Ten days ago, Newark mayor Corey Booker criticized Barack Obama’s campaign ad attacking Mitt Romney’s work at Bain Capital:
…I’m not about to sit here and indict private equity … If you look at the totality of Bain Capital’s record, they’ve done a lot to support businesses, to grow businesses. And [the Obama attack] to me, I’m very uncomfortable with … [T]his kind of stuff is nauseating to me on both sides.
The Republicans immediately seized on Booker’s comments, creating their own attack ad entitled “I Stand With Cory.” All of this caused great confusion in America, as Corey Booker is a liberal Democrat and staunch supporter of Barack Obama. Also, aren’t those big private equity firms bad? said liberals. I thought we were supposed to hate Wall Street, and yet, I also thought we were supposed to love Corey Booker. I no longer know what to think.
But then Booker walked back his comments on “The Rachel Maddow Show” and explained that Obama’s attacks on Bain were “fair game” because Obama was “not condemning all of private equity,” just “focusing in on a guy who is bragging about his job creation record.” And all was right with the world once again, as Obama and Booker and the rest of liberals returned to one side of the argument, and Romney and Wall Street and the rest of conservatives returned to the other.
Until last night, that is, when former President Bill Clinton went on Piers Morgan. ”I don’t think we ought to get into the position where we say, ‘This is bad work. This is good work,’” Clinton said. ”There’s no question that in terms of getting up and going to the office and basically performing the essential functions of the office, a man who has been governor and had a sterling business career crosses the qualification threshold.”
Goddamnit, I thought we had this whole Bain Capital thing figured out, said liberals. Get it straight, Dems, am I supposed to hate Bain Capital or not??
Conservatives were equally confused: Wait, but I LOVE private equity. I want to occupy Wall Street just so I can make sweet, sweet love to it…and yet I hate Bill Clinton. I have no idea what to think anymore.
Okay, so here’s the deal on Bain Capital:
Mitt Romney has based nearly his whole campaign on his experience at Bain Capital – more so even than his experience as a governor. Bain Capital is largely a private equity firm, meaning it takes money from its investors — in Bain’s case, mostly public employee unions and their pension funds — and invests the money in various companies with the hopes of making boatloads of money for its investors, and in turn, itself. Sometimes, this means companies with a lot of potential get an influx of capital, which allows them to succeed even further, and everyone leaves happy (see, e.g., Staples). Sometimes, this means companies get broken apart and thrown to the side of the road, and Bain and the investors leave happy but the workers all get screwed (see, e.g., GS Technologies, from the Obama attack ad). And occasionally, this means the investment loses money, and no one leaves happy, except for Bain, which still gets to keep its 2% management fee. For the most part, though, Bain did very well in earning profits for its investors, and this in turn made Mitt Romney even wealthier than he already was.
In other words, Bain made assloads of cash doing something perfectly legal. There are no legitimate accusations that Bain Capital ever did anything criminal, nor are there any legitimate claims that Bain Capital did poorly for its investors. Moreover, as a general concept, private equity is not a bad thing: it places money in the hands of businesses that need it and earns returns for pension funds and other investors.
But just because Romney may have earned investors a bunch of money, this does not mean that he necessarily created a substantial number of working class jobs. And most importantly, of those jobs he did create, all of them were merely an inadvertant after-effect of the investment. It’s not as though Romney invested in Staples in order to give cashiers and supply clerks a steady paycheck. He invested in Staples because he thought it would make investors, Bain, and himself a lot of money. The jobs were just a collateral benefit.
So, for Romney to now say he is qualified to be President because his record at Bain demonstrates that he knows how to create jobs is a little like the Jersey Shore cast saying it’s qualified to run E.P.T. because they’ve already created so much business for the company. It may indeed be true that the cast has improved E.P.T’s bottom line, but the purpose of all that smooshing was not to increase profits for a home pregnancy test company. Therefore, while the cast may reasonably count their experience at the Shore House as evidence of their ability to seduce drunken Guidos and Guidettes, they do not get to count it towards running a successful home pregnancy test company. Same goes for Mitt. Did he generally know how to pick successful investments? Yes. Does this mean he necessarily knows how to create jobs? Absolutely not.
Photo attributions: flickr/GageSkidmore, flickr/ThomasShahan, wiki/Sailko
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