The GOP primaries have kicked up a campaign kerfuffle over Mitt Romney’s record as head of Bain Capital. This fall, if Mr. Romney is the Republican nominee, President Obama will also probably take a shot at the private equity firm.
Scratch down a bit further, however, and the real issue is a fear among many workers that they may not be able to adapt to rapid change in the economy.
Bain’s role in that economic churn has been to buy up distressed companies for investors. Old jobs are lost, new ones gained, all to achieve innovation, productivity, global market share, and ultimately profits. Preserving jobs that aren’t competitive is a low priority.
If a steel mill in Indiana can’t compete with China, it’s shuttered. If it can adapt to making a speciality steel, then retrain the workers, renegotiate a union contract, buy patents, and rebuild the mill, jobs are saved or created.
Most Americans understand that static companies fail. And now that a majority of workers are also capitalists – by owning company stocks through their retirement kitties – they also want efficiency and profits, just as Bain does. They can’t afford to be Luddites toward new technologies or isolationist about trade.
Yet many workers still face being either winners or losers. The ones who are displaced or who want out of low-wage jobs need help to retool themselves. Government provides some relief, such as retraining or low-cost public higher education. It can also adjust policies on trade, taxes, energy, research, housing, and transportation to help the economy be more competitive.
But come election season, candidates play to worker fears, engaging in “the paranoid style in American politics,” as historian Richard Hofstadter put it. Bain is described as a “vulture” capitalist that “kills” jobs even as Romney counterpunches with ads about the workers helped by Bain.
Bain is an easier and closer target than, say, China. That country’s rapid rise in the global economy has been far more disruptive to Americans.
In size, China has about four times more people. Its workers accept lower wages. And China’s entry into textiles, electronics, cars, and other manufacturing industries has forced the United States to move higher up the global economy’s food chain.
But many US workers aren’t equipped to move into the kind of industries where America is strongest, such as higher-level financial services, the latest digital and biological technologies, or speciality fields in education and health care.
China may yet become a big issue in the presidential campaign, just as Bain has. Romney himself refers to China as a “cheating” competitor. Indeed, the Chinese government has distorted free trade by its protectionist and mercantile policies.
But whether the issue is Bain or China, the deeper concern is worker fear about how to revamp for the future. Helping people adapt to an ever-changing economy should be the campaign issue.
Rather than play to fear, candidates need to offer ideas that inspire and comfort Americans about their ability to adjust to a new era.