Thursday, January 12, 2012

Is Bain the Bain of Romney or the losers?

“The Bain Capital Bonfire” (“Opinion”, Wall Street Journal, January 11) is the fulcrum of this Second Civil War of the United States of America. If the Republican Party and its presumptive nominee for president of the United States are not willing to stand up proudly for the capitalist/free enterprise system of the U. S. the central control of our government and society by the liberal/progressive branch of the Democratic Party will win out.

Although I have made all of the following up, I believe Mitt Romney should say something like this:

“I am a millionaire. I have proudly achieved this by getting businesses to run better. I can be just as successful if I become your president by working with folks to accomplish the same thing in our government. By helping our government to more effectively work for you we can save money and provide significantly better service to you who are both boss and customer.

“I started my career working for a management consulting company, Bain & Company in Boston. I remember my first assignment...[Romney inserts his personal story here.]

“I moved up in the ranks by helping companies that were troubled, many ready to fail. We'd go in and walk around the working areas, talk to the people and ask them what could be done better. It is true that sometimes those on top of a company or in the government can't really know what's going on. The only way to find out is to ask those who truly know.

“As part of improving some companies and helping them survive, some jobs would have be changed or eliminated. I remember at Allied Parts. Webster Johnson was very helpful in reconfiguring how we'd move parts from production to shipping. A result was that he designed himself out of a job. But he was a great and useful employee so we found another place for him. Not so for Jeff Bingham who with the changes became redundant with other employees. But we worked hard to help him get another job; out-placement is always important to the Jeffs of the world but also to the other employees and was core to our belief system. Jeff is still working for that other company, Helsell Parts and still living in Peoria after thirty years. I think both Jeff and Webster will retire in the next few years.

“One way of looking at it is that Jeff sacrificed his job to save a hundred other jobs and the company itself. That company was losing money, but after restructuring it became profitable. Now there’s a misconception that profits go into some fat cat’s pockets. Not so. In Allied's case, profits - which simply is an accounting term -- went to purchase another metal-bending machine and related equipment and to lease additional manufacturing space for it. And after a year-and-a-half Allied hired four more people. Not old Jeff though, he was happy at Helsell.

“After helping it become profitable, we advised Allied in raising some investment capital which with its profits financed its continued growth.

“This all happened in the private, non-government sector of our economy. The private sector has its ups and downs as Allied proved. But the company weathered the bad times with the help of Bain and without any need for government aid, investment or intervention. Many fail even with the management assistance and capital. This is the private enterprise system that has created for America the most free, prosperous economy in the history of the world.

“Through events like Allied we saw an opportunity to provide financing to these troubled or developing companies for which we consulted at Bain. Since there would have been a conflict with Bain, with its encouragement a few of us started Bain Capital, an independent venture capital entity.

“One of our first investments was in a single store office products retailer in Boston. Twenty-seven years later it has turned into Staples, Inc. with $15 billion in revenues and some 90,000 employees. A huge success for us, for its employees, for America.

“The investment monies for Bain Capital first came from wealthy individuals, but later on pension funds, not-for-profit foundations and university endowments put money in. These organizations have received a higher return on their capital thus funding employee retirements, more charitable donations and better educations for our citizens.

“An example is [this is fictitious, since Bain doesn’t disclose investors] Haverhill County, MD whose retiree funds have received on average thirteen percent a year return over the fifteen years it has invested in Bain Capital funds. For comparison, Social Security provides less than two percent today. The difference is enormous to the county and its retired employees. And Bain has never had a down year, which is not to say it won’t, but it hasn’t.

“Just think of how much better off our country’s finances would be receiving that return instead of the interest on U. S. Treasury securities as Social Security does now. While today I am not advocating it, openly researching this without bias would be one of the Romney administration’s activities.

“In 1999 I was asked to take over as president of the Salt Lake Organizing Committee for the 2002 Winter Olympics. There were some organizational, financial and ethical issues. I helped clear it all up and we held a highly successful and profitable Winter Olympic Games. But that is another story.

“Thank you for listening.”

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