John Hawkins, at Right Wing News, observed that, “Since Mitt Romney had a mediocre record of job creation as the governor of Massachusetts, he has touted his record of creating jobs at Bain Capital. He’s noted time and again that he created 100,000 jobs at Bain.”
Hawkins added that since Romney refused to say precisely how he calculated this, or what the numbers were from which he calculated it, or what assumptions he was using when calculating it, Hawkins himself looked at the historical record, and he estimated that Romney’s net jobs-production at Bain had probably been closer to a loss of seven thousand jobs.
However, Hawkins ignored the jobs that had been lost at firms that shrank due to their competing against firms that Bain had financed. But it’s wrong to count only micro economic results to the firms Bain financed, and not macroeconomic results to the economy-at-large, which includes both one’s own firms and their competing firms. That’s the difference between the task of a corporate executive, versus the task of a national President.
The biggest of the Bain-financed firms that Romney brags about for “growing jobs” was Staples, which began in 1986, when two supermarket executives, Leo Kahn and Thomas G. Stemberg, came up with the idea for a stationery and office-supply super-store, which became Staples. Bain invested nearly $2 million in it, and sold out in 1990 at around $15 million.
Of course, Staples did produce jobs. And it made lots of money for its investors. But unfortunately, Staples also put out of business many thousands of small local stationery and office-supply stores. Was the balance in the Staples case really a net plus for jobs?
The U.S. Bureau of labour Statistics has published throughout the 22-year period from 1990-2012 the number of employees working in this retail segment: They’ve tracked the “Production and Nonsupervisory Employees” in “Office Supplies and Stationery Stores.”
This 22-year period fortunately covers virtually all of the direct jobs-impact that actually resulted from Bain’s success in its Staples investment – both the jobs-created and the jobs-lost, from the office-superstore phenomenon that Staples pioneered.
These data show that, during this 22-year period, the number of employees in this segment declined by about 10 thousand until 1993, then increased 50,000 under Bill Clinton (when 19 million private nonfarm jobs were being added to the nation’s economy, so this sector was adding jobs at only one-quarter the rate the national economy was), then lost 60,000 jobs from 2000-2012.
There was a net loss of 13.5% or 18,000 jobs throughout this retail field, during this 22-year period in which Staples was adding jobs continually. In this 22-year period, the entire national economy increased employment 46%; so, Staples’ superstore model was simply decimating employment in its field.
An associated graph shows that the “Average Weekly Earnings” of these workers during those 22 years rose 71%, which was less than the 78% increase in the Consumer Price Index during that period. Thus, Bain’s investment actually drove real wages down in this jobs-category – down by 4% – in this field that had shrinking employment, while Staples was adding to its workforce, and national employment grew. And this was the net income-impact to workers throughout America, in the case, Staples, that Romney is the proudest of, for his supposed record as a “job creator.”
A separate report has explained these results: its category “NAICS 45321” shows that the “productivity” of workers in these stores soared five-fold during the period. Productivity rises as stockholders extract increasing profits from each dollar spent on wages – all of the “productivity” benefit goes to stockholders. Workers don’t receive it.
Bain’s investment did produce millions in profits for Bain’s investors, and tens of thousands of jobs at Staples.
So, although Bain’s investment did produce millions in profits for Bain’s investors, and tens of thousands of jobs at Staples, it reduced lots more jobs than that throughout its field, and it also reduced the real wages in the reduced number of jobs that remained at the end of those 22 years.
And this is without even considering any of Bain’s flops, the businesses that they placed deep into debt and that went bankrupt and lost all employees. Although those investments were generally also very profitable for Bain (from fees), even Romney doesn’t claim that they produced jobs.
Overall, then: since Staples represented Romney’s best jobs-case, but still was net-negative for the nation, on both employment and wages, Romney at Bain clearly produced net losses for America’s workers, on both jobs and pay. (And, of course, he also clearly produced investment-losses for the “stockholders” in the competing stores: “mum and Pop.”)
So: Romney’s claim to have produced 100,000 jobs at Bain is a flat-out lie. Even his Staples investment didn’t produce any jobs, but reduced jobs – and that’s his best case.
