It’s not the ‘Bain’ of our economy
By now, most Americans know that private investment and venture capital firms do little but destroy jobs, while job creation comes largely from government stimulus package or subsidies for particular industries.
Or not. We certainly don’t believe private capital and investment firms are the bane of our economic system. In fact, they play an important role in them.
However, a lot of Americans understand that’s what the Obama campaign and many Democrats want them to believe. It’s the essence of Team Obama’s now infamous ad attacking Mitt Romney and the company he created 28 years ago, Bain Capital, as being “vampire capitalists.” The ad features former steelworkers laid off from a company that Bain acquired and later took into bankruptcy.
Although President Barack Obama has defended the ad, numerous observers have denounced it for, among other things, failing to note that Romney had actually left Bain well before the steel company went into bankruptcy. It also omits any mention on Bain successes that kept companies alive and thereby preserved or increased jobs.
The larger issue is the role such companies play in society.
Obama has tried to hedge his bets in that regard, declaring in one speech that he supports private equity companies in principle, even if he disagrees with what Bain did. But, as the Washington Post noted, the president is trying to have it both ways, accepting money from leaders of private equity firms while his campaign ad disparages the industry.
It isn’t just Republicans and newspapers who have challenged the Bain ad, however. A number of leading Democrats — most famously, Newark, N.J., Mayor Cory Booker — have also said the ad is unfair or inappropriate. Booker later recanted, but other Democrats, including Obama’s former economic adviser Steven Rattner, have not.
Obama says the ad is part of his effort to challenge Romney’s claim to having the best skill set for dealing with our current economic problems. Certainly, Romney’s claims and his record are fair game.
However, sometimes private companies become bloated and unprofitable. They need to be scaled back and become more efficient if they are to survive and continue to provide jobs. Bain and other private equity firms purchase companies and accomplish that, or loan them money with conditions to do so. They aren’t always successful. Then they lose money and companies may close. Other times, they have great success and make substantial profits while rescuing companies and expanding their workforce, as Bain did with firms such as Staples.
This election will clearly be a choice between a man who puts his faith primarily in government solutions to economic problems and one who looks first to private enterprise. Voters will have to decide which view they think will serve them best.