Romney’s “…I like to fire people…” is fair game


Romney’s quote on firing people has created a debate liberal/progressive circles: is it fair to attack Romney saying he “likes firing people”. I think it is fair to ding Romney for this quote the given context.

Here it is in context:

“I like being able to fire people who provide services to me,” Romney said to an audience in Nashua, New Hampshire. “You know, if someone doesn’t give me a good service that I need, I want to say I’m going to go get someone else to provide that service to me.”

and the video:


Who likes getting rid of their people? Or even thinking about it?

If it’s personal or medical services for you or your family, people like to find someone and use them. Dry cleaners, tailers, cobblers, grocers, babysitters, schools, doctors. If you pay people do services for you, quite often they become people that get christmas cards and bonuses from you, and can become quite close to the family. You just want to pick the right person. You don’t want to have to think about firing them. Ever.

A lot of folks heard this and point out that firing people generally sucks. It sucks for a lot of employers, supervisors and managers because you have to be the bad guy and/or you may be laying off a perfectly good worker. The emotional toll in mass layoffs can be stressful for all involved. In addition to that, a manager shouldn’t really like to fire someone. Employee turnover, recruitment and training is expensive. Firing employees either in discrete situations or in mass layoffs is not all peaches for those who operate a company. It says you may have hired wrong: too many too soon? Too many in the wrong role? Too many resources on a bad product? Stress increases while pay stagnates for workers you do keep. It can ruin the morale of a company. It can mean you didn’t hire well enough, or train well enough, or screen well enough or pay well enough last time. Employee turnover is not a good thing for a company’s operations. If you are someone running a company that creates jobs, you want to avoid losing employees as much as possible. “Like” and “firing” is not something a lot of folks outside of the “Devil Wears Prada” would say.

Romney wanted to let 2 of the 3 auto makers go bankrupt and wanted to let the whole foreclosure thing play out

The TARP bailout funds the George W. Bush administration approved for automakers in 2008 GM and Chrysler and the Obama administration approved for auto suppliers in 2009 continue to be attacked by Mitt Romney. Romney argued that those funds, used as operating capital by loans from TARP to survive long enough to go through managed bankruptcy and restructuring. That plan, which has put these companies back on the right track was designed and administered by the Obama AdministraGM, Chrysler and GMAC, shouldn’t have been provided and the auto makers should have been forced into managed bankruptcy immediately. This doesn’t seem to make sense. The automakers and suppliers needed the bridge tion. Last June, Romney is quoted in Politico as saying:

“The bailout program was not a success because the bailout program wasted a lot of money,” Romney said in the debate, arguing that the right thing to do was “letting these enterprises go through bankruptcy” with no public support.

Basically, Romney is arguing that more layoffs were in order and possibly the shutdown of Chrysler, GM which would have shuttered their suppliers. GM and Chrysler could not find any private investors prior to restructure. The government was the investor of last resort. Steve Rattner the “auto czar” for the Obama Administration, quantifies the job loss prior to the bailouts for Tom Walsh of the Detroit Free Press:

In sum, Rattner remains a fierce defender of the auto bailouts — as the alternative to liquidation — and he’s proud of the post-bankruptcy profits of GM and Chrysler. Yet he frets that they employ far fewer U.S. workers. The 113,000 jobs the U.S. auto industry added since mid-2009 is only one-third of the 334,000 lost in the year preceding the bailouts.

Emphasis on the part about liquidation is mine. Basically the Romney “private bankruptcy only” prescription for GM and Chrysler would probably have cost in the order of a million+ of jobs in the midst of the worst economy since the great depression vs. thousands lost under the TARP bailout and Obama administration’s managed bankruptcy plan (334K – 113K). Romney desire to allow financial ruin to run it’s course is hardly isolated to corporate bankruptcy.

“Don’t try and stop the foreclosure process. Let it run its course and hit the bottom.”October 17, 2011

That’s the first thing with Mitt’s statement: it betrays the sentiment that he believes that widespread financial ruin is something that makes sense. Advocating for foreclosures to run their course in this deep recession and for two US automakers to be left in the lurch basically is arguing for longer unemployment lines, abandoned communities and a deeper economic despair.

He created Shareholder Value, not Jobs

Romney didn’t “operate” companies that were bought out by Bain. What Romney did at Bain was good for shareholders. It is good for the folks in corner offices who need to lower cost so that they hit their revenue goals and get their bonuses. Creating wealth for those few by restructuring an existing company is not creating jobs, it’s extracting value. That’s what Romney was good at Bain: extracting capital for his investors. Bain was not brought in to grow a company, it was brought in to grow shareholder value. Bain is brought in when the owners feel that their employees aren’t delivering enough profit to them by doing their jobs. So they bring in Bain Capital to make it so by identifying people who aren’t giving them the “good service that they need”. Bain says so and is honest about it (from: Ezra Klein in the Washington Post):

[…]the Bain prospectus says “The objective of the fund is to achieve an annual rate of return on invested capital in excess of the returns generated by conventional investments in the public equity market and the private equity market.” It never mentions “jobs,” “job,” or “employees.” Those simply aren’t the objective. Sometimes, in fact, they’re collateral damage.

He got rid of those folks and got shareholders what they were looking for: money. He was a good consultant for them, but in no means was he ever tasked or proficient at creating jobs.