"He's a vulture capitalist." -- Rick Perry, on Mitt Romney's activities at Bain Capital.
"If we identify capitalism with rich guys looting companies, we're going to have a hard time protecting it... because people look over and say, 'How come I lost all my savings and you stayed a millionaire?'" -- Newt Gingrich, alluding to Mitt Romney.
"Dodd-Frank obviously is a disaster... But Sarbanes-Oxley costs a trillion dollars, too. Let's repeal that, too!" -- Ron Paul, echoed by Michele Bachmann and others, referring to laws designed to restrain the financial industry.
The Republican candidates for president have collectively dug themselves into a hole. In the rush to discredit front-runner, Mitt Romney, they've taken turns assailing him for being rich and out of touch with ordinary Americans, called him a "vulture capitalist," and suggested his wealth has come at the expense of American workers.
Funny, but this sounds a lot like a "war on success" to me. You know, the one that GOP leaders have repeatedly accused President Obama of waging.
Romney's offense is that he made (or added to) his riches while running Bain Capital, a private equity firm. Private equity firms borrow money from wealthy investors, using the funds to purchase companies. Once they are majority owners, they decide to either help the company grow, downsize it, or change management in order to increase profitability. It is very similar to the practice we used to call "leveraged buyouts," where one big company buys a smaller competitor in order to gain more market share or reduce its competition. That's how companies like Citibank, Wells Fargo and AIG became "too big to fail." These acquisitions and mergers sometimes create jobs (at least in the short run); other times, they lead to employment loss, off-shoring of jobs, or erosion in wages and benefits. The point is that for companies like Bain Capital or Citibank, jobs -- and a whole lot of other things -- are beside the point. It's making a return for investors that counts.
Rick Perry has labeled this "vulture capitalism." The real name for it is simpler: capitalism.
From the time of Charles Dickens' England through the Gilded Age of the late 19th century, right up to the present, a clear and irrefutable pattern emerges: Capitalist economies concentrate wealth, and then political power, in the hands of the very few, primarily those who own the capital (hence the name). In Andrew Carnegie's day, this capital took the form of steel mills and rail roads, while now it is more likely to be hedge funds or other financial instruments. Capitalism creates wealth, there's no doubt about it. The question is, what kind of wealth, for whom and at what cost to workers, communities or the environment?
Until this present moment, folks like Rick Perry and Newt Gingrich have vehemently insisted that a critique of capitalism is equivalent to an endorsement of socialism, if not Soviet-style communism. Along with many a Democrat, they've used the fear of socialism to persuade us, as author David Korten has said, that "the only alternative to the rapacious excess of capitalism is the debilitating repression of communism." In their critique of Mitt Romney, GOP leaders fail to recognize that the only thing that has ever moderated the excesses of capitalism is some form of intervention by government, leading to regulations intended to reduce its destructive impacts (the "vulture" part). Yet every single GOP presidential candidate insists on radical deregulation, not only of their hated EPA, but of all the agencies and laws that limit, however meekly, the power of large corporations and financial institutions.
As a farmer and small business owner, I believe in the power of the market and entrepreneurship to generate innovation and productivity. I've seen it first-hand. But I also know that capitalism without restraint does not create broadly based, enduring wealth, that, like communism, it creates "a concentration of unaccountable power that stifles liberty and creativity for all but a few at the top" (Korten). We see this in the extraordinary concentration of corporate power, not just among banks, but in energy, food and farming and the media. And in the unprecedented "trickle up" of wealth from the middle class to the very wealthy. Both have been enabled by deregulation and other so-called free market policies.
Mitt Romney is not a vulture capitalist, just a successful one. The issue is not him, but a government ever more influenced by and beholden to the very small group of folks like him, rather than to "securing the general welfare," as our founders demanded. How to build an economy and political system that secures this general welfare, now and in the future, is the most critical and challenging question we face.
Anthony Flaccavento is a full-time farmer and part-time consultant just outside of Abingdon, Virginia. You can reach him at email@example.com
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