Jim Hightower: Romney's Economic Fix and the Inequity of Private-Equity Hustlers

Published on Wednesday, April 25, 2012 by Creators.com
Romney's Economic Fix and the Inequity of Private-Equity Hustlers

by Jim Hightower


What are these phantasmagoric money machines that they call "private-equity firms?" They're much in the news these days, because a fellow who was a private-equity magnate is presently running for president. Mitt Romney piled up a quarter-billion-dollar personal fortune through his Wall Street equity outfit, Bain Capital, and he now claims that, because of his success in that business, he knows how to "fix" our economy.

Before you clear that, note that private equity whizzes are all about The Fix — not necessarily a good thing. They operate by borrowing big piles of cash at high interest rates from rich speculators to buy out XYZ Corp. Then, to meet the interest payments owed to the speculators (and to siphon off a financial killing for themselves), the fixers do two things: One, they plunder XYZ's assets, selling the profitable chunks of the corporation; and two, they severely downsize the XYZ workforce, firing as many workers as possible and demanding deep wage cuts and benefit givebacks from the employees they keep.

It's a raw redistribution-of-wealth scheme, shifting XYZ's wage payments from its many workers to a handful of wealthy high-rollers. The process downsizes America's middle class, while creating no real economic value. Nothing equitable about it.

But the fix also includes a set of very special partners, few of whom are even aware that they're in on the deal: taxpayers. The private-equity business model is not structured on old-fashioned, free-enterprise principles, but on a skewed system of tax loopholes punched into federal law by these financiers' lobbyists and the lawmakers who do Wall Street's bidding. .............(more)

The complete piece is at: http://www.commondreams.org/view/2012/04/25