While Mitt Romney was running for the presidency in 2012 his former company, Bain Capital, bought a steel company by gaining control of its stock. Romney, from what I understand, had several million dollars invested in the acquisition. In its last operating year in the United States the company made a profit of three hundred and something million dollars. This meant that after paying all the compensation expenses from the executives to the janitors, that included 6.2 percent for social security, 1.4 percent for Medicare, medical insurance, retirement, plus any other costs associated with each employee, the company still made that profit. There were about 169 employees involved in operating the company.
The executives at Bain Capital decided that it was more profitable to move the entire operation to China. They would move the factory machinery there, reset up the plant, and use local labor to operate it, replacing all the American employees. They brought Chinese workers to the United States to be trained by their American counterparts who they would be replacing when the factory was moved overseas.
Apparently the cost of a Chinese worker would be a fraction of what it cost to employ an American. Even with the greater shipping distance the cost of the finished product would be one tenth or less of the cost of producing the item in America. The yearly profit would be over three billion dollars a year, allowing for a massive return to the stockholders. Mitt Romney’s few million dollars investment would be worth about ten times the amount he spent.
The people at the plant had appealed to Romney for help. He had ignored them. Obviously business is profit; the more profit the better the business. The people employed are just a disposable tool when it comes to profit.
Bain Capital acted in a modern capitalistic manner, searching to maximize its profit. They could earn much more using Chinese workers in China, where there is no social security, Medicare, or retirement, than by using American employees in the United States.
I’m not sure what happened to the steel company’s retirement fund. Bain Capital could have looted it to pay for the transfer of the company to China and left the Federal Government with the responsibility to make good on it for their former employees. They had done that type of thing before, more than once.
Bain Capital calls itself a Venture Capitalist Company, but they are actually Vulture Capitalists; like the bird they pick and devour the flesh and sinews off a living or dying creature, leaving only the lifeless bones behind. They will take a successfully functioning company, sell off the parts, making millions in the process and leave unemployed workers and an empty structure behind or move a successfully functioning factory outside of the United States where there are far cheaper labor markets.
Is this all legal? I would suspect it, more or less, is. There may be some gray or very grey areas where the legality is highly questionable. For example, some of these companies have looted long existing retirement funds leaving the Federal Government to pick up and fund the mess. Bain Capital has, over the years, bought a number of companies and then added what it spent for the purchase to the company’s debt, turning a successfully operating business into a bankrupt concern. There are probably a number of other ways to turn a quick profit employed by Bain and similar companies.
I would suspect there needs to be a thorough examination of the existing business laws leading to a thorough revision of the these statutes Their purpose should not be to allow for many of the practices that now exist.
In the 1930s then Senator Harry S. Truman called these people “the wrecking crew.” They existed then and pulled these practices during the Great Depression and they certainly exist today.
Mitt Romney during his presidential campaign called those people, part of whose employment he had done away with, part of “the 47% who expect a free economic ride.” I see Romney and his like as the true economic leaches in this country. They are the ones who have taken a free economic ride by exploiting a large percentage of the public and, in many cases, left the taxpayer, by way of the Federal Government, to pay to pay the bill.