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Friday, July 06, 2012

Paul Krugman: Off and Out With Mitt Romney

Mitt Romney's record in the business world -- a cornerstone of his campaign -- should be a cause for concern rather than comfort:

Off and Out With Mitt Romney, by Paul Krugman, Commentary, NY Times: In a better America, Mitt Romney would be running for president on the strength of his major achievement as governor of Massachusetts... In reality, however, Mr. Romney is ... bitterly denouncing the Supreme Court for upholding the constitutionality of his own health care plan. His case for becoming president relies, instead, on his claim that, having been a successful businessman, he knows how to create jobs.
This, in turn, means that ... the nature of that business career is fair game. ... Was ... what was good for Bain Capital, the private equity firm that made him rich, ... also ... good for America?
And the answer is no..., the tools of macroeconomic policy — interest rates, tax rates, spending programs — have no counterparts on a corporate organization chart. Did I mention that Herbert Hoover ... was a great businessman...?
In any case, however,... Bain didn’t build businesses; it bought and sold them. Sometimes its takeovers led to new hiring; often they led to layoffs, wage cuts and lost benefits. On some occasions, Bain made a profit even as its takeover target was driven out of business. ... And then there’s the business about outsourcing.
Two weeks ago, The Washington Post reported that Bain had invested in companies whose specialty was helping other companies move jobs overseas. The Romney campaign went ballistic... What was more interesting was the campaign’s insistence that The Post had misled readers by failing to distinguish between “offshoring” — moving jobs abroad — and “outsourcing,”... having an external contractor perform services that could have been performed in-house.
Now, if the Romney campaign really believed in ... free-market principles, it would have defended the right of corporations to do whatever maximizes their profits, even if that means shipping jobs overseas. Instead..., the campaign effectively conceded that offshoring is bad but insisted that outsourcing is O.K....
That is, however, a very dubious assertion... Why, for example, do many large companies now outsource cleaning and security...? Surely the answer is, in large part, that outside contractors can hire cheap labor that isn’t represented by the union and can’t participate in the company health and retirement plans. ...
[I]f Bain got involved with your company, one way or another, the odds were pretty good that even if your job survived you ended up with lower pay and diminished benefits. In short, what was good for Bain Capital definitely wasn’t good for America. And ... the Obama campaign has every right to point that out.

    Posted by on Friday, July 6, 2012 at 01:17 AM in Economics, Income Distribution, Politics, Unemployment | Permalink  Comments (44)


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