"When Mitt Romney Came to Town," also known as "The King of Bain," the long-form attack ad that Newt Gingrich's supporters are running, is a very bad documentary. It is the kind of sensationalist fear mongering that the right wing hates when Michael Moore does it.
The film, which was originally made by Romney employees, was sold to a pro-Gingrich political action committee.
The film shows Romney and his firm, Bain Capital, buying up several companies, firing most of the workforce, making huge profits by getting other people to loan the companies money, and then shutting them down completely. In one case they started a technology firm, got favorable ratings from Lehman Brothers, made a huge pile from the initial public offering, then sold off all their stock just before the company went bankrupt.
In each case - and the film says there are many more - Bain acts like the vultures that Rick Perry says they are.
What the film does not do is investigate whether the companies could have been run profitably at all. The film-makers did not even ask whether anyone could have saved these firms.
I do not know the answer to that question. So far, no commentators on the film have tried to answer it. It may be that Bain Capital, and Mitt Romney, are indeed "vulture capitalists" or "mafia capitalists," buying profitable companies, suckering investors into giving Bain lots of money in exchange for worthless debt, then destroying the firms. It may also be that Bain Capital bought failing companies, performed necessary creative destruction, and saved the fragment that would otherwise have failed.
I would really like to know which kind of businessman Mitt Romney is. But "When Mitt Romney Came to Town" is a very bad way to try to answer the question.
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From what I have read, Bain was one of the better companies in the private equity business—better for its investors and better for the companies in which it invested.
Initially, on behalf of its own investors, which included retirement funds, religious organizations, municipalities, and as well as other investors, invested in young companies, e.g., STAPLES in 1986, allowing those companies to grow and prosper, while gaining a significant return for Bain’s investors.
Later, Bain began investing in companies that had been largely financed by debt and were no longer as able to grow, e.g., Dominos Pizza. Those companies were reorganized, generally made profitable, and then sold to other investors. Making a company profitable often necessitates cutting both managerial fat and unprofitable portions of the company. If a division in West Overshoe, Colorado is highly unprofitable, it is sometimes necessary to close it down in order to save the rest of the company’s operations in Alligator, Louisiana, Buttermilk, Wisconsin, and Pinetar, North Carolina. The workers in West Overshoe may be legitimately distressed at their loss, but the workers in the other three cities are thankful that the company, as a whole, was saved, rather than letting the whole company die.
As I understand it, at least one group that made the ad in question were employed by a typewriter manufacturing company in North Carolina Initially, Bain made changes and it looked as if the company would survive. It did not (although Bain’s overall success rate was phenomenal). The same may be said of buggy whip manufacturers in the early 20th Century.
Sometimes technology makes companies and entire industries obsolete—when was the last time any of use used a typewriter? Some may wish that government would step in and require all automobiles to be equipped with a buggy whip in order to save jobs, or that computer technology be based on mechanical typewriters. It is not going to happen because consumers, the people who buy the product, will not accept such insanity. As my Grand Dad often said, wistfully, “Sometimes the price of progress can be pretty high. But we either progress or we die.”
Fair question Beau, fair answer Mac...
Check out Stephen Colbert's joke about how Bain could "restructure" the US if Romney were elected. I would post the link, but it's all different in Canada than the US. It's hilarious. Any ideas on which parts of your nation should be sacrificed to make the rest turn a profit?
Perhaps he could sell Vermont to Canada?
I vote for California.
Some fact-checking of the film by Politifact: http://www.nytimes.com/2012/01/13/us/in-laurens-sc-the-redneck-shop-and-its-neighbor.html?_r=2&pagewanted=all
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