It seems almost too obvious to have to point this out, but, in general, people don’t start businesses, run businesses, invest in businesses, or buy businesses in order to create jobs. They generally do it to make money for themselves. Duh, right? Everyone knows this, but all the Repub talk about the “job creators” could lead you astray.
My buddy Tom Hamburger of the L.A. Times published a piece over the weekend about Mitt Romney’s track record at Bain Capital, the leveraged buyout firm he ran before he went into politics, and which turned him into the multi-hundred-millionaire he is today.
Hamburger acquired a 1999 prospectus in which Bain listed the ten biggest investments Bain made during the Romney years and sheds a lot of light on how they went. Some of the businesses thrived and some flopped. A lot of jobs were created and the lives of ordinary Americans were enhanced and a lot of jobs were destroyed and lives ruined. Some of the companies that Bain acquired ended up bankrupt, but thanks to all the cool ways there are to do these deals, Bain actually came out ahead on most of the ones that went bust.
Through it all, Bain’s estimated annual returns were five times that of the Dow Jones Industrial average. Five times. I wish I had had a piece of that actioin, but it required a minimum of $1 million to buy in.
On one 1996 deal, Bain and another private equity firm acquired Experian, a consumer credit reporting firm and sold it two months later, “reaping $252 million on its initial investment of $88 million,” according to Hamburger’s story.
Romney was obviously a very smart and successful businessman, judged the way success in business is normally judged. He made a ton of dough for himself and his investors. Five times. And I don’t doubt that, as Romney frequently says, he demonstrated that he knows a lot about how the economy works. But in the context of the rest of the nonsense that flows through these debates, you might think the economy exists to create jobs. At least from the standpoint of Romney during the Bain years and of his partners and investors, the economy existed to create wealth for investors.
If that sound a little Bolshie to you, let me put in the words of one of Romney’s former partners who, for some unimaginable reason gave Hamburger a quote that makes the point quite clear:
“I never thought of what I do for a living as job creation,” said Marc B. Walpow, a former managing partner at Bain who worked closely with Romney for nine years before forming his own firm. “The primary goal of private equity is to create wealth for your investors.”