Saturday, January 14, 2012

EconomicsUSA: Obama vs Free Enterprise: How Obama's stance toward Romney undermines a healthy society

Criticism of Mitt Romney by Republican rivals over his private-equity record at Bain Capital LLC is fair and will haunt him in November ... “The critique against Romney, really, is the way, under his leadership,  Bain Capital operated in the fact that so many companies went bankrupt under his tenure .... They put a lot of people out of work, shipped a lot of jobs overseas."  "Romney's rivals for the Republican presidential nomination, including former House Speaker Newt Gingrich and Texas Governor Rick Perry, have critized the former Massachusetts governor's role at Bain as they campaign in South Carolina ahead of that state's primary election January 21.  Romney won the first two nominating contests in Iowa and New Hampshire. Perry said companies like Bain are "just vultures sitting out there on the tree limb waiting for the company to get sick."
Gingrich is now looking to recast his attack on Romney’s investment background as Republican commentators and business leaders call for him to tone down the attacks. Gingrich said Jan. 12 he wanted to focus on a bigger critique of Wall Street bailouts. -- Criticism of Romney Private-Equity Record Is Fair -- Businessweek 

The Obama regime in the USA is the first place to look in the suddenly controversial case of "private equity" company Bain Capital in which Mitt Romney was once a key leader.  The term "private equity" makes reference to a particular kind of structure of financial organization or business), while "leveraged buyout" refers to what private equity often does when a company or set of investors buys an existing company to take possession of it, change it to function better or to subdivide it and dismember its subdivided entities for resale.  In the capitalist case, this is always an attempt to realize a monetary profit (dollars, in the USA), most of which is added to the principal invested and the total of profit + principal is repaid to the original investors.

In a non-capitalist situation engineered by the state, whether in the case of a socialist regime or a socialist manoeuvre in a mixed economy where the state (not primarily an economic entity like a free corporation that instead pursues profit by use of private equity raised from investors), the socialist(-manoeuvering) state uses taxes from the people to take over the management, subsidize or re-organize, and perhaps dismember a private company):  this is precisely the definition of the Obama regime.

Let's focus on the state (in this case, the Federal government's) deployment of tax monies from all the people to prevent the free market from working appropriately in the notable instance of just once industry -- the automobile industry.  A few over-arching facts, first about Chrysler and even more prominently General Motors Corporation (GM).   

The headline regarding how "GM collapses" into the USA Federal "government's arms" is followed, in this article by Neil King Jr and Sharon Terlep (June 2, 2009) some two-and-a-half years ago, is followed by a subtitle reading "Second-largest industrial bankruptcy in history; Obama defends intervention as CEO asks public for "another chance."  Immediately after GM filed for bankruptcy under Chaper 11, President Barack Obama, after some few months devoted to rescuing GM (largest auto maker in America)and Chrysler LLC (third-largest) by deploying $62 billion of taxpayers' money. "GM officials portrayed the bankruptcy…as an unprecedented opportunity to reverse decades of decline.  GM said it woud close 17 factories and parts centres and lop off 20,000 more jobs by the end of 2011 in Michigan, Indiana, Ohio, Tennessee and other states."  In capitalize this market interventionism, the USA Federal govt took money from the 50% of American households who actually pay taxes, as well as tax-paying corporations (some corps do not pay any taxes at all, like General Electric) in exchange for part ownership of GM.  "[T]he USA will own 60% of the new GM.  In all, the rescue of the car industry coud cost taxpayers close to $100 billion."  

King's and Terlep's 2009 report continues:  "Some Republican lawmakers called the move another sign of the administration's deepening incursion into the private sector. And the risk remains high that the administration or Congress coud meddle in the company's day-to-day affairs, an experience familiar to banks that took government bailout cash last fall" (2008). What does "incursion into the private sector" mean?  

