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.
 |
 |
|
| Obama | Romney | |
|---|---|---|
| Electoral Votes (270 to win) |
332 | 206 |
| Obama | Romney | |
|---|---|---|
| Total | 65,899,660 | 60,932,152 |
| Percent | 51.1% | 47.2% |
| Democrats* | Republicans | |
|---|---|---|
| Current Senate | 53 | 47 |
| Seats gained or lost | +2 | -2 |
| New Total | 55 | 45 |
| Democrats | Republicans | |
|---|---|---|
| Seats won | 201 | 234 |
"BANE CAPITAL" ?????
On the one side, we've got a person who turned "Change" into a bumper-sticker that gradually disintegrated and fell off the bumper. On the other side, we've got an 0.00001% percenter.
While hundreds of millions of people in this "land of opportunity" of ours have no jobs, still have no insurance or health care, and are from time to time dropping into the river at rush-hour because an Interstate highway bridge collapsed for lack of maintenance (a headline that disappeared after a mere three days, BTW), these people have turned Washington DC into a den of thieves, and raw power into a thing that is bought and sold. Laws, and law (non-)enforcement, have also been turned into a profitable commodity, while the house-of-cards woven by central banks is unraveling not only here but throughout the world.
Do you seriously think that "it's the only/best thing that 312 million people can come up with to do" to make a Hobson's choice between one corrupt multi-millionaire or another?
You ask, ‘…if Washington, D.C., became a Bain Capitol after the November elections. Would it be worse or better for job creation and the economy?’
Sure it would be better. Better than the Public Equity failures that the successive governments, both Republican and Democrat, have foisted on the taxpayer over the years, bridges to nowhere, Solyndra, GM Motors, AIG, etc…
It would be good to have someone in the Whitehouse that…:
a) Has run a successful business, turned around failing non-profit efforts such as the Winter Olympics, and has governed.
b) Understands that economic growth is predicated on fostering risk taking, efficiency, innovation, capital formation, and self determination…instead of the same ruinous borrow-and-spend Keynesian gimmickry that pulls forward tomorrows economic growth and opportunity to create short-term artificial growth and jobs.
c) Understands that long-term measures create the stability and incentives for people to grow businesses, such as lower taxes and regulatory reform that has no sunset, instead of the half-measures and short-term tax breaks that do nothing to promote sustained investment.
d) Understands that efficiency drives growth, not more subsidies and protections. This is particularly important to apply to the bloated government sector that grows to the detriment of the private sector.
Kai
a) RE: "Understands that efficiency drives growth, not more subsidies and protections." Romney's Winter Olympics got tens of million of dollars from the federal government. http://firstread.msnbc.msn.com/_news/2012/02/18/10444876-salt-lake-city-olympics-earmarks-a-double-edged-sword-for-romney?lite
b) According to a Federal Reserve business survey, having a successful business has less to do with tax breaks and all to do with having sufficient sales. Which means having customers who earn enough to afford the product by having good full-time jobs that pay well enough to increase their standing in life.
c) That ruinous borrow-and-spend Keynesian gimmickry, you mentioned, that pulls forward tomorrows economic growth and opportunity to create short-term artificial growth and jobs is exactly what WAR did for the last 30 years. It was used as an economic stimulus to drive the economic growth and private profits.
d) RE: "This is particularly important to apply to the bloated government sector that grows to the detriment of the private sector." You mean like the billions spent in the privatization of government services. Where the government funded hidden private sector jobs that don't actually reduce the size and responsibility of government.
To most Americans it would seem Obama favors govt jobs over private jobs. Perhaps because they are used to promote minorities in to the middle class? perhaps because they are unionized?
Clearly we can't afford more govt jobs as they are not productive..they are not job multipliers in the same way private jobs are...again because of profit. They may be necessary....and have value...but they certainly drain money out of govt and the taxpayer.
Banks doing the same...lending is way down and difficult. Add in the concern of what the govt policy is going to be...and you have job stagnation. Everybody is nervous. No one is happy....The cost of what an employee is going to cost is a big concern for anybody who hires. So we have a mess...not sure an election is going to cure it.