I normally don’t comment on particular horses in the Presidential race. That will change during the general election. However, the Bain bane currently occurring amidst the Republican camp is reflective of larger questions concerning free market capitalism. Before I look at Bain, I’ll just note that Mitt made his own millions, unlike most other candidates. I’ll also note that Mitt is the most affluent person ever to run for the Presidential office. Does he know the economy and how to make money? You betcha. I’m told by insiders that he is very savvy and capable economically. So it comes down to character and motive. That’s for voters to decide.
Mitt formed Bain Capitol as a venture capital firm, which means they gave money to start and fix businesses in order to make a profit for their shareholders. Capital is the lifeblood of the free market. Over time, Bain morphed into a predatory corporate raider, buying companies to tear them apart and sell off the pieces. This is the yin and yang of free market reality and is how the game is played.
Did Bain create jobs? You betcha. Did Bain destroy companies and fire lots of people? You betcha. Romney seems good at both. I do note that some on his executive team called him “the surgeon” for his dispassionate dissection of companies in later years. So it all comes down to character and motive.
Rather than reduce Bain to a Frankensteinian “friend good, Bain bad” position, Bain reflects the amoral complexities of survival of the fittest free market realities. Bain was good at what it did in all its iterations and doubled shareholder profits, which is called winning the game.
The natural world and the economic world don’t follow Disney rules. Surveys indicate that a majority of Americans object to the notion of evolution, and many feel evolutionary capitalism is morally distasteful as well. These emotional reactions will enable Romney’s detractors to gain unrealistic political advantage, particularly in the general election.
A couple of points to make here. Americans are still largely mentally stuck in the past notion that work is making stuff. Capitalism is about making money for business owners, not making stuff, creating jobs, building business capability, or advancing the American Dream. Making profit for shareholders is the purpose of venture capital/ corporate raiding companies. They don’t really make anything but rather move assets and money from one bank account to another. Mitt erred when he jumped on the “job creator” bandwagon. Did Bane create jobs? Sure. Did it cut jobs? Sure. That’s their game. It made money, which is the bottom line. Making huge profits without making stuff is one of the objections the average guy has of Wall Street. The average guy can understand that Bain didn’t make anything other than shareholder millionaires. We’ll see how that plays on Main Street
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The other point is that while Mitt may indeed be very capable at creating a very favorable and stimulating climate for free market capitalism, this ain’t your daddy’s capitalism. There is currently a disconnect between corporate profits and worker benefit. So as business and their owners might get much richer and fatter, the rest of the country will get leaner. All the defenders of the free market never seem to address this reality. This disconnect is the single most factor, in my opinion, contributing to the erosion of the Middle Class, America as we knew it, and prosperity for future generations. Putting a business friendly hand at the helm without re-forging this connection will keep our country headed towards the rocks. I’m all for free market profits. Just connect them throughout the business.
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