Some people tell me, in response to this, “Well, but Staples lowered prices for consumers.” Irrespective of whether that claim is true, Mitt Romney is not asserting that he lowered prices for consumers. He asserts that he increased employment in the national economy. But he actually reduced America’s employment.
Have Republicans in power actually improved the economy more, or instead perhaps less, than Democrats in power?
Mitt Romney is clearly a liar; he even bases his campaign on this lie. He chose to make his campaign about lowering the nation’s unemployment rate, not about lowering the nation’s inflation-rate, and this is how he does it. He’ll live with the consequences of his choice; no one but he is accountable for it.
But there’s still more here: Romney also says that Republicans in power have better economic ideas, and will be better for the economy, than Democrats. What does the actual historical record show, regarding such questions? Have Republicans in power actually improved the economy more, or instead perhaps less, than Democrats in power?
Let’s focus on the stock market, because many people think of that as the Republican Party’s particular economic strength.
Ever since Fred C. Allvine and Daniel E. O’Neill published their “Stock Market Returns and the Presidential Election Cycle” in the September 1980 Financial Analysts Journal, financial analysts have noted that there has long been a remarkable correlation between Democratic Presidents and booming stock markets, vs. Republican Presidents and poorly performing stock markets.
The most exhaustive academic study to probe the question of how well the U.S. stock markets perform under Democratic and Republican presidents was the 1 June 2000 “Political Cycles and the Stock Market” by Pedro Santa-Clara and Rossen Valkanov, available at several places on the internet, which was subsequently published by the Journal of Finance, October 2003. This study found that from 1926-1998, there was a 9% higher growth-rate for big-corporate stocks, and 16% higher growth-rate for all stocks, under Democrats than under Republicans.
Then, Sean D. Campbell (of the Federal Reserve Board), and Canlin Li (of U. Cal. Riverside), issued their FEDS Working Paper No. 2004-69 in November 2004, “Alternative Estimates of the Presidential Premium” and reported that most of the Democratic advantage in those returns occurred during periods of high stock-market volatility.
Also, Carol Vinzant of slate.com, using a different data-set, carried the analysis back a full century, to 1900, and came up with essentially the same finding, that Democrats are far better for investors than are Republicans, and that this is true not only for presidents, but also for congresses; i.e., a Republican congress is bad for investors. Headlining, on 4 October 2002, “The Democratic Dividend: The Stock Market Prefers Democratic Presidents to Republicans” she found that “Democratic presidents have produced a 12.3 per cent annual total return on the S&P 500, but Republicans only an 8 per cent return.
In 2000, the Stock Trader’s Almanac, which slices and dices Wall Street performance figures like baseball stats, came up with nearly the same numbers (13.4 per cent versus 8.1 per cent) by measuring Dow price appreciation. (Most of the 20th century’s bear markets, incidentally, have been Republican bear markets: the Crash of ’29, the early ’70s oil shock, the ’87 correction, and the current stall occurred under GOP presidents.)”
Then, she added: “Nor does having a Republican Congress help the market. A Democratic Senate showed returns of 10.5 per cent (versus 9.4 per cent for a GOP upper chamber), and a Democratic House returned 10.9 per cent versus 8.1 per cent for the Republicans.”
A $10,000 investment in the S&P grew to $11,733 if invested under Republican Presidents, and to $300,671 under Democratic Presidents.
A month later, Mark Hulbert at marketwatch.com headlined on 12 November 2002 “Pop Quiz on Politics and the Markets: Which is better, Republicans or Democrats?” and he used inflation-adjusted data, which showed that, since 1901, the average annual market return under a Democratic president has been 7.2%, while under a Republican president the average annual return has been only 3.7%.
On 14 October 2008, a former information graphics editor at Money, Tommy McCall, presented, as an op-ed in The New York Times, a brilliantly clear chart, “Bulls, Bears, Donkeys and Elephants,” covering the prior 80 years, half of which had Democratic Presidents, and half of which had Republican ones. It showed that a $10,000 investment in the S&P grew to $11,733 if invested under Republican Presidents only, and to $300,671 under Democratic Presidents only. If Herbert Hoover’s Great Depression were to be excluded, the Republican Presidents’ results would have been raised to $51,211.
