Romney's self-esteem issues

Every time there's a big win, the Republican frontrunner counterbalances it with self-inflicted woun

One step forward, two steps back -- that's the Mitt Romney way. The runner-up to the 2008 nomination looks like he's going to be the belle of the ball this year with the endorsements (or just kind words) from a passel of heavies in the Republican Party, including former President George H.W. Bush and Mark Rubio, the Senator from Florida and darling of the Tea Party who is rumored to be gunning for a tap as VP.

Romney's opponents are falling by the wayside, too. Newt Gingrich's staff has quit. He's in hock for a cool million. His billionaire backer says he can't win. Rick Santorum, not long after suggesting -- by accident, but still -- that voting for President Obama would be better than voting for Romney, is finally watering down his bile. He's campaigning on the cheap, he's polling behind Romney in his home state of Pennsylvania, and besides, he needs to avoid looking like a spoiler. And Ron Paul ... well, most of us forgot he was running.

Even as he lost to Santorum in the last primary in Louisiana, Romney was winning, and will win ultimately. The rest of the primary season -- in big states like New York, Wisconsin and California -- look more like gravy. And that was to be expected. Rick Perlstein, author of Nixonland and other books on conservative political history, has said for all the drama of the nomination, its ending has been predictable. Democrats fall in love with candidates, Perlstein said, while Republicans fall in line. Forget about insurrections -- much less the laughable notion of class warfare! -- within the GOP. Romney was the second in line in 2008. To the Republican Party bosses, that makes him the Anointed One.

But remember those two steps back? Even as Romney was finally getting made, he was getting played -- by Mitt Romney. During a conference call with Wisconsin supporters, Romney recalled a funny story about his dad, George Romney, the head of American Motors, closing a plant in Michigan:

"Now later he decided to run for governor of Michigan, and so you can imagine that having closed the factory and moved all the production to Wisconsin was a very sensitive issue to him, for his campaign," explained Romney, who described a subsequent campaign parade in which the school band marching with his father knew how to play Wisconsin's fight song, but not Michigan's.

"Every time they would start playing 'On Wisconsin, On Wisconsin,' my dad's political people would jump up and down and try to get them to stop, because they didn't want people in Michigan to be reminded that my dad had moved production to Wisconsin," said Romney, laughing.

You'll notice a pattern. Romney seems to have a self-esteem issue; every time there's a big win -- in delegates or endorsements -- Romney and his people have to counterbalance that with self-inflicted wounds. Recall the poor people statement after Florida and the Etch-a-Sketch statement after Illinois. Now, Romney chuckles reminiscing about Dad the Job-Killer.

Perhaps this was also to be expected. George Romney wanted to be president and he, too, had a way of making an art out of self-sabotage. Romney was a popular and highly respected politician and businessman (his face was on the cover of Time; he championed automotive fuel-efficiency in the 1950s). But the principal issue of the 1968 election was Vietnam. In The Boys on the Bus, his classic study of electoral politics and the press, Timothy Crouse wrote that Romney was the kind of candidate ideal for arousing the pack mentality of campaign reporters.

The more they hounded him with questions about Vietnam, the more flustered Romney became, and the more flustered he became, the more savagely the press treated him. Their animosity reached its zenith when Romney returned from a trip to Indo-China and said that he experienced "the greatest brainwashing that anybody can get when you go over to Vietnam."

What he meant was that the American military tried to snow him with propaganda, but his eyes were telling a different story, and our misadventure there was doomed. Even so, the press stopped listening after "brainwashing." One is tempted to blame the media for blowing up a small thing, but one is also tempted to blame the candidate for disrespecting the myopia and narcissism endemic to American political journalism.

"The 'brainwashing' remark encapsulated all of Romney's ineptness in one easily remembered word," Crouse wrote, "and it finished off his chances."

As November draws near, you can imagine what's going to happen. We live in a post-Citizens United world. The airwaves will be filled with Romney gaffes, innocently intended, brutally exploited. History indeed repeats itself, but for Romney, that might go double.

Republican presidential candidate, former Massachusetts Gov. Mitt Romney. Photograph: Getty Images.

