Mitt and Bain

There’s been a fair amount of ink and electrons expended in regards to the topic of Mitt Romney and Bain Capital. Most of it has been of the nature of a sporting activity, either “boo, vulture capitalist” or “yaay, job creator.” Although this vague attempt to envision the consequences of a candidate’s principles is theoretically a slight improvement on the “Horse Race Journalism” I railed against in a previous post, it continues the chattering class’s insistence on confusing labeling with rational analysis. Hence my surprise today to encounter a reference in a NY Times editorial today to an article actually looking deeper into the fortunes of 77 companies acquired by Bain Capital during Romney’s tenure. The article appeared in the Wall Street Journal 1/9/12.

Now, overall, Bain produced about $2.5 billion for its investors on about $1.1 billion invested. Ok, 250% is not a bad return compared with, say, the fraction of 1% I’m getting on my bank savings account now, but hey, I guess Mitt’s just a really good manager. But take a look at the specific gains. Not too surprisingly, 10 of the 77 deals produced over 70% of the gains (see figure). How gainful were these gains? Well, you can see that Bain invested $5.1 million in American Pad & Paper in ’92, took them public in ’96, and pocketed $102 million—a 20 fold return (2000%). Oh, and Bain made AP&P so profitable and successful that AP&P went bankrupt  4 years later, in 2000. Even better was Wesley Jessen VisionCare, which turned a $6.4 million investment in ’95 into a $302 million (47x) profit after going public in ’95.

Wall Street Journal, 1/9/2012

Wiley business strategies? Absolutely. I wish I made 250%, or 2000% or 4700% on my money—then I’d be rich and you all would have to listen to me (or at least run me for president). But is this investment success evidence that Mitt knows how to manage businesses out of a jam, solve the problems that are keeping them from being profitable? That’s the narrative the Republicans want, because that shows he’s the man to fix America’s problems, too. Well, let’s think about it. Take American Pad & Paper. How do you fix and manage your way to 2000% profit? Even if Mitt went in and found that Tom on the 3rd shift had mistaken the office supplies coming off the production line for scrap paper and was throwing them all out, you couldn’t make an extra $100 million. Not even if Mitt personally invented a new, cheaper glue for Post-it notes. Now I’m sure that many management improvements were made, but that is how you go to 20% profit, not 2000%—and fixing management problems doesn’t put you in bankruptcy a few years later. Without further digging into these private deals than even the WSJ did or could do, we can’t say for sure what happened (gee, how about that) but there doesn’t seem to be any way to avoid the conclusion that Mitt’s success was all due to leveraged buyouts and sucking money out of IPOs rather than any particular ability to run a business (other than a vulture capital business, which is what he should stick with). There is zero carry-over to managing the USA.

My Marriage is in Danger!

Yes it is. Ann Hathaway smiled and winked at me from the tv last week…least I’m pretty sure it was me. Who else could it have been? And now, my marriage is in danger because, when Ms. H. wants someone, she cannot be denied. Surely my wife will understand.

Of course my running off with Ann Hathaway is just a product of my fevered imagination, but it’s no more imaginary than the desperate fear-mongering conjured up in response to President Obama’s recent statement in support of gay marriage.

Now I’ve always found this right wing mouth-frothing puzzling. Although it’s pretty obvious how Ann Hathaway flirting with me could endanger my marriage, I just can’t come up with any causal chain, even a convoluted Rube Goldberg one, by which gay people marrying hurts my marriage (or me, or pretty much anyone or anything except maybe the jilted boy/girl friend in a gay love triangle). And the homophobes haven’t produced any rational argument about how gay marriage harms them either.

But you know, let’s leave that aside a moment. Convincing people that things they think are bad are not, in fact, bad is a nigh-unto impossible uphill slog. I mean, 50 years after Vatican II there are still some elderly Catholics who wont eat meat on Fridays, and the Pope himself said that it was ok. So let’s just for the sake of argument grant the bigots their prejudices and irrational beliefs; we’ll all suppose for a minute that gay marriage is in fact a Bad Idea (by which I mean all manner of things unhelpful, hurtful, unethical, immoral or just plain stupid—sort of like the Republican Party’s legislative agenda). Ok, fine. But what no one ever addresses is the question “What bad ideas need to be made illegal?” When does the state (whether as Big Brother or Nanny Mary Poppins) need to intervene and stop people from implementing Bad Ideas?

Well, the right-wingers knee jerk response would be “always!” If it’s a Bad Idea, it should be illegal! They think there’s a simple one-to-one correspondence: Bad Idea = Illegal. Off with their heads! Simple thoughts for simple minds, I guess. But a moment’s reflection generates a number of Bad Ideas that are not illegal (the list is enormous, so for the sake of space, I’ll leave out ones like unclogging your lawnmower while the engine is running, smoking in bed and buying at the top of the market, and stick to Bad Ideas that are also immoral).

Bad Ideas That Are Not Illegal

  • Having an affair
  • Cheating at cards
  • Being rude to your mom on Mother’s Day (or any day)
  • Bragging to friends about false accomplishments 
  • Ignoring your children

(and note that these are all Bad Ideas that cause some degree of harm to others not just oneself). I’m sure you can come up with others.

So it’s not enough for conservatives to say that gay marriage is “wrong,” they have to provide some rational arguments as to why this particular wrong thing needs to be forbidden by the power of The State, why 2 people who want only to commit themselves to a single life-partner, through sickness and health, richer and poorer, etc. etc. must be kept from doing so! And this argument has to be something more than “I don’t like it,” or “The invisible galactic overlord doesn’t like it.” So far I’ve heard nothing. Time to stop using the law to enforce bigotry and prejudice.