Saturday, January 14, 2012

Mitt's Problem is Our Problem

 Click on the title page of this post and you'll be directed to a great article by RJ Eskow about Mr. Romney's current problems with his image and why even the most full-throated "free-enterprise" conservatives such as Rick Perry and Newt Gingrich are spouting invective against Mr. Romney like an Occupy Wall Street protester.  I can't do the article justice by repeating here so I highly recommend you read it, then come back and read my thoughts on the matter.

Mr. Romney's troubles are as Mr. Eskow suggests the end result of well intended government policy to foster investment and "job creation".  As the article describes, Bain Capital came to life after regulations were eased to facilitate what was hoped to be a spark of investment in companies, products and services and ultimately jobs.  Of course,  wealth or the accumulation of wealth is like water in that it finds the path of least resistance.  Why build wealth through production or through work that results in production when one can hire some very intelligent analysts and take advantage of the laws and regulation to make your money without all that pesky labor and effort beforehand? 

So, here we go.  People have used a system intended for one thing and manipulated it for another.  Surprise, surprise!  Mr. Romney and his colleagues at Bain didn't do anything illegal. No, quite the contrary, they scrupulously followed policy, law and regulations and made hundreds of millions of dollars for their investors and themselves as a result.    It seems that this is a story that repeats itself over and over again.  A well intended action generates unintended consequences, and after it is done enough, no one really pays attention to it except to jump on the bandwagon and attempt to achieve similar results. 

This is human nature.  Having wealth provides a level of security that our base instincts want.  In the early 1940's, a psychologist named Abraham Maslow published a paper titled "A Theory of Human Motivation" which describes a basic level of requirements (Hierarchy of Needs)  for a human to eventually become as Maslow perceives, "self-actualized".  At the base levels of the hierarchy are core requirements such as physiological needs like breathing, water, food, etc..  Just above this level is "Safety", which involves security.  One of the ways to be "secure" as we have learned over history is to accumulate wealth or its cousin, power.  Obtaining wealth lets one live in a safer place, eat better food, get good medical care when you are sick, influence people to do what you want them to do, and many other things.

OK, as a result, we are all kind of wired to find a way to be secure for ourselves and our families.  In our society, that generally means having enough money to see those desires realized.  If getting some wealth makes one secure, then having a lot of wealth makes one very secure right?  Well, sometimes.  Nonetheless, we'd all like a little more money.  We have many ways of doing this. We work at our jobs, we go to school to get smarter so we get better jobs. We save, and back to the relevant part of this article, we invest.  Some of us do this professionally and become very good at it. Some of us do it on the guidance of others who trade and invest for us or we buy into instruments like mutual funds, bonds, real estate, etc. hoping that our money invested will return more than we put in.   So, an emergence of people like Mitt Romney and all those who came before or after him have established an industry that focuses on making wealth through the manipulation of money.

Much of this activity is good.  Investment does allow people to create and establish businesses that hire people and produce many useful things such as the computer I am using to write this article.  This is good and proper, and as a result many people are made a little richer and a little more secure.

The problem with Mr. Romney's private sector industry of choice however is the other side of the coin.  It is the side of the coin that makes money not by producing things, rather by re-organizing them.  Sometimes this is needed as companies become inefficient, poorly managed and are headed for dissolution.  Companies such as Bain Capital can provide help to save these businesses. Staples is an example of where this worked.  Other companies, despite well intended efforts to save them, didn't make it.  That's the way the world works. Some succeed, some fail.  Even that is not the problem.  The problem is when companies such as Bain Capital intentionally strip a company of assets or reduce its cost basis to the point of where the business cannot function solely for the purpose of making profits for Bain's investors.  This is known as 'destructive capitalism', or as Mr. Perry has so loudly described 'Vulture Capitalism".   Companies are stripped bare, people are laid off, buildings, assets and other items of value are sold off and the investment company (e.g. Bain Capital) walks away with a tidy profit and return for itself and its investors.

