When I was a freshman at Carleton College in the mid-sixties, I was one of three guys on campus with long hair. Lots of people made fun of us, the usual gibe being: “Are you a boy or a girl?” One day, I went into a dorm called Musser, reputed to be “the jock’s dorm.” Ten or twelve guys saw me in the hall and began to jeer. Sensing trouble, I tried to push past them, but one said “Let’s cut off his hair.” I knew this was bad. I tried to bolt, but the pack caught me and swiftly brought me down. Suddenly one of them had a pair of scissors. They all tried to hold me down as the one boy worked the scissors, but I kept wriggling and struggling, so he kept stabbing the scissors into my skull accidentally. Probably, I should have stopped struggling. Just-let-it-happen would have been the safe move. But I was freaked out beyond reason at that point, simply flailing like an animal. Fortunately, just then, my friend Rich Libby wandered into Musser, saw what was happening, and waded in. Rich was a wrestler, a burly guy, and between us we managed to get me out of that place. It took me a while to get unjangled though. And I never forgot that this thing had happened.
A couple of years ago, I went back to Carleton for a 40th reunion. My wife and I were staying in a fancy new dorm. Late that first night, some other alum stumbled in and took the room next to ours. The next day, I ran into this fellow in the hall and we walked to the dining room together. He looked familiar, and his name rang a bell, but I couldn’t place him till we got to talking about college days and he told me he had lived in Musser. Then it all snapped clear: he was part of that pack that tried to cut my hair: the ringleader in fact. I could tell he didn’t remember me, and he didn’t remember the episode. For him, it had not been memorable.
I thought about that event recently, when the story came out about Romney joining a pack of boys in college to cut some guy’s hair. He said he had no memory of the event. He said it was just a college prank. His campaign said people should not be held accountable for pranks they may have committed in college.
Pranks. I thought back to those guys attacking me with scissors in Musser Hall, and “prank” is not how I would describe what they were doing. What I felt from them was not humor but hatred. Not for me personally, to be sure, but for something I apparently represented, because I had long hair a year or two before long hair became a commonplace for guys.
Short-sheeting a pal—that, to me, is a prank. Forming up as a gang going after some guy with a pair of scissors, even if only to cut his hair—that’s a hate crime. As hate crimes go, it’s a trivial one, but let’s be clear on the essential character of the act. And when I thought about the guy I met at the reunion, and when I heard about Romney’s so-called prank in his college, I thought: “What kind of a guy would do a thing like that?”
Romney’s campaign has made much of the trivial nature of the prank. It was long ago, the American people have real issues, big issues, to worry about, why dredge up some moment of lighthearted merry-making from long ago? But I’m thinking it goes back to the question: “What kind of a guy would do a thing like that?”
“What-kind-of-guy” is, I think, a legitimate question to ask, even all these years later, because Romney’s career after college raises the same question for me—and suggests the same answer. What kind of guy ? A bully without much obvious capacity for empathy. As head of a private equity firm called Bain, Romney practiced what he calls “creative destruction.” He paints a picture of himself as a disciplined businessman, strengthening the overall economy by whipping inefficient companies into shape and culling those too hopelessly flawed to deserve survival. He would have us see him as analogous to those guys who buy decrepit buildings, fix them up, and sell them for a profit. In fact, Romney’s formula was quite the opposite from that of the house-flippers. What he (and Bain) often did, it seems, was to buy firms in the pink of health and bleed them dry.
Pete Kotz, writing for the Seattle Weekly this April, chronicles how, in the 1990s, as head of Bain, Romney bought a highly successful company called Georgetown Steel, which employed 750 people. This company’s workers had great benefits including a handsome profit-sharing plan that kept them loyal. Based on the company’s productivity, Bain borrowed millions of dollars and paid it out as dividends to Bain investors and as fees to Romney himself and to the Bain management team he installed. These payments required that costs be cut to balance the books, so the new team eliminated profit sharing, cut down on maintenance, and stopped upgrading equipment. Four years later Georgetown went broke, and the 750 workers lost their jobs; Bain however managed to unload the company and its debt, and the bankruptcy did not hurt Romney and his investors at all, because they had already gotten their money early. Seen purely as an investment, Georgetown Steel was a success story.
Kotz offers another case in point: American Pad & Paper, which Bain bought in 1994. This Indiana plant had so much business, it was running three shifts a day. The new Bain team fired all 258 workers and had them reapply for their same old jobs at lower wages. Their health-care benefits were cut by 50 percent. The cost-cutting improved the bottom line. Even so, six months later, Bain shut down the plant and shipped the jobs to Mexico.
Want more? The century-old Armco steel mill in Kansas City, Missouri, was another booming firm with a generous profit-sharing plan for its workers. Romney bought it, combined it with two other companies, and formed a new conglomerate, GS Industries. Armco cost Romney $75 million. He paid $8 million down and borrowed the rest. After the acquisition, he immediately borrowed another $36 million by issuing bonds. This money went to Bain and its investors—i.e. to Romney and his cronies. Romney thus spent $8 million to get $36 million—but left GSI carrying a debt of $378 million. Bain went on charging GSI $900,000 a year in management fees and borrowed $97 million more to retool the plant: a company that had previously made an array of products now made only wire rods. To service the company’s massive debt, the new management cut down on maintenance. They stopped purchasing spare parts and when equipment broke, they rented instead of buying. They also cut funding for the pension plan.
Then GSI went bankrupt. The Armco workers in Kansas City all lost their jobs. The pension plan was so underfunded by then that the bankruptcy court drastically cut the pensions they were hoping to collect, now that they were out of work; even the shrunken payments they did get required that the feds—i.e. taxpayers—chip in $44 million to cover the gap. The bankruptcy did not hurt the people at Bain because they had already pocketed their millions, and the debt belonged to GSI, not to them; they could simply walk away from the corpse.
It turns out that Bain did not, as a rule, buy troubled companies and turn them around with ruthless efficiency and good management. What they often did was to buy profitable companies, use the profitability to borrow money, pocket the borrowed money as dividends, fees, and salaries, and leave the firm dying or dead. Financial writer Josh Kossman disputes the term “vulture capitalism” for such firms because “… vultures eat dead carcasses.” Romney’s Bain, by contrast, sought out healthy companies and fed on them.
To be sure, this is not what happened every time. Some companies bought and run for a while by Bain were still healthy when sold. How many? What’s the ratio? Well, it’s hard to tell because Bain won’t provide a list of the companies it has purchased—and it is not required to by law. But a Wall Street Journal study of 77 known Romney investments seems to show that one-third of the companies he bought ended up foundering and 20 percent of them went bankrupt. Four of the companies that went broke were among Romney’s top-10 moneymakers.
What kind of guy would lead a pack to wrestle down some poor guy and cut off his hair because they thought he was gay—and think of it as a prank? Well–the kind of guy who would operate as Romney did when he headed up Bain—that’s the kind of guy who might do it. (Pete Kotz’s article ran in the Seattle Weekly on April 18, 2012.)