Saturday, January 14, 2012


“There are two questions concerning Mitt Romney’s service at the private equity firm Bain Capital. The narrower question is: Did Bain help ailing companies and add value to the economy or did it plunder dying firms? The larger question is: Does Romney’s success in business tell us anything about whether he would be a successful president?”

David Brooks, from his 1/13/12 New York Times column, “The C.E.O. in Politics”

Brooks has indeed put his finger around two issues that many of us have been asking lately. In my opinion, however, he has placed the importance of these issues in reverse order.

Let’s examine the trivial issue first: Does Romney’s success in business tell us anything about whether he would be a successful president? Do you know why this issue is trivial? Because barring some sort of September or October surprise – such as a war with Iran into which Obama is reluctantly dragged – Romney is going down hard, whether we like his business record or not. And why is he going down? Because he fails in the critical test of what it now takes to be elected President of the United States.

I’ve pointed this test out before, and I’ll do it again: when it comes down to the general election, the man or woman we elect as President is almost invariably the candidate whom we’d rather see as the color commentator for a National Football Conference Championship game. Why the NFC Championship game? Because it is typically held on a cold and/or windy day and it is marked by hard hits, guts, strategy and heart. The analyst for this game has to be informed, honest (i.e., willing not only to point out the future hall of famers but also the posers and chokers), and able to relate to the common person in TV land. These games have a lot on the line – a Super Bowl appearance, to be precise – and those of us in the audience don’t have the patience to listen to blowhards, bull-shitters or wimps spew clichés. Not when it’s 20 degrees on the field and some of our favorite players are limping off with injuries, and even those who aren’t limping are hiding the fact that their bodies have taken so many shots over the past few months that the next morning, they’ll have trouble getting out of bed, win or lose.

Say what you want about Tricky Dick, but he knew his football and he knew how to “make it real” when he spoke. Most of us would have rather had him than McGovern do the commentary when the Redskins hosted the Cowboys in the ’72 season.

Now the situation in ’76 was an anomaly. Gerald Ford was once a heck of a football player and yet he lost the election. Still, Ford was the epitome of a dullard when it comes to speaking – so when the Vikings hosted the Rams in the ’76 season, we’d probably turn down the sound rather than listen to the ever-sanctimonious Carter or the bumbling Ford announce the game.

The situation returned to form in the 80s. We’d definitely prefer listening to Reagan (a former sportscaster!) to Carter when the Eagles hosted the Cowboys in ’80, or to Mondale when the 49ers hosted the Bears in ’84. In ’88, when the Bears hosted the 49ers, we sure would have preferred listening to George H.W. Bush, a huge fan of both football and golf, to Michael Dukakis, who was such a geek that he couldn’t even summon some genuine passion when he was asked how he would feel if his wife was brutally assaulted.

In ’92 and ’96, all but the most partisan Republicans would have loved to listen to William Jefferson Clinton display his seemingly encyclopedic knowledge of sports – and maybe throw in a few comments about the cute cheerleaders – when the Cowboys were hosted by the 49ers or the Packers hosted the Panthers. Then, in ’00 and ’04, W would have been our choice to talk about the Giants hosting the Vikings or the Eagles hosting the Falcons. W might not have been as informed as Gore or Kerry when it comes to domestic or foreign policy, but he did once own the Texas Rangers baseball team, and it’s difficult to imagine anything he enjoyed more than sports.

Finally, in ’08, when the Cardinals hosted the Eagles, we would have much rather watched Barack Obama do the game than John McCain. Obama is extremely articulate, likeable, and enamored with sports, whereas McCain comes across as a crusty jerk. We don’t need our announcers to be crusty jerks. The game itself is hard-hitting enough.

I went through all those elections so that you can truly see for yourselves how infallible this test is. Perhaps it didn’t work in 1976. Then again, Ford was essentially given the nomination on a silver platter, and all Carter had to do was show up and say “I wasn’t hand-picked by an impeached President.” (Besides, would you really want to listen to Gerald Ford announce a football game?) In other words, that election was unique, and not representative of much of anything. In all the other cases, the guy who wins the “regular guy” and “sports fan” award went on to win the election. Always.

This year, the Republicans are giving us the second coming of John Kerry. Mittens comes across as smug and out of touch, which is not what anyone is looking for in a color commentator. Obama should win. Hands down.

Now that we’ve dispensed with Brooks’ political question, let’s look at his second question, the one he refers to as narrow: “Did Bain help ailing companies and add value to the economy or did it plunder dying firms?” I suppose that if you frame the question precisely like that, it is of limited interest. So allow me to rephrase it a bit: What can we as a society learn from Bain Capital to better inform us about the industry of venture capitalism?

Once that question is asked, others immediately come to mind. Many of these are being asked by critics on the left (and a few opportunists on the right): Do we believe that venture capitalists often behave like vulture capitalists? Do we want to see additional regulations introduced in this industry? Do we believe that venture capitalists have moral obligations to take care of the communities and employees served by the business that they acquire such that even when they are engaging in legal profit taking, they may still be behaving immorally? Hasn’t the media demonstrated a tragic bias by closely scrutinizing even the slightest misstep by federal government officials, while allowing venture capitalists to plunder corporations with hardly any public attention?

Other legitimate questions can be asked by observers on the right: Does our society owe much of its long-term economic success over the decades to the unheralded role played by venture capitalists? Isn’t the overall track record of venture capitalists one of massive job creation, not job loss? Has our society been poorly served by the constant vilification of venture capitalists by Hollywood, which inevitably dwells on the failures of the industry rather than the successes? Is the current attack on venture capitalists simply a thinly veiled attack on capitalism generally?