John Stoehr teaches writing at Yale. His essays and journalism have appeared in The American Prospect, Reuters Opinion, the Guardian, and Dissent, among other publications. He is a political blogger for The Washington Spectator and a frequent contributor to Al Jazeera English.

 

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Labour's investment bank plan could help fix our damaging financial system

The UK should learn from the success of a similar project in Germany.

Labour’s election manifesto has proved controversial, with the Tories and the right-wing media claiming it would take us back to the 1970s. But it contains at least one excellent idea which is certainly not out-dated and which would in fact help to address a key problem in our post-financial-crisis world.

Even setting aside the damage wrought by the 2008 crash, it’s clear the UK’s financial sector is not serving the real economy. The New Economics Foundation recently revealed that fewer than 10% of the total stock of UK bank loans are to non-financial and non-real estate businesses. The majority of their lending goes to other financial sector firms, insurance and pension funds, consumer finance, and commercial real estate.

Labour’s proposed UK Investment Bank would be a welcome antidote to a financial system that is too often damaging or simply useless. There are many successful examples of public development banks in the world’s fastest-growing economies, such as China and Korea. However, the UK can look closer to home for a suitable model: the KfW in Germany (not exactly a country known for ‘disastrous socialist policies’). With assets of over 500bn, the KfW is the world’s largest state-owned development bank when its size is measured as a percentage of GDP, and it is an institution from which the UK can draw much-needed lessons if it wishes to create a financial system more beneficial to the real economy.

Where does the money come from? Although KfW’s initial paid-up capital stems purely from public sources, it currently funds itself mainly through borrowing cheaply on the international capital markets with a federal government guarantee,  AA+ rating, and safe haven status for its public securities. With its own high ratings, the UK could easily follow this model, allowing its bank to borrow very cheaply. These activities would not add to the long-run public debt either: by definition an investment bank would invest in projects that would stimulate growth.

Aside from the obviously countercyclical role KfW played during the financial crisis, ramping up total business volume by over 40 per cent between 2007 and 2011 while UK banks became risk averse and caused a credit crunch, it also plays an important part in financing key sectors of the real economy that would otherwise have trouble accessing funds. This includes investment in research and innovation, and special programs for SMEs. Thanks to KfW, as well as an extensive network of regional and savings banks, fewer German SMEs report access to finance as a major problem than in comparator Euro area countries.

The Conservatives have talked a great deal about the need to rebalance the UK economy towards manufacturing. However, a real industrial policy needs more than just empty rhetoric: it needs finance. The KfW has historically played an important role in promoting German manufacturing, both at home and abroad, and to this day continues to provide finance to encourage the export of high-value-added German products

KfW works by on-lending most of its funds through the private banking system. This means that far from being the equivalent of a nationalisation, a public development bank can coexist without competing with the rest of the financial system. Like the UK, Germany has its share of large investment banks, some of which have caused massive instabilities. It is important to note that the establishment of a public bank would not have a negative effect on existing private banks, because in the short term, the UK will remain heavily dependent on financial services.

The main problem with Labour’s proposal is therefore not that too much of the financial sector will be publicly owned, but too little. Its proposed lending volume of £250bn over 10 years is small compared to the KfW’s total financing commitments of  750 billion over the past 10 years. Although the proposal is better than nothing, in order to be effective a public development bank will need to have sufficient scale.

Finally, although Brexit might make it marginally easier to establish the UK Investment Bank, because the country would no longer be constrained by EU State Aid Rules or the Maastricht criteria, it is worth remembering that KfW’s sizeable range of activities is perfectly legal under current EU rules.

So Europe cannot be blamed for holding back UK financial sector reform to date - the problem is simply a lack of political will in the current government. And with even key architects of 1980s financial liberalisation, such as the IMF and the economist Jeffrey Sachs, rethinking the role of the financial sector, isn’t it time Britain did the same?

Dr Natalya Naqvi is a research fellow at University College and the Blavatnik School of Government, University of Oxford, where she focuses on the role of the state and the financial sector in economic development

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