Asset Stripping: In Zimbabwe and at Bain Capital

My traveling wife having just returned from a three week trip to Africa (south) we settled in to watch an eye opening (for most of us) documentary about Zimbabwe, the long struggle of a white African family to hang on to their farm against Mugabe’s madness, rolled in a chaff of racism.

Titled Mugabe and the White African, it is a documentary focused on Michael Campbell and his son-in-law, Ben Freeth and their effort, principally in the courts, to hang on to their farm — where 500 Zimbabweans are employed.  Mugabe, as he does with anyone who presents him opposition, has them beaten.  There are some horrific pictures following the beating of the two men, and Campbell’s wife.  Freeth was close to death from the skull fracture he took. It’s a sad, personal story and one which has been true of many other white farm families under Mugabe’s reign of terror, thought  they have not been the principle targets of his armed-lunacy.  That privilege belongs to black Zimbabweans who have stood up to him repeatedly, in courts, in elections and in the streets.

What caught my attention particularly, however, was a phrase that was used to describe the behavior of the so-called peasant-farmers who are sent to add the whiff of legitimacy to what is going on to this “land redistribution.”  These men, and some women and children, are not farmers, farm-workers or even farm laborers.  They, according to the film and other articles I have read, are the poor and homeless, easy to find in the wretched economy Mugabe has engineered, and aresent in as a rag-tag army of looters.  They don’t know how to drive a tractor but they know the tires might be sold, and the bolts, and cutting tines, and gasoline, and spark plugs and…..  Copper is worth a lot — whether in the form of wire, tubing or brass pots.  A television might get a bit at the local market.

This is called asset stripping.

And who should leap into my mind, watching the shaking, wildly swinging shots from the clandestine camera, of the farm being stripped, but Bain Capital and it’s founder and presidential hopeful, Mitt Romney.

Though Bain doesn’t send in thugs with knives and firebrands, the end effect is much the same. Ruined companies stripped of all their tools, labor and organization.   Under color of the law, Bain and others — dizzy with the ideology that only money matters– take over companies which need help, with the promise of bringing in teams to set things back to stable.  In some cases this happens.  A  knowledgeable team is put together.  Financing is secured.  Marketing experts find willing buyers of the product and a company is turned around.

In most cases, as we have read, this does not happen.  Instead, the company, once with a corporate life of its own, and people who depended on it for a livelihood, is “asset stripped.”  Pieces are sold off, sometimes in the dead of night; mailing lists, patents, methods, hardware, software, down to the desks and computers.  Ask anyone who has ever gone to a  corporate asset auction say, under the steady gavel of Dove, Disposition Services, or Corporate Assets, Inc. For the happy scavenger these are happy days.  I remember boxes of hard-drives being carted out to the back of the station wagon, fine flat screen monitors and printer that might or might not work, but who cared, they were so cheap!

For the fired worker, manager and sometimes even founders, the day is not so happy, as some of the testimonies in the Obama ads have been telling us. It shouldn’t take such ads for us to know the pain, and suspect the deceptive hardball practices of the Bains of the world.  They don’t give a damn about turning an unsteady company into a steady one. They want to know what the parts are worth, and they set about stripping them, to sell them on any market they can find.  Just like the scavengers in Mugabe’s Zimbabwe, who at least have their own spectacular poverty to exonerate their actions to some degree.   In Romeny’s case the sold-off parts have built him mansions around the world.

Mark them up with nice graffiti:  Asset Stripper Lives Here.


The movie, qua movie, is not terrific.  The focus on the white farmer, almost exclusively, means that the much larger case against Mugabe isn’t made.  Their story needs to be told.  The beatings and fear they have lived under should happen to know one, but they are a mid-size piece of a much larger, and even more terrible, story — which wasn’t told.  Had it been, and the Campbell farm story been part of it, we would have had a powerful and much needed indictment of Mugabe and his band of thugs.

Romney’s Bain Yielded Private Gains, Socialized Losses

Straight from Bloomberg News

Mitt Romney touts his business acumen and job-creation record as a key qualification for being the next U.S. president.

What’s clear from a review of the public record during his management of the private-equity firmBain Capital from 1985 to 1999 is that Romney was fabulously successful in generating high returns for its investors. He did so, in large part, through heavy use of tax-deductible debt, usually to finance outsized dividends for the firm’s partners and investors. When some of the investments went bad, workers and creditors felt most of the pain. Romney privatized the gains and socialized the losses.

What’s less clear is how his skills are relevant to the job of overseeing the U.S. economy, strengthening competitiveness and looking out for the welfare of the general public, especially the middle class.

