Dr. Tim Stanley is a historian of the United States. His biography of Pat Buchanan is out now. His personal website is www.timothystanley.co.uk and you can follow him on Twitter @timothy_stanley.
Obama’s attack on private equity is hypocritical, shallow and a big mistake
There’s a good chance that Mitt Romney’s career at Bain Capital will become the defining issue of 2012. As Joshua Green at the Boston Globe writes, Bain is all about Romney’s election-winning claim to real world experience of creating jobs (Mitt puts the figure at around 100,000). Therefore, it’s imperative that Obama challenge that record and produce a counter-narrative: “Obama’s reelection, in other words, hinges on discrediting Romney as a viable alternative. That means going after Bain and private equity.”
Given that the very words “private equity” send a shudder down the spine of anyone in employment, that sounds like a smart move. We all instinctively despise the champagne and braces brigade who head up private equity – grease-haired upstarts just two years out of college who think they can save a business by changing the wallpaper and sacking everybody. Yet despite the profound cultural appeal of denouncing Bain as a “vampire” organisation, Obama’s gambit has received a poor reception across the press. Why?
For starters, the political influence of private equity groups like Bain extends well into the Democratic Party. One of Obama’s own campaign spokesmen, Federico Pena, works at Vestar Capital Partners. According to this report, Vestar has “laid off 1,000 workers from Del Monte this month, closed three factories and laid off 540 people at Solo Cup Co., and fired another 500 workers at BirdsEye food-processor in 2006.” And Pena isn’t the only “vampire” that Obama takes money from. In 2008, he received almost twice as much private equity cash as John McCain did – roughly $3.5 million.
Within the wider economy, the record of private equity is a great deal more beneficial than Obama’s attacks suggest. Firms like Bain borrow to acquire failing companies, streamline them, rebrand them, then sell them on at a profit. In the 1980s these “bloodsuckers” gained a reputation for asset-stripping – reducing the payroll down to a skeleton staff then selling off the company’s assets. Mitt Romney’s choice of career is not dissimilar to that of Gordon “Greed is Good” Gekko.
But the historical panic over the destructive capacity of private equity is misplaced. In most instances, it was in the investing firm’s interests to save rather than strip a business. In many cases, private equity was actually motivated by a benign desire to rescue family and industrial businesses from outdated ideas and practices. Bain points out that, “Despite political attacks that emphasize the few companies that have struggled … revenues grew in 80 percent of the more than 350 companies in which we have invested.” A survey of roughly 3,200 companies bought out by private equity firms between 1980 and 2005, found the companies lost jobs at a rate that was only one percent higher than comparable businesses. But those companies were also more likely to open new branches or see an upturn in profits. Crucially, their new found profitability often led to the creation of new jobs. Rebirth from wreckage; order from chaos. Private equity is very Zen.
And the moderate, pro-business wing of the Democratic Party knows it. That’s why Senator Mark Warner has defended Bain and why Mayor Cory Booker of Newark called Obama’s attacks on the firm “nauseating.” To quote Booker, “I live in a state where pension funds, unions and other people are investing in companies like Bain Capital. If you look at the totality of Bain Capital’s record, they’ve done a lot to support businesses, to grow businesses.” Booker is right. Roughly 60 percent of moneys that private equity receives are from pension funds, endowments and foundations.
In short, the anti-Bain agenda suggests that Obama “doesn’t get capitalism.” His administration has placed an emphasis upon government-led bailouts that have the aura of the command economy (Solyndra, high-speed rail, Chrsyler, General Motors). Because these operations are directed by social need rather than profitability, they’ve largely failed (automobiles are a notable exception). In contrast, Romney’s experience tells him that key to creating jobs is a mix of pleasure (investment) and pain (streamlining). For a country saddled by debt – a nation that must reform its welfare, tax and regulation systems simply to survive – the private equity model might actually prove more attractive to the enlightened voter.
“It certainly creates an impression that the only thing that they’re about is developing a nuclear weapons capability,” Ross said in an interview with CBS News.
