Wednesday, May 23

How Shit Gets Sugared

David Brooks, "How Change Happens". May 21

IT is May 23rd in Indiana, Land of the Midnight Sun, and I have already seen 5,673 Mike Pence For Governor spots.

I tuned out 5,672 ago, but that isn't the point. What is the point is that this is what people like David Brooks peddle as "freedom". But the system this replaced, where campaigns did not begin until Labor Day, and the Trustees of the Public Airwaves had a responsibility to present a balanced picture, wasn't Tyranny; it was Decency. Of course, the modern American Right didn't invent Doublespeak. It simply, as here, realized the benefit in raising generations of Americans so inundated with crap that few can tell the difference anymore.

(Which reminds me that in between Pence commercials yesterday I saw somebody's exposé of rampant teacher cheating on Indiana's standardized high-stakes testing. Teachers are cheating on tests. Sometimes en masse. Congratulations all around. I'm sure the state legislature would get around to finding innovative solutions to the problem in twenty years, or at least auctioning off the right to find a solution to the highest bidder, but there won't be any public schools left, so why bother?)
Forty years ago, corporate America was bloated, sluggish and losing ground to competitors in Japan and beyond. But then something astonishing happened. Financiers, private equity firms and bare-knuckled corporate executives initiated a series of reforms and transformations.
Once again, one starts off picking a nit with Brooks and finds his whole column unraveling. Forty years ago it was 1972. The less said about the political situation the better, but let's say this about economics, with the usual caveat that I know nothing whatsoever about the subject and cannot be induced to care: Nixon and his advisors had frozen Wages and Prices the previous year, imposed an across-the-board tariff, and taken us off the Gold standard. The last of these either acceded to, or kicked the ass of, the international financial community, which had been devaluing the Dollar relative to Gold because, if I may be so illiterate, of Vietnam. Like it or not, Mr. Brooks--and just joking; I know the answer--our little Indochina excursion showed a lot of people worldwide what we had truly become since the days of the Marshall Plan. And it had created commodities scarcities which seemed for the first time to get people thinking about limited global resources. Or so it seemed to me; I was seventeen, and make no apologies for not understanding everything that happened before my time, seeing as how so many people earn a living at the New York Times writing as though the history of the Republic precisely corresponds to their cherished notions about it.

Anyway, maybe the international financial community had also glommed on to what the Big Three were beginning to figure out: that so long as American industry could finagle the courts it could pretty much do as it damned well pleased. And would. It's true that at the time UAW workers made 50% more than comparable working people in other industries. Nobody's ever said that the history of trades unionism is one of unprecedented altruism. But if you want Bloat, try what was stuffing the skulls of the Big Three boardrooms of the era. Japanese car makers didn't eat America's lunch because of innovation (and they weren't doing so in 1972, a year before the first Oil Embargo). They made smaller, quality vehicles, while the nepotistic Big Brains in Detroit insisted good gas milage and reduced emissions were un-American.

Which organized American (that is, multinational) business is still doing, mutatis mutandis. If "bloat" is a large, prosperous workforce, "slimming" doesn't consist of letting Mitt Romney and his fellow sociopaths make 50 times the yearly income of the average family of four per hour. The word I believe we're looking for there is "piracy".  Nobody (that I know of) has questioned whether what Mitt Romney was up to at Bain was legal. Many of us question its morality, and its sanity.

Private equity firms aren't founded by moral crusaders. They're founded, and operate, in order to use large piles of capital to strip value from anything in their path. That much is pretty straightforward. You can't simultaneously praise their economic carrion-feeding and pretend they're all charity organizations.

Oh, sorry. You can, of course.