Mr. Romney is an intelligent man. He and his partners knew full well that they could make themselves and their investors very wealthy by taking advantage of policies and regulations that would allow them to leverage destructive capitalism fully.  They receive through the tax code a break on their investment returns because capital gains are only taxed at 15% where as the people's incomes who work at the companies Bain

I have no problem with a businessperson being President if he or she have a track record of actually producing something that involves the entire business cycle of investment, creation, production, consumption, etc.  That way you'll know they at least are exposed to the lives of the majority of the people in the country and might have some way to relate.  We don't need aristocrats and patricians who have no conception of what it is like not being able to make the rent, or to make a decision on buying food instead of medicine.   Mr. Romney is out of touch with the majority of the people in this country, and it stands to reason that someone who understands the issues of the majority of the people in this country might have a better chance of helping those who need it most.  Those people are not the ones Mr. Romney worked with at Bain Capital. 

At the end of the day, this circumstance Mr. Romney finds himself in can be traced back to who we elect to represent us either in Congress or the White House.  The environment that Mr. Romney enriched himself in was put in place by legislators.  If you like that kind of public policy fine, then Romney is your guy because he'll repeat it over and over again if he can.  If you think it makes sense to promote wealth through the production of things versus the manipulation of tax codes, then someone else is probably your candidate.  Remember, we made this

Now, Mr. Perry, Mr. Gingrich and anyone else attacking Romney (you too Mr. President) need to look in the mirror because I'm sure if there were any other way to take a shot at Romney they would be using it. But, there's not (except for the Mormon thing and I think that's a non-issue personally) so this is what they have.  Don't think they are purists as much as opportunists.  Mr. Romney is the front-runner, so his experience and record will be called into question as it should. But, the people that are lobbing hand grenades at him over his business experience have their own problems.  I'm talking to you Newt. 

I say once again that this situation is why elections are important and we need to pay attention to who we send to Washington to do our work for us.   Romney's wealth is there because we put it there.  Let's do a better job of selecting people we send to write our laws and lead our nation, and perhaps, we can obtain that level of security that Maslow describes by doing something that actually results in a building, a road, a computer, a car, or other item we will actually use.

Tell me what you think,

regards,
Dennis 

Sunday, January 01, 2012

2012 Here We Come


Well, OK, maybe just to December 21st then if you are a Mayan.  If you, like me are happy to see 2011 in your rear view mirror, then welcome.  I am happy to see that sorry year fade into oblivion.  2012 is promising for us.  There are many exciting opportunities for us to seize and experience (the aforementioned Mayan prediction excepted of course).  Politically, we have an election year and all the wonderful nonsense that brings forward to us.  What are your predictions?  Who will the GOP finally decide upon to compete with President Obama?  Will the Republicans beat the President and retake the White House?  Will Congress ever get their approval above 15%?  What will be the single biggest case decided by the Supreme Court this term?  Let's play Predict The Outcome:
1. Presidential Politics:  - We are in full swing in terms of primary season.  The Iowa Caucuses are this coming Tuesday for the GOP.  Of course, the President is sailing to renomination by the Democrats with no challengers in the primaries.  I think that is a mistake as we need someone to challenge President Obama if for nothing more to remind him he is a Democrat. (Mr. President, I'm fairly peeved with you about signing the indefinite detention deal.  Bad form!).  So leaving the Democrats for a minute, let's look at the current polling for the GOP field:

Our Candidate slate is as follows:
Michelle Bachmann - Congresswoman from Minnesota and Tea Party star (Michelle, finally, after putting that harpy from Wassilla on the shelf has risen to be the single female candidate in the race this year.  Suck it, Sarah!)
Newt Gingrich - Former Speaker of the House, Historian, Lobbyist, etc (finally, has learned his lesson from his serial philandering and will bring his uncanny ability to alienate everyone he speaks with to the White House, which will most certainly improve the climate in the Beltway)
Mitt Romney - former Massachusetts Governor and Business man (Saved the Olympics, can honestly save us too!  Don't pay any attention to that guy who was governor of Massachusetts in the 1990s, who passed a health care plan that closely resembles "ObamaCare". Mitt has no idea who that guy was.  Oh, yeah, and Corporations are People too!)
Ron Paul - Congressman from Texas, Libertarian, favorite of the anti-war, pro-pot, conservatives in the GOP (all two of them). Seriously, Paul does pull in a lot of independents.
Rick Santorum - Former Senator from Pennsylvania (spends way too much time worrying about saving traditional marriage)
John Huntsman - Former Utah Governor, scion of a wealthy industrial power (Huntsman chemicals), former Ambassador to China (speaks fluent Mandarin).  (Why is this guy not winning?  Oh, yeah right, he's somewhat of a moderate and used to work for that Muslim Kenyan poser in the White House when he was the Ambassador to those Reds in China).
Buddy Roemer - Former Governor of Colorado  (Buddy who?)
Rick Perry - Governor of Texas (Didn't we learn anything the last time?)

Honorable mention - Herman Cain,  the wonderful, massive car crash of a campaign that was Herman Cain.  Oh Herman, how we miss you.

Well,  the punditry community thinks this is Romney's to lose and dammit, he can lose with the best of them!  Seriously though,  It seems like Romney is holding enough of the base that he can weather the primaries and come out with the nomination.  His organization is strong, he has a lot of money, he's not afraid of going negative (sorry Newt), and he really, really wants the gig.  I'm not convinced the others in the race are really there to win.  Gingrich benefits from the celebrity in that he sells more books, gets more speaking engagements, who knows, maybe a VP slot?  Huntsman is I think doing a dress rehearsal for 2016, though he needs more face time (He's the guy in all the debates standing on the far, far end of the stage) and needs strong showing in New Hampshire to stay somewhat relevant.  Look for him for a potential VP spot or a cabinet post if the GOP somehow wins.  Who knows, maybe Obama appoints him again to a spot in the administration should he win reelection.  Bachmann had her moment in the sun, winning the Ames straw poll in Iowa.  She was flavor of the month for a while, but has been relegated to the back of the GOP primary bus along with Huntsman and Perry.  Speaking of Governor Perry; Have you ever seen anyone fall so quickly?  All it took was two debate performances for him to move from putative nominee to the bottom of the stack.  Talking about someone who is so not ready for the national stage.  He's messed this up so badly I don't think anyone would seriously consider him for a VP slot.  As to Mr. Paul, he is shaking things up nicely in GOP land.  He is competing seriously in Iowa, and has said he may not support any GOP nominee should he not win the nomination.  Some folks think he might splinter off and run as an Independent in the general.  He has enough support to cause some damage to the GOP in my view.  I think he pulls more from the GOP leaning independents than from the Democratic leaning independents.  Rick Santorum is surging well in Iowa right now thanks to a lot of elbow grease and commitment from him and his campaign.  Make no mistake, this guy is a tough campaigner and smart, except he can't get off the social wedge issues.  As long as he is shouting at the rooftops about "gays in the military" (you too Mr. Perry), saving traditional marriage, etc., he will not pull any independents in the general, so, I think he is a one trick, socially conservative candidate who might do well in Iowa and some of the southern primaries but that is about it.

So, here is my predictions for the GOP Nomination for 2012.
GOP Primary:
Romney is the nominee
Romney picks a southern state appealing VP candidate to counter the backlash to his Mormonism.  Candidates include;  Haley Barbour former Governor of  Mississippi, Marco Rubio (senator from Florida), Susana Martinez (governor of New Mexico).    I think the idea of picking someone to from Congress is a non-starter, given the abysmal rating Congressional leaders have right now. 

General Election:

Obama wins a squeaker with just over the 270 electoral votes required to retain his job.

What are your thoughts on the 2012 Presidential sweepstakes? 

regards,
Dennis