The Blair Writing Project

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Richard Blair

Richard Blair
Location
Saginaw, Michigan, United States
Birthday
March 24
Bio
Richard Blair is a freelance writer and editor currently living in Saginaw, Michigan. (Shorter: he doesn't have a real job at the moment.) Armed with a BA in journalism from New Mexico State University in the 1970’s, he promptly joined the U.S. Navy as a Machinist Mate in the USN's Submarine Service. Since then, he's written two books, as well as countless newspaper, online, and trade journal articles. When Richard isn’t practicing "The Artist's Way", and if the weather is warm, he can usually be found sprawled on a sandy beach in some exotic location such as New Jersey.

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Salon.com
JANUARY 13, 2012 11:15AM

Reagan, Romney, and Bain

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I've bain thinking about this since I first viewed NewtPAC's scorched-earth video destruction of Mitt Romney and Bain Capital.

Romney's brand of vulture capitalism (love that term!) was the natural progression of the corporate run that started at the outset of Ronald Reagan's second presidential term.

Harvard Business School (with Michael Hammer at the forefront) began preaching the gospel of "shareholder value" when it was clear that they had been green-lighted to do so by Reagan's re-election.  I distinctly remember the first time I heard this framing during an all-hands meeting at the public utility company where I was working at the time.
 
And why?

In early 1984, the company CEO sent every manager at the director level and above to HBS for a six month intensive based on Hammer's business principles.  As each of the bigshots returned, the culture of the company shifted very quickly from an employee oriented, union supporting public utility, to a company that was focused only on the next quarterly financial statement.  Safe and stable five or ten percent growth was no longer acceptable.  Anyone in management that didn't toe the line was tossed off the bus very quickly.  By the late 80's, the company was in the middle of an M&A frenzy, significant downsizing, and the specter of  utility industry deregulation loomed.

During the same timeframe, Bain Capital was simply following the HBS model -- maximizing shareholder value -- even if this protocol meant axing thousands and thousands of jobs, and shuttering acquired companies after they'd been bled dry.  Now, multiply this by whatever number you choose.  There were many more corporate raiders doing the same  conservative economic dance during the 80s and 90s.  Remember Carl Icahn or "Chainsaw" Al Dunlop?

Reagan's voodoo economic policies started the ball rolling, and these policies grew more robust with each subsequent administration (both Dem and GOP), right through the current one.

How many billionaires existed in the 70s and 80s?  Very few, if any, I suspect.  Being a multi-millionaire was sufficient.  Not anymore.

And that's the short story of how we got to where we're at today: "shareholder value", with no consideration to and at the expense of anyone else that had any kind of equity, sweat or otherwise, in the outcome of a company.  The employer / employee social contract was broken.

Mitt Romney and Bain Capital were not and are not unique.  The same vulture capitalist policies that spawned Romney and Bain continue to play out in the canyons of Wall Street today.  Until that changes, nothing else changes, regardless of who sits the Oval Office.

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