A Brief and Obvious Defense of Mitt Romney’s Scandalous Days as a Capitalist

Spare yourself the agitation of rationalizing the Republican candidates’ attack on Mitt Romney’s private equity days. You’d be foolish to put any opportunity for easy populist points past this crop of Git Offamah Propertys, especially in the midst of a vicious nomination cycle. It’s too bad Romney wasn’t a fixed income wiz or commodity speculator or something, because we could all stand to bash those effigies a little bit longer. Instead he was a venture capitalist, a good one by most accounts, and it’s wrong to make him stand trial for following capitalism’s best practices.

The kerfuffle started when Romney dropped another deuce on his own campaign by stating that he liked “to be able to fire people” who weren’t performing up to standards. The opposition immediately jumped on him: Vulture! Heartless! Profiteer! I was waiting for Perry to cry “socialist agenda!” but apparently he has a better grasp on that term than I thought. The irony is that Romney implied absolutely nothing offensive. Termination, just like the failure of an insolvent business, is inherent and necessary to capitalism. Seeing a group that is this close to describing all the nasty things they would do to free enterprise, lashing out at one of its fundamental mechanisms, was infuriating. What do they think capitalism is? we all fumed. The entire line of attack on private equity and Romney’s wealth exposes the fallacy of capitalism’s place in the dogma of these candidates. Like justifying the Patriot Act as a defense of freedom, “capitalism” in this crowd is a buzzword for a sales pitch, nothing more.

Private equity is a poor target with which to start discussing the inequalities of high finance. Yes, the industry attracts some predators. But few investment vehicles provide nearly as much economic good as venture capital. Rather than being parasitic like most Wall Street trading, VC has the potential to produce tangible results out of ailing businesses and land failing ones as softly as possible. It is almost pure capitalism, worlds away from the artificial financial culture wherein economic cataclysm is merely volatility. From what I’ve heard, Bain was a highly-regarded firm more interested in building than stripping for parts. When a company’s balance sheet sags to the point that these types of investors are brought in, the company generally faces death without the kind of (often long-anticipated) cuts that Romney joked about on the stump. Average workers sometimes lose jobs, but so do managers who prove ineffective or too costly. All of it is geared toward rebuilding a functioning business. An incoming VC consultant's role is no more heartless than that of any manufacturer, currently the most romanticized occupation in economic America. Both are after two goals: to maintain quality and get leaner. Lower outflow is simply what a profit-driven system rewards. Anyone with a problem with those two goals should look to change the incentives, not their pursuers.

The Republicans, of course, are not looking to change any incentives. They just want to draw blood. The only thing this asinine episode revealed is how unsubstantive claims made during a no-holds-barred election can be. Look for more of this in the general election. Prepare to hate democracy, Americans.