Ph.D. Octopus

Politics, media, music, capitalism, scholarship, and ephemera since 2010

Romney, Bain, Letters, and Archives

with 2 comments

by David

Mitt in the middle, celebrating his first love, money, along with the boys of Bain capital

People in both parties are attacking GOP frontrunner Mitt Romney for his time at Bain Capital, a private equity firm that bought companies, downsized them–that is, fired many employees–and then sold those companies at a profit. Even his rivals in the Republican primaries have taken something of an anti-capitalist line, in opposition to the free markets that Romney represents.

As readers of this blog can guess, I don’t have a particularly high opinion of Mitt Romney. The only office I’d ever elect him to would be the captaincy of team douchebag. Nonetheless, it’s important to know whether we’re asking the right questions about his time at Bain.

My free market friend Josh, now writing for Forbes, has identified the right questions. But first, he explains some basic but important economics.

Private equity firms like Bain often seek to fix firms that have failed to adjust to economic change. This can mean downsizing, increased automation, offshoring, and the like. These changes make enterprises more efficient, and in some cases save firms that would otherwise have gone bankrupt. These kinds of changes also produce broad-based gains that should not be discounted, particularly in the form of lower consumer prices. We could not, and should not, have stopped these changes in the economy.

As Josh notes, certain classes of workers have been hit especially hard. While capital has benefitted, workers have seen layoffs, pay-cuts, and long term unemployment, particularly those with skills that have become less valuable or even obsolete. Josh is right to argue that as a businessman, Romney was correctly concerned with making his company profits, not with the plight of his laid off workers. But Josh wisely adds, “while the human effects of these economic shifts are not properly the concern of business executives, they are the concern of government officials, and Romney wants to be president.” And so the right questions are:

What policy implications arise from the economic shifts of the last few decades, driven (in small part) by private equity. Does rising income inequality mean that fiscal policy should be more redistributive? Does a reduction in job security call for a stronger safety net? Do new workforce needs mean we need a shift in education and training policies?

Basically, the president is not a CEO, and it’s his or her job to care about all the workers, and the economy as a whole. And if you don’t want to take Josh’s word for it, take Paul Krugman’s, who said pretty much the same thing in his recent column. Josh reminds us that “as governor of Massachusetts, Romney’s signature policy achievement was a universal health care program—that is, a safety net program that reduces the cost of job loss or income loss.” Of course, Romney has said that Romneycare worked for Massachusetts, but the Affordable Care Act, patterned after Romney’s plan, is no good for nation. But that’s a whole other discussion.

As a historian, I’m more interested here in Josh’s observations about economic changes over time. As mentioned above, automation and sending jobs to other countries has hurt American workers. But we cannot, and should not, go backwards. While I don’t worship at the capitalist cult of efficiency, there is no question that producing better products more quickly and cheaply has benefitted society as a whole. I think even old Karl Marx would say the same thing.

Today, America has lost big in the manufacturing game, and become much more of a service economy. And one of those famous services is the postal service.

We all know the joys of writing and receiving letters. In a recent New Yorker piece, writer Roger Angell decried the decline of the postal service, end of next day delivery for first class mail, the end of the Saturday mail delivery, and the downsizing that will come with it. But more than that, he lamented the loss of the world of letters.

Losing the mixed pleasures of just arrived letters may not mean as much in the end as what we’re missing by not writing them. Writing regularly to several people—a parent, a friend who’s moved to another coast, a daughter or son away at college—requires one to keep separate mental ledgers, storing up the weather or the idle thoughts or the disasters we need to pass on. We’re always getting ready to write. The letters out and back become a correspondence, and mysteriously take on a tone of their own: some rambly and comfortably boring; others cool and funny; some financial; some confessional. They stick in the mind and seem worth the trouble.

As a historian, I have a particular affection for letters. The bulk of my research involves going to archives and searching through musty old letters, many of them handwritten and over 100 years old. I love this. And if I didn’t also love writing and teaching, I could do it all day. I love the window they provide into people’s lives, the sense of age and history that comes from reading directly from them, trying to make out the words, feeling their fragility.

But you know what? If all the letters I needed could be digitized tomorrow, I’d gladly use them on computer and not go to the archives. It’s trite to say that technology has made our lives easier, but it has. Yes, I miss the joys of going to the video store to rent a movie, but I prefer Netflix (despite all its flaws). And yes, writing and receiving letters is fun. But phones are better. So is email, Facebook, Twitter, and Skype, instant messenger, and videochatting. I love reading books, real books, bound volumes that feel like something. But as they pile higher in my small NYC apartment and my wife complains about the space they take up, I’ve come to love my Kindle and iPad as well.

Of course, this does not mean the postal service should go away. As Angell notes, people will still send wedding invitations, condolence cards, birth announcements, and the like, via mail. And people will still send parcels, and rush order important documents. Businesses and non-profits and politicians will advertise through the mail, as much we hate the spam. The postal service should exist to provide a cheaper, government run option to do these things, as compared to FedEx and UPS. But it certainly does not need as many employees as it has today. If the US budget requires spending cuts, they should come first from defense, but the postal service, sadly, is not a bad place to cut as well. That means layoffs. That means people will need to find new work. And the government should help them. I don’t think we can rely on a president Romney to help them. But that doesn’t mean we should lament the vast improvements to our lives that this technology brings. Historians and others will feel nostalgic. But that nostalgia is outweighed by all the advantages we take for granted.

Now, the fact that this technology (like Apple products) is built on the backs of slave labour in China and elsewhere, that’s a whole other issue…


Written by David Weinfeld

January 14, 2012 at 14:19

2 Responses

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  1. Manufacturing output is still trending upward. It’s manufacturing employment that’s trending down.


    January 14, 2012 at 14:29

  2. And when he addresses the issues, he does so without regard for Austrian economics or use of principles.

    Sophia Black turuk

    February 5, 2012 at 03:56

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