…. Enriching investors by taking leveraged bets isn’t a qualification for a job requiring long-term vision and concern for public welfare. It is appropriate to point that out to voters.

Read On

Republicans and Freedom to Hide Information

What is it with these Republicans?  The entire theory of free markets depends on ‘the market’ having access to information — prices, quality,  ability to extrapolate costs and prices based on knowledge of the health of the  farms, fields and factories. It absolutely requires freedom of information; with out it there are no markets, there are deals, fast deals, strokes of luck and blows of fortune.  Yet, with every breath they take, the Republicans try to bottle up, obscure, or completely hide the information that is needed.

The preceding article on GOP trying to strip full disclosure on political ads is one example among hundreds.

The full page ad on the back of the NY Times Sunday Book Review, for Edward Conrad’s new book, “Unintended Consequences: Why Everything You’ve Been Told About the Economy is Wrong,” is another, trifling but instructive, example.  Although the cover informs us he was a former managing director of Bain Capital, you’d hardly know from the blurbs in the ad that this isn’t at least an honest attempt at fresh analysis and explanation.

Not so.

It is a statement of faith, say the Nicene Creed, masquerading as a history and analysis of  competing views of a famous man.

In fact, the book is almost jaw-dropping in its exculpation of big capital for what has just befallen the United States, and the world, claiming that what is most needed is more of Bain Capital’s kind of buy-the-cow-to-suck-the-marrow agricultural wisdom.

If he is so proud of his brand of economics why doesn’t he insist his book be marketed as what it is, a claim that Bain-Romney capitalism benefits the most by benefiting the fewest with the most?  Why?  Because book sales would tank. Only the readers in the .1% would be interested.  By selling it as a new look at an old field, filled with surprising wisdom, and by getting blurbs from Freakonics’ Leavitt, the famed Nouriel Roubini and others of a not obviously partisan stamp a wider universe of eyes is beckoned to.

There is a lot available before you buy, revealing the true faith of Mr. Conrad, a faith like so many, that depends not at all on beliefs matching reality, so caveat emptor.


Adam Davidson in the NY Times did a good review of the Bain Beliefs, and actually talked to Roubini, whose blurb is meant to help Conrad’s sales.

At its core, Conard’s book addresses what is perhaps the most important question in economics, the one Adam Smith set out to answer in “The Wealth of Nations”: Why do some countries grow so rich and others stay poor? Where you come down on the answer has as much to do with your politics as your economic worldview (two things that can often be the same). Glenn Hubbard, a prominent economist and one of Romney’s chief economic advisers, takes his ideas seriously. “He doesn’t have the blinders of a model-based view of the world, which is an advantage and a disadvantage,” Hubbard told me. Others, like the progressive economist Dean Baker, were less kind. “I can’t say there was much I found compelling,” he told me. The celebrated New York University economist Nouriel Roubini went out of his way to say that he had “great intellectual respect for his sharp mind,” even if he didn’t agree on numerous points, especially the benefits of inequality.

Wonkette offers a more snarky take on Conrad’s blaming the plebes for chicken-shitting-out on an entirely correctable bank-run.

And Joseph Stiglitz actually takes on Conrad and his weird financial history.

Timothy Noah at TNR has a brief notice of the book, and in a link, debates Conrad (at 20:45)

Back to my lede… yes, Conrad is open about his faith.  What he hides is what is hidden from those not at the very core of his buy ’em and rend ’em and sell ’em practice.

Risk Free Entrepreneurship by Mitt Romney

Louis Menand, the fine student of American Literature and Culture, [see especially his Pulitzer winning The Metaphysical Club: A Story of Ideas in America]  has an interesting piece in the current New Yorker, using Michael Kranish and Scott Helman’s biography “The Real Romney” (HarperCollins), and Mitt Romney’s own campaign book, “No Apology: The Case for American Greatness” to take a look at the current front runner for the Republican nomination.

There are many nuggets of interest, including a short course on theories of management.  One that leaped out at me was  the telling of Romney’s actual experience of the risks of entrepreneurship and the “creative destruction” he is fond of citing as necessary.  He was asked by his boss, Bill Bain, at  Bain & Company, to head up Bain Capital, premised on a new business model.  Romney said no.

It sounded too risky, he said. Bain (who was Kranish and Helman’s source for this account) replied that if the business didn’t work out he would guarantee Romney his old job back at Bain & Company, at the old salary plus any raises he would have earned. Romney was worried, though, that if the new business failed it might damage his reputation. Bain promised that if Bain Capital didn’t work out he would provide Romney with a cover story—something about his value as a consultant being too great to lose. So Romney finally took the job. As Bain told Kranish and Helman, Romney was facing “no professional or financial risk.”