Before the process of deconstructing Willard Romney began in earnest a month ago it was difficult to objectify that special world of Finance which exists as a form of supra-capitalism I choose to call Financiocracy---a Confederation of institutions and individuals who in a multi-national context make money with money. 

The Confederation exists in an ethos which is literally not anchored to our traditional form of locale-specific capitalism. One of the most vivid examples of such un-connectedness is when, in the invention of Mortgage Backed Securities, sold and traded world wide, home mortgages in the U.S.were severed from the established grounding of actual paperwork and signatures, and the physical recording of mortgages in the municipalities where the asset resides, a centuries-old practice, was violated. 

Romneyville crystalizes one aspect of this brave new world of finance so discreetly and clearly that it is likely to remain as Exhibit A of a practice known as Private Equity for a generation to come. Romneyville rests on several important privileges extracted from the government and populace of the U.S (see below).

 A significant enabler of this brave new world of Finance is a companion narrative of "capitalism" and "free market economy" which touts the Financiocrats as essential Job Creators in our overall economy---a message aimed at the middle and the working class who are suffering low wage growth and unemployment.

In objectifying Romneyville, the types of privileges underlying much of the success of the Financiocrats have been laid bare. The privileges consist of tax breaks such as "carried interest" which allows earned income for managing investments to be taxed as if it were the same as a capital gain on the underlying asset---thus producing a 15% rate for "work". In taking over companies in the manner which Bain Capital did, small amounts of "equity capital" were boosted with large low interest and tax deductable loans. In addition, offshore "blocker accounts" were most likely used to skirt taxes such as the UBIT tax. 

While the above description of privileges is truncated and over simplified, the important point is that those practices and privileges are just the tip of the iceberg in terms of the rarified and multinational menu available to the elites in the system within which Private Equity operates. For example, by setting up Bain investment vehicles in tax havens like the Cayman Islands, foreign investors can invest in Bain deals, thereby minimizing or eliminating their taxes.

The essential revelations about Romneyville do not go to its legality---as most likely the letter of the law was followed---but whether this system of supra capitalism is fair. And, just as important, in its concept was it a default option and a sin of omission. Were there, and are there, better and more effective incentives to govern, manage and grow our economy?

The Confederation of international players making money with money exists as a privileged oligarchy which is extracting profit from the world economy without a clear understanding of the value that is being created in terms of goods and services being produced nor a clear understanding of the positive impact, if any, upon employment. In a world where two or three hundred million workers are unemployed, the burden of proof of the economic and social benefits of supra-capitalism rests with the Financiocracy itself.  

As the first, foremost, indelible, and walking definition of a Financiocrat in American history, may Romney's name, and his infamous campaign, reside in the annals of rogue Capitalism and moneyed politics---and not in a registry of the occupants of 1600 Pennsylvania, Ave., Washington D.C. 

Note: Physiocrat was a term coined in 18th Century France and related to the economist Quesnay's posit of Physiocracy---the rule of nature---as the foundation of a single science of politics and economics grounded in private property. The exclusive method of productivity was agriculture. Anyone considering himself to be a Physiocrat would most likely have been landed gentry--for example, Crevecoeur, who penned "Letters from an American Farmer".