Thursday, October 18, 2012
Nine years ago, the Ohio Art Co. closed its Etch A Sketch operation in Bryan, Ohio, and moved the jobs to Shenzhen, China. The 100 laid-off American workers weren't surprised. They'd been training their Chinese replacements.
Months ago, a Mitt Romney aide famously declared an "Etch A Sketch" campaign -- whereby the candidate would erase what he'd done before (like shaking an Etch A Sketch toy) and draw a more appealing portrait for a general electorate. That image is apt, in an unwelcome way, for a Romney now bashing China for taking American jobs. Romney's private equity company, Bain Capital, did its bit to help China win the work, and with enthusiasm.
In the second presidential debate, Romney accused China of "cheating," mainly by holding down the value of its currency. But that doesn't shake clean the Bain prospectus promoting China's "strong fundamentals" -- among them, wages 85 percent lower than Americans.' "Accordingly," the prospectus reads, "Bain Capital expects to see an increasing array of high-growth companies available for investment."
Does that sound like anyone wanting to see the Chinese currency rise in value? The stronger the Chinese currency, the harder it is for Bain's (or anyone else's) Chinese factories to sell their wares on world markets.
Offering another viewpoint, workers from Freeport, Ill., demonstrated this week at the Massachusetts headquarters of Sensata Technologies, a Bain Capital creation that has moved thousands of Americans jobs offshore. Sensata made the Illinois workers train the Chinese who will take their jobs as a condition of receiving their meager severance pay. Sound familiar?
Part of Romney's rap against China is the stealing of U.S. technology. But Microsoft had accused Bain's Chinese retailer, Gome Electrical Appliances, of pirating its software. And Global-Tech, a Bain Chinese appliance company, was found to have violated a U.S. patent held by a French company.
Around the time Etch A Sketch left for China, Asimco Technologies bought two auto parts factories in Michigan, closed them and laid off 500 Americans. Bain saw the "strong fundamentals" of Asimco's operations and acquired the company. Today, Asimco makes the same camshafts on land donated by the Chinese government. China has designated this area as an export metropolis, showering the companies that move there with a variety of government subsidies.
Romney counts himself among the American heroes who built a business, but what his business built above all was an army of crack Washington lobbyists. For example, the profits Romney collects from Bain are taxed at a low 15 percent, rather than the top rate of 35 percent. Even many Wall Streeters regard this as an outrageous loophole, but private equity lobbyists fight to preserve the deal, which Romney has no plan to change. Forget the malarkey about a blind trust managing his Bain investments. It is run by Ropes & Gray, the Boston law firm that advises Bain.
The head spins over Bain's offshore holdings in the Cayman Islands, Luxembourg and so forth, all tasked with exploiting the U.S. tax code -- or put in less neutral terms, tax-dodging. Sadly, too many of our paid-for representatives in Washington cast a blind eye toward such tax games. (The direct subsidies come from China.)
Once stripped of their jobs, the laid-off Americans apply for unemployment and other government benefits to survive. Guess that turns them into the "takers" whom Romney holds in contempt.
Romney didn't create globalization, but having made a pile off it, you'd think he'd at least spare some change for its American victims. A 9.5 magnitude earthquake couldn't shake that unpleasant a picture off the Etch A Sketch.
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