walrus51

On the eve of the Republican Convention in Tampa, I keep thinking back to the movie, “Other People’s Money” which starred Danny DeVito in the role of “Larry the Liquidator.”

Larry was a Vulture Capitalist who was noted for buying up under-valued firms; then breaking them up into component parts; selling off the parts; and making lots of money for himself and his partners.

In this scene from the movie, the essence of the dilemma emerges: http://www.youtube.com/watch?v=p7rvupKipmY

Gregory Peck as the current executive in charge of New England Wire and Cable is immersed in a critical vote at the company’s annual meeting which could allow Larry and his Vulture Capital Firm to take control of the company, which would result in closing down the company and putting hundreds of people out of work. Permanently.

New England Wire and Cable was modeled on the many indigenous American family-owned small manufacturing companies which took root in New England in the 19th century. The inspiration for the theme of Other People’s Money was a real company in Seymour, CT which went through a fatal and permanent intervention by some Venture Capital Pirates around 1990.

Back in the Golden Age of Pirates (approx. 1650s to the 1730s), the pirates were self-declared. They typically didn’t dress up in suits, fly in private aircraft, or ride in chauffeured black cars. Today’s pirates operate openly in daylight; they pay taxes (albeit at greatly reduced rates vs. regular working people); and many own multiple mansions in delightful places around the world.

I imagine a shortened version of Other People’s Money (Part 1) where the name of Larry’s firm was changed to “Brain Capital.”

Then, I envision Part 2 as a take-off which is focused on ‘off-shore blocker’ strategies where the principals of Brain Capital explain their strategies:
http://news.yahoo.com/bain-documents-romney-offshore-investments-used-blockers-avoid-185957445–abc-news-topstories.html

Part 3 of the series could contrast one or more successful U.S. entrepreneur(s) who have invested their own money into a business that manufactures some product and where 50 to 500 people work full-time at decent wages with benefits, against a principal from Brain Capital. Part 3 would contrast the effective tax rate (and amounts paid) by the actual entrepreneur and all of the employees (year after year) vs. the tax rate (and amount paid) by the Vulture Capitalist in the current year. Don’t forget: once the Vulture Capitalist liquidates the company, there will be no further jobs; no further purchases; and no further local property tax, sales tax or income tax collections.

Part 4 of the series could be a lesson on the multiplier effect of all of those employees; the goods and services purchased by the manufacturing company; and so forth, vs. the absolute finality of the liquidation of a struggling but operating business.

To a great degree, the contrast between a real American entrepreneur and a Vulture Capitalist is very similar to the contrast between hard-core, tea-party conservatives and main-stream Democrats (plus what some might call ‘Centrist Republicans’).

The hard-core Right seems to be laser-focused on reversion to a society and economy that mirrors Medieval Europe and Feudalism, where the majority of main-stream residents in the U.S. seem to continue to favor the more egalitarian approach on which the United States was founded and has operated until very recently.

Through some very clever sound bites and an inordinate amount of attention on trivial but emotionally engaging issues, Tea-Party conservatives have polarized our society in an unprecedented way.

Best example of this would be Obama-care — which was inspired by the health care reforms enacted in Massachusetts under the leadership of former Gov. Mitt Romney.

Obama-care is not a perfect solution — primarily due to the amount of compromise that was required to get it passed — but the majority of experts tell us that it is a significant move in a positive direction.

Yet, there are a number of elected officials (and their disciples) — ‘Hard-Core Right’ — who continue to hammer on REPEAL!

What are their reasons, what are their real objections? Here is a synopsis: http://theamericandrivein.com/2010/11/21/why-repeal-obamacare/

As Jon Stewart may have already said — while stamping his feet and whining: “Just because!”