Monday, July 16, 2012

Bain for Dummies

cross-posted from Dagblog

Over the past week much of our national media, especially the national pundit corps, was consumed with two questions: Was the attack about when Mitt Romney left Bain Capital fair? and Would Romney choose Condoleeza Rice as his running mate? These are both silly questions. The correct answers are, "Yup," and "Of course not." That part of the press corps took the second question seriously at all, even for one day, shows how disconnected they are from reality. Their chatter about the Bain question is just as clueless.

The question many pundits asked themselves was whether it was accurate to claim that Romney did not leave Bain Capital in 1999, just because he was listed in SEC filings as the company's  "CEO, Chairman, President and sole stockholder" for another three years? Pundits asked themselves this question because only pundits would not know the answer. Of course, they also asked a number of GOP sources, for balance's sake.

The "Is it fair?" question follows the earlier concern-troll version of the question, "Will attacks on Romney over Bain backfire?" (In fact, you still get some of that.) That question, too, defies and denies the obvious. Mitt Romney has run against a Democratic opponent in exactly two elections. The Democrat who hit him on Bain, hard and early, beat him comfortably. That isn't the whole story of either election. But what part of that record says going after the Romney's work at Bain is a bad strategy?

The argument for the "fairness" of the attacks is on a complete lack of perspective. It takes for granted that what is "fair" is what is considered normal within a tiny sliver of America: the wealthiest and most powerful sliver. Romney's Bain arrangements between 1999 and 2002 were within accepted business practices among high-flying financiers. They were vetted by lawyers, and involved legal fictions that have become standard in Romney's slice of the business and social worlds. And so to people who are accustomed to moving in those worlds questioning Romney's complicated but perfectly routine and legally-vetted relationship to Bain seems somewhere between impolite and outrageous.

But if you have reached the point where being "on leave," and CEO, and sole stockholder, and drawing a $100,000 salary, and having nothing to do with the operations of the business that pays you to be CEO, all seems normal to you, you are in the bubble. Part of the problem is that you have lost any sense of how most Americans would view these arrangements, and indeed any sense that the rest of the country does not share the perspective of private-equity managers or publishers of major newspapers. You have lost the basic understanding that your particular world view might not be shared by the whole universe.

Only someone in the bubble, for example, would think of Condi Rice as a great running mate. As hilarious as it would be to see Mitt Romney paired with someone stiffer and less natural on the campaign trail, it will never happen. There's a reason that Rice has always been appointed to office, and not elected. That reason is Condoleeza Rice. If you're used to seeing Rice on her home court, at Georgetown social events or government functions or press availabilities, you could lose sight of some basic things about her, like the stiffness. You might "realize", having spent more time around her, that she's not as stiff as she looks. But this "realization" is an illusion fostered by proximity, and only the tiny segment of the population that's spent a lot of time around Condoleeza Rice could fall prey to it. Seen from further away, Rice is revealed to be even stiffer than she initially looks, which is impressive. Also, seen from a greater distance, she looks uncannily like someone who downgraded the priority of fighting Al-Qaeda and then signed off on a disastrous and unpopular war, because that's who she is.  You can't send her to the Iowa State Fair and have her shake swing voters' hands. You also can't have her debate Joe Biden, who was in the War Room when bin Laden was killed. Either would be a disaster. If you can't see those things about her, the problem is that you're too close. You have lost perspective.

And once you lose touch with the fact that not everyone sees the world the way the people immediately around you do, you start to lose touch with basic reality. You can begin to accept absurd things as perfectly normal. You become unable to hear how silly, and how transparently dishonest, a phrase like "retired retroactively" sounds. Or, like Bob Woodward, you can go on Meet the Press and declare that "everyone knows that SEC filings are meaningless." That statement only makes any kind of sense at all if you have a very restricted sense of who "everyone" is. But the bigger problem is that if "everyone" knows SEC documents are just nonsense, then "everyone" has lost touch with basic moral realities. "Everyone" is corrupt and doesn't know it.

But once you get your head far enough outside the bubble to notice why saying "retroactively retired" insults other people's intelligence (if not your own), you might start to notice some other very strange things that are invisible inside the bubble.

For example, four years after crisis in the financial sector threw the country into this massive recession, the Republicans have nominated a guy from the financial sector for President. He claims that he can make everything okay again, by going back to the old policies from before 2008.

That may not sound odd to our investor class, or our politicians, or our mainstream journalists. But actually, it's really odd.

Not seeing why Bain is a problem is part of not seeing why nominating Romney was a problem in the first place. Not seeing why Romney is a problem is part of not seeing what's wrong with our financial class or our economy. And many influential people in our country are deeply committed to not seeing those things.

They are committed to not seeing why even modest new financial regulations are necessary. They are commttted to not seeing that the banking sector needs reform. They are committed to not understanding why Obama has been "so hard" on Wall Street, let alone seeing how soft Obama has actually been on Wall Street. They are committed, God help us, to not seeing why years of high unemployment would be bad for the economy. They are committed to not seeing even the most obvious solutions to America's economic problems, because they are passionately committed to not seeing the problems.

This election isn't just about America's future, and its economy, and basic questions of fairness and the American dream, although it's about all those things too. This election is about something even bigger than that: the reality principle. The next four months are going to be a bitter, dogged campaign to break down our ruling class's fundamental disconnection from real world. They aren't going to like it.  Not one bit. And that's why they're so upset over the Bain Capital attacks: because those attacks are true. And once this election begins to be about the truth, the truth is really, really going to start to hurt.

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