COLUMN: The Case For Romney
By Professor Bentley Whitfield
Nationwide (November 6, 2012) -- In 2005, the Gallup Organization undertook an ambitious project - the Gallup World Poll. The goal of the World Poll for the next one hundred years is to scientifically access the views of the entire world's population on variety of important issues. A number of interesting and disturbing facts are being revealed. Global population is roughly seven billion people. After eliminating those who are either too young or too old to work, at the present time there are three billion people worldwide who want good jobs. Good jobs are defined as providing employment for a minimum of thirty hours per work and issuing a regular paycheck. Economists often refer to these as formal jobs. This is not a particularly surprising discovery.
However, currently only 1.2 billion good jobs exist. Worldwide there is a shortfall of 1.8 billion good jobs. This is alarming; competition for jobs amongst nations will be fierce. Creation and retention of good jobs will be one of the most important tasks confronting world leaders in the coming decades. In The Coming Jobs War, a book by Gallup Chairman Jim Clifton, both the opportunities and pitfalls are spelled out. Global GDP is now $60 trillion. It is projected to grow by $140 trillion and eclipse $200 trillion by 2040. With annual GDP of $15 trillion (25% of total global GDP), America is the strongest economy on the planet, but there will be an economic world war to capture the businesses, markets, customers and jobs that will produce this new $140 trillion in global GDP. Winning that war will determine the quality of life, liberty and happiness for generations of Americans.
Much of this election cycle has focused on curing the diseased state of our existing economy. The facts speak for themselves a) GDP is growing at an impotent 2% level, b) Our national debt is a staggering $16 trillion and growing, c) The trade deficit is $559 billion (2011) and growing, d) the federal government is borrowing almost 40 cents for every dollar that it spends, e) 23 million people are unemployed or underemployed, f) 49 million people are on food stamps, g) 53% of college graduates are unemployed or underemployed, and h) crime rates are rising. Our current economic problems are immense and must be addressed, but in addition we must also prepare for the looming economic battles of the future.
Mitt Romney is the best choice for president. Selecting Romney is not an indictment of the Obama presidency. Romney will simply bring a vastly different skill set to the oval office. That skill set is better suited for addressing the economic disease that currently weakens our nation, preparing for the economic battles of the future and breaking the political gridlock that frustrates and infuriates us of all. As the governor of Massachusetts, Romney a Republican, worked in a civil and productive manner with a state legislature that was 87% Democratic. In addition to his healthcare legislation his accomplishments included a school system ranked among the best in the nation, cutting deficit spending by $1.6 billion, improving efficiency in state agencies and bureaucracies, updating jobs programs and improving the permit approval process. So, the first skill that Romney will bring to the White House is that he is accomplished in the art of domestic political diplomacy; he can work with both sides of the isle. Romney has a track record of getting the executive and legislative branches to cooperate. This may be the most important talent that he will bring to a nation that is deeply and bitterly divided.
For much of the past four years congress and the president have fought like cats and dogs. Most of the disagreements have been driven by honest differences in policy and political philosophy, however; there is no doubt that some of the venom that has been directed at President Obama is driven by racism. Congress and the president must cooperate for the benefit of the nation. Ultimately what is in the best interest of the nation must be our priority. Can we really expect cooperation between congress and the president if Obama is re-elected? Dating back to George Washington almost every two-term president has found their second term to be more difficult than their first term. In addition, Republicans outnumber Democrats by fifty seats in the House of Representatives. It is highly unlikely that Democrats will take back the House. Even if Democrats retain the senate it will be with a razor thin majority. Obama is a good and decent man, but if re-elected he will be mired in the same toxic situation that now exists. More importantly, the fate of 308 million Americans will be mired in the same toxic mess that now exists. An Obama win will leave his supporters elated for one night. Our nation will be condemned to political fist-fights and stagnation for another four years. Who is at fault is important but it is not a priority. America must be our priority. A Romney presidency simply has the greatest chance of producing cooperation between the executive and legislative branches and that is best for America, our children and our future.
Romney's second skill is his immense knowledge of business and economics. Jim Clifton argues in The Coming Jobs War that in the next thirty years "a new $140 trillion of customers, employees, new businesses, and equity will come into the global mix. The global war for jobs will be an all - out battle." With more than a quarter century of experience as a hugely successful executive in a field that requires vast knowledge of multiple businesses and industries, Romney is a compelling presidential choice for a nation with a floundering economy and facing brutal economic competition. Romney began his career with the consulting firm Bain and Company. In 1984 he formed Bain Capital, a private equity firm, along with two other Bain and Company partners, T. Coleman Andrews and Eric Kriss. He was encouraged and supported by Bain and Company leadership.
Bain raises capital from investors. That capital is then invested into companies that have been vetted by Bain and are determined to be good bets. They initially focused on venture capital deals. Venture capital transactions are typically made during the early stages of a company's life. These companies will often have innovative technology or highly attractive business models. Around 1989 Bain became involved in leverage buyouts (LBOs). LBO transactions also involve investing in companies; these companies are typically older and more mature than those of venture capital deals. LBOs are often used to secure positions in struggling companies where investors believe they can turn around the company and make it profitable or sell off parts of the company at a profit. Many LBOs use the cash flow or assets of the target company to repay or secure obligations incurred with acquiring the target company. Since its founding Bain Capital has invested in hundreds of companies, the following are some of the more well known companies: AMC Entertainment, Aspen Education, Brookstone Retail Stores, Burger King, Burlington Coat Factory, Clear Channel Communications, Dominos Pizza, Double Click, Dunkin Donuts, D&M Holdings, Guitar Center, Hospital Corp of America, Sealy, Sports Authority, Staples, Toys R Us, Warner Music and The Weather Channel. These companies alone currently now employ more than 600,000 people.
