Over the past few weeks, the main debate in the political arena has centered on what would it mean if Washington, D.C., became a Bain Capitol after the November elections. Would it be worse or better for job creation and the economy?
The Romney campaign began the debate by claiming that Mitt Romney's experience at Bain Capital made him extremely qualified as a job creator who would be able to turn the economy around because of his business experience. The Obama campaign countered this assertion by declaring that Bain was a job destroyer rather than a job creator during Romney's tenure. The charges from both sides were characterized by little analysis and heated rhetoric.
Private equity -- is it a job creator or job destroyer? The answers are it all depends and on the whole not much of either.
There is agreement on this across the political spectrum. Conservative-leaning David Brooks noted in a recent column, based upon a "giant study" that he reviewed, "when private equity firms acquire a company jobs are lost in old operations. Jobs are created in new, promising operations. The overall effect is modest." Progressive-leaning Jared Bernstein, former economic advisor to Vice President Biden, weighed in recently also -- staying neutral on whether "PE deals add value" but concluding unequivocally, "they're not net job creators."
Given these assessments, it appears that Mitt Romney's role and Bain Capital's performance as a private equity firm is essentially irrelevant to the issue of job creation and economic development that is beneficial to the nation as a whole and its citizens. As, we might add, was Barack Obama's role as a community organizer or performance as a law professor at the University of Chicago.
Both of these men have solid and substantial resumes. But their prior experience and expertise outside of the oval office will not be dispositive in improving the country's economic situation.
We have enough evidence of successful presidents who came to office with what some would describe as less than stellar credentials. For example: Abraham Lincoln, a small town lawyer from Springfield, Ill. A haberdasher from Kansas City, Mo., named Harry Truman. And Ronald Reagan, a "B" movie actor from Hollywood.
In contrast, there have been less highly regarded presidents whose bios indicated that they had all the right stuff to excel in the presidency. For example: Warren Harding, an entrepreneurial newspaper publisher from Ohio. Richard Nixon, a Duke Law School graduate from California with an impressive and extensive public sector track record. And Jimmy Carter, from Plains, Ga., who graduated near the top of his class at the US Naval Academy and became a nuclear submarine commander.
Neither private equity nor sheepskins will resolve the job creation conundrum. Therefore, the central questions to be asked in this presidential election must be:
In addition, assuming that the proposed agenda will have to be translated into legislation, we would add to these questions the following tests drawn from the Job Creation chapter in our book, Renewing the American Dream: A Citizen's Guide for Restoring Our Competitive Advantage released in July of 2010. Will the future "jobs" bill:
What would it mean if Washington, D.C., became a Bain Capitol after the November elections in terms of job creation and economic growth? The answers to the foregoing questions and tests will determine that. They will not be dictated, however, by a background in private equity or business but by what the person puts into his plans and does on the job.
President Obama proved that when he used a distinctly private sector approach by bringing in Steve Rattner, former investment banker and private equity firm principal, to be his lead auto advisor to the United States Department of Treasury. Working with his operatives in conjunction with GM management and union leadership, Rattner and his team applied private equity type principles to produce a turnaround plan. That plan helped transform GM, put it back in the driver's seat and salvaged (if not created) millions of jobs for American automobile manufacturers and suppliers.
So, while D.C. has not been a Bain Capitol, it is not unfamiliar with the application of private equity practices. Objective data suggests that these practices are neither good nor bad in and of themselves nor in their consequences.
Therefore, our request is this: let's take private sector equity as a job creator or job destroyer -- or my bona fides versus yours -- off the table and make them part of the "no fire" zone. Let's engage instead in detailed presentations and substantive discussions on each person's respective agenda and give the American electorate the opportunity to choose the agenda and the advocate they think will be best for them, and for America and its future.
Let's put our full faith and confidence in the citizens. We know that's a novel idea. But it might be one worth pursuing.