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“Creative Destruction”: Re-Examining The Myth Of No-Fault Capitalism

From all evidence, the issue of economic justice isn’t going away. Break the news gently to Mitt Romney, who seems apoplectic that the whole “rich get richer, poor get poorer” thing is being discussed out loud. In front of the children, for goodness’ sake.

“You know I think it’s fine to talk about those things in quiet rooms,” he told the “Today” show’s Matt Lauer last week. “But the president has made this part of his campaign rally. Everywhere he goes we hear him talking about millionaires and billionaires and executives and Wall Street. It’s a very envy-oriented, attack-oriented approach.”

Actually, those blasts weren’t coming from President Obama. That was Romney’s competition for the Republican nomination, sounding like a speakers’ lineup at an Occupy Wall Street rally.

Now, I predict, will come a furious attempt by the GOP to unring the economic justice bell. Damage control efforts began with Newt Gingrich backing away from his sharp-fanged criticism of Romney’s record at Bain Capital, the investment firm he led. Don’t attack the GOP front-runner for being a ruthless, heartless corporate raider, Gingrich announced, but rather for not being conservative enough.

This admonition came as a pro-Gingrich political action committee continued to blast Romney as a ruthless, heartless corporate raider. Inconsistency, thy name is Newt.

By most accounts, Bain was a relative laggard in the ruthlessness department. Other private-equity firms were far more brazen in the way they bought troubled companies, laid off workers, stripped away assets and fattened investors’ bank accounts. While Romney’s claim to have created 100,000 jobs looks like a gross exaggeration, it’s true that Bain stuck with companies such as Staples and Sports Authority and helped them grow.

But as for heartlessness, well, it comes with the turf, right? Bain was just serving as an instrument of “creative destruction,” and if workers lost their jobs, if they had to raid their children’s college funds to pay their mortgages, if perhaps that money ran out and they ended up losing their homes, in the long run they’ll still be better off. Or the country will be better off. Or something.

In any event, capitalism means never having to say you’re sorry. Perish the thought that anyone would critically examine this ethos except in a “quiet room.”

But to the horror of radical free-market ideologues, the myth of no-fault capitalism is under scrutiny. No one is arguing against markets, which are indeed the best way to create wealth and thus the best weapon against poverty. No one is arguing that investors who risk their capital in a company should not be able to reap rewards. What the ideologues ignore, however, is that workers also have “capital” at risk — in the form of mind and muscle, creativity, loyalty, years of service. Why is this investment so casually dismissed?

The first of the Republican candidates to raise the fairness issue was Rick Santorum, who spoke in debates of the pain many families were suffering because of economic dislocation. This was before his strong showing in Iowa, so no one was paying attention.

Then Gingrich and Rick Perry picked up the theme in an attempt to slow Romney’s march to the nomination. Whether they meant what they said or were just being tactical, the effect was to open a discussion of economic fairness and justice that will be hard to squelch.

The next logical step is to look at the results being produced by the radically deregulated, no-fault capitalism that has been practiced in this country since the Reagan revolution. Overall, we’ve had tremendous growth and low inflation. But we’ve also seen rising inequality and falling mobility. Middle-class incomes have stagnated, upper-class incomes have skyrocketed, and rags-to-riches stories are now less likely than in most of the “European social democracies” Romney holds in such disdain.

We have failed to keep pace with other industrialized societies in public education, and rather than offer relevant retraining to employees displaced by innovation and globalization, we leave them to their own devices. As a result, we’re starting to lose not just basic manufacturing jobs but also high-value-added, knowledge-based jobs to countries where workers are more qualified.

Government has played a huge role in guiding the nation through previous economic upheavals — after World War II with the GI Bill, for example. It can and should play such a role now.

That’s my view, at least. Thanks to the Republican candidates, of all people, we’ll get to hear what President Obama and his eventual opponent think.


By: Eugene Robinson, Opinion Writer, The Washington Post, January 16, 2012

January 18, 2012 Posted by | Election 2012 | , , , , , , , , | Leave a comment

MItt Romney, Money And “Quiet Rooms”: Mr. 1 Percent Is Clueless About Inequality

The GOP primary keeps getting funnier. Just as Newt Gingrich was telling a South Carolina Romney supporter “I agree with you” that attacking Mitt Romney’s Bain Capital career could help Democrats on Wednesday, his friendly Super PAC “Winning the Future” released the long version of its hit piece “When Mitt Romney Came to Town.” I thought MoveOn did a bang-up job last week with an ad profiling a pair of older Kansas City steelworkers left jobless thanks to Bain; this ad is so slashing MoveOn might have thought twice about releasing it. If you haven’t seen it, it’s here. Clearly, Gingrich is trying to have it both ways: Mollifying wealthy GOP donors horrified by his attacks on capitalism while continuing to bloody Romney. We’ll see how well it works.

Romney continues to insist Democrats, as well as some of his GOP rivals, are practicing “the politics of envy,” and on NBC Wednesday made what might be his dumbest remark yet. Asked whether there was ever a fair way to discuss income inequality, the GOP front-runner replied:

I think it’s fine to talk about those things in quiet rooms and discussions about tax policy and the like. But the president has made it part of his campaign rally. Everywhere he goes we hear him talking about millionaires and billionaires and executives and Wall Street. It’s a very envy-oriented, attack-oriented approach and I think it will fail.

Maybe Mitt wants to confine talk of inequality to “quiet rooms” because he’s seen the Pew Research Center data showing that Americans think conflict is growing between rich and poor.  Two-thirds of Americans see that conflict, up 50 percent since 2009. While African-Americans are still more likely than whites to see that conflict, the percentage of whites who agree tripled. Credit Occupy Wall Street for hiking consciousness about the gap between rich and poor, but credit the GOP for creating the conditions that allowed income inequality to soar, and the top 1 percent to gobble up 40 percent of the nation’s wealth.

A sly Sarah Palin called for Romney to release his tax returns on Sean Hannity’s show last night, to Hannity’s seeming distress. Palin defended Rick Perry’s “vulture capitalism” attack even as Hannity kept trying to get her to declare it unfair. She’s gone rogue again! We can only dream that Romney releases his tax returns. I think he’s less scared about showing his staggering wealth than revealing the scandalously low tax rate he pays, given how much of his income comes from investment and is thus subject to lower capital gain taxes. (I’m sure we’d also learn a lot from the tricks Romney’s accountants use to keep his effective tax rate even lower.)

Palin also demanded that Romney substantiate his claims to have created 100,000 jobs while at Bain, calling it a “come to Jesus” moment. What is she up to? Her snow-machine-driving husband Todd endorsed Newt Gingrich last week, to great derision, but it did raise questions about what the nominally neutral ex-V.P. nominee is thinking. She’s not thinking good thoughts about Mitt Romney, that’s for sure.

Meanwhile, the man who foisted Palin on the world, John McCain, today accused Romney’s anti-Bain attackers as supporting “communism.” But BuzzFeed recalls that in 2008, McCain himself attacked Romney’s Bain days. “He presided over the acquisition of companies that laid off thousands of workers,” McCain complained back then, and campaign manager Rick Davis told the National Journal:

“He learned politics and economics from being a venture capitalist, where you go and buy companies, you strip away the jobs, and you resell them. And if that’s what his experience has been to be able to lead our economy, I’d really raise questions.”

By: Joan Walsh, Editor at Large, January, 12, 2012

January 16, 2012 Posted by | Class Warfare, Economic Inequality | , , , , , , , | Leave a comment


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