Sunday, October 21, 2012

Part Seven - Mitt Romney and Jobs

This is the seventh in a series of blogs on my intent to vote not only for President Obama, but a straight Democratic ticket at the national, state, and local levels. I plan to look at issues that are important to me and I believe important to the American people.

Whether you are a Democrat, Republican, or something else, I welcome your responses. I will publish whatever comments you have unless they are mean-spirited or do not speak directly to the issue addressed in this particular blog.

Why I Plan to Vote Democratic

"I know how to create jobs! And I will do it better than President Obama!" has been the main mantra of candidate Romney in his run for the presidency.  

For those who have have eyes to see, President Obama's record is clear, and defensible. Nobel prize winning economist, Paul Krugman, puts it simply:
— recovery from a severe financial crisis is always difficult, and especially so when the opposition party does its best to block every policy initiative you propose. And things have definitely improved over the past year. Still, unemployment remains high after all these years, and a candidate with a real plan to make things better could make a strong case for his election.
Krugman puts it more politely than I would. If Senate Minority Leader, Mitch McConnell, is to be believed, the Republican priority was not to create jobs but to deny President Obama a second term: "Say 'No!' to everything he puts on the table." No matter what the President proposed on jobs, debt, or anything else, it was to be rejected out of hand so the President could achieve nothing. And that is pretty much what the Republicans did. It strongly suggests to me that if the Republicans could have done anything to keep the unemployment figure from dropping below 8% they would have. It reminds me that hundreds of thousands who might have been put to work weren't because to do so would not contributed to the Republicans' number one priority. 

Mr. Romney says he knows how to create jobs and has a plan to do so. I believe there is good reason to doubt his word on both counts.

First, does Romney really know how to create jobs? 

He says he is a better "job creator" than President Obama largely on his success and experience in the private sector. Most of that experience has been at the private equity firm, Bain Capital, that he founded. 

In an article, "A Financier in Chief," Peter Joseph, for twenty-five years a partner in two private equity firms, says that Romney has not been eager for the electorate to see the connection between his financial activity and his ability to create jobs. The world of private equity business is carefully and clearly explained in great detail by Joseph. [Given the lack of general knowledge about such things and its importance for the way things work today, I wondered if perhaps this article shouldn't be required reading by those not studying business in high school and college.] The bottom line (no pun intended) says Joseph:
In pursuit of single-mindedly maximizing the return on an investment, a financier must focus on how to increase a company's cash flow in order to create value, and herein lies Romney's greatest political difficulty. A businessman seeking to optimize profitability will look to lower labor costs by reducing head-count, whether through technology, out-sourcing, or rationalization. This is right out of the basic playbook. It is not the mission of the financier to create jobs. In fact, his mission is often to do just the opposite. [Bold mine]
Mr. Romney has had much experience in job-reduction and optimizing profitability for investors, but little in job creation.

There is something else about Financier Romney that he hasn't acknowledged on the campaign trail: how much of his wealth has been made on managing government pension funds. Joseph puts it well:
Although Romney is unlikely to admit it on the campaign trail, his much-vaunted private sector success was based in significant part on the savings of public sector workers. Romney constantly derides big government, but government is made up of individuals, whose pension funds helped make him and Bain unimaginably rich... It seems odd to hear Romney criticize big government without any acknowledgment that he has made much of his fortune managing the retirement funds of many public employees.
If you listened to his speech at the convention, you may recall him saying how he started as a small businessman with thirty-seven employees. What he didn't and doesn't say was how he started that "small business" with thirty-seven million dollars 
raised from sources that included wealthy Europeans investing through Panamanian shell companies and Central American oligarchs living in Miami while death squads associated with their families ravaged their home nations. Hey, doesn’t every plucky little start-up have access to that kind of financing?
So, does Romney know how to create jobs? If he does, it is not obvious in his resume. In fact, his resume suggests just the opposite.

Second, even if he has little experience in creating jobs, does Romney have a plan that will create jobs?

Paul Krugman calls Romney's plan "a snow job." He
doesn’t have a plan; he’s just faking it. In saying that, I don’t mean that I disagree with his economic philosophy; I do, but that’s a separate point. I mean, instead, that Mr. Romney’s campaign is telling lies: claiming that its numbers add up when they don’t, claiming that independent studies support its position when those studies do no such thing.
As has been frequently noted, the plan has five points and no specifics. Krugman says,
Loosely speaking, however, it calls for a return to Bushonomics: tax cuts for the wealthy plus weaker environmental protection. And Mr. Romney says that the plan would create 12 million jobs over the next four years.
Where does that number come from? When pressed, the campaign cited three studies that it claimed supported its assertions. In fact, however, those studies did no such thing.
Just for the record, one study concluded that America might gain two million jobs if China stopped infringing on U.S. patents and other intellectual property; this would be nice, but Mr. Romney hasn’t proposed anything that would bring about that outcome. Another study suggested that growth in the energy sector might add three million jobs in the next few years — but these were predicted gains under current policy, that is, they would happen no matter who wins the election, not as a consequence of the Romney plan.
Krugman speaks in less polite terms to say that citing those studies is "lying." And, moreover, that Romney and his advisers know it. 

What then in their heart of hearts do Romney and his economic advisers really believe? 
As best as I can tell, they’re placing their faith in the confidence fairy, in the belief that their candidate’s victory would inspire an employment boom without the need for any real change in policy. In fact, in his infamous Boca Raton “47 percent” remarks, Mr. Romney himself asserted that he would give a big boost to the economy simply by being elected, “without actually doing anything.” And what about the overwhelming evidence that our weak economy isn’t about confidence, it’s about the hangover from a terrible financial crisis? Never mind.
Because I don't believe Romney's background equips him to create jobs as President, because I believe his jobs plan is a sham, and because I don't believe in the "confidence fairy," I plan to vote Democratic in the election.
What about you? Do Joseph, and Krugman have it wrong? If what they say is true (and Romney is not), does it make any difference in the way you will vote?
-  Milo

1 comment:

Milo Thornberry said...

Bert sent this: Krugman is right about Romney, but Romney is right about the number of jobs which will be created in the next four years, excepting that he would not be responsible for their creation. Natural growth and adaptation will create 12 million jobs no matter who is president. More jobs could be created by government policies to improve and repair infrastructure as proposed by Obama and opposed by republicans. Romney plays a shell game wherein the pea does not exist --so we can never get to the truth.