Mitt Romney’s work with Bain Capital, the venture capital firm he founded, has become a major issue in the GOP race for The White House. Mitt’s opponents suggest that his firm behaved like a vulture, tearing apart and killing off companies, firing a bunch of workers, then walking away with millions upon millions. Romney and his supporters say that Bain Capital identified opportunities for profit and acted on them — like good capitalists. They say the firms Bain bought up — in a lot of cases — were failures that needed to be put out of their misery.
Which brings us to a post from Erick Erickson on his blog RedState.com . Erickson is always a good read — after you get done with The Haymaker, of course. I often find myself nodding along in agreement as I read his stuff.
Erick posted an interesting observation on the Bain kerfluffle today:
If I understand this right, Bain Capital profited from the creative destruction of capital. It went in, found the unappreciated or hidden value in companies, restructured and/or chopped up companies, and returned the valuable parts to health.
It did it across the board.
And if I understand it right, attacking Bain Capital or Mitt Romney for what Bain did is unacceptable as an attack on capitalism. Now, this bit may be a bit over broad as I suspect there are things Bain did that conservative might attack, including itself taking government money in the past.
But that’s the gist, right?
Bain participated in capitalism, revitalized defunct companies, spun off as needed, and from the ashes of creative destruction of capital made a profit, saved or created companies, and saved or created jobs therefore let’s not attack Romney for his time there.
If I have that right (and I largely agree with it), I have a question.
If Mitt Romney saw, knew, profited from and participated in the creative destructive of capital, why did he advocate the government passing the troubled asset relief program (“TARP”)? Why not let the creative destruction of capital solve the problem and potentially make a profit off it?
It seems to me, considering his continued involvement with Bain, though indirect, Bain and other private equity groups and others in the private sector could have handled the messiness without government involving itself, deciding some were too big to fail, and now potentially setting up a scenario where people take undue risks thinking the government will do it all over again.
And if the answer is that they are different functions or what have you, then is making the comparison between what Romney did with Bain and Obama did with General Motors a comparison that can hold water? One, after all, is a private company profiting from the creative destruction of capital. The other is the government taking over a business.
Just a question.