Is Mitt Romney an amoral, job-killing buyout king? Or a vital cog of capitalism whose financial worth and know-how make prosperity possible for others?
This is the debate Barack Obama and Mitt Romney want voters to have. It's also a phony way to frame an economic problem that directly affects millions of Americans and the choices that will determine their financial future. As with many political battles, distorted facts and ominous insinuations obscure the real issue—in this case, America's economic competitiveness—while misleading voters about how they can better manage their own opportunities.
This entry is the first in a series about the way political warfare in America is disserving voters and harming the nation. Democracy is rarely tidy, and politics has always been a ruthless business. But we can no longer afford the sophistry that has become a political reflex in Washington and is corroding Americans' trust in government. The United States faces problems that will become debilitating if not addressed soon. We need leaders who are shrewd problem-solvers, not Machiavellian partisans. Above all, voters need to educate themselves better and push back when cynical politicians try to manipulate them.
President Obama is casting Romney, his presumed Republican opponent in the presidential campaign, as a heartless banker who wrecked companies and killed jobs while enriching himself as the head of Bain Capital in the 1980s and '90s. A new website launched by the Obama campaign, Romneyeconomics.com, provides details on three manufacturing companies and one retail chain that went bankrupt after Bain got involved. In each case, the smart money at Bain managed to turn its initial investment into a multimillion-dollar payday before the roof fell in.
It sounds pretty rapacious, until you consider the fact that the manufacturing and retail sectors in general have been upended over the last 20 years, for reasons having little to do with greedy bankers. It's hardly news that manufacturing jobs have been migrating to low-cost countries like China. Manufacturing employment peaked in the United States in the late 1970s at about 19.5 million jobs, and has shrunk to about 12 million today. As for retail, the bankruptcies of firms such as Circuit City, Border's, Blockbuster, and Linens 'n Things are ample testament to the pressures faced by chains that responded too slowly to e-commerce and clung too long to outdated business models.
The myth perpetrated by the Romneyeconomics site is that everything would have been fine at these four companies—Ampad, Dade Behring, GST Steel, and Stage Stores—had the bankers simply stayed away. That's almost certainly bogus. Globalization has generated intense competition in most parts of the world. The companies that turn out the best products at the lowest cost are the winners. That's great news for consumers, and for innovators who come up with better ways of doing things. Plus it continually makes the economy more productive, which is what makes living standards rise.
But it's terrible news for people and companies determined to keep doing the same things the same way for the same pay. That's why General Motors and Chrysler went bankrupt in 2009, and why hundreds of other companies have dwindled and died. They simply didn't adapt.
The Romneyeconomics storyline threatens to misinform voters because it implies that government can somehow protect workers from becoming obsolete. That's a dangerous message to send because more than ever, workers need to constantly update their skills, to make sure they remain relevant and employable. Everybody needs to think like an innovator these days, whether starting the next Facebook or simply devising a more effective way to communicate with clients or manage the mail.
People also need to become more self-sufficient and less dependent on government, and do it in a hurry. Washington is running out of money. Before long, it will have no choice but to demand more from citizens, in the form of taxes, and give less, in terms of services and subsidies. That's simple math.
The conversation we should be having about economic policy would start with a frank acknowledgement that the government cannot protect workers from normal market forces. Government can do a better job at the margins, by funding limited safety-net programs and helping people transition from the old to the new. But if politicians were honest, they'd tell struggling workers that they need to go back to school, become more entrepreneurial, move if necessary to find better opportunities, and keep preparing for a rainy day. That's the truth, and it won't change no matter who gets elected in November.
Rick Newman is the author of Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.