12. Bain Capitalism

17 May

Bain Capital is headquartered in Boston and Mitt Romney is one of its 1984 founders.  It engages in financial services and  venture capital.  Romney asserts that his experience with Bain prepares him for running a country.  Democrats are critical of this assertion, but they often seem to miss the important point.  The capitalism that Bain engages in is among the worst kind.

The essence of ethical and admirable capitalism, which I heartily endorse, is to work hard and achieve monetary or other success.  You create a product, refine a service, or develop an idea — and you make a good profit.  Non-rich people generally do not resent this.

However, what “capital” companies often do,  is to take over and manipulate a company for massive personal profit.  A determination is made at some point to either:

1.  Build up a promising business with good potential, or

2. Destroy a troubled business and grab all the money you can, while leaving the workers with nothing.

In many instances, the huge amount of profit taken by the capital company could have been used to restore the business, or at least provide support for the fired workers.

There is nothing wrong in making a simple bond or stock investment in a business.    The unethical method is to step in and “manage” a company, which you did not create, and manipulate it for huge personal profit, while the personnel are fired and left with nothing.  I might also mention that there are other types of abuse, such as Wall Street gambling on “derivatives” — often incurring huge losses that require a bailout.  Our goal should be to enhance productive capitalism, and to discourage and regulate unethical monetary and business manipulation.

Now, let us imagine how Mr. Romney can use his Bain Capital experience in running our country.  A “capital” company is primarily concerned with profits for the company (and any investors), and has little regard for the business it is managing.  So we can expect him to manipulate our government for the benefit of himself and his wealthy supporters.  The rest of us are pretty much irrelevant, like the workers who are fired when one of his managed companies is destroyed. Rich Republicans are desperately trying to hold onto their low tax rates, giant tax loopholes and corporate subsidies.  If this is unclear to you, then remember that all Republican congressmen endorsed the Norquist tax pledge, which includes opposition to closing tax loopholes.

I must add a final word. The general public needs an increased awareness of the distortion of a great system — our form of capitalism.   Our citizens and lawmakers need to support those who advocate necessary regulation to rid us of the wealthy manipulators who will ultimately destroy the middle class.  Throughout history, we have seen revolution  when a few wealthy people run a country, rob its citizens, and produce massive poverty.  The “Tea Party” and “Occupy” movements are the first signs of a potential serious revolution.  (Unfortunately, the Tea Party was blown off course by a misunderstanding of “basic causes” and by the influence of insidious rich manipulators.)

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