Saturday, August 4, 2012

How Mitt Romney Got Rich Destroying American Jobs and Promoting Sweatshop Capitalism

Published on Alternet (

AlterNet [1] / By Paul Davidson [2]

How Mitt Romney Got Rich Destroying American Jobs and Promoting Sweatshop Capitalism

August 1, 2012

Right now, a man whose predatory career has claimed the jobs of countless Americans is trying to wrap himself in the flag and call himself a “job creator” and “wealth creator.”

Does he mean miserable jobs in Chinese factories? Wealth for the 1 percent? Apparently that’s exactly what he means.

Republicans claim that Mitt Romney's entrepreneurial activities at Bain Capital have been good for Americans. The truth is that Romney has spent his career offshoring and outsourcing American production processes -- and associated jobs -- to countries like China where human labor is valued in the market at a very low wage rate.

Mitt Romney’s tenure as Bain’s CEO has long linked him to offshoring and outsourcing. Even today, although he is no longer in that position, Romney still makes a nice profit on undertakings done long after he left the day-to-day management of the firm.

The usual justifying claim is that offshoring and outsourcing are methods where the American entrepreneur finds the lowest labor cost of production for specific goods and services. Conservatives argue that even if there are additional shipping costs, the entrepreneur can provide goods and services at a lower price to American markets than if the product were produced at home. According to this line of thinking, American consumers are said to be winners because they can buy more for each of their dollars of income. (Never mind that those folks whose jobs were shipped overseas will not have much income to buy much of anything.)

In reality, there is nothing just in such practices. They run counter to American values and are detrimental to a decent society.

Bain’s engagement in outsourcing under Romney’s leadership can be traced back to at least 1993, when the firm bought into a company called Corporate Software Inc. CSI provided a range of services for hi-tech companies such as Microsoft. One service you’ll be familiar with if you have ever had a computer glitch is the outsourcing of customer support, often through call centers. At first, CSI employed U.S. workers to provide these services, but by the mid-1990s CSI was establishing call centers in other countries.

Then CSI merged with another enterprise to form Stream International Inc. Stream immediately became active in the growing field of overseas calls centers. According to SEC reports filings, Bain was active in running Stream, providing “general executive and management services.”

Bain has gone on with a host of additional offshoring activities since Romney left day-to-day operations. Romney’s enormous wealth is partly derived from a golden handshake package he received when he left the management, which included a share of profits.

In 2006, for example, Bain created the Sensata enterprise, which manufactures sensors and controls for major U.S. automobile companies. Recently, Sensata Technologies has announced plans to close a U.S. plant and outsource 170 jobs to China. Even more astonishing is that Sensata’s U.S. employees are training their Chinese replacements, who have been flown to the U.S. plant by the firm’s management.

As a major investor in Sensata, Romney could gain from any outsourcing move that is likely to cut costs and increase the company's profits. It is reported that Romney owns at least $7.8 million in eight Bain funds that collectively hold 51 percent of Sensata's shares.

Recently, conservative writers in the mass media have lauded Romney’s role in destroying American production and jobs. Libertarian Charles Murray, for example, wrote in the Wall Street Journal that “Mitt Romney’s resume at Bain should be a slam dunk. He has been a successful capitalist….Capitalism … gives people a chance to get rich by creating value and reaping the rewards.”

Slam dunk? Maybe for the super-wealthy. The rest of America just got plain slammed.

David Brooks, in a New York Times piece, "More Capitalism Please," suggests that what this country needs to get out of our current economic funk is for more Romney-style entrepreneurs to pursue additional off shoring and outsourcing high profit opportunities to provide cheap goods (and high profits) to the U.S. market. Brooks apparently does not recognize, or comprehend, the difference between an unrestrained -- and inhumane -- capitalist system and a civilized capitalist economic society that America has been developing since Roosevelt's New Deal.

What if China built a shoe factory in California that was operated in the same way that factories are run at home? Here’s what it would look like:

(1) Children under 14 would work with their elders more than 60 hours a week.

(2) There would be no occupational safety standards for workers.

(3) The wage would be much less than the U.S. minimum wage.

(4) Workers would not have social security or pension benefits.

(5) The factory would have free-rein to pollute the surrounding environment.

If such a company were built, then the laws of the U.S. would shut it down, thereby preventing the factory from selling any shoes in American markets. Nevertheless, under the banner of “more capitalism please,” Brooks argues that the Americans (especially managers of large corporations?) gain from having open access to cheaper goods from offshoring and outsourcing production to such grotesque factory conditions. He seems to forget entirely why the U.S. outlawed sweatshops and child labor, and introduced social security laws. Hint: it wasn’t to enrich predatory capitalists at the expense of ordinary Americans.

The plea for more Romney-style capitalism would have us abandon our civilized social beliefs in treating all American workers with dignity. If we permitted American entrepreneurs to produce under the same uncivilized and unhealthy factory conditions as those practiced in China, their factories might very well sell cheaper products. But Brooks "more capitalism” is really a rallying cry for more sweatshop jobs, more child labor and more impoverishing of American workers so that offshoring and outsourcing entrepreneurs can make more millions and keep their incomes in offshore banks and out of the hands of the U.S. Internal Revenue Service.

It is true that if we would enforce the legal prohibitions on foreign production that prevent American firms from using sweatshops, child labor and other harmful practices to sell products and services in American markets, then the prices at Walmart and other retail firms might rise somewhat. But that surely is a small price to pay to make sure that Americans and their neighbors have decent paying jobs in a safe environment and their children are enjoying their childhoods in school, rather than working from dawn to dusk in a production process environment.

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