Hostess Brands’ demise is a recurring story that should be well-known after Americans learned the predatory private equity tactics of Bain Capital during Willard Romney’s failed run for the White House. In fact, union president Richard Trumka pointed out that Wall Street investors that own Hostess were disinterested in the company’s success and cited similarities to the situation of Bain Capital and KB Toys in 2000. As a reminder, Bain Capital’s scheme was leveraging companies with crushing debt, cutting workers’ wages and benefits, and when the company can no longer repay their loans they go into bankruptcy, often more than once. Hostess is in bankruptcy for the second time since 2009 and a major factor in their inability to succeed is that over the past eight years, they were owned by Wall Street investors that were restructuring experts, managers from other non-baking food companies, and now a liquidation specialist. There was no plan for Hostess to succeed and it appears that was the objective all along.
Hostess’s failure was compounded by having six CEO’s in 8 years who had no experience in the bread or cake baking industry, and despite their financial woes, the company’s CEO got a 300% salary increase from $750,000 to $2,250,000, and other top executives received raises worth hundreds-of-thousands of dollars; all while the company was struggling. Instead of acknowledging the lack of competent leadership and exorbitant executive salaries as contributing to the company’s decision to close its doors, CEO Gregory Rayburn issued a statement saying, “We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike.” However, Rayburn and Hostess management claimed the strike would be responsible for closing plants even before there was a strike, and they had made plans to close plants whether or not workers accepted the Draconian wage and benefit cuts the company offered, or if they went on strike.
In the 70s, the owners of capital were able to blame our country's economic troubles on high labor costs. The 80s saw the removal of all sharp teeth from the labor force. The 90s saw the end of substantive welfare for the poor. By the 00s, the owners of capital could not blame any of the massive economic troubles on labor. Those economic problems, which exploded in 2008, still persist to this day, and labor still has nothing to do with them, and yet the owners of capital (or borrowed capital—which in our age amounts to the same thing) have the nerve to blame the collapse of Hostess entirely on labor, a long-defanged labor, a labor force that hasn't had meaningful protections or representation since the 70s.
What is clear in all this is that capital longs for the restoration of its legitimacy. It has been operating in the open since 2008 and is now desperate for some kind of idealogical cover, some way to justify ("the market has the best solutions for social problems") its exploitive practices. This exposure cost Romney the election—indeed, the exposure was so bright he couldn't show his tax returns in any real way. He knew that nothing covered the fact of how he and his kind make lots of money.