There's no crying in capitalism

  • Article by: DENNIS CARSTENS
  • Updated: July 16, 2012 - 8:34 PM
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It's time for people to be told some harsh truths and, more important, to face them and stop the whining.

Mitt Romney, like any other CEO of a company in this country, is not a heartless monster if he outsourced jobs to other countries. A CEO's first legal, ethical and, yes, moral responsibility is to the owners of that business, the shareholders. The CEO's absolute top priority is to maximize the value of the company's shares, the ownership certificates, held by the owners of that business.

In fact, this fiduciary duty is so ingrained in the law that if a CEO and other corporate officers fail to fulfill it, they can be held personally liable by those same shareholders. They can be made to pay compensation, out of their own pockets, for any losses, or any lost profits, that occur because of their decisions.

There likely are those who think all this is wrong -- that shareholder value should not be the foremost thing a CEO is concerned with. They think the corporation should be more concerned with keeping people employed, even if it means less profit for the company and less share value for the owners.

People who think this way are certainly entitled to their opinion. Believe it or not, any good corporate executive does, in fact, take employees' interests into consideration and makes every effort to keep people employed.

But if some employees have to go to keep the company afloat, then that must be done. It's not pleasant; no one smiles at the prospect of hurting people who are laid off through no real fault of their own. Sometimes it is simply necessary.

Grow up, America. This is the way of capitalism.

There seems to be an attitude in this country that the owners of corporate America are a few thousand rich, fat white guys who sit around all day smoking Cuban cigars and drinking expensive Scotch, all the while conspiring about how many "little people" they can crush to make themselves even richer. This is childish nonsense.

If you have a pension plan, you are a corporate owner. If you have a 401(k), you are a corporate owner. If you have an insurance policy with an investment portfolio in it, you are corporate owner. If you have an annuity with which you plan on supplementing your retirement, you are a corporate owner. Getting the picture?

Almost everyone in this country owns a piece of corporate America, and we all want our piece to prosper and grow. We all want to open our monthly 401(k), pension, insurance and investment statements and see that they have improved. Who among us looks at their statement, sees that it has gone down and happily says, "Good, I'm losing money, so I'm doing my share to keep people employed." It's hard to imagine too many of us making that statement.

As to Bain Capital in particular, this is a business that bought out or, at least, into other companies that were distressed. It was Bain's business model to buy these companies and try to save them. Sometimes it succeeded, even though some of the employees lost their jobs in the process. Sometimes Bain failed, and the company ended up closing. This is called capitalism.

This is also precisely what happened with General Motors and Chrysler, two companies the government bailed out. They eventually recovered, although not without a lot of pain, layoffs and losses.

Remember that when you hear someone, on behalf of President Obama, bragging about how great he was for bailing out GM and Chrysler, and how evil Mitt Romney is.

Personally, I believe that GM and Chrysler should have simply gone through bankruptcy. Both companies would actually be better off today than they are, and taxpayers would have saved a lot of money. That, too, is capitalism.

Dennis Carstens is a business owner in Eagan.

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