January 14, 2012

jgreendc asked: Thought I'd ask you to engage in a little thought experiment about wealth, if you're game of course. "If we were to push the wealth question a bit further, would people be more receptive of someone who had a net worth of 10 million who made it in private business or a person who made the same while serving as a public servant?" --- This is inspired by the Romney/Obama discussion, but clearly the facts are quite different and levels of wealth are not even close. Let's just call me curious.

Your question is loaded, of course. Obama made his money “while” in public office, but not as a result of his public service. He made his money on his books, and the tradition of elected politicians publishing books is well-established. The interesting thing about Obama is that he appears to have actually written his, which in the realm of books by politicians (or celebrities for that matter) make him an exception.

I have no problem with Obama making money from a book he writes. My only problem with Obama making money from his books is that I have never made that much —okay, very much — money from the 6 books I have written. Otherwise, more power to him.

Had Obama made his money from corruption, he’d need to go to jail … as, say, Medal of Honor winner and former Republican Congressman Randy “Duke” Cunningham has for taking money from notorious lobbyist Jack Abramoff. That is making unsalaried money FROM public service and is illegal.

It seems to me that no one would have a problem with how Mitt Romney made his money if he seemed to have made it from purely productive enterprises—creating jobs and products people need and/or enjoy. There are lots of rich politicians whose money is not controversial, at least in the sense that people recognize the person made the money in a productive way. Think Darrell Issa’s car alarms and bill boards: they’re annoying, but he built the business and has reaped its rewards. (When you hear “step away from the vehicle,” it’s Issa’s voice you’re hearing.)

People are troubled in Romney’s case because he served at the epicenter of the predatory leveraged buyout industry in the 1980s and 1990s, when companies like Bain Capital bought companies largely by telling the banks that once they (Bain) bought the company with the money that Bain was asking the banks to loan them, they’d guarantee the loan with the acquired company’s stock. It was this “leverage” that put a lot of acquired companies into the debt that eventually killed them and the jobs they provided. Had the leverage not been taken on, the companies might—might—have survived. Hence, the mechanism for acquiring the company appears, in at least some cases, to have destroyed the company…but made Mitt Romney and the investors in Bain Capital rich(er).

People wonder if that kind of activity is really productive. It might be—I really have no training to judge whether a leveraged buyout saved a company or destroyed it. But it’s a good question.

10:49am  |   URL: http://tmblr.co/ZPUuPyElfsqE
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