Unmoored Republicans lose by bashing capitalism
E. Thomas McClanahanThe symbol of the Republican Party is the elephant and in popular lore, the elephant never forgets. But this year, some key GOP figures forgot things they were supposed to know.
The late 1970s and early ‘80s, when the economy was ailing with stagflation, was a time of intellectual ferment. One of the books that circulated widely was George Gilder’s “Wealth and Poverty.” The key chapter is No. 19, in which Gilder notes that the seminal conflict in any economy is between the past and the future — that is, “between the existing industries and the industries that will someday replace them.”
Ronald Reagan was a different kind of Republican because he put the GOP on the side of the future. In doing so he put a paradoxical twist on the word “conservative.” What he sought to conserve was not the status quo, but America’s free-market dynamism — the revolutionary force that puts the status quo under constant threat.
So it is astonishing to see GOP candidates like Newt Gingrich, Rick Perry and Jon Huntsman whack Mitt Romney for his work at Bain Capital, a private equity firm that invested in start-ups and declining companies, tried to restore them to health and then sold them.
Gingrich was by far the worst. He said Romney should give back the money he earned “bankrupting companies and laying off workers.” A Gingrich-allied SuperPac released a trailer for a film entitled “When Mitt Romney Came to Town” that deploys all the manipulative techniques familiar to the genre: tearful laid-off employees, grainy images of shuttered factories, narration that works in the word “greed” as often as possible.
In the struggle between past and future, the defenders of the past always have the rhetorical edge. It’s easy to point to the short-run price that’s paid when products or services become obsolete and livelihoods are lost. Sorry, but sometimes restoring companies to profitability requires cost-cutting and layoffs and even then success is hardly assured.
It takes far more political skill to speak up for the still-unknowable future, for the messy process that clears away declining companies, allowing capital to migrate to enterprises that deliver the wealth-creation and productivity we need to prosper.
Defending that messy process is what most people expect Republicans to do. Gingrich, Huntsman and Perry sound as if they want no part of it.
Yet what Joseph Schumpeter called “creative destruction” is essential if we are to avoid decline. Standards of living cannot rise unless obsolete industries are swept away, something the Soviets never learned and the Chinese have learned only imperfectly since the late 1970s.
There are many definitions of socialism, but in practice it is an economy that steadily declines because too much capital is locked up by losing enterprises that cannot be driven out of business.
Gingrich gives lip service to capitalism but in his rage at being thwarted in Iowa by a Romney ad blitz, he reached for the nearest weapon at hand. Perhaps it’s telling that he gravitated toward the rhetoric of the left, just as he did earlier in bashing Rep. Paul Ryan’s Medicare reform proposal — branded by Gingrich as “right-wing social engineering.”
Running for president is a brutal and revealing process. In Gingrich’s case, it has reinforced every doubt about his suitability for the nation’s highest office.
To reach E. Thomas McClanahan, call (816) 234-4480 or send e-mail to mcclanahan@kcstar.com.
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John Ferguson
4 months agoPerhaps we’d have greater confidence in the GOP’s ability to lead if it would champion businesses and industries that did not make us so dependent on others.
Mark Hastert
4 months ago“There are many definitions of socialism, but in practice it is an economy that steadily declines because too much capital is locked up by losing enterprises that cannot be driven out of business” Read more here: http://voices.kansascity.com/entries/unmoored-republicans-lose-bashing-capitalism/#storylink=cpy
Nonsense, absolute nonsense. I checked several sources for the definition of socialism and your fabricated definition appears nowhere. There are faults with any economic system. The criticisms of vulture capitalism (thank you Rick Perry) are legitimate. Our bastardized system rewards failure and that will certain lead us into decline. We need to be a country that makes things not one that trades paper for it’s own sake.
These neo robber barons too often took a going concern and junked it for parts. They weren’t interested in building a company, only only sucking out the last drop of marrow. Tell me what good came out of the destruction of Armco/GTS Steel besides millions in profits for Bain? Kansas City lost jobs and a substantial tax base. Employees lost their incomes, big chunks of their retirement and health insurance. The US tax payer had to bail out the under funded retirement plan. Romney and Bain, on the other hand, profited handsomely. Creative destruction only created wealth for Romney, et. al and destroyed a business.
The GOP criticism is fair game. It’s a debate that needs to be had.
Kent Mueller
4 months agoMark, that is the second time you have said the taxpayer paid the GST pension benefits. You said that in a comment responding to a drive by hit written by Lewis Duiguid. I asked at the time why you would say the taxpayers paid the benefits, but I suspect you haven’t returned to that blog.
Why would you say the taxpayers funded GST’s pension benefits? The Pension Benefit Guarantee Corporation is funded by assessments on sponsors of defined benefit plans. Business funds the PBGC, which insures defined benefit plans, not the US taxpayer. Why would you say the taxpayer paid?