But the rest of us might see it from a little different perspective, and many of us are old enough that the whining about "how our elections have sunk to this point" just provokes a memory of the cruel laughter this sort of hypocrisy used to jam in our gorges, back when it at least seemed fresh. And with all due respect to the hard scrabbling economists at the Harvard School of Business and the University of Chicago--I'm sure someone will be along any minute now to explain to me how much respect they are due, and why--anytime someone with a vested interest can do no better than to claim "a modest overall effect"--no one in Vegas would take my bet that the reveal would be "modest overall negative effect", even if I discounted "modest"completely--it's time to put both hands on your wallet. For all the good that does ya.

Six percent job loss due to equity scavenging. That's the best they can do. In other words, rust would be an improvement. Unless you're Mitt Romney.


prairie curmudgeon said...

Rmoneys' brand of PE capitalism would not have been possible were it not for the remaining strength of the government of the people to pick up the pieces, to socialize the costs of leveraging for the taker few and the loser many. Now the Rmoneys think that an unfettered free market can grow robustly enough to pick up the pieces via creative destruction. Nice proposal from those who own all the parachutes. They perceive social democracy to be their fiercest enemy and competitor while in actuality a strong social democracy provided the base for their casino economics. And now, they wish to take us on the grandest experiment in conservatism -- weakening the base, ecological and social, to grow the economy. Like we ain't seen clusterfuck enough. And didn't the world try this experiment back in the 19th century?

hells littlest angel said...

Found on David Brooks' desk:

1. A sheet of paper on which the phrase "bare-knuckled corporate executives" had been scrawled repeatedly.

2. A semen-stained handkerchief.

Both Sides Do It said...

Rust never sleeps

Capital never stops

Dammit, I should have just left it at that, but I read the fucking column. I'm nauseated.

"Nor is it true that private equity firms generally pile up companies with debt, loot them and then send them to the graveyard. This does happen occasionally (the tax code encourages debt), but banks would not be lending money to private equity-owned companies, decade after decade, if those companies weren’t generally prosperous and creditworthy."

How low in the American educational system do you have to go before the average intelligence of a grade can't point out the flaw in that sentence? 10th? 8th? Or this one:

"It faced closure when Romney and Bain, for some reason, saw hope for it in 1993. Bain acquired it, induced banks to loan it money and poured $100 million into modernization, according to Strassel. Bain held onto the company for eight years, hardly the pattern of a looter."

But this is the most precious thought I have ever seen a grown man express:

"While American companies operate in radically different ways than they did 40 years ago, the sheltered, government-dominated sectors of the economy — especially education, health care and the welfare state — operate in astonishingly similar ways.

The implicit argument of the Republican campaign is that Mitt Romney has the experience to extend this transformation into government."

The second sentence doesn't follow from the first, the first sentence is wrong, and there is absolutely no evidence for the second. Perfect, genuine, complete, crystalline, pure. Believe that sentence and the bullet will enter the back of your brain. You will love David Brooks.

Anonymous said...

I'm confused how there is constant railing about teachers and others who ostensibly hog resources or supposedly don't pay their way when "you know who" picks winners and losers. (e.g. people who can work whenever they want vs. the remainder of the population who must get up in the dark or Amazon vs. bricks and mortar or private schools vs. public schools or...I'm getting exhausted and there's much more to go!)

fred c said...

Two guys go to the movies at the mall. Leaving the parking lot later on, the driver says to his friend, "validation?" His friend says, "you are a good man, a fine writer, and the quality of your ideas is high."

Great blog, Riley. Thanks.

Anonymous said...

Wait. Indiana has a governor's race happening this year?

I'm serious. I don't know what is happening down there in Indianapolis but I haven't seen a single ad anywhere up here in South Bend. I can think of one-- ONE-- yard sign for Pence, and one guy at my building has a bumper sticker for Gregg.

It's a stealth campaign in this part of the state.

Weird Dave said...

I like your name for the column much better.

Li'l Innocent said...

What Prairie Curmudgeon said.

I don't understand a lot of this stuff, and one thing I particularly don't understand is where, exactly, Mitt and his fellow rakers-in think that stuff they're stealing actually, ultimately, comes from?

They're like kids who, when asked where they think milk comes from, say "Cartons". Or "The store".