Saturday, June 23, 2012

Jobs! Jobs! Jobs!-- Romney Has A Record Of Sending Them To China And India


It scares me that so many Americans taking election year polls express confidence that Romney's business acumen-- his ability to make himself and his partners very, very rich-- will result in national job creation. This week an OpEd in the very Republican Wall Street Journal makes the case that congressional Republicans are willfully blocking Obama's attempts to promote American job creation and that if Romney were to be elected he wouldn't lift a finger to create any jobs for anyone-- other than for butlers and parlour maids.
As the economy continues its recovery from the worst downturn in three generations, it's clear that, once again, decisive action is needed to create jobs now and lay the foundation for stronger, shared economic growth.

There is a strong consensus about what the immediate challenges facing our economy are: first and foremost, a continued lack of demand as a lingering result of the recession. We also know the areas where this has caused the most damage, including deep state and local government layoffs and continued weakness in the construction sector. And we have a good idea of what tools work best to address these problems.

The president has put forward a plan that uses exactly these tools. Nine months ago, President Obama outlined his American Jobs Act and independent economists said it would create as many as 1.9 million jobs. While Congress has acted on some of his proposals-- most notably, extending payroll tax cuts that provide $1,000 for an average family-- it left more than a million jobs on the table.

One of the largest drags on our economy has been the layoffs of public employees like teachers, firefighters and police officers due to state budget cuts. Even as American businesses have created nearly 4.3 million private-sector jobs over the past 27 months, state and local government employment has fallen by 450,000 jobs during that time. But Congress has failed to act to put hundreds of thousands of teachers and first-responders back to work.

Likewise, the crash of the housing markets continues to take a toll on construction workers. There are still two million fewer construction workers employed than when the recession started in 2007. Yet Congress has failed to act on the president's plan to put construction workers back on the job rebuilding our roads, bridges and airports.

Both of these steps would strengthen our economy now and for years to come. Economists Raj Chetty, John Friedman and Jonah Rockoff have shown that in a single year of teaching a great teacher raises the lifetime earnings of her students by $250,000 relative to an average teacher-- so laying off some of our most promising teachers is tragic. Infrastructure boosts productivity and economic growth, yet we are spending less than half as much on infrastructure as Europe does as a share of the economy, and only a quarter of what China spends.

President Obama would take other steps as well: cut taxes for small businesses that add jobs or increase wages, make it easier for homeowners to refinance their mortgages, and put veterans back to work. The president has also put forward a budget that would reduce the deficit by more than $4 trillion over the next decade and stabilize our debt-to-GDP ratio. But he would achieve that deficit reduction while continuing to invest in education, infrastructure and innovation.

This approach stands in stark contrast to that of Gov. Mitt Romney. What would Gov. Romney do to create jobs now? In a word, nothing. In fact, the proposals he has put forward would slow the recovery, reversing the gains we have made since the recession ended.

But not even Romney tries to claim-- at least not any more-- that Bain was creating jobs. Other than in the most superficial terms, Romney doesn't want to talk about his role at Bain or the role he played in the two places where Bain did create jobs: Indian and China-- although even there it wasn't really creating jobs as much as stealing them. Bain, it turns out, was shipping decent middle class American jobs to China and India where they could be done much more cheaply and with no safeguards for the workers or the environment or the society in general.

Today, as a candidate, part of Romney's song and dance routine stump speech is to denounce China for stealing American manufacturing jobs. But Bain Capital made a fortune facilitating that. It was an integral part of the Romney business model.
During the nearly 15 years that Romney was actively involved in running Bain, a private equity firm that he founded, it owned companies that were pioneers in the practice of shipping work from the United States to overseas call centers and factories making computer components, according to filings with the Securities and Exchange Commission.

...[A] Washington Post examination of securities filings shows the extent of Bain’s investment in firms that specialized in helping other companies move or expand operations overseas. While Bain was not the largest player in the outsourcing field, the private equity firm was involved early on, at a time when the departure of jobs from the United States was beginning to accelerate and new companies were emerging as handmaidens to this outflow of employment.

