The Bain of Romney’s business resume
Mitt Romney’s presidential campaign is built on his business acumen and turnaround skills. But what exactly does that mean? This week, New York magazine submits its answer. The magazine credits Romney’s former firm, Bain Capital, with helping to reshape the way American businesses look at corporate governance and productivity. It also credits Bain for helping to usher in an era of soaring executive compensation and widening income inequality — with helping to create, in essence, the one-percent economy.
New York traces Bain Capital’s origins to the frustrations of Bain consultants like Romney. American business managers were “sloppy,” “complacent,” and “lazy,” Romney’s former Bain colleagues tell the magazine. They were unprepared to compete in a changing global economy, and largely unwilling to toe the Bain consultants’ hard line. So Bain, and Romney, raised a fund, got into the equity business, and started running companies themselves. They dove deep into performance data and ruthlessly weeded out inefficiencies.
Tom Stemberg and Staples pop up. So does Harold Kellogg, the office supply manufacturer whose plant Bain de-unionized, and who retaliated by dogging Romney during his1994 US Senate campaign against Ted Kennedy. “Those jobs were going to get destroyed internationally,” one of Romney’s partners tells New York. “That plant was going to go out of business, and there was nothing Mitt should have done, or could have done, to prevent it.”
Unionized blue-collar workers weren’t alone on the unemployment line, though. Because of the private equity wave that Bain helped launch, unemployment notices later came for white-collar middle managers whose work could be eliminated by computerization. Downsizing led to gains in productivity and corporate profits, and performance bonuses meant that corporate profits went hand-in-hand with soaring executive compensation.
The post-Bain system, New York argues, is “a system that is more productive, nimble, and efficient than the one it replaced; it is also less equal, less stable, and more brutal.” A Stanford economist tells the magazine, “What you end up with is a choice between a bigger cake less equally split and a smaller cake equally split,” adding, the choice between the two is “a social question.”
That social question is being debated on occupied city streets across the country. Companies are profitable, even as wages shrink. Soaring income inequality is driving popular protest. It’s an environment in which it might not be safe to be friends with guys who stuff large bills in their mouths for laughs. Or maybe it is? That, as they say, is why we have elections.
Peter Lucas, writing in the Lowell Sun, backs Frank McNamara to head the Republican Party in Massachusetts.
NECN reports on Internet cafes in Worcester that run gambling-like games. Attorney General Martha Coakley says such cafes are illegal, but they keep opening.
The Senate advances a bill increasing the cap on grocery store liquor licenses, two weeks after it was filed.
State officials will sue to lower the pension of former Weymouth mayor David Madden, who allegedly boosted his annual pension by more than $33,000 per year by retiring as a no-show fire chief.
Elizabeth Warren tells The Daily Beast she created much of the intellectual foundation for Occupy Wall Street. Political consultant Michael Goldman, now a columnist with the Lowell Sun, says Occupy Wall Street is the country’s middle class speaking out through the actions of their children. An Occupy Salem movement launches, the Salem News reports. Two arrested at Occupy Boston for allegedly selling heroin, WBUR reports.
CommonWealth’s Colman Herman finds at least one similarity between the Occupy movement and the Tea Party: They both have a paucity of color.
A second bid to recall Lawrence Mayor William Lantigua is set to kick off tomorrow night, the Eagle-Tribune reports.
Quincy got a reprieve from having to print ballots in Chinese for the upcoming mayoral election. However, Quincy and five other Bay State cities will have to meet federal standards for bilingual ballots going forward, because they have reached a population threshold that triggers the requirement.
The controversial power plant proposal in Brockton is causing a deep divide in the race for city council.
In an editorial, the Salem News urges a focus on what’s doable at the soon-to-be-closed Salem Harbor Station, which probably means another power generation facility or manufacturing and marine uses.
The state is putting pressure on towns that are not in compliance with state law requiring every community with 12,000 or more residents to have a full-time veterans affairs official and all other communities to have a part-time staffer to aid vets.