If Obama won’t get moving, the Israelis will. We cannot have an Iran with nuclear weapons.
“When you see a rattlesnake poised to strike, you do not wait until he has struck to crush him.”
−Franklin D. Roosevelt
Joe Biden says we (Republicans) don’t get it. No, I don’t get it, Joe. Joe lives in a $2.5 million mansion, and Obama is worth about $10 million. I don’t get why the working class folks believe these millionaires will look out for their best interests. In fact, they won’t look out for the working class. Biden and Obama know how to work the system to enrich themselves at the expense of others, and they will say whatever keeps their perks in place.
I don’t get what happened to the old-fashioned work ethic in this country. You do ten dollars worth of work and you earn ten dollars. That’s how it worked when I had a newspaper route and when I drove a cab. Biden and Obama, on the other hand, encourage their lackeys to suck off the system and take as much disability pay, unemployment compensation, and any other dollars they can, whether they deserve it or no. Say it isn’t so, Joe.
Poets and Philosophers
The rich are the scum of the earth in every country.
~G. K. Chesterton, The Flying Inn
It is wealth to be content.
~Lao-Tzu, philosopher of ancient China, best known as the author of the Tao Te Ching (often simply referred to as Laozi)
Don’t marry for money. You can borrow it cheaper.
When you let money speak for you, it drowns out anything else you meant to say.
~Mignon McLaughlin, The Second Neurotic’s Notebook, 1966
And she said, “See, your sister-in-law has gone back to her people and to her gods; return after your sister-in-law.”
But Ruth said, “Do not urge me to leave you or to return from following you. For where you go I will go, and where you lodge I will lodge. Your people shall be my people, and your God my God. Where you die I will die, and there will I be buried. May the LORD do so to me and more also if anything but death parts me from you.” And when Naomi saw that she was determined to go with her, she said no more.
“Many a man proclaims his own loyalty,
But who can find a trustworthy man?”
She said I’m sorry baby I’m leaving you tonight
I found someone new he’s waitin’ in the car outside
Ah honey how could you do it
We swore each other everlasting love
She said well yeah I know but when
We did–there was one thing we weren’t
Really thinking of and that’s money–
~Cindi Lauper, “Money Changes Everything” (1983)
(if you drive a car, car) – I’ll tax the street;
(if you try to sit, sit) – I’ll tax your seat;
(if you get too cold, cold) – I’ll tax the heat;
(if you take a walk, walk) – I’ll tax your feet.
Now my advice for those who die, (taxman)
Declare the pennies on your eyes. (taxman)
‘Cause I’m the taxman,
Yeah, I’m the taxman.
~George Harrison, The Beatles, “Taxman,” Revolver (1966)
Before Lot and his guests could go to bed, every man in Sodom, young and old, came and stood outside his house and started shouting, “Where are your visitors? Send them out, so we can have sex with them!”
Elisha left and headed toward Bethel. Along the way some boys started making fun of him by shouting, “Go away, baldy! Get out of here!”
Elisha turned around and stared at the boys. Then he cursed them in the name of the LORD. Right away two bears ran out of the woods and ripped to pieces forty-two of the boys.
–2 Kings 2:23-24
President Obama said about Mitt Romney today, “And so if your main argument for how to grow the economy is, ‘I knew how to make a lot of money for investors,’ then you’re missing what this job is about.”
Pray tell, what is the job about, Mr. Obama? You’ve spent $5 trillion and you promote a rip-off-the-rich agenda. The lowest that unemployment has been during your party-every-day tenure was the day you took office. Tell me how we are better off than we were $5 trillion ago. Tell me how our children and grandchildren will do when they have to pay off a national debt to which you contributed so much.
I would rather have someone in the Oval Office who knows what to do in the private sector than a socialist who considered himself a spy in the enemy camp when he worked in the private sector, a socialist who raises campaign funds from politically naive movie stars who would have supported Lenin and Stalin. I would rather have someone in the Oval Office who talks about earning money and saving money than someone who only knows how to spend it. You don’t know what your job is about, Mr. President.