Feature

Bain: ‘Vampire’ capitalism on trial

In November, American voters will choose between two "competing visions of capitalism."

Mitt Romney is a jobs destroyer—not a jobs creator, said Devin Banerjee in Bloomberg.com. That’s the central message of President Obama’s latest campaign ad, which attempts to undermine Romney’s claim that his business experience makes him more qualified to fix the economy. The ad attacks Romney’s former venture-capital firm, Bain Capital, for buying and destroying a company called GST Steel in Kansas City, Mo. Some 750 employees lost their livelihoods and pensions, while Bain walked away with a $12 million profit. “It was like a vampire,” says one former worker in the emotionally powerful ad. “They came