2012 GOP presidential hopeful Mitt Romney has been pinning his campaign to his economic record, claiming that his time as an investment executive gives him the necessary experience to boost the nation’s moribund job creation.
When Romney mentions his private sector experience, he’s referencing his time with Bain Capital, the private equity firm that earned Romney his millions. Bain’s model for creating profit was to buy up companies and, as the Los Angeles Times put it yesterday, maximize profits “by firing workers, seeking government subsidies, and flipping companies quickly for large profits.” In fact, one of Romney’s former partners at the firm said that he never saw his role as that of a job creator, undermining one of Romney’s top selling points:
Bain managers said their mission was clear. “I never thought of what I do for a living as job creation,” said Marc B. Walpow, a former managing partner at Bain who worked closely with Romney for nine years before forming his own firm. “The primary goal of private equity is to create wealth for your investors.”
Plenty of the former employees of companies that Bain bought would certainly agree with that assessment. For instance, Bain Capital formed GS Industries by snapping up steel companies. GSI went bankrupt, and “more than 700 workers were fired, losing not only their jobs but health insurance, severance and a chunk of their pension benefits. GSI retirees also lost their health insurance and other benefits.” However, “Bain partners received about $50 million on their initial investment, a 100% gain.”
Over the years, Bain caused several corporate bankruptcies and thousands of layoffs, enriching investors at the expense of workers at firms like American Pad & Paper, Dade International, and LIVE Entertainment. And while Romney is trying to spin this record into something giving him job creation expertise, even his former colleagues are evidently not buying it.