Over Bain, Romney's Rivals Hit a Major Low

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Desperately seeking to reduce the still limp appeal of frontrunner Mitt Romney, Republican presidential candidates have unsheathed the always hurl-inducing economic populist card. To say they've lifted it from the bottom of the deck is arguably the understatement of the year.

About Romney's wildly successful tenure at Bain Capital, Newt Gingrich bloviated "I am totally for capitalism [but] I do draw a distinction between [it] and looting a company." Apparently forgotten by this most self-unaware of candidates is how he looted us taxpayers when he accepted large paychecks from Freddie Mac.

Also commenting on Romney's time at Bain, Texas Governor Rick Perry drooled in South Carolina that "There is nothing wrong with being successful and making money, but getting rich off failure and sticking someone else with the bill is indefensible." Choosing to twist Romney's reasoned point that he enjoys firing service providers who fail him (this being one of the myriad beauties of capitalism - we can transact with whomever we want), former Utah Governor John Huntsman told reporters "Governor Romney enjoys firing people. I enjoy creating jobs."

Comments like these perhaps remind us that bad as the Evil Party's leader (Obama) is, those vying to head the Stupid Party are nearly as objectionable. Gingrich, Perry and Huntsman should hang their heads in shame.

About Romney, it should be made clear up front that he is an unfortunate candidate, and that on their own, Romney's policy views make him an easy target to discredit. Romney's promise that he'll "get tough" on China for its citizens selling us what we want at low prices is not only anti-freedom, but speaks to staggering economic illiteracy when we consider how trade wars always end badly (sometimes with war itself) for all concerned.

That Romney's China stance is an implicit comment from him that he would seek an ever weaker dollar if elected similarly signals in advance a failed economic presidency owing to the fact that weak dollar policies bat 1,000 when it comes to sinking the political fortunes of White House occupants. Romney also continues to defend his indefensible "Romneycare" that was foisted on Bay State residents years ago, and then we have his tax proposal: that he would only reduce the tax burden on the non-rich ensures less vibrant economic growth for all income classes - rich and poor - should he be elected.

To state what should be obvious to Romney's opponents, the current Republican frontrunner has handed them all the ammunition they need to derail his candidacy. Past policies, along with ones proposed for the future are his downfall. Stick to them.

Regarding Romney's work for Bain Capital, there it could and should be said that he was "doing God's work", to paraphrase Goldman Sachs CEO Lloyd Blankfein. Far from bankrupting companies, Romney and his cohorts at Bain frequently purchased poorly run companies in possession of underutilized assets, and in most instances managed them with great skill.

If this is doubted, the naysayers which sadly include Romney's opponents would have to explain the exceptional profits Bain earned for its investors during Romney's tenure that, according to the Wall Street Journal, ranged anywhere from 50 to 80% on an annual basis. To raise the money needed to purchase those companies, Romney et al obviously didn't hold guns to the heads of investors, rather the backers of Bain lined up for the opportunity to ask Bain to manage their money.

Did layoffs occur at the companies that Bain purchased? Of course they did. Businesses are not in business to create jobs; instead they exist at the pleasure of investors (including pension funds allocating the capital of the average worker) and must achieve profits in order to remain open. For Romney's opponents or voters in general to lament this reality is for both to lament progress, all the while revealing that they haven't a clue about how jobs are created.

Assuming they don't, jobs are created when profitable concepts are matched with capital. Simple as that. Of course a major reason that Bain purchased the companies it did was that existing management had failed on the profit front, thus necessitating layoffs in order to bring production costs down. Businesses are not charities.

And in reducing costs that would naturally include overhead, Bain succeeded a lot of the time in nursing the companies it purchased back to profitability. For those who care about jobs, what Bain did should excite them. Indeed, it is profits that attract the investment that is tautologically necessary for companies to expand, and through expansion, offer up employment.

With job creation in mind, Romney and his camp should regularly shine a light on his brilliant doings while at Bain. The layoffs that the corporate turnarounds necessitated set the stage for much better employment in the future for underutilized capital being freed up to fund expansion that was actually profitable. It's no doubt similarly true that the healthy companies Bain created were a magnet for further investment that fostered the creation of even more jobs.

As for the individuals let go, they too should thank Bain, and by extension, Romney. Indeed, as evidenced by the low rates of unemployment that prevailed during his time there, the individuals made redundant in most instances found work better suited to their skills, and that the markets actually valued.

Furthermore, had Bain not worked its certain magic it would be folly to assume that those jobs lost would have existed in perpetuity. Jobs only exist to the extent that there's capital available to support them, so in halting the further destruction of capital within the companies that made them buyout targets to begin with, Romney and Bain stopped the bleeding that was eroding the capital stock, and with it, job prospects.

Back to Mitt Romney's policies, there's so much to criticize him for there. His opponents should do just that. If not, as in if they continue to denigrate Romney's brilliant capitalistic exploits they'll not only lower themselves, but they'll sound like the Democrat they're eager to unseat. And when a Democrat runs against a Democrat, a Democrat wins.

John Tamny is editor of RealClearMarkets, Political Economy editor at Forbes, a Senior Fellow in Economics at Reason Foundation, and a senior economic adviser to Toreador Research and Trading (www.trtadvisors.com). He's the author of Who Needs the Fed?: What Taylor Swift, Uber and Robots Tell Us About Money, Credit, and Why We Should Abolish America's Central Bank (Encounter Books, 2016), along with Popular Economics: What the Rolling Stones, Downton Abbey, and LeBron James Can Teach You About Economics (Regnery, 2015). 

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