Mark Hastert
4 months agoWell let’s review. Armco/GST’ pension fund was underfunded to the tune of $41 million. Bain/Romneyy paid themselfs about $50million is fees and bonuses, more than enough to have covered the shortfall. The PBGC is a government insurance program and if the assessments were enough to cover the PBGC deficit you’d have a point but it isn’t, and you don’t The PBGC ran a $23Billion deficit. So Bain/Romnet essentially got paid out of the funds that should have gone to fund the pension that the government had to bail out. If you want to be an apoligist for that kind of behavior so be it but they partied on our credit card and the credit card of their retired employees. I think it stinks.
In short, the criticism by the GOP candidates of this aspect of “free market capitalism” is legitimate and We as a people need to decide if we want to worhip profit by any means at any cost.
Phil Cardarella
4 months agoThe last persons to abuse the name of Socialism so badly were the Communists under Stalin. Not every socially-desirable limitation on capitalism is Marxist.
There is no simple choice between capitalism and socialism. Unfettered capitalism does exzctly what is is doing now: Concentrating wealth and power in the hands of a very small minority. And it ultimately destroys the economy it has built — just as it did in 1929 and nearly did in 2008.
Sharing the wealth is GOOD! That is what builds a middle class that creates NATIONAL wealth, not just a few multi-billionaires.
Capitalism — suitably regulated — as a great system for creating jobs and distributing wealth. The problem is that Vulture Capitalism and Casino Capitalism do not do what capitalism is supposed to do: Create a wealthy SOCIETY, not just a wealthy .1%.
Theodore Roosevelt understood this. His cousin, FDR, saved the rich from the consequences of their own actions. Far from being a “Traitor to his Class”, he was their savior — keeping them from sharing the fate of the rich in Russia and Germany.
Problem is, too many of the weathy are just plain too stupid to understand that it is better to be really wealthy in a stable nation that insanely wealthy in one that is not. Better to be a billionaire in a society that has roads and bridges and gainfully employed folks who can provide for their families — that a multi-billionaire who is not safe in his own bed.
Capitalism is good. Yes, even some greed is good. But, greed that creates jobs and benefits society. Greed for greed’s sake is just one of the seven deadly sins.
The critique of Mitt Romney is not that he made money. It is HOW he did it. It is the belief that if he had made a bit less money he could have avoided so many folks losing their jobs and pensions. It is the belief that his VALUES are warped.
Kent Mueller
4 months agoMark, let’s review. You said the taxpayers paid the GST pension benefits. You said it twice. There has never been any tax funds in the PBGC pool. So, therefore, you are wrong. The taxpayers have not paid the GST benefits.
Just because you surmise something in the future, you can’t retro fit that to cover up for the fact that what you said was wrong.
And by the way, both the Obama Administration and the National Commission on Fiscal Responsibility and Reform have proposed that the premiums, that are assessed to the plan sponsors, be increased. They have also proposed that the setting of the premiums be taken away from Congress (Yea, one of the few times I agree with Obama)and be set similarly to how the FDIC assesses premiums.
So, Mark, what you said was not true, and there is no proposal on the table to have tax funds injected in the future.
Kent Mueller
4 months agoPhil….you bring up values, and that is a good point of discussion. But, the values that I think deserve to be highlighted, are the values Obama exhibited when, within weeks of his inauguration. Within weeks, he eliminated the funding for the Washington DC school voucher program, that previously to his decapitation of funding, provided opportunity and upward mobility to many young, disadvantaged children. After his cutting of those funds, needy, well deserving children could no longer go the the school that he and Michelle had just enrolled their daughters into. What values are at play there? Ohhhhh, the teachers unions are more important than the children. Great.
JR Beillenhouser
4 months agoPhil -
what you fail to realize is that as a society, we are incredibly rich. Even our poor are way better off than poor elsewhere in the world. Travel a bit and see.
Mark Hastert
4 months ago“There has never been any tax funds in the PBGC pool. So, therefore, you are wrong.”
Read more here: http://voices.kansascity.com/entries/unmoored-republicans-lose-bashing-capitalism/#storylink=cpy
The fund has been running a deficit for years so tell me just how the shortfalls are made up? Did Romney/Bain and the otehr compmanies that underfunded their retirees pay back the money? Are you saying that there was no bailout?
Wiggle around the issue & obfuscate all you want but the fact remains that Romney/Bain paid themselves about $50million in fees and bonuses with borrowed money then left the pension underfunded by $41 million. In effect they paid themselves with the retirees pensions and had to be bailed out by the big bad government. so where was Romnet’s personal responsibility? That sort of free market capitalism stinks and all your obfuscation won’t take the stink off it.
Kent Mueller
4 months agoMark, no matter how many time you say the government paid the GST benefits with tax funds doesn’t make it true. You can say it three more times if you like. That might get you up to double digits. It will still be as false as when you said it the first time over on another blog.
For whatever political, or just plain stupid, reason congress allowed the PBGC fund be underfunded by not increasing the premiums to a level that would cover the risk plus administrative costs. And, once again, those premiums are charged to the sponsors of defined benefit retirement plans. Yep, businesses. You big, ol, bad ol businesses.
The “bailout” will occur. However, I think the odds are hugely in favor of increasing the premiums to do so, and I agree with that.
Kent Mueller
4 months agoMark, thank-you for stopping saying that taxpayer funds were used to pay the GST pension benefit liability. There is something about incorrect statements made over and over that really irk me.