Paul Krugman has attacked Romney’s honesty in earlier columns. But on Friday, he dissected Romney’s argument that, because he is a successful businessman, he knows how the economy works:
But there’s a deeper problem in the whole notion that what this nation needs is a successful businessman as president: America is not, in fact, a corporation. Making good economic policy isn’t at all like maximizing corporate profits. And businessmen — even great businessmen — do not, in general, have any special insights into what it takes to achieve economic recovery.The solution to America’s problems is not simply to increase corporate profits. That’s a notion that those who have gained from globalization love to repeat. They have done well by slashing costs. However,
Consider what happens when a business engages in ruthless cost-cutting. From the point of view of the firm’s owners (though not its workers), the more costs that are cut, the better. Any dollars taken off the cost side of the balance sheet are added to the bottom line.During his tenure at Bain Capital, Romney and his partners purchased 77 companies. 22% of those businesses were shuttered. But Bain made money even when firms went belly up. Romney has said that, by the same logic, he would have let GM and Chrysler fail. Besides the jobs at both companies, the multiplier jobs — at auto parts plants, tire plants, steel companies — would have also gone down the tubes.
But the story is very different when a government slashes spending in the face of a depressed economy. Look at Greece, Spain, and Ireland, all of which have adopted harsh austerity policies. In each case, unemployment soared, because cuts in government spending mainly hit domestic producers. And, in each case, the reduction in budget deficits was much less than expected, because tax receipts fell as output and employment collapsed.
Romney succeeded because of a narrow focus on profits. Countries are about more than making profits. Krugman reminds his readers that the last two presidents who claimed to be businessmen — George W. Bush and Herbert Hoover — left shipwrecks behind them.
Responses:
1)“businessmen — even great businessmen — do not, in general, have any special insights into what it takes to achieve economic recovery.”
Amen to that line. And lets not forget in the business world there are different types of businessmen. Some actually build stuff, others find ways to make money of the ones who actually build stuff. Romney is one of the latter.
I find it funny that Gingrich, who really had no business running for Pres anyways, is so angry at losing his grip on it that he’s decided to take a flamethrower to the guy who ousted him. Letting Gingrich back into elected politics was bad for the GOP, for all the reasons they should have known with their history of him.
2)Just a couple of comments. One I may have already pointed out in previous comments, but here it goes anyway.
1. Article 2 of the constitution provides for 7 specific responsibilities of the President. Five of those are foreign policy or military related, one is requirement to give update to congress on the state of the union and the last one is authorizations to fill key government positions with the consent of the senate.
We have come to think of the president more like a king than what the founding fathers envisioned the President’s role. The congress is responsible for domestic policy, which includes economic policy. The president can make recommendations, but the leadership has to come from congress and over the past 15 years, they have done an awful job. I won’t go into specifics here, but anyone who follows congress will find many actions that created the problems we have today.
2. One has to question the comments about companies being broken up and jobs cut by Bain and then look at actions at GM when the government bailed out GM. Pontiac was eliminated cutting many jobs. Hummer was sold, again eliminating many jobs and Saab was sold, again eliminating jobs. Last, Saturn was eliminated, with more jobs lost.
In addition, hundreds of dealers were forced to close their doors by GM and Chrysler, even if those dealers were profitable and had been in business for years, been a good community partner and was a good member of the GM/Chrysler family.Here again, hundreds of jobs were lost in sales, maintenance and repair of those cars.
Although we all can agree that all of this had to happen to make the these companies profitable, with the exception of dealer closings that had no impact on the manufacturers, a good political marketing manager could develop political ads that state the Obama administration took over GM and immediately eliminated 37% (3 out of 8 ) of GM’s product lines, forced hundreds of dealer closings and cut XXX number of jobs through their corporate actions.
Once everyone begins to realize that our problems comes from congress and not the President will things start to change.
Don’t like healthcare law, well who passed it?
Don’t like the country not operating with a budget? Well who has not passed a budget?
Don’t like the country spending 1.3 trillion more than it takes in? Who passes appropriation bills?
Don’t like earmarks? Who includes them in bills that have nothing to do with spending?
Next time you hear something governemnt has done that you do not like, just ask, who authorized that action. 99% of the time the answer will be congress!
http://themoderatevoice.com/134098/p...d-businessmen/
