Tuesday, July 2, 2013

Essay: A parable about Mitt Romney and public risk vs. private profit

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A parable about Mitt Romney and public risk vs. private profit

From the book: Chum for Thought: Throwing Ideas into Dangerous Waters by David Satterlee

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How businesses #redistribute their risks and loses.

Chum For Thought:
Throwing Ideas into Dangerous Waters

A parable about Mitt Romney
and public risk vs. private profit

Joe rolled his eyes after watching yet another cranky TV talking head take yet another pot shot at the other party’s candidate. “I just don’t get it,” Joe moaned, “They’re all crooks. If I even bother to vote this year, I’m tempted to just write in, ‘Someone Else.’” Linda looked at him quietly for a moment. If there was going to be a teachable moment, this was probably going to be it.

Linda had always been pretty quiet. Joe had always loved the gentleness in her touch, the light in her eyes, and the eagerness in her kiss. They had met in high school. Joe dated several of the pretty girls and Linda had let someone else take her to the Junior Prom. But, Linda loved Joe’s honest directness, his strong hands and character, and the attention and energy that he
gave to the things he loved… and he said that he loved her.

Joe started working for his father early on. His dad owned a small, but reasonably successful, chain of retail stores. As soon as Joe could drive, he started driving a delivery truck for his Dad. Linda won a scholarship to a state university. Joe made the trip to see her the first weekend of every month. By the time she graduated and moved back home, Joe had been promoted to warehouse supervisor. They got married that fall, just like everybody always thought they would.

Linda took a breath. This was not a time to cite macroeconomics or quote Noam Chomsky. So, Linda started, “The big difference between the political parties these days is all about who gets the goods. One party wants to make it easier to make a profit…”

Joe interrupted her: “There is nothing wrong with earning a profit. If you don’t earn a profit, you go out of business and then what good is that to anybody?”

Linda smiled her best disarming smile. “You’re absolutely right. Businesses and the people who buy from them keep money in circulation and make the economy healthier, and that is just as it should be. And, if a business makes a profit and wants to take a risk, they can invest in a new location, or a new product line, or something worthwhile. And, because they put their own money at risk, they stand to make an even greater profit and that’s a good thing too.”

Joe knew his woman well, so he just waited. The other shoe was about to drop. Linda regrouped, “The problem comes when you want to make your profits on transactions that put other people’s money at risk… or by buying and plundering other people’s companies and the pension plans of their employees. Some investors have even figured out how to keep profits while transferring risks and losses back into public society.”

Linda realized that she was going too fast when Joe replied, “Wha…?” It was quite obvious that he was experiencing some issues and had just barely not objected: “What the hell are you talking about?” Actually, that would have been better than some of her friends’ husbands who would just have gotten a beer and turned on ESPN. All was not lost.

Linda remembered a paper that she had written for American History 202. “Actually this is nothing new. Andrew Jackson had a problem with the Second Bank of the United States. He said that those bankers had been using funds on deposit to speculate in commodities. And, when they won, they divided the profits, but when they lost they charged it to the bank. He said they were a den of vipers and thieves.”

“Well damn.” Joe interjected, “I hope he closed them down.”

“He sure did,” Linda agreed, “and you can see how bad that kind of thing is. In fact, that is why the recent financial crisis was so hard on the country. That kind of financial abuse has been happening on a huge scale. And then, when their bad investments went south, it was us that had to bear the burden of the bailouts, protecting them from their losses, because they truly were too big to fail.”
Joe was still feeling angry. “The government should do something about that.”

“Well, your candidate actually sometimes did that kind of financial juggling for a living and his party is fighting hard for others like him to be able to keep on doing it. They want to keep on reducing government regulations that protect the public, people like me and you… and your dad with his business. I’m planning to vote for my candidate because I just can’t support such a den of vipers and thieves.”

Now Joe was feeling alarmed — with just the first twinges of regret. Some sort of penance was in order. He reached over, took Linda’s hands in his, and he promised to support her and vote for her when she ran for City Council.