Wednesday, January 11, 2012

Gingrich and Perry vs. Cannibalism or, Opposing Romney is not Opposing Capitalism

Newt Gingrich and Rick Perry both criticized Mitt Romney for buying companies in order to break them up, to close them down, and to sell off portions of them piecemeal for a profit.  Their opposition to this practice has been characterized as opposition to capitalism and as “bashing business success.”
It is not.
By opposing Romney’s marketplace actions, Gingrich and Perry are not “bashing business success.”  They are saying that not all ways of making a profit are morally equal.  In a free market, Romney is free and able to make money in many ways.  That is not the problem.  That he chose to do what he did in the face of countless other options and opportunities for success is a problem. 
One is free to make money working as a doctor for Planned Parenthood, or as a brothel owner in Nevada, or as a medical marijuana dealer in CA.  The activities and the profits made from those activities are legal and are part of the free market, at least here and now.  But neither contemporary legality nor contemporary freedom puts those activities and those profits above criticism or beyond reproach.  Choosing to make money in any of those ways, or as a business vulture the way Romney did, is worthy of principled opposition.  That opposition is not anti-capitalism.  It is criticism against some of the choices we capitalists ocassionally make.
Capitalism itself is not on trial here with Gingrich and Perry; Romney's choices within that system are.
Being a friend of the market is not an absolutist position.  One is not required to endorse either every activity and every profit the market yields or else none of them.  Sometimes market advocacy requires subtlety and distinctions (of which Ron Paul seems too often incapable).  One can be a strong advocate of the market and yet forcefully criticize some activities within it that still yield a handsome legal profit.  Sometimes one might need to drive the money changers out of the Temple -- not because the marketplace itself is evil, but because while some things are profitable, not all things are right and deserve protection, support, or applause.  Producing economic road kill, and then selling off bits of it as steak and sausage the way Romney did might be just such an activity.
You cannot tell what is right by seeing what is legal or profitable because “legal,” “profitable,” and “moral” are not the same.
Opposing pornography, for example, is not opposition to the free market.  It's opposition to the destruction of souls and of families.  Opposing pornography is right and good, even though the market permits and rewards it.  In other words, the free market is good in many ways and for many things -- many, not all.
The marketplace is very good at giving people what they want; it is not so good at teaching them what they ought to want or what they ought to do.
By the same token, while cannibalizing businesses and putting folks out of work is legal and profitable, it is not without objection.
So Gingrich and Perry objected.
Good on them.
They haven't yielded their obligation for acute moral discernment to the marketplace, which, like all human institutions, from best to worst, is fallen.

12 comments:

PWS said...

We should indeed oppose what you describe here. But that's a false characterization of what Romney and Bain did. That's the problem, and why Gingrich and Perry have been rightly denounced by most of the conservative world as demagoguing good private sector work (taking struggling companies, rebuilding them, making them work better) as those on the far left would. In Gingrich's case this seems shameful because he seems to know better. A month or so ago he let slip the kind of criticism of Bain he has now decided to make central to his campaign. He then quickly apologized and said the remarks "made no sense" and didn't "fit my values."

IlĂ­on said...

So: it's *my* business how you dispose of your own (honestly acquired, naturally) wealth, the sweat of your brow?

It seems to me that a man is either for liberty, or against it.

Dr. Michael Bauman said...

No, a man is for some liberties and not others. Some of the things we are free to do we are not right to do. The fact that a particular activity is legal or yields a profit in the marketplace is not a moral justification for the activity. Jesus was not being anti-liberty when He drove the money changers from the temple, even though they were legally free to do as they did and were gaining a profit by it. Those who criticize the morality of some activities are not anti-freedom; they are anti-evil. The bottom line for a Christian conservative regarding any human action is not "Is it free?" or "Is it profitable?" but "Is it good?" If it is not, it merits criticism.

Dr. Michael Bauman said...

PWS, Bain didn't make struggling companies profitable; they killed struggling companies and sold off portions of them for the profit of Bain investors. The companies were dissected and their workers, many thousands of them, were sent packing. The process is legal and profitable, but that does not make it morally justifiable. They took a sick man, so to speak, and rather than heal him, they removed his heart and gave it to someone else.

PWS said...

