Ron Johnsonomics, or How to Eliminate the Competition from Your Business Plan without even Trying

This sentence caught my eye reading an otherwise positive piece in the Onalaska Holmen Courier-Life:

Pacur started with just one customer, Curwood, a company co-founded by Johnson’s father-in-law, Howard Curler.

That probably sounds pretty innocuous, maybe even a little cute: a brash start-up valiantly trying to make it in this crazy world, the old man chipping in to help out ... but that's really not an accurate way of looking at things.

Curwood is actually a wholly-owned subsidiary of the Bemis Corp. and has been since 1965, twelve years before Johnson started Pacur. In other words, his father-in-law wasn't just helping out Pacur by throwing some business its way, this was a corporate giant (that made almost $5 billion last year and has been a publicly-traded company since the early 1970s) granting a lucrative subcontract to a company with no prior track record for delivery.

Those kinds of business relationships only come about through crazy connections and in this case the connections were familial.

Apparently, Bemis has remained Pacur's largest customer ever since.

This isn't a small detail. It's probably a lot easier to secure a loan for manufacturing capital when you can explain to the loan officer at the bank that your small business is guaranteed a fat contract from a local supplier once it gets up and running. It may very well be the reason why Pacur even exists in the first place.

I don't want to begrudge Pacur its success -- cashing in on family connections is just smart business -- but it is not, repeat, not an example of the "free market" principles that Johnson extols continuously on the campaign trail. I'm sure that Pacur provided Bemis with a quality product, but I sincerely doubt they have faced much competition. Let's face it: Curwood was never going to pull the plug on a contract co-owned by the owner's son and son-in-law. When a person or company is all but guaranteed a significant portion of it's annual income regardless of performance, well, that sounds an awful lot like welfare.

Johnson may rail against government handouts and sing the praises of Ayn Rand, but his career in business is an illustrative example of how even "Free Markets" are never actually completely "free." Even if we lived in a laissez faire paradise without any government regulation or taxes, we still would never live in a completely "free market." Had I produced a product for Bemis of higher quality and at half the cost, would anyone believe I would have stood a chance of competing for Pacur's contract with Curwood? Of course not: the livelihoods of the owner's son, daughter and grandchildren depended on money moving from Bemis through Curwood and to Pacur.

No wonder Johnson is such a big proponent of the "free market" -- it's been competition "free" for most of his career.

In a sense, Johnson owes much of his good fortune to a form of private sector welfare. Yes, Pacur has other clients, but a big part of business is building a foundation from which to work on, and that was essentially provided for Johnson by virtue of his family connections. Had he not married into the Curler family Johnson might still be keeping the books at a class ring-making company instead of becoming the President of a plastics manufacturing company.

The other angle to this story involves is the extent of Bemis' partnership with Pacur over the years. Part of the persona that Johnson is selling to voters is that of the savvy business leader who knows how to create manufacturing jobs. That may be true, but if Bemis is responsible for 50%, 60%, 75% of Pacur's business, then Johnson really hasn't been responsible for growing a business so much as that business is essentially a glorified subsidiary of Bemis.

In a recent TV spot Johnson tried to frame the Senate race as a common sense businessman with 30+ years of creating jobs vs. a career politician. It's easy to critique the "career politician's" record because Feingold's made thousands of votes in the last 20 years, so perhaps we should start giving Pacur the same level of scrutiny?

I don't doubt that Johnson is a hard worker, but his business history simply does not jive with his Randian conception of the economy. Johnson has been the recipient of numerous enormous breaks that a vast majority of people don't get in their careers and to pretend like he's some kind of economic ubermensch who will led us to prosperity through the sheer force of his own will to power is ridiculous.