Normally, when I post a blog, I don’t raise questions without at least trying to answer them. This time is different, though. I need to raise these questions both because they fascinate me, and because they ought to fascinate anyone who is concerned about our economy. But I raise them as open questions because up until now, our society has made such a minimal effort to shed light in this area that those of us outside of the business world have little ability to answer them. Regardless of the industry, when it comes to the conduct of our big corporations, our media has seemed disinterested. It is only when something disastrous happens that anyone even begins to pay attention, and only then for a short time. The big companies pay for the advertisements that fuel the media, and that fact appears to give these companies Teflon. Sure, you’ll see a few companies vilified on shows like 60 Minutes, but an occasional exposé is hardly going to give rise to a national debate, like the debates we have whenever a politician or a political party acts in a questionable manner. In a democracy, it is essential that our society engages in such national debates in order to give “the people” a voice, and there is no reason why we shouldn’t have a voice in the world of business just like we have one in the world of politics.

There are those in Hollywood who may think that they have been encouraging such a debate by portraying the leaders of big corporations as soulless pigs. That is almost invariably the way Hollywood treats the folks who run companies like Bain Capital. Even when a movie or TV show is not centered around a “greed is good” theme, you can bet that the men and women in the boardroom, whenever they are shown, will be depicted as amoral at best. As a result, those of our “best and brightest” children who are influenced primarily by Hollywood may avoid the world of business like the plague, and concentrate instead on more movie-friendly occupations like law, medicine, law enforcement or vigilante justice.

Something tells me that whereas Hollywood hasn’t been giving these venture capitalists enough credit, the media has been giving them too much of a free ride. Now, hopefully, thanks to the candidacy of Mitt Romney – and the counter-attacks of Newt Gingrich and Rick Perry – we might get a more serious and balanced vision of the venture capital industry. At least that is my hope. I want to learn more about this industry myself. I’ve watched the 28-minute attack ad against Bain Capital by googling “When Mitt Romney Comes to Town” – and while it seemed overly negative, it did whet my appetite for more.

Throughout my adult life, I personally have (a) trumpeted capitalism philosophically as a preferable mode of production to the available alternatives, and (b) preferred to work as a public servant rather than a businessman for moral reasons. And yes, I’ve often wondered if that combination of choices reflects a fundamental inconsistency and unwillingness to come to terms with uncomfortable beliefs. Have I overrated capitalism in the abstract by refusing to recognize that its intolerable excesses are a necessary part of the model? Have I sold short the contribution to our society made by the typical successful venture capitalist or banker? Or is it possible that I have concluded that bankers and venture capitalists may harden their hearts and corrode their souls as individuals, but end up playing a tremendous progressive role in society?

I won’t attempt to answer those questions today. But I hope to be able to answer them better in the upcoming weeks and months. Here’s wishing that the media will NOT drop the ball when it comes to examining Bain Capital. Oh sure, you know they’ll attack these issues to the extent they see them as relevant to the “horse race” of Presidential politics. But I want them to evaluate Bain’s conduct as an exemplar of the large modern venture capital firm. And I want them to use Bain as a window on which we as a society can better understand the strengths and weaknesses of the capitalist system as a whole.

I still have a bias in favor of capitalism, having seen all too well the problems with government as a producer of services. But that is not to say that our approach to capitalism can’t be improved. If the lessons from Bain Capital can enlighten the public enough to demand such improvements, we will all be thrilled that the Republican electorate ignored that Mitt Romney comes across neither as knowledgeable about football, particularly honest, or able to relate to the common person. In other words, though the Republicans are poised to set themselves up for failure in November, at least, as we sports fans would say, they seem to be “taking one for the team.”

1 comment:

Unknown said...

mitt has it exactly right....

i want to be able to fire the jerk entitled lifer at the dmv.....

"Baining" the government would restore the peoples faith in it it as a force for good.

And whats wrong with Bain, or KKR, or any other private equity firm? They just accelerate the forces of creative destruction and resisribution of capital to more productive ends; that is essentially what keeps our country vital especially relative to the failed statist social democratic paradises (aka, France, Greece, Italy, Spain, Germany=collapsing Euro) that Barack, Michelle,and their retainers (who like you Dan are too "moral" to be businesspeople)seek to emulate. Look at how those people, and the public sector unions they are beholden to, in California as Barry the Bomber's vision.

Tes Dan, people lose jobs. It is unfortunate, but if they cant adapt or seek to prolong their lives in unproductive industries, they are toast anyway whether its Bain or Government Motors. However, it is you...who has had only one employer...who iu out of touch. the true immorality is to pretend otherwise. i've had 5 employers since i got out of grad scoll, and now i work for myself which means getting new clients (aka) employers continually; something you have choisen not to do and are properly incapable of doing cause it probably isnt justified by Spinoza or something like that.

it is far more imorral for the taxpayer to prop failing industries up and impede the development of new onmes by diverting capital through taxation than redistributing labor and capital to their best use. And Bain is far better at itrather than cosseted entitled statisticians in the Department of Labor.

People would rather be Romney than the entitled jerk at the DMV. That;s why this election will be awfully close, and probably won by the GOP if Christie or Rubio is on the ticket.

The one thing I'll concede is that I'd give Barry the commentating job; love to see him there instead of tony dungy on sundays, and he'd probably be great as marv albert's (bite me) sidekick on ESPN NBA. I personally am ambivalent about Mitt; I went to grad school with too many of them. But Mitt'll do far less damage than another four years of Michelle's "wonderful regress".