Why are there so many stories like this one?
Apparently they liked what they saw. Soon after, in October 1993, Bain Capital, co-founded by Mitt Romney, became majority shareholder in a steel mill that had been operating since 1888.
It was a gamble. The old mill, renamed GS Technologies, needed expensive updating, and demand for its products was susceptible to cycles in the mining industry and commodities markets.
Less than a decade later, the mill was padlocked and some 750 people lost their jobs. Workers were denied the severance pay and health insurance they'd been promised, and their pension benefits were cut by as much as $400 (258 pounds) a month.
What's more, a federal government insurance agency had to pony up $44 million to bail out the company's underfunded pension plan. Nevertheless, Bain profited on the deal, receiving $12 million on its $8 million initial investment and at least $4.5 million in consulting fees.
And this one?
Romney was the chief executive officer of Bain Capital in 1992 when the company purchased American Pad & Paper, or Ampad, and oversaw the management of that company and others.
Ampad went bankrupt in 2000, and investors netted over $100 million from the deal, according to the Boston Globe.
And this one?
By the time the Harvard M.B.A.’s from Bain were finished, sales at the medical company, Dade International, had more than doubled. The business acquired two of its rivals. And Mr. Romney’s firm collected $242 million, a return eight times its investment.
But an examination of the Dade deal, which Mr. Romney approved and presided over, shows the unintended human costs and messy financial consequences behind the brand of capitalism that he practiced for 15 years.
At Bain Capital’s direction, Dade quadrupled the money it owed creditors and vendors. It took steps that propelled the business toward bankruptcy. And in waves of layoffs, it cut loose 1,700 workers in the United States... .
There are more.
But have you noticed what's "weird" here? Think Progress has:
22 percent of the money Bain Capital raised from 1987 to 1995 was invested in five businesses — Stage Stores, American Pad & Paper, GS Indusries, Dade, and Details. These five made Bain $578 million in profit, even as all five eventually went bankrupt.
But there's more to it than that. Let me highlight the point I'm trying to make, put most succinctly in the second linked story, above:
Ampad went bankrupt in 2000, and investors netted over $100 million from the deal
Ask yourself how it is that Bain deals are described in the papers as making millions for Bain, but the companies it bought go bankrupt. Why is it that so many of the stories of companies bought by Romney at Bain have the same story? They go bust, but Romney makes money. If you or I bought a company and it went bust, how much would you expect to make from the deal? I have to think that for most of us, the answer would be "zero."
So, doesn't the fact that Romney made money on these busts mean he's a great businessman? Well, it does if you can get past the quaint notion that a "successful businessman" was one that kept businesses operating as going concerns. Once it was discovered that "business success" could mean nothing more than getting as many dollars as possible, there was no point in keeping a business that did things open at all. The only business worth having was the one that entitled you to the keys to the bank vaults.
So that's what Mitt Romney built for himself. A corporate safe-cracking engine. Buy a company, put yourself on the board, vote to max out its credit line and award yourself the cash. Then when they're all out of money, you say, "Oh well, company's broke," fire everyone and shut the doors. That's called a "bust-out," if you're a fan of Goodfellas or The Sopranos. But in real life (and in court, if necessary), it's just called "bad business judgment," provided you went through the niceties of making your financial control of the company a matter of public record first. People who control and plunder companies through secret, off-the-books loans are "legitimate businessmen" (in the old movie gangster parlance). People who control and plunder companies through regular loans are legitimate businessmen. Even if the intent was always to bust it out. You just can't say so in open court.
Gangsters can only pull this stunt on targets of opportunity, though they surely work hard to create opportunities. ("Hard work! They deserve to be rich!") Locust capitalists have made it a replicable business model. You use the cash you siphoned out (paid to you as "management fees"—a great tool that gets you paid to do what regular company owners call "running your damn business") to buy the next company you can find that has a healthy credit line. Remember, it doesn't matter if the companies you buy survive. All that matters is that they have access to cash or credit that you can extract. Like locusts. They don't care if the farmer goes bust when they descend on his crops. He has crops! Eat them! Eat them now!
The truly sick part of Romney's locust capitalism is that it only works if he acquires middling but otherwise healthy companies (the cheapest kind that can still be used for these purposes) and then leverages their health to borrow as much money as they can get banks to lend them, until they can't afford it any more and they die. The social cost of it all is that workers who were doing just fine—maybe not going gangbusters, but making a nice product and making their bosses a little money while they were at it—end up losing their jobs. The money that was paying their salaries is considered a waste, from the locust's perspective. If you see people carrying off ears of corn while you're descending on the field, why let them leave with it? Eat it out of their hands! You can go back for what's still on the stalk later!
That's why it's such a sick joke for Romney to campaign as a "job creator."
"Job creators" are people who put their money into payrolls. Locust capitalists like Romney specialize in taking money out of payrolls, and keeping it for themselves. What the Very Serious People have all apparently missed in the last 30 years is that the mantras of "job creation" and "maximizing shareholder value" are actually opposite things. But Republicans (and not a few "business friendly" Democrats) have convinced people that they're actually the same. They say that "maximizing shareholder value" is a good thing because the money goes to "job creators." It's a sort of Jedi mind trick that works because the intuitive thought is that if you or I bought a company, we'd try to run it. Because you and I would be "job creators." To us, owning a company means running a company. To Romney, owning a company means the ability to pack up its assets and keep them. Romney says he's a job creator because he's rich. Truth is, he's rich because takes home the money his companies had saved (or could borrow) for legitimate job creation, but never got the chance to use.
The reason the "job creator" label doesn't quite ring true as a description of today's mega-wealthy is that "job creation" means giving money to other people. Yes, in exchange for work product that's supposed to make you richer when it goes to market. But you still have to give them the money. It changes hands. They can use it to do things like stimulate the economy. You remember that one, don't you?
But like I said, that doesn't ring true anymore, does it? Because today's mega-wealthy keep the money for themselves. True, they parcel it out in drips and drabs, say, to quadruple the size of their seaside mansions. But that's hardly the same thing as providing a livelihood for 750 steelworkers.
And that's why the Romney camp is having such a difficult time justifying their claims of "job creation." Romney's wealth came from the opposite practice. He hasn't got any experience creating jobs. He's got experience hoarding for himself what makes jobs valuable to others. And that's the exact opposite of what a suffering economy needs.