Bain & The Democratic Conversation

Ed RendellThe recent controversy about the role of companies like Bain Capital is giving Democrats an opportunity to discuss just what, exactly, is the party’s posture on economic issues. It’s an important discussion.

In order to get the party out of the post-Carter wilderness, a decision was made in the ’80s and ’90s to hand the economic reigns of the party to the economically conservative wing. Buoyed by the bull market and generally good economic conditions during the Clinton presidency, the idea took hold that if you combined more traditional Democratic positions with a hands-off approach to the market you had something.

The problem is, this mentality helped get the ball rolling on the lax oversight and deregulation that became accelerated in the Bush years.

Trust me, I know, I used to be a big believer in a lof that Third Way stuff.

Except it doesn’t work. The invisible hand will not magically regulate the market. Left to its own designs, big business will collude and extract profits at the expense of social good. It isn’t (in all cases at least) a matter of evil triumphant, but rather that for big business the incentive from doing harm is better than doing good.

Now you have some Democrats who have learned the wrong lessons of this era. They have so internalized the GOP message that Democrats are bad for business (I’d gladly compare the Dow during Clinton/Obama to the Bush presidency) that they bend over backwards in two directions for big business.

We’ve seen that this week with Ed Rendell and to a lesser extent Cory Booker whining about attacks on Bain, stupidly equating them to race-baiting Jeremiah Wright ads.

Democrats really need to have this conversation. Are they going to be just another rubber stamp for big business like the Republican party is? Or are they going to champion entrepreneurship while also emphasizing the social obligations of business, and at the same time being an aggressive watchdog of big business.

I favor the second choice. To insist that there should be rules of the road that are enforced is not even close to “an attack” on capitalism, or socialism. Big business is great and it provides jobs and is often a driver of our economic growth and stability, but that doesn’t mean you should genuflect in the direction of their corporate headquarters, either.

I think Gov. Rendell and Mayor Booker have been dead wrong in their defenses of Bain business. But you can forgive them if the party has been giving off all manner of mixed signals on a key issue. What do Democrats stand for on economics?

Let’s talk about it and have an answer before November.

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  • Zython

    Evidence of collusion, please?
    Evidence that business’ response to profit motive detracts from the social good, please ?

    Um, ever heard of a trust?

  • Justanotherrighty

    Froth, unfortunately (for you and your argument) you can say the same about anything that happened in 1999.
    The real debate here should be : Business operates both successfully and ethically under Federal Control
    For the Pro position – Obama
    For the Con position – Romney

  • Bruce Henry

    Yay! Someone finally cleaned up the oy dude’s mess. I was fixing to finally give up on this blog. I’ve only been reading it since 2004 anyway.

  • Ol Froth

    While correlation doesn’t necessarity equal causation, I think we can draw some pretty rough conclusions from the number of devestating economic meltdowns the occured prior to the enaction of Glass-Steagall, the number of collapses of similar scale that occured while that legislation was in force, and the number that occured following G-S’s repeal.

  • Justanotherrighty

    … this mentality helped get the ball rolling on the lax oversight and deregulation that became accelerated in the Bush years …
    evidence, please ?

    … Left to its own designs, big business will collude and extract profits at the expense of social good.
    Evidence of collusion, please?
    Evidence that business’ response to profit motive detracts from the social good, please ?

    for big business the incentive from doing harm is better than doing good.
    evidence, please?

    Anything will do, as long as it’s true …

  • SaveFarris

    Sounds a whole lot like Geithner: “We don’t have an [economic policy]. We just don’t like yours.”

    For all the so-called “lax regulation” of the Bush years, he sure did spend a lot of time putting out fires that were started in the Clinton administration (Enron, WorldCom, Tyco).

    Although if you want to be Party of Regulation, that’s perfectly fine by me. Own It. Just remember to own all of it.

    The market-clearing price for new 2015 capacity – almost all natural gas – was $136 per megawatt. That’s eight times higher than the price for 2012, which was just $16 per megawatt. In the mid-Atlantic area covering New Jersey, Delaware, Pennsylvania, and DC the new price is $167 per megawatt. For the northern Ohio territory served by FirstEnergy, the price is a shocking $357 per megawatt.

    Why the massive price increases? Andy Ott from PJM stated the obvious: “Capacity prices were higher than last year’s because of retirements of existing coal-fired generation resulting largely from environmental regulations which go into effect in 2015.” Northern Ohio is suffering from more forced coal-plant retirements than the rest of the region, hence the even higher price.

    These are not computer models or projections or estimates. These are the actual prices that electric distributors have agreed to pay for new capacity. The costs will be passed on to consumers at the retail level.