Sunday, July 22, 2012

A Response to Kathleen Parker

And now it’s time for a note to Kathleen Parker regarding her column today.  Go read it.  Go ahead, I’ll wait.  When you get back we can ask, in unison: Kathleen, have you completely lost your mind?  You’re usually a fairly reasonable person.  I know you’re a big Romney fan, but let’s get real here.

Start with her first line:

“When it comes to over-the-top politics, the Obama campaign has set a new standard with recent attempts to paint Mitt Romney as a felon.”

What’s wrong with calling this a new standard in over-the-top politics?   I mean calling him a felon is pretty bad, isn’t it?

First, the Obama campaign did not try to “paint Romney as a felon”, they just pointed out a logical problem in Mr. Romney’s rhetoric.  As Parker quoted them later in her piece, what they said was that if Romney misrepresented himself in filings with the SEC then he would be a felon.  But that’s clearly true: it is a felony to file a false statement with the SEC.  So either the report that was filed was true, or Mitt Romney committed a felony.  Note that this doesn’t mean that Mr. Romney was guilty of outsourcing or layoffs that occurred in 2000, for example. It does not mean that Romney fired anyone in those later years.  But it does mean that he either was or was not CEO.  Is Ms. Parker claiming that filing false reports with the SEC is all ok?

Now having said all of that, I should hasten to add that I do NOT think that Romney is a felon.  I think that the statements he files with the SEC are all true.   And why not?  Why on earth should he have quit as CEO?  There is nothing wrong with being CEO of a significant company; it’s a great accomplishment.  Bain had no complaint about keeping him, even if he was doing little work for them between 1999 and 2002.  He had, from all reports, done great work for them before that, and they were willing to keep him on as CEO in the hope that he would return.

Ms. Parker asserted that

“Nine days is hardly enough time to pack a toothbrush, much less push the paperwork necessary to hand over a multibillion-dollar business.” 

What??  Romney could not write a letter of resignation as CEO in nine days??  I could write one in 15 minutes, and so could Kathleen Parker.  But maybe Mr. Romney is functionally challenged in this; maybe he’s slower than Ms. Parker and I are.  I still doubt that it would take more than an hour.  He does speak English; it’s his mother tongue.  He did not resign as CEO, and that was not because he was just too rushed to get that done.  I'm not sure why it was; maybe it was to keep his options open for a return to Bain when his work with the Olympics was over, and maybe he would have done that if he had not been overtaken by political ambition .  But claiming that he just didn't have time is stretching so hard that I'm surprised Ms. Parker didn't snap.

I have no doubt that Mr. Romney left day-to-day control to others after 1999.  He was busy.  But the idea that he left on a moment’s notice, and simply ceded to others all control in the company on which his entire fortune rests without even watching what they were up to is beyond all credibility.  No.  All indications are that he left a bit of a vacuum when he disappeared from Bain in 1999, and there’s not much doubt that he observed Bain from a far greater distance than he had while he was in charge, but if he truly just left without following what Bain was doing with his personal fortune he’s a much frostier human being than most of us are.  Cyborg frosty.

The Obama campaign would like Romney to admit that, and frankly I think he should.  What on earth is he afraid of?  But I’ll get to that later.  There’s another issue to deal with first.

When it comes to over-the-top politics it’s hard to compete with the loonies who have gone after Barack Obama over the last few years.  And two pages before Ms. Parker’s column was another column by Dana Milbank displaying the latest eye-popping gibberish from these people.    Mr. Milbank discussed a recent event organized at the National Press Club (!), a venue that lends a veneer of near-sanity to these people.  The organizer of this event was a man named Cliff Kincaid.  You can look him up.  But here’s a quote from the Milbank column:

“On the program, Obama’s photo was alongside Vladimir Lenin’s and those of radical Muslim clerics. Kincaid got right to the point: Obama was actually sired by the late author Frank Marshall Davis, identified by Kincaid as a communist pornographer.
There is, Kincaid said, a ‘distinct possibility that Davis was Obama’s real father.’ The host further informed the assembly that Davis was ‘Obama’s sex teacher’ and that ‘Obama was under the tutelage of a pedophile.’ Kincaid asked ‘what Frank Marshall Davis may have done to a young Barack Obama’”

Wow.  Compared to that exudation the Obama campaign’s request that Romney admit that he maintained an interest in Bain, a perfectly respectable American company, during the years between 1999 and 2002, seems pretty tame and wholesome, doesn’t it?

Now let’s get back to the economics of this.  Because what Obama and his campaign really want is a real discussion of the issue of outsourcing to other countries.  So let’s look at that for a minute.
I’ve said before in this blog that the government is not a business, and not a household.  This is one example of an area where a business has a different view because it has a completely different purpose than the government: there is nothing wrong with a business hiring people wherever it is best for their bottom line to hire them.  If that is India or China, then it is.  And it is not the purpose of any business to maximize employment: on the contrary, as Nick Hanaour has been saying all over the country, hiring new people is a last resort for any real profit maximizing company.  If Mr. Romney did not behave like that when he did have day-to-day operational control of Bain then he was failing in his duty to his shareholders.  But the government of the United States has an interest in, and must promote, full employment for its population.  

These are different goals.  But the important thing to recognize is that they are not competing goals.   There’s no real conflict between individual private companies acting in their own best interest, reducing their own payroll if that is what they think is best, even outsourcing to China, on the one hand, and the achievement of full employment in the country as a whole on the other.   That is not because the rich, or private companies, are grand humanitarian “job creators” and will gladly hire locally even if it loses money for them.  It’s because with sufficient demand for the products the companies create they will have no choice but to hire people in this country to design and build those products.  They will do that, as a last resort, because they must do that to achieve their maximum level of profits.

It is the job of governments at all levels to help that happen, and they have multiple tools at their disposal to do that. The government can and does control the money supply and the interest rates to provide an appropriate level of incentive for borrowing to invest. The government can hire people directly, and that will have a multiplier effect as those direct hires spend their incomes.  The government also impact exchange rates with other currencies, and this is the real issue when we are talking about outsourcing outside the country.  If the workers in China appear cheaper than the workers here, one reason might be that the Chinese government has been holding its currency at an artificially low exchange rate for a very long time.   There’s no reason that reliable, high quality, local American manufacturers could not compete with distant, lower quality, less reliable Chinese manufacturers if the dollar/yuan exchage rate were at a level that would allow that.

The point is that Romney’s response is to avoid this discussion.  He shouldn’t.  The truth is that he would outsource, and he would fire people, in pursuit of profit in business, and the further truth is that he believes in his inner heart that doing those things is the proper and correct behavior for business management.  He should say so, and provide an honest argument based on his true beliefs.  Why doesn’t he?

No comments:

Post a Comment