rexcritchlow

Thoughts from the "King of the Hill"

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Posts Tagged ‘Michelle Bachman’

The Bain Paradox

Posted by Rex Critchlow on January 29, 2012


The story of Bain Capital under the guidance of Mitt Romney seems to be fading from our mindset without having ever really discussed the points raised by his detractor, Newt Gingrich. The mainstream media, both republican and democrat pundits (and anyone with a dog in the fight) all decry “Newt is attacking Capitalism”. This plea, without equivocation, absolutely false. At worst, Newt’s criticism was an incitement of Mitt Romney’s policies of Corporate Governance.

 

Corporate Governance (according to Wikipedia) “deals with prevention or mitigation of the conflict of interests of stakeholders”. In the case of Bain Capital and the businesses that Mitt closed, the ‘conflicted stakeholders’ are the investors and the employees. Be absolutely clear when it is said that Mr. Romney broke no laws in his time at Bain Capital, there appears to be no evidence to the contrary. He accomplished many great things – funding, guiding and building many companies that today employ more than 100,000 people. He also closed many businesses and fired a lot of people, leaving those least able to suffer through the upheaval he created in their lives.

 

The waters are murky at best when trying to sort out exactly how many people lost their jobs when Mitt closed businesses. What does seem to be unchallenged is that Bain and Mitt both profited wildly even in the worst investments. As Bain/Mitt seem to hold the details of these transactions close to the vest, unless Bain Capital releases all documents in the name of transparency, this assumption will have to stand. One particularly disturbing case alleges that Bain invested between $20 Million and $50 Million for a period of eight years, incurred massive debt in the name of the business, then declared the company bankrupt, closed the business, fired all the employees and still managed to walk away with just short of $200 Million.

 

Despite how one feels about such massive profits from ‘Corporate Raiding’, it remains a perfectly legal, although morally dubious practice. The question that has gone unanswered to date is “In the name of Corporate Governance, could (or more accurately should) Bain Capital and Mitt Romney have done more to mitigate the turmoil in the lives of the people caught in their wake?”

 

With more than $100,000,000.00 in profit, the answer  is obvious. Yes. Consider this: An unwavering commitment by Bain Capital to invest a substantial amount of the profit back into the terminated employees. Promises like: 1. Every effort would be made to place any employee, that so desired, a position in another Bain managed business. 2. Those that could not be placed immediately would receive free education or cross-training to make them a viable candidate. 3. Guaranteeing the financial stability of every terminated employee (within clearly established, reasonable guidelines) with mortgage, utility and food assistance until comparable work and pay could be acquired.

 

In other words, treat the employees with the respect and dignity they deserve – after all, it was their backs on which Bain made all that money.

 

There are frequent news reports on companies ‘gives back to the community’. Those companies are deservedly praised for their commitment and dedication from whom they have prospered. It is also perfectly legitimate and within the confines of the law for any company to choose not to pursue such endeavors. This evaluation of how Bain Capital and/or Mitt Romney conducted their business should in no way be construed as a call for legislation or mandate to force community programs. However, one must wonder…if Mitt Romney had done more to protect the lifestyle and livelihood of the employees he terminated, could anyone – including Newt Gingrich – have any legitimate criticism of his actions?

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