Romney at Bain: The case he can't make

I'm beginning to feel sorry for Mitt Romney. Here is an essentially decent man, a devoted husband and father, who built a thriving business, passed a model health care program and saved the Winter Olympics. He's succeeded at just about every endeavor he's ever tackled. Yet when anyone mentions his record as chief executive of Bain Capital or as governor of Massachusetts, he instinctively changes the subject.

Granted, Romney's been boxed in by the necessities of running as the standard bearer of a party dominated by the far right. But a political campaign, like everything else in life, is a test. If Romney can't articulate the case for his career so far, how will he handle Congress, the economy, Putin and Ahmadinejad?

Granted, too, if you agree with Walter Lippman's famous observation— "Ultimately, government is just organized opinion"— then Romney's incoherence about what ought to be his strengths is a poor recommendation for his presidential candidacy. Whatever else you may say about George W. Bush, he was a superb organizer of public opinion. Why else would so many Democrats in Congress have acquiesced sheep-like to his unwarranted invasion of Iraq?

Corporations really are people

If Romney can't defend his business career, who will? As the naval lawyer Barney Greenwald remarked when assigned to defend Lieutenant Steve Maryk in Herman Wouk's The Caine Mutiny, "I'd rather prosecute." Still, in the absence of other volunteers, let me take a crack at it.

"Corporations are people, my friend." This unnecessary gaffe will follow Romney to Election Day and possibly to his grave. But it happens to be true.

Corporations are associations of individuals who've voluntarily banded together for some collective purpose. They may be investors hoping to make money or music lovers operating an orchestra or idealists advocating for human rights. Precisely why they should be denied the right to speak collectively— and why I should be denied the right to know where they stand— eludes me.

To be sure, corporations lack hearts and souls. They don't have hopes and dreams. They don't eat and sleep, go out on dates or get drunk. But contrary to popular belief, corporations do go through life cycles very much like those of humans: They are born, they grow up, they grow old, they get sick and they die.

What happened to Wanamaker's

I'm old enough to remember when all Philadelphians thought the Pennsylvania Railroad, the Evening Bulletin, the Curtis Publishing Company, the First Pennsylvania Bank, Scott Paper Company, John Wanamaker, Strawbridge & Clothier and Horn & Hardart would last forever.

And what American over 40 ever doubted, back in the day, that such entrenched household names as J.P. Morgan, A & P, Bethlehem Steel, Standard Oil of New Jersey, RCA, Time Inc. and Trans World Airlines wouldn't be around forever, too?

Even teenagers surely remember when Dow Jones, Knight-Ridder Newspapers, AOL.com and Lehman Brothers were on top of the heap. Come to think of it, has anybody heard from Blackberry lately?

According to the best estimates, the chemicals, skin and other elements contained in a deceased human body are altogether worth about $4.50. But a dead or dying corporation may be worth millions, in the right hands.

Which brings me to….

"'Vulture capitalism'

Bain Capital, Romney's private equity firm, has been assailed for making money by dismantling companies and eliminating jobs. "Vulture capitalism," Texas Governor Rick Perry called it.

That's a pithier phrase than anything Romney has come up with, but it doesn't withstand close scrutiny. To employ Romney's argot, vultures serve a purpose, my friend.

The dismantling of companies is a tragedy only if you believe that corporations last forever—which, as I said, they don't. When a company is sick or dying, often its best hope is to find an equity firm like Bain that specializes in salvaging sick companies.

Since Tolstoy's maxim about unhappy families also applies to sick companies— no two are alike— every solution may be different. Sometimes it's a matter of pumping new blood or fresh capital into an operation. Sometimes it involves transplanting a dying company's vestigial organs into other healthier bodies, where they may do some good.

Sometimes it's a matter of cutting the overhead or pruning the deadwood. Sometimes it's a matter of outsourcing jobs to China or Indonesia.

If an equity firm like Bain does its job, the target company will survive and sometimes grow, albeit in a different form. Some people may lose their jobs in the process— but that's better than everyone's losing their jobs, which is what would happen without outside intervention.

Garbage, or recycling?

Denouncing a firm like Bain for eliminating jobs is like scolding a hospital because some of its patients die. The test of a company like Bain isn't how many people lose their jobs— it's how many people keep their jobs.

I speak from long experience as a financial writer, as well as the editor of the forthcoming memoirs of the Philadelphia entrepreneur Jack Farber, whose company, CSS Industries, has spent 40 years cleaning up the corporate messes left by other executives. I also speak as the former CEO of an alternative weekly (Philadelphia Forum, 1996-98) that folded because I couldn't bear to fire anybody.

Surely even Obama supporters will agree that the garbage man, the junk man and the recycler perform important services to society. Surely anyone whose home is crumbling will make drastic improvements or move. And where would Nature be without vultures to clean the decaying flesh from rotting carcasses?

Romney's pitch

That's the argument I would make to the great masses of Americans who Dreamed They Saw Joe Hill Last Night and have overdosed on screenings of Wall Street, Rollover, Margin Call and Arbitrage. But here's the same argument as Romney has typically phrased it on the campaign trail:

"The reality is in the private sector that there are some businesses that are growing and thriving, and we were fortunate enough to be able to be a part of that in a small way. But there are some businesses that have to be cut back in order to survive.... Sometimes we're successful at that, and sometimes we're not."

Let's face it. If Romney needs me to make this sale for him, he probably doesn't belong in the White House.

By contrast, George W. Bush browbeat Congressional Democrats into cutting taxes on the rich, for goodness' sake. On the other hand, Obama seems unable to browbeat Congressional Republicans into doing anything.

What we have here is a failure on the part of both candidates to communicate— which, as Walter Lippman noted, is a president's primary job.♦


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