People get hostile when you want to ask critical questions about someone's money. If it's a profile hailing an entrepreneur as a genius, then things are okay: we're only inquiring about the accumulation of an implicit good. When talk verges on criticism, people get itchy.
Yesterday, John Cook published 950 pages of documents about Mitt Romney and Bain Capital's finances. Business insiders waved them away as an old story, an irrelevancy, while regular readers asked in the comments why we were talking about this at all. Each asked the same question from different parts of the spectrum: "Why does this matter?"
It matters because Romney says it does. It matters because Romney's said it's the only thing that matters.
Up until his selecting Paul Ryan as a running mate, Mitt Romney's entire campaign strategy was this: minimize errors and make this election a referendum on Barack Obama. The economy hits incumbents especially hard—especially in the sort of straits America finds itself in—so all Romney had to do was keep it foremost in voters' minds while offering himself as an alternative. The election would then become a clear binary choice: Obama's big government bumbling, or the cool private-sector efficiency of multimillionaire Mitt Romney and his private equity firm Bain Capital.
Here's the problem, though: either through 1980s corporate films like Wall Street or the daily paper, average Americans have a rough understanding of how a firm like Bain makes money. Their conception may not be especially nuanced, but casually reading or tuning in is enough to fuel a humble, classical ignorance: enough knowledge to know what questions to ask and enough to know what gaps exist in their experience.
Thus when Romney utters some version of, "I know what it takes to run the United States, because I ran Bain Capital," plenty of people know enough to say, wait a minute, how the fuck does that work exactly? Because the metrics of success in that one arena do not apply to the other.
For instance, here are some things neither Bain nor The Romney Experience could do if they "acquired" America:
- Jump-start development on big American projects by getting matching-grant funds from, say, Germany.
- Improve American liquidity by getting big tax credits on America from Great Britain.
- Take a huge commission in "consulting" fees and stock value and cash out of America, leaving the original owners—all of us—holding skyrocketing loan debt. The previous CEO administration under George Bush and Dick Cheney already did this. It only works for the consultants.
- Slash American expenditures and get America out of the red by firing millions of underperforming workers. The Republican party has been doing this on the state and national level since 2009 (and philosophically since 1981), and, again, it's good for the top earners and consultants. However, it tends to suck for millions and millions of people who, stubbornly, remain part of America.
- Short stock in America or buy credit default swaps against American performance, then pocket the profit on America's failure and use it to compensate America.
- Gut America until it's a hot, lean and mean property, sell it to a third party like Russia, then use the windfall profit on selling America to buy America a new house and car and a primo 69-inch HDTV.
Surely many of those examples seem infantile to equity fund managers or their flacks. But it's an analysis commensurate with Romney's economic plans—and his $10.7 trillion debt-inflating tax plan—which have declined even to meet the standards of seeming intellectually lazy. That's not only dishonest but rude. You can explain Smith, Keynes, Galbraith, Hayek, Friedman or von Mises to any high school graduate willing to spend 10 minutes hearing a story. Macroeconomics is not especially hard. You can't explain Romney's plans to a savant, because there is nothing there. You might as well try to paint a watercolor on a fog.
All that's really left to the lay-reader or -writer is divination through reading a cup of mold-mottled tea. This is why trying to understand the recent Bain Capital documents is as valuable as anything else. Mitt Romney is an alleged big thinker who seems almost phobic about revealing any process of actual thought. How his business addresses regulation and optimizes performance for its clients says something about what he considers best practices. Reconstructing what he means to do to America by a forensic examination of his company's documents is all we have.
This is also why those who understand the operations of equity firms abdicate a responsibility to the public when they handwave away the details of stuff like those 950 pages of Bain files. If your beat is covering expert equity firm managers and writing expert commentary on them for other expert equity managers, that's one thing: you're writing in Chinese about mandarins. But that accounts for only a few writers, and there are many more out there, with many more possible readers waiting on them.
That this Bain discussion might already have been held in loftier or more foreign-sounding circles does little for anyone else. Most of America wasn't included. Besides, nobody ever went broke applying a clinically accurate blowjob to the practices of the American aristocracy's economics with a few agnostic bits of real information thrown in to make the whoring go down. Just ask Malcolm Gladwell. Dismissing others' attempts to grasp the information benefits no one. For one thing, why get mad at a genuine willingness to understand the topic that is the lifeblood of your job? It's like watching a golf pro clothesline mom after mom just trying to buy their daughters lessons for their birthdays.
Which brings us back to everyone else. It's a pernicious bit of false piety in America to assume that wealth confers goodness and goodness wealth; that the two evidence an indivisible value to anything other than profit. Asking how Romney became wealthy and how he manages wealth transgresses nothing. It is not an unreasonable intrusion or a heretical line of inquiry. There is not and will never be a minimum number of zeroes to your net worth that confers either absolution or immunity.
More to the point, Romney has, at every step of the way, induced and nurtured this line of inquiry. He has made the existence of his bank statement (or what he claims it is) and the existence of his business practices (and what he claims they are) the alpha and omega of his presidential qualifications. But even a pop-cultural understanding of an entity like Bain Capital demonstrates a set of practices that optimize the distribution of wealth upward and prioritize the profit-making of few against the whole—a fiscal strategy antithetical to the prosperity of every citizen of a nation.
What that general understanding tells us is bad enough. But looking over those 950 pages of documents, we see another profit strategy, one geared toward exempting people from transactional fees and taxes, sheltering wealth overseas and ensuring that everyday business is emphatically none of America's business. There is no reasonable way to apply that strategy to a nation, unless you're draining its prosperity upward. You cannot run America by avoiding American regulation. You cannot offshore "America." You can't set, as American policy, the guarantee that its left hand is unstintingly unaware of the behavior of its right.
That, however, is what those papers suggest works best for Romney's business. If his best appeal is to apply the same to a country, then we must have every opportunity to know more and to demand that analysts join the conversation patiently and democratically. Because regulatory capture isn't just an agency problem; it's a knowledge problem and a business beat journalist's problem. It makes the terms of the debate understood only to an elect that speaks and pardons itself on its own terms. It elevates jargon to arcana, makes daily economic news incomprehensible to millions and makes words and acronyms into incantations—more powerful than the things they describe, closer, indeed, to magic.