Bain played several roles in helping these outsourcing companies, such as investing venture capital so they could grow and providing management and strategic business advice as they navigated this rapidly developing field.

Over the past two decades, American companies have dramatically expanded their overseas operations and supply networks, especially in Asia, while shrinking their workforces at home. McKinsey Global Institute estimated in 2006 that $18.4 billion in global information technology work and $11.4 billion in business-process services have been moved abroad.

...In addition to taking an interest in companies that specialized in outsourcing services, Bain also invested in firms that moved or expanded their own operations outside of the United States.

One of those was a California bicycle manufacturer called GT Bicycle Inc. that Bain bought in 1993. The growing company relied on Asian labor, according to SEC filings. Two years later, with the company continuing to expand, Bain helped take it public. In 1998, when Bain owned 22 percent of GT’s stock and had three members on the board, the bicycle maker was sold to Schwinn, which had also moved much of its manufacturing offshore as part of a wider trend in the bicycle industry of turning to Chinese labor.

Another Bain investment was electronics manufacturer SMTC Corp. In June 1998, during Romney’s last year at Bain, his private equity firm acquired a Colorado manufacturer that specialized in the assembly of printed circuit boards. That was one of several preliminary steps in 1998 that would culminate in a corporate merger a year later, five months after Romney left Bain. In July 1999, the Colorado firm acquired SMTC Corp., SEC filings show. Bain became the largest shareholder of SMTC and held three seats on its corporate board. Within a year of Bain taking over, SMTC told the SEC it was expanding production in Ireland and Mexico.

In its prospectus that year, SMTC explained that it was in a strong position to meet the swelling demand from other manufacturers for overseas production of circuit boards. The company said that communications and networking companies “are dramatically increasing the amount of manufacturing they are outsourcing and we believe our technological capabilities and global manufacturing platform are well suited to capitalize on this opportunity.”

Just as Romney was ending his tenure at Bain, it reached the culmination of negotiations with Hyundai Electronics Industry of South Korea for the $550 million purchase of its U.S. subsidiary, Chippac, which manufactured, tested and packaged computer chips in Asia. The deal was announced a month after Romney left Bain. Reports filed with the SEC in late 1999 showed that Chippac had plants in South Korea and China and was responsible for marketing and supplying the company’s Asian-made computer chips. An overwhelming majority of Chippac’s customers were U.S. firms, including Intel, IBM and Lucent Technologies.

A filing with the SEC revealed the promise that Chippac offered investors. “Historically, semiconductor companies primarily manufactured semiconductors in their own facilities,” the filing said. “Today, most major semiconductor manufacturers use independent packaging and test service providers for at least a portion of their... needs. We expect this outsourcing trend to continue.”

This isn't the image Romney has worked so hard to craft for himself. He'd much rather talk about how he saved the 2002 Olympics in Utah. But even that is being challenged-- and by people who know... the folks at Salt Lake Magazine. Romney's back in Utah this weekend with every super-rich Mormon in America-- and super-rich non-Mormons who are willing to help them take over the White House. But the cover story of the magazine, The Myth of Mitt, isn't the kind of stuff Romney wants any of them to dwell on. It begins with a look at all-too-typical Romney self-aggrandizement: "The opening ceremonies of the 2002 Winter Olympics were still months away, but already Mitt Romney was thinking about the legacy they would leave behind. " In Romneyworld, it's always about him-- until it starts falling apart... and then he always finds someone else to blame for his poor leadership qualities. Today his staffers would probably prefer to talk about the Olympics instead of the nitpicking between what is "outsourcing" (which he admits that he champions) and what is "offshoring" (which he's afraid to touch with a 10 foot pole). I can't imagine Romney, out of touch as he is, is clueless enough to want his staff to get into a protracted argument about how Willard spent 15 years of his life getting rich by sending American workers' jobs overseas-- especially not when his two top economic advisors, Greg Mankiw and Glenn Hubbard and notorious advocates for aggressive outsourcing and offshoring.

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