The corporate website of the maths genius Stephen Wolfram includes an interactive chart, “Stock Market Returns by Party,” which extends all the way back to 1897, and up through to the end of George W. Bush’s Presidency, a total span of 111 years, during which period Democrats were President for 48 years, and Republicans for 63 years. Despite the additional 15 years under Republicans, the $10,000 initial investment became only $156,017 under Republicans, versus $217,202 under Democrats.
Finally, Bloomberg News bannered, on 22 February 2012, “Stocks Return More With Democrat in White House” and Bob Drummond reported that, from 1960-2012 (till February 21st of this year), $1,000 invested in the S&P throughout all of the 28 years of Republican Presidencies would now be worth $2,087, but in all 23 years of Democratic Presidencies would now be worth $10,920 – a 992% Democratic gain, vs. the mere 109% Republican gain – and this despite the fact that there were actually five more years for the money to grow during Republican Presidencies. “The Democratic edge is so large that the party comes out ahead even without counting Bill Clinton (the Democrat with the biggest S&P gain) and George W. Bush (the Republican with the worst market record).” The Democratic advantage was enormous: “It’s not even close.”
These and other studies have also found similar differences regarding economic growth, unemployment, average length of unemployment, inflation, federal debt, and other economic indicators (as is documented in my recent book on this subject). The Democratic superiority isn’t just on jobs; it’s on all of the economic indicators. In all cases, during Democratic and Republican presidencies and congresses, the economic trend-lines have been stunningly better when Democrats were in power, than when Republicans were. No finding, anywhere in the social sciences, is more consistent than this finding: the difference is so great, they’re not even close.
It’s important to note here that none of this information relates to how good or bad the economy was under any given President, but instead to the extent the economy either improved, or else worsened, during that person’s Presidency. It’s also important to note that, since I am a historian, not a propagandist, the studies I’ve mentioned here are all of the studies that I have been able to find on this subject. The data-analyses that are referred to here are not a selection, but are an inclusive list of the relevant ones on this subject, as of the present time.
It isn’t just Romney who is bad for jobs and for wages: Republicans are bad for the entire economy.
Mitt Romney and other Republicans are clearly wrong in their economic ideas; that’s now a well-established historical fact, not just a matter of partisanship or mere speculation. Democrats have far better economic records than do Republicans. Republican (“trickle-down”) economics has consistently proven to be far less successful than Democratic (“percolate-up”) economics.
When the record is clear, as it is here, it’s much more reliable than any politician’s mere claims or promises, which may then be ignored, even when honestly intended (which they often are not – e.g., that lie about 100,000 jobs). It isn’t just Romney who is bad for jobs and for wages: Republicans are bad for the entire economy, including inflation and all the rest. That’s proven by history: To vote for a Republican is to hurt the U.S. economy. To vote for a Democrat is to help the U.S. economy.
Though perhaps shocking to Republicans, it’s the clear reality: Republicans are simply wrong about economics. The problem here isn’t just Mitt Romney; the problem is his Party, the underlying ideology. To say this is basically similar to saying: The problem wasn’t just Adolf Hitler, it was fascism; and, the problem wasn’t just Joseph Stalin, it was communism. The fortunate difference here is: The Republican Party isn’t (at least not yet) as authoritarian as those parties were.
Mitt Romney, like his fellow aristocratic Harvard Business School MBA and successful businessman George W. Bush, might think that he can make something true just by believing it strongly enough himself or even just by his saying it’s so, but it doesn’t really work. History doesn’t merely show this, but shows it unambiguously. Being a good businessperson is very different from being a good political leader, especially if that businessperson happens to be a Republican – in which case they are clearly worlds apart.
And so, this brings us to Romney’s third big lie: When he says that only a person who is wealthy as a private businessman possesses the necessary executive skills in order to be a good President of the country, he states something else that’s clearly false, because none of the great Presidents was a tycoon: FDR, Lincoln, Jefferson, Washington, weren’t; and yet Romney implies that people like Astor, Vanderbilt, Rockefeller, and Morgan, should have been Presidents instead of them. All of America’s great political leaders were politicians; none were tycoons.