School and business difference from the state: 
Examples of public/private distinction in social philosophy

The state is a public-legal entity for balancing all the "private" interests and r+ts in the various spheres of societal functioning, to ensure public justice in our h+ly differentiated society of today.  Public education and public-support for non-govt education, is an example of public justice in regard to the different modal orders of society -- where entities (institutions, organizations, etc) that interact with each other both within a given order and between each order, each with its own different set of typical institutions (some schools interact with businesses by training future leaders and workers, some businesses interact with schools by supplying goods and services to the schools for a competitive price, including a profit).  An "outside" societal order of public-legal justice (of course, it too is "inside" the the broader configuration of society as such), a government function must be kept separate from schools and businesses in order, in part, to balance the interests and r+ts of the institutions that are outside 1.) the distinct public-legal order of the state structures -- in these examples, we mention again institutions within 2.) the distinct order of education and within 3.) the distinct order of business.  If the government and its agencies (public-justice entities) intervene in another mode of societal order -- such as educational institutions or businesses, especially corporations listed by the govt-regulated stockmarkets (policed by the Securities and Exchange Commission in the USA, for instance) -- then government sets itself up to function as a corporate-governance institution that intervenes "lawlessly" ( = antinormatively) in another kind of order.  

The order of for-profit enterprises operating freely in a free-market economy is one where businesses compete with one another, that is part of their function in the order of a free market.  Businesses are thus subject to laws of efficiency proper to their order (in order to compete), competition in the free market is one of the paramount rules to sustain a free enterprise and a free market (speak of sustainability!).  The govt is subject to paramount "laws" ( = meta-rules, norms) other than efficiency (efficiency is always necessary, in govt too, but that is not the priority-norm of public-legal functioning, which is society-wide justice between and within societal spheres, institutions, organizations, and other entities of these kinds (thus, individuals and groups with consociational standing also have legitimate interests and r+ts, with consequent claims against all other societal entities which must be balanced in a state that is not functioning within the competition of businesses, but outside it as a public-legal government for justice).  The govt, contrary to Obama practice, should not be competing with businesses, should not be favouring some businesses over others, shoud not be preventing the collapse of businesses headed for collapse (becawz they did not compete well with other businesses in their sector and industry), and should not be preventing the firing of individual managers and workers and indeed the whole labour-union structure that contributed to the collapse.  The govt should not be playing the role of a private-equity firm and its investors, the govt should not be playing favouritism among the competing businesses or unions ("crony capitalism").

But the Prez has been practicing all these worst business practices (WBPs), not letting diseased businesses and union locals die.  In pursuing his policy of protecting GM and the United Auto Workers at all costs from suffering the consequences of their failures to behave with any economic-financial competence, Prez Obama distorted the role of govt, using it as a competing business on a playing field where the competitors were blocked from bidding with investors' capital to re-structure and make profitable the new businesses that emerge from the wreckage of GM -- a wreckage cawzed by GM's failed management and by the UAW.  If he woud stop playing his infernal game of favouritism in the marketplace, capitalism woud open the opportunity for better-run companies to thrive becawz of their better business practices (BBPs).  Or, non-intervention by the govt, as in the cases of the auto industry overall, GM, and Chrysler, woud allow private-equity firms to raise capital from investors for the purpose of  a leveraged buyout of the failing GM, Chrysler (autos) Solyndra, Evergreen, (energy)  Fannie Mae, Freddie Mac (housing), the banks and insurers, and so many others.  GM and Chrysler coud well have been dismembered with the good parts of the companies (if any) being re-established with workers transferred/re-hired (but not necessarily the unions) by the new, smaller companies under new managers.  Also, the UAW structure coud have been been dismembered, with considerable justice, becawz it contributed very deeply to the bankruptcy of GM and Chrysler, where inquitous labor laws prevent a principially-differentiated array of unions to compete for workers' individual votes that woud assign a plurality of unions selected to jointly and proportionately represent workers.  I have little doubt that a significant segment of surviving workers in the restructured healthy new companies woud have voted to be represented by the Christian Labor Association USA.  Remember that Obama's takeover used the taxes paid by all taxpayers (ruffly 50% of the population), not just those who favour monopoly unionism.  Among the other ills that Obama nurtures is the anti-democratic obsolete laws that prevent more than one union from representing workers in a workplace or company.  CLA-USA has a r+t in union elections to campaign for workers' support and, as a result of the vote, to represent proportionally the segment of workers who choose it to represent them.

All the foregoing shows how Obama's regime in its takeover of business and labour, protecting from competition his donors and supporters like the UAW which, thru its contracts with management, locks in workers by automatic checkoff of dues, even where significant numbers of workers don't want to be represented by the privileged union in power, don't want to pay dues to it, and can't gain democratic workers representation thru a union of their own free choosing.

-- EconoMix

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