Is President Obama for capitalism or is he against it? It’s hard to tell from his and his surrogates’ attacks on Mitt Romney’s tenure at the private equity firm Bain Capital, and the defense of those attacks they have since been forced to mount.
Here is how Obama described Romney’s former industry at a NATO press conference Monday: “I think my view of private equity is that it is set up to maximize profits. And that’s a healthy part of a free market. That’s part of the role of a lot of business people. That is not unique to private equity. And as I think my representatives have said repeatedly and will say today, I think there are folks who do good work in that area.”
Got that? Now here is how Obama surrogate and House Assistant Democratic Leader James Clyburn, S.C., described Romney’s tenure at Bain Capital on MSNBC on Tuesday: “[T]here’s something about raping companies and leaving them in debt and setting up Swiss bank accounts and corporate businesses in the Grand Caymans. I have a real serious problem with that.”
That is quite a disconnect, but don’t blame Clyburn. Just look at how the people in Obama’s own television ads describe Bain and the private equity industry:
» “It was like a vampire. They came in and sucked the life out of us.”
» “Bain Capital walked away with a lot of money that they made off of this plant. We view Mitt Romney as a job destroyer.”
» “To me, Mitt Romney takes from the poor and middle-class and gives to the rich. He is just the opposite of Robin Hood.”
Those do not sound like descriptions of good folks doing the healthy work of free markets.
The reason Obama surrogates like New Jersey Mayor Cory Booker, former auto czar Steve Rattner, Clyburn and former Pennsylvania Gov. Ed Rendell can’t stay on message when it comes to Bain is that Obama seems conflicted about capitalism.
Obama’s ads betray a belief that profits are, at best, a necessary evil that should always take a back seat to other community concerns. This probably explains his “investments” in losers like Solyndra and high-speed rail (for the sake of the Earth), as well as his bailouts of Chrysler and General Motors (for the sake of the unions). Never mind that Solyndra had an unsustainable business model, or that taxpayers spent $50 billion to save a car company that is worth only $34 billion today.
What Team Obama still doesn’t understand is that profits are just a signal that businesses depend on to determine how best to invest their resources. Thanks to profit-seeking private equity, many of America’s bloated industries that had stagnated in the 1970s came back to life in the 1980s and 1990s. As capital was reallocated from poor performers to profit-makers, new jobs arose in more productive economic enterprises.
Yes, the jobs lost in that process were often concentrated in particular towns and industries. They were painful, and people are understandably bitter. But those jobs were doomed by global economic realities, not by private equity. To take the example in Obama’s ads, Bain can hardly be blamed for America’s total loss of its dominance of the world steel market over the five decades after World War II.
What this nation needs, and what it currently lacks, is a president who understands the role that businesses play in the economy — including private equity firms. It would be quite an improvement over a leader who demonizes some industries while subsidizing and bailing out others.
