin Wallace-Wells in New York magazine.)

6) Psychopaths frequently say strange and incoherent things. (All right, I’m still not making any accusations, but just consider the following statements: “I like to fire people who perform services to me.” “The trees here are just about the right height.” “Strange things are happening to me.” “Who let the dogs out? Who? Who?”)

But perhaps the most lasting effect Romney’s strange personality has made on an institution to date was his vainglorious self-regard and creepy propensity for inspiring other people to emulate him. “Bain partners think the profits they made are a sign of their brilliance,” said David Foster, a former steelworkers union official who negotiated labor contracts with GST management from 1994 until the company’s bankruptcy. “It’s not brilliance. It’s lurking around the corner and mugging somebody.”

Just wait and see if we fail to communicate our alarm about this strange bird to enough other people, what kind of mark a Romney presidency might leave on the White House.

Tags: ,

One Response to “The Bain of Mitt’s Existence”

  1. Emily Theroux Says:

    The reason Romney usually gets away with claiming that Bain Capital “created tens of thousands of jobs” under his direction is that he pretends that “venture capitalism” (which helped “grow” then-fledgling businesses like Staples and Domino’s Pizza) is the only thing Bain does. In reality, Bain’s venture capital arm, Bain Capital Ventures, accounts for only 2.5 percent of Bain’s $60 billion portfolio.

    The bulk of what Bain Capital did during Romney’s tenure was to engage in the morally ambiguous private equity business, which often employs predatory “leveraged buyouts” to “(acquire) control of businesses by using investors’ money amplified by debt,” as Talking Points Memo explains. Like other leveraged-buyout firms, Bain “maximized returns by firing workers, seeking government subsidies, and flipping companies quickly for large profits,” said the LA Times. “Sometimes Bain investors gained even when companies slid into bankruptcy.”

    The confusion created when Rick Perry conflated private equity and venture capitalism into “vulture capitalism” has unfortunately been working in Romney’s favor because few in the media report or explain the difference. While venture capitalism helps spur creation of new jobs (although the net effect can be to eliminate old jobs in obsolete industries or simply shift market share to newer ventures), private equity companies acquire already established companies, then “cut overhead” (fire workers) to make them more “profitable” in the short term – which all redounds to the benefit of private equity investors.

    What happens later to these companies’ unfortunate workers – or how the “restructured” companies manage to pay off the huge debts taken out to help finance their acquisition by Bain – has never been Romney’s concern. The goal is to rack up a lot of debt and reduce “payroll,” so there’s plenty of cash available for Romney and his investors to pay themselves with before they make their exit and leave the raided firm – and the surrounding community – to their collective fate.

    Bain’s venture capitalist branch serves as a fig leaf, providing cover for the company’s vastly more lucrative pursuit of pure profit. The “vulture capitalism” and “creative destruction” philosophies that Romney espoused at Bain combined to earn him his $250 million personal fortune.

Leave a Reply