Dr. Bauman, you're repeating what Gingrich and Perry are saying, but I don't think you know what you're talking about, or have done any serious looking into what Bain did. The recent Wall Street Journal story would be a good place to start, or today's Wall Street Journal editorial (as the editorial puts it: Gingrich and Perry are "embarrassing themselves") (http://online.wsj.com/article/SB10001424052970204879004577108500491449164.html), or the National Review editorial (Gingrich's claims "asinine," "foolish," "disturbing") (http://www.nationalreview.com/articles/287654/romney-s-profitable-past-editors). No one disputes that Bain succeeded (in improving companies) most of the time, and that a minority of their companies did not succeed. But Bain TRIED to make those companies succeed -- that is the kind of work that they did. That is clear. And no one seems to dispute that on the whole Bain is responsible for far, far more new jobs than lost jobs. Your portrayal is not just uncharitable, it's plainly wrong. http://www.politico.com/news/stories/0112/71349.html#ixzz1jFqwqbWL http://www.nationalreview.com/corner/287862/example-vulture-capitalism-rich-lowry

Dr. Michael Bauman said...

PWS, It's both presumptuous and insulting (not to mention false) to think that because we disagree I do not know what I'm talking about. We agree on what Bain did; we disagree over how it ought to be properly characterized. Nor am I merely repeating what Gingrich and Perry said. I am arguing that they were right to say it and that saying it is not an attack on capitalism. It is a criticism of Bain, and it says that what folks like Herman Cain was more praiseworthy than what Bain did.

PWS said...

The reasons I suggested you didn't know what you are talking about is that you said "Bain didn't make struggling companies profitable." That's false, since they made many struggling companies profitable. You said they "killed struggling companies." That (in addition to your sick man analogy) implies the intention of ending the company without trying to make it succeed; I suggested that there is no evidence that Bain ever intended that; rather, they intended to fix companies, though in a minority of cases they didn't succeed. I don't know on what basis you reached such a conclusion about the intentions of Bain in those minority cases. Without strong evidence, it seems at best deeply uncharitable. As you note, I had in fact assumed you were uninformed, because given what we know (what I am aware of, at least), your characterization seems so unfair and over-the-top.

Dr. Michael Bauman said...

You too positively, and to that degree inaccurately, describe how Bain sometimes went about making companies profitable, and who got the profit (and who got the shaft) in the process of Bain making money.

If you take over Acme Corp., replace Acme's management with your own, and if your new management cannot make it succeed, and then, rather than firing yourself for your failure and incompetence, if you break the company up into smaller pieces, fire the workers involved in the pieces you failed to make profitable, and then either sell off or discard those pieces you failed to make profitable, then it remains, to me, an open question (A) whether or not what survives is Acme Corp. and that you have fixed it; and (B) whether or not the way you went about fixing what now goes by the name Acme was moral, even though it was legal and turned a profit for you under the Acme name.

I'm not saying businesses shouldn't change or evolve over time. They must. I'm not saying that folks should never be fired. I'm not saying failure is no proper part of the free market. I'm saying that some changes, some ways of making a profit, and some ways of arriving at failure deserve criticism. Bain's way sometimes falls into that category.

Say Fred is a quadriplegic. Say his condition and prospects both are bad. If you cut off Fred's defective arms and legs and either sell them to the highest bidder or just throw them away; if you replace his brain with your own; and if you reap the profits of the work that now gets done; it's highly debatable that what you've got before you now is Fred or that you have fixed him. Perhaps you have worked hard and made a handsome profit for your efforts. But it is not clear that you have done right morally even though you have done well financially. There are better ways to make a living with your impressive medical skills. Saying so is not anti-capitalistic. Gingrich and Perry are not against capitalism. They are against some of the things capitalists do to get money. Bain's work here is not above criticism or reproach.

Dr. Michael Bauman said...

After defending Romney/Bain repeatedly against statements made in a recent pro-Gingrich political ad, CNN ends by saying:

"To be clear, none of this is to suggest that Romney and Bain didn't make some very real mistakes, or that they shouldn't be criticized for situations in which they profited from financial engineering rather than from company growth."

Anonymous said...

Vulture may not be the best term to use
to refer to Bain.( Capital) its LBO
antics.
Cannablism for profit is more on target.
Some seem to feel that is his liberty pursuits.
Sad, he ducked the draft like Cheney.
Is the GOP party becoming the abuser party,
under some banner of liberty.
Weird is the GOP.
Now, a lot of toadies want Newt to shut his mouth,
like it can't hack the full truth.

PWS said...

I still don't think you're accurately capturing the actions of Bain, though there can certainly be a legitimate moral debate over the nature of what private equity firms do. In any case, my point in all this was simply that your characterization of Bain was misleading, that most readers of your blog post will get a very false impression, and indeed your repeated and unqualified claim that the business of Bain is "killing struggling companies" is not defensible.

Dr. Michael Bauman said...

PWS:

In my view, the portion of this document dealing with Bain is worth downloading and reading:

http://news.yahoo.com/opposition-file-romney-hits-internet-likely-2008-mccain-094643763.html

Cheers, and many thanks for pursuing this issue in a purposeful and insightful manner. I appreciate and respect it.
MB