When most people buy a stock we know the story behind the company and we may study some technical data such as earnings per share, price earnings ratios, and dividend yields. The research conducted by equity funds, such as Bain Capital and other institutional investors, is far more thorough and exhaustive. Their research involves multiple visits to each company they will invest in, multiple meetings with management, reviews of audited financial statements and internal financial documents, legal reviews of existing contracts and obligations, projections of future performance, reviews by outside experts to verify the quality and quantity of natural assets, background checks of management, evaluation of competition and reviews of political and legal conditions that may affect overseas operations. Following this intense research, and before an investment is made, often complex contracts and corporate structure documents are executed.
It is important to understand that Romney engaged in this voluminous type of fundamental research, not only for the hundreds of companies that Bain Capital invested in, but also for companies that Bain Capital declined to invest in. This is what consumed his life day after day for decades. He understands what is good and bad for business in all regions of the country. The result of his undergoing this quarter century crucible is that with respect to economics and business, Romney will be the most knowledgeable president to ever occupy the White House. Essentially Romney is an economic specialist who can take office during an economic crisis.
Historically the United States has elected presidents with very special skills to address very specific problems. Our "specialist presidents" have served the country well. Shortly after winning our independence as a nation, survival of the United States was far from certain. There were wolves all around us. Great Britain was bitter at having lost the colonies. They still had troops in the Michigan area. Canada was a part of their empire. France had helped the United States win its independence and they wanted to exert more influence over this infant nation. Both France and England were 18th Century superpowers. Neither country "loved" our new nation. Neither would have shed a tear "if the baby were killed in the crib." The most important task for our early presidents was to make sure that the nation survived. The special skill required of this first generation of specialist presidents was knowledge of foreign policy and diplomacy.
It is no surprise that six of our first eight presidents came to the White House with substantial foreign policy expertise. (John Adams - US Minister to the Court of St. James, Thomas Jefferson - 1st US Secretary of State, James Madison - 5th US Secretary of State, James Monroe - 7th US Secretary of State, John Quincy Adams - 8th US Secretary of State, Martin Van Buren - 10th US Secretary of State). Even with this considerable level of diplomatic expertise in the White House, we narrowly avoided a war with France in the late 1790s and the US did fight a second war with Great Britain, the War of 1812. But ultimately this first generation of specialist presidents succeeded. The baby was not killed in the crib, the United States survived.
The period following the Civil War was dangerous. It was uncertain. Three presidents were assassinated between 1865 and 1901 (Abraham Lincoln, James Garfield and William McKinley). Would elements of the Confederate Army fade in and out of the mountains and forests engaging in ongoing guerrilla warfare? Would some foreign power take advantage of our weakened condition after we had tried to commit suicide as a nation? Would some other internal conflict erupt? These were real concerns. The special skill required of presidents of this era was simple, rock solid military experience. The chief executive had to come to the oval office with the ability to check any convulsions that might arise from within or any threat that might be external. From 1868 to 1900 six of the seven presidents elected held a military rank of major or higher and five were former generals (US Grant - Commander General of the Army, Rutherford B. Hayes - Brevet Major General, James Garfield - Major General, Chester A. Arthur - Brigadier General, Benjamin Harris - Brigadier General and William McKinley - Captain Brevet Major).
These presidents are collectively guilty of some giant failures. The conquest of the west involved a bloody, brutal suppression of Native Americans resulting in the taking of their lands and to a large extent the destruction of their culture. The Reconstruction era saw the rise of domestic terror groups such as the Ku Klux Klan who disenfranchised African Americans and committed unimaginable acts of violence against Black men, women, children and even unborn fetuses. These acts are unforgivable. But on the one do or die issue they faced, which was to make sure that the country avoided another near-death experience, this second generation of specialists presidents was enormously successful. By the end of the 19th century American had not only survived, it had the largest economy in the world.
Romney is clearly an economic specialist. He is the best choice for a nation facing an economic crisis. While we are not facing a national life and death situation, we are facing a potential nation changing scenario. We must grow our economy. We must bake a bigger economic pie. According to the 1950 US Census America had a population of 150,697,361. 89.54% of the country was white, the rest largely Black. Six decades later our population now exceeds 308 million and America is no longer a White and Black country. As of 2010 63.4% of the population is White, 16.7% are Hispanic, 13.1% are Black and Asians are now one of fastest growing ethnic groups. Growth in population and diversity can be a good thing. It can also be a problem. It must be accompanied by comparable economic growth. Insufficient economic growth means that more and more people must share a smaller and smaller pie. That economic pie must also feed the debt service payments on our $16 trillion national debt. Without sufficient growth, somewhere in the future these different ethnic groups will clash.
Adequate economic growth cures so many problems. It drives down unemployment, it provides funds to update our aging infrastructure, it funds education, it funds healthcare initiatives, it allows us to humanely absorb the undocumented among us and it will allow us to begin to address the problems with Medicare. We must grow the economy. The economy is driven by the private sector and only one candidate has vast experience with the multiple industries and businesses that fuel the private sector. Mitt Romney is the best candidate for president in 2012.
B. Whitfield is a professor at the State University of New York (SUNY) and a former Wall Street vice president and portfolio manager. The views expressed are his. Contact him at Bentleywhitfield2000@yahoo.com
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