However, this seems to be the exact opposite of what Americans believe. They accept the Republican and Romney lie on this. A Fox News/Opinion Dynamics poll taken on “February 7-8, 2006” and published on “9 February 06,” included the question: “Which one of the following would you rather see as our next president?” The highest percentage of respondents, 33%, chose “a business leader.” Tied in second place were “a military general” (another authoritarian icon), and “a career politician,” both at 21%. No other option scored higher than mere single digits. The most popular choice, “a business leader,” reflected the widespread view that this heavily Republican category had been the people selected by “the invisible hand” of God, and were therefore the best leaders.
However, even if “a business leader” is good at business (and was Richard Fuld, who was the head of Lehman Brothers, or Bernard Ebbers, the head of Worldcom/MCI, actually good at business?), then there is still an enormous difference between being good at business, and being good at government. If the American public doesn’t know this fundamental historical fact of democracy, our entire nation is in danger, because we’re then likely to choose political leaders on the basis of mushy myths and outright lies from very rich conservatives, instead of on the basis of incontrovertibly hard historical facts. The increasing influence of billionaires over our politics is the greatest threat to this nation, especially in the wake of the Republican U.S. Supreme Court’s infamous 2010 Citizens United decision, allowing aristocrats to buy “elections” through deceiving the public in this way.
Further evidence of this dangerous popular misconception came on 25 May 2012, when Gallup bannered “In U.S., Nearly Half Identify as Economically Conservative.” It was 46% conservative, 32% moderate, and 20% liberal. Trickle-down economics was more respected than was percolate-up economics, even though the historical record is clear and overwhelming that percolate-up economics has worked far better in every respect, during at least the past hundred years in the United States.
History is comprised of facts, not opinions
Despite what many people apparently think, government is no mere business – it concerns the public interest, no one’s private interest – and the whole of a nation does not equal the sum of its private parts. To think otherwise is like thinking that a person is the sum of his or her private parts. It is false, and so doesn’t work. A body isn’t mere pounds of flesh. It’s a great deal more than that. And so is a nation. History unambiguously says this.
History speaks here; and history is comprised of facts, not opinions. It’s not partisan at all. Sometimes it doesn’t speak with one voice, but it speaks with one voice in this matter. However, though the historical data are unanimous on it, the public predominantly believe the other way. Their believing falsely on this is itself a fact, not an opinion.
So, Republicans’ being factually wrong on economics is no opinion; it itself is a fact. Saying that it’s the case is nonpartisan. This is the kind of thing that science, in any field, is all about: honestly reporting the facts. That’s what’s being done here. It’s history, though stating it might unfortunately be viewed as “controversial,” merely because this history happens to come as news to many Americans – especially to Republicans. If they choose to reject these facts (history), they do it routinely (just as they reject the reality of global warming, and the reality that the Earth is more than 10,000 years old), which is how they’ve come to be and to remain as conservatives. But it can’t change any of the facts, which are being reported here.
History provides us with yet further relevant evidence regarding Mitt Romney’s claims about himself and regarding his supposed qualifications to be the President of the United States. Two previous Presidents had eerily comparable backgrounds and ideologies to Romney’s. George W. Bush has already been mentioned in this light. The other case was Herbert Hoover.
A squib for him if you google the phrase (in quotation marks) “Herbert Hoover” is: “Herbert Hoover, acting as a main investor, financier, mining speculator and organiser of men, played a major role in the important metallurgical developments that occurred in Broken Hill in the first decade of the twentieth century, developments that had a great impact on the world mining and production of silver, lead and zinc. In later years Hoover liked to think of himself and his associates as having been ‘engineering doctors to sick concerns’, and so hence his reputation as the ‘Doctor of sick mines.'”
As George Santayana said in his 1905 Reason in Common Sense, “Those who cannot remember the past are condemned to repeat it.” It is obvious that too many Americans “cannot remember the past,” because they never even learned it; maybe they didn’t actually want to know it. However, on the present matter, at least for the readers of this, bad teachers can no longer serve as an excuse for any continuation of this dangerous ignorance.
That ignorance among the masses may be useful for billionaires, but it is toxic to democracy.
Investigative historian Eric Zuesse is the author, most recently, of They’re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010, and of CHRIST’S VENTRILOQUISTS: The Event that Created Christianity.
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