In a better America, Mitt Romney would be running for president on the
strength of his major achievement as governor of Massachusetts: a
health reform that was identical in all important respects to the
health reform enacted by President Obama. By the way, the
Massachusetts reform is working pretty well and has overwhelming
popular support.
In reality, however, Mr. Romney is doing no such
thing, bitterly denouncing the Supreme Court for upholding the
constitutionality of his own health care plan. His case for becoming
president relies, instead, on his claim that, having been a
successful businessman, he knows how to create jobs.
This, in turn, means that however much the Romney
campaign may wish otherwise, the nature of that business career is
fair game. How did Mr. Romney make all that money? Was it in ways
suggesting that what was good for Bain Capital, the private equity
firm that made him rich, would also be good for America?
And the answer is no.
The truth is that even if Mr. Romney had been a
classic captain of industry, a present-day Andrew Carnegie, his
career wouldn’t have prepared him to manage the economy. A country is
not a company (despite globalization, America still sells 86 percent
of what it makes to itself), and the tools of macroeconomic policy —
interest rates, tax rates, spending programs — have no counterparts
on a corporate organization chart. Did I mention that Herbert Hoover
actually was a great businessman in the classic mold?
In any case, however, Mr. Romney wasn’t that kind of
businessman. Bain didn’t build businesses; it bought and sold them.
Sometimes its takeovers led to new hiring; often they led to layoffs,
wage cuts and lost benefits. On some occasions, Bain made a profit
even as its takeover target was driven out of business. None of this
sounds like the kind of record that should reassure American workers
looking for an economic savior.
And then there’s the business about outsourcing.
Two weeks ago, The Washington Post reported that Bain
had invested in companies whose specialty was helping other companies
move jobs overseas. The Romney campaign went ballistic, demanding —
unsuccessfully — that The Post retract the report on the basis of an
unconvincing “fact sheet” consisting largely of executive
testimonials.
What was more interesting was the campaign’s
insistence that The Post had misled readers by failing to distinguish
between “offshoring” — moving jobs abroad — and “outsourcing,” which
simply means having an external contractor perform services that
could have been performed in-house.
Now, if the Romney campaign really believed in its own
alleged free-market principles, it would have defended the right of
corporations to do whatever maximizes their profits, even if that
means shipping jobs overseas. Instead, however, the campaign
effectively conceded that offshoring is bad but insisted that
outsourcing is O.K. as long as the contractor is another American firm.
That is, however, a very dubious assertion.
Consider one of Mr. Romney’s most famous remarks:
“Corporations are people, my friend.” When the audience jeered, he
elaborated: “Everything corporations earn ultimately goes to people.
Where do you think it goes? Whose pockets? Whose pockets? People’s
pockets.” This is undoubtedly true, once you take into account the
pockets of, say, partners at Bain Capital (who, I hasten to add, are,
indeed, people). But one of the main points of outsourcing is to
ensure that as little as possible of what corporations earn goes into
the pockets of the people who actually work for those corporations.
Why, for example, do many large companies now
outsource cleaning and security to outside contractors? Surely the
answer is, in large part, that outside contractors can hire cheap
labor that isn’t represented by the union and can’t participate in
the company health and retirement plans. And, sure enough, recent
academic research finds that outsourced janitors and guards receive
substantially lower wages and worse benefits than their in-house
counterparts.
Just to be clear, outsourcing is only one source of
the huge disconnect between a tiny elite and ordinary American
workers, a disconnect that has been growing for more than 30 years.
And Bain, in turn, was only one player in the growth of outsourcing.
So Mitt Romney didn’t personally, single-handedly, destroy the
middle-class society we used to have. He was, however, an enthusiastic
and very well remunerated participant in the process of destruction;
if Bain got involved with your company, one way or another, the odds
were pretty good that even if your job survived you ended up with
lower pay and diminished benefits.