Presidential candidate Mitt Romney has been taking a lot of heat over his private-sector career at Bain Capital. Newt Gingrich has been especially vigorous in pursuing this line of attack. At a debate in New Hampshire, Gingrich made several references to a short film packed full of interviews with people who lost jobs at companies Bain bought and sold. A Super PAC supporting Gingrich proceeded to build an entire ad campaign around it.
Gingrich himself, unabashedly angry over the withering treatment he received at the hands of the Romney campaign and allied political action committees in Iowa, said from the New Hampshire campaign trail that “those of us who believe in free markets, and those of us who believe that in fact the whole goal of investment is entrepreneurship and job creation find it pretty hard to justify rich people figuring out clever legal ways to loot a company, leaving behind 1700 families without a job.”
Did we really need to see other Republicans hitting Romney from the left? Do we really need to go over Economics 101 with Newt Gingrich, a man who has previously declared himself a champion of capitalism? The “goal of investment” is not “entrepreneurship and job creation.” The goal of investment is profit. “Entrepreneurship” for its own sake means opening a boutique business for fun, and shutting it down when the losses become unbearable.
What law is Bain Capital supposed to have broken? What law would Romney’s ardent critics suggest, to prevent an equity firm from purchasing businesses, attempting to make them profitable, and selling them when profitable operations are not possible? And how would any of the Republican candidates be a better choice that Barack Obama for implementing such laws? Obama has a zeal for command economics that far outstrips any of theirs, and he’d get far less grief from the media for seizing the power he would need to obstruct the lawful business practices of free men and women on a massive scale.
The exact record of Bain Capital with respect to job creation, and Mitt Romney’s personal role in it, remains hotly disputed. Romney himself claims that over 100,000 net jobs were created, although others criticize his claims. Of course some people lost their jobs during this process. Would you like a demonstration of what a calcified organization, in which jobs are virtually “guaranteed,” looks like? Nip on by the Department of Education, whose budget has increased by over 500% since its foundation, even as student performance nose-dived and public schools become quagmires.
That department, like much of the federal government, exists only because titanic amounts of money are being printed, borrowed, and stolen from the next generation to cover its losses. What sort of “profit” would any intelligent person expect from a private entity in which no one could be fired? Conversely, it was only a few days ago that the media celebrated President Obama for unveiling defense cuts that would put tens of thousands of troops out of work. Clearly, even liberals don’t believe that firing people is always wrong. Does anyone think the solution lies in a new federal Department of Downsizing, headed up by a “pink slip czar” who would decree when it is morally permissible for a struggling company to reduce costs by cutting jobs?
It would be one thing to criticize specific investment decisions Mitt Romney made while working for Bain Capital, making a detailed case that a particular action was short-sighted or foolish… but that’s never what the critics do, any more than they mention success stories like the 90,000 jobs saved at Staples. Instead, they paint Bain as a job-destroying corporate chop shop, using the broadest possible brush and the thickest populist pigments.
You can’t have capitalism without capital. There are only two ways to get it: attract investors in search of profit, or tuck money into a politician’s pocket and hope he’ll loot the taxpayers for a big Solyndra-style subsidy. Capital is either owned by the people, or distributed by the government. If it will be owned by the people, then they must have the freedom to invest it as they see fit. The alternatives are not called “capitalism.” They are grim, and often grisly. None of them produces broad-based prosperity, although all of them feature very wealthy and powerful ruling classes, whose relationships with their servants are most certainly not subject to popular approval.
This is not a point Republican candidates should be ceding to the Left, in the hopes of scoring a few bloody cuts against a political opponent. For the defenders of economic liberty, the ownership of capital – including human capital, which is acquired through the voluntary offering and acceptance of employment – is what the great strategist Sun Tzu referred to as “fatal terrain.” We cannot afford to lose a battle on that ground.
Capitalism is the practical expression of freedom, and freedom is not limited to actions that must have invariably positive results, or meet with universal approval. The property rights of a company’s shareholders are not subordinate to some arbitrary, politically attractive notion of how many people the company should be hiring or firing at any given moment. As long as a company like Bain Capital obeys the law, their employees – both current and former – should be allowed to mind their own business.