North Attleboro tries again, and fails again, to get additional school funding through Town Meeting.
Debate is unfolding over expansion of a federal program allowing deep-pocketed immigrants who invest big in US firms that create jobs to jump the line in getting green cards.
Just because there can never be too many GOP presidential candidates, the American Spectator touts Louisiana Gov. Bobby Jindal as having the right stuff following his recent reelection. And Mitt Romney is not the only Bay State presidential hopeful: Green Party activist Jill Stein throws her fair-trade purchased hat in the ring.
Rick Perry unveils his economic plan, which includes a 20 percent flat income tax and spending cuts. Meanwhile, Slate discovers the source of Perry’s claim that his energy policy will create a million jobs — the official Exxon company blog.
Michele Bachmann’s former New Hampshire campaign team explain why they quit en masse last week.
WBUR reports on a new report from The Boston Foundation indicating home prices in Greater Boston may be headed downward again. Meanwhile, CommonWealth’s Paul McMorrow, in his weekly Globe column, says banks have no one to blame but themselves for recent court rulings that threaten to invalidate thousands of foreclosure sales. The White House expands its refinancing program for underwater homeowners. It’s the subject of criticism from the right and the left — proof, the Atlantic says, that there’s no political safe ground in housing.
A survey of nonprofits finds that a majority of workers (though not us here at CommonWealth) say their jobs are either not fulfilling or only somewhat satisfying and salary reductions triggered by a drop in donations could be cause for nearly half to seek other jobs. Via Chronicle of Philanthropy.
Netflix lost 800,000 US subscribers in the third quarter.
Sanofi taps a new CEO for Genzyme.
It’s hard out there for a banker.
Universal Hub has a wrap-up, along with video, of last night’s Boston School Committee meeting where school officials presented their proposed reorganization plan to many skeptical parents and students. Here’s the Globe account.
The Fitchburg commuter rail line gets $75 million in federal funding for a face lift, the Lowell Sun reports. Several other Massachusetts transportation projects receive federal funding as well. For a full list, click here.
Dartmouth officials pulled the plug on two planned wind turbines on town-owned land in favor of a solar panel project they say is more cost efficient and provides the town with enough power to sell under net metering limits. Earlier this year, CommonWealth had an in-depth piece on communities eyeing the chance to cash in on net metering. Meanwhile, Provincetown also pursues a solar project.
A state trooper saves a wounded owl from the breakdown lane on the Mass Pike in Auburn.
Ayer Town Meeting approves a new bylaw restricting where sex offenders can live in town, the Lowell Sun reports.
The Departed meets Good Will Hunting: Matt Damon tells GQ that he and fellow Cantibrigian Ben Affleck will team up to make a Whitey Bulger biopic, with Damon playing Bulger and Affleck directing.
Vandals desecrated a 19th century mausoleum in New Bedford’s Rural Cemetery, busting up two wooden coffins and scattering bones inside the crypt.
A Superior Court judge has ruled a woman who claims the Boston Herald and one of its reporters defamed her when the paper ran a story saying state Rep. Gloria Fox snuck her in to jail and that she had sex in prison with an incarcerated boyfriend on prior occasions can move forward with her suit against the paper.
So much for taking on the US government: WikiLeaks suspends operations.
The founder of the TMZ, the celebrity news site, tells the news media something it already knows: Adapt or die.RED SOX
Just how much are the Red Sox more than a sports story in our world? About 1,600 words worth of op-ed space in the Boston Globe. That’s what was given over this morning for Theo Epstein’s “Farewell, I love you” valentine to Red Sox Nation. For all the warm and fuzzy feel of the moment, however, it was hard not to notice on BostonGlobe.com that the piece is accompanied by a photo of the former GM and multimillion dollar wash-out Daisuke Matsuzaka under a headline, “The Theo Epstein era.”