The brilliant phrasemaker Rick Perry has taken to saying that Mitt Romney wasn’t a venture capitalist but a vulture capitalist. Newt Gingrich, who made his post-speakership millions by selling historical insights to clients who just happened to have vital business matters before Congress, has taken to denouncing “crony capitalism.”
Yesterday, I watched the full 30-minute attack video on Romney and Bain Capital that Gingrich’s cronies — excuse me, those running the independent and uncoordinated advertising on behalf of Gingrich’s presidential prospects, which Gingrich knows nothing about except what he reads in the papers — have made available.
The film focuses on laid-off workers from four of the companies that were owned or controlled by Bain Capital during the years Romney was in charge. The workers were ordinary folks who took a serious hit. I feel sorry for them. But I’m sure that millions of workers suffered similar embittering job losses during the same period as part of what capitalism apologists like to call “creative destruction.” The Gingrich cronies are exploiting these folks and the political motive behind the attack couldn’t be more obvious.
Perhaps it is possible to create some kind of clever distinction between the good kind of creative destruction that Gingrich and Perry celebrate as “freedom” and the bad kind that they now attack. But, sorry to be in such a cynical mood this morning, it will turn out that the real distinction is that if Romney can be associated with it, it’s the bad kind. It would be a fair and reasonable question to ask whether Gingrich/Perry ever denounced these particular forms of predatory capitalism during their long years in public life before they found themselves running against Romney.
Personally, I have no sympathy for Romney. He is, by all accounts, very smart and worked very hard and was very successful in business. Although he grew up rich, as the son of a CEO, he has grown much richer (net worth in the quarter billion range), mostly by his work at Bain. He claims that, on net, Bain’s endeavors during his years with the firm created about 100,000 jobs, although he certainly acknowledges that many jobs were destroyed as part of the net-net. The claim, which can’t really be proven or disproven, is fairly silly if you think it through. Bain played a big role in the development of Staples, the business equipment chain, which I understand employs about 90,000, but on the other hand, the growth of Staples undoubtedly caused the elimination of a significant number of jobs from the businesses of its less-successful competitors, large and small.
Last night, watching the PBS “Newshour,” which I had revered for decades as the most serious, substantive daily news show on television, I learned more about Bain and companies like it. I’ll embed the video of the segment below. As usual with the “Newshour,” it is not sexy, but it is whizzer smart and substantive. (Years ago, I heard that the “Newshour” staff had an unofficial that went: “Dare to be dull.”)
As they often do, “Newshour” simply interviewed two reporters (one from Boston Globe, one from Fortune magazine) who have studied Bain Capital deeply. In case you didn’t watch the segment (but really, do), the main takeaway is that no one can reasonably estimate the net-net of Bain’s record as a job creator, but the company was way-above-average at its main job, which was to make money for its investors. (Of course, even that becomes morally complex when you consider that the investors included pension funds, college endowment funds, non-profit associations, etc.) The investors made astonishingly high annual returns on the money they put into Bain (88 percent a year during the Romney years). Bain was so reliably successful that it was able to demand a 30 percent “fee” on the profits it made for the investors, compared to 20 percent for more typical firms in the industry.
The two reporters emphasized clearly that Bain was all about making money for the investors and for itself. If they had cared more about creating jobs than making money for their investors, they could have been sued and certainly would not have continued to have investors pounding on their doors with more money to invest.
Washington Post fact-checker Glenn Kessler, when he looked into the Romney 100,000-jobs claim, noted that in the Romney-era prospectus that Bain used to raise investment funds, it never mentioned job creation as one of its goals or purposes. In fact, the prospectus never mentions the words “job” or “employees.”
Here’s the “Newshour” segment:
Watch What Mitt Romney’s Role at Bain Capital Means for His Presidential Bid on PBS. See more from PBS NewsHour.