The Washington Post has just published a review of Bain Capital and its history of moving American jobs overseas. Frankly, I’m figured everyone already knew that, in addition to planned bankruptcies, Bain took great pains to ship jobs overseas where regimes with less-than-stellar human rights records produce goods at a discount. But apparently this is breaking news to many.
What makes this story worse for Mitt Romney is that Bain Capital operated at the forefront of the efforts to drive jobs overseas. Far from following the pack, Bain Capital pioneered the effort to move American jobs overseas, forging partnerships with Chinese companies and mastering the legal and regulatory red tape to assist companies in taking the leap.
And this is the biggest lesson to take from this story — outsourcing is not easy. There’s a lot of effort involved in finding partners in China or in building a plant of your own in India. There’s no such thing as a free lunch, and you can’t find a 30 cents/hour worker chained to their station in a poorly ventilated room without a little investment either.
In the grand scheme of the national debate, this story presents Romney with two major problems. First, he must confront his anti-job record at Bain Capital. On a conference call that concluded about 30 minutes ago, David Axelrod labeled a Romney presidency as “Outsourcer-in-Chief” and that’s not flattering. He can argue that he helped move jobs overseas because of flawed labor laws at home, but the implicit argument there is that the U.S. needs to be more like China, which is a less than pleasant thought to most Americans. He can argue that the problem is high corporate tax rates, but that doesn’t provide much daylight with Obama, who has already sought a corporate tax cut. Obama also can seize the upper hand because he favors cuts for businesses who bring jobs back from overseas while Romney favors a “blank check and pray they come home” tax strategy.
Second, it undermines Romney’s favorite mantle as someone “willing to stand up to China,” as featured in his “Day One” ad. Revisiting the chummy history Bain Capital forged with China demolishes Romney’s credibility on the issue of outsourcing jobs and can bring focus back to other background stories, such as Romney’s book, No Apology: The Case for American Greatness, where Romney criticized the Obama administration for standing up to Chinese efforts to flood the U.S. market with artificially cheap goods. Said Romney:
President Obama’s action to defend American tire companies from foreign competition may make good politics by repaying unions for their support of his campaign, but it is decidedly bad for the nation and our workers. Protectionism stifles productivity.
If that’s Romney’s position, what exactly can we expect on “Day One?” This is a question Romney does not want asked. But I’m looking forward to hearing his answer.