In My Opinion

Dita De Boni is a Herald business columnist

Dita De Boni: Money paves road to the top

129 comments

Do Mitt Romney and John Key understand what it's like to be bottom of the heap?

Illustration / Anna Chrichton
Illustration / Anna Chrichton

There were some who felt the Occupy Wall Street movement was the preserve of new-age hippies in ramshackle tent-towns ranting aimlessly against "the man".

But despite the apathy, even aggression, the movement engendered among much of the general population - even here in New Zealand, where "get a haircut, and get a real job!" seemed to be the main retort to Occupy camps - the movement achieved one thing. Its main message, that a lucky few work zealously to protect a level of privilege completely inaccessible to the rest of us, has seeped into the general consciousness. Even if most of us have no intention of doing anything about it.

When even Americans are questioning the fairness of their much-vaunted capitalist system, it's pretty obvious a sea-change has occurred. Under normal circumstances, US Republican presidential hopeful Mitt Romney, a ruthlessly successful businessman, might have been held up as nothing short of inspirational. Now, though, he is suffering for his links to the private equity firm he co-founded in 1984, Bain Capital.

It's beyond doubt that Bain, which Romney ran until 1999, did what the most aggressive, high-flying private equity funds have always done - pick floundering targets, raise debt and slash costs, all the while ensuring there's still plenty of cream for shareholders. Ethical or not, it's all legal stuff.

But his background as a corporate raider (or "vulture capitalist" as his critics would have it) has put Mitt on the back foot in his race to the White House. Some of the companies Bain "restructured" were forced to outsource their work to the likes of China and India and/or lay off lots of people, and that still wasn't enough to stop several of them careening into bankruptcy.

Much of this misery happened in the years between 1999 and 2002, when Romney had ostensibly left Bain to run the Winter Olympics in Salt Lake City. But Mitt continued - continues to this day, in fact - to draw a share of profits from the firm, as well as earn millions for his family from a blind trust run by Bain. A lot of the money is also channelled offshore, allowing the obscenely rich Romney to pay as little tax as possible.

Again, there's nothing to suggest anything illegal. But should a significant stakeholder in any firm be held responsible for the actions of that firm if they later offend public sensibilities? Is it unfair to expect private equity firms or their managers to hold fast to certain ethical mores, or, as received wisdom would have it, are they there to return the maximum possible profit to shareholders without fear or favour?

A more fundamental question, perhaps: is running a private equity firm in any way good training to run a nation?

In New Zealand we appear to have bucked the trend in the rest of the world; far from treating moneyed men with suspicion and contempt, we have twice voted one into the top job, and continue to give him the benefit of the doubt. John Key does not come from great wealth, like Romney, but he does come from the privilege of a loving home. With this behind him, he has gone on to build a successful career and great wealth.

Does he, like Romney, really have the required understanding of what it's like to be at the bottom of the heap? Or in John Key's continued success - and Romney's prospective success - are we revealing that we don't think the question matters anymore?

* Illustration by Anna Crichton: illustrator@annacrichton.com


Debate on this article is now closed.

- NZ Herald

Sort by
  • Oldest

© Copyright 2014, APN New Zealand Limited

Assembled by: (static) on red akl_a4 at 02 Sep 2014 00:37:45 Processing Time: 499ms