Republicans Begin to Doubt Market Economics

Romney is presenting himself as a successful entrepreneur, but in light of the financial crisis and the Occupy Wall Street demonstrations, that doesn’t necessarily resonate with many people — not even with those on the right, who are coming to terms with Romney and free markets.

America, the land of almost limitless opportunity, is facing its next existential crisis. After the bailout crisis and the tea party crisis, the nation is now facing a morality crisis. The bizarre thing about it is that it is conservative politicians who have plunged the country into a national debate about whether there should be limits on capitalism or if “anything goes.” In other words, they are asking whether a former private equity manager like Mitt Romney has the proper moral compass to become president.

And it’s equally remarkable that the criticism comes not from the left but from the right. It is politicians like Newt Gingrich, who also seeks the Republican nomination to run for president, who are questioning Romney’s integrity.

The ex-Speaker of the House calls Romney a plunderer who enriched himself on the backs of working people. Texas Governor Rick Perry, who suspended his campaign on Thursday, went so far as to call Romney’s behavior as CEO of Bain Capital Management “vulture capitalism.”

It is correct that as manager of Bain Capital between 1984 and 1999, Romney amassed a fortune estimated today to be around a quarter of a billion dollars. Bain invested in companies, increased their profitability and then sold them off for considerable profit. It is also correct that at times, thousands of workers were fired in the process, many of the companies went bankrupt and Romney’s company profited from low tax rates.

But many other companies were strengthened by the restructuring and later hired workers. Mitt Romney calls this process creative destruction and says it is an important element of capitalism, a system that ultimately results in better, more competitive companies.

That may well be, but it is also correct to say that the social costs of doing business this way are very high — so high that it has led to a discrediting of capitalism in the very bosom of its own motherland. Wherever Romney appears publicly, he finds himself confronted by members of the Occupy movement. They call out to him that they are part of the 99 percent. Romney, in contrast, belongs to the 1 percent of Americans who, according to Nobel Laureate for economics Joseph Stiglitz, control 40 percent of the nation’s wealth.

Romney’s attempts to butter up the common people just makes them more angry.

Romney tries to defend himself with arguments that are often ludicrous. For example, he claims that as the multimillionaire son of a multimillionaire auto executive, he has also had to worry about losing his job on occasion. He has also said that much like the people he’s addressing, he’s also unemployed.

Such schmoozing just serves to increase the anger directed at him by critics who know they have hit a raw nerve in society. According to a recent Pew Research Center survey, two-thirds of Americans think there is a serious conflict between rich and poor in the United States, an increase of 20 percent since 2009.

Mitt Romney’s biggest financial supporters

It is not only leftists and liberals who share that opinion. The strict constitutional constructionists of the tea party movement have an equally large problem with those who profit from the system. Their definition of American success is the entrepreneurial spirit that contains an element of risk and creates additional value. What they don’t approve of are those who only know how to get the most out of tinkering with their personal fortunes.

The fact that the Republican Party is preparing to nominate a candidate that is the very antithesis of the capitalist is causing great concern among the ranks of the party conservatives. Gingrich even believes that Romney, if chosen to run against Barack Obama, is unelectable — even if his warnings are nothing more than the crocodile tears of a power politician who milked as much as he could out of the system as an adviser to the quasi-governmental mortgage bank Freddie Mac and as a well-paid consultant for Credit Suisse.

That is what makes this fight so unbearably hypocritical. It isn’t being waged truthfully, and it is so exploitative. If these were different times and there was no financial crisis, not one American would get excited about the fact that the made-in-the-U.S. brand of capitalism is often brutal, unfair and demands sacrifices. It was libertarian Ron Paul who leaped to Romney’s defense a few days ago. That in itself is remarkable since Paul is closest to Romney in the opinion polls at the moment. Paul says of Romney’s critics, “I think they’re wrong. I think they’re totally misunderstanding the way the market works.”

It was a reminder that in the United States, capitalism is market capitalism, not social capitalism, and within those parameters, Romney was absolutely right. If these were different times, Romney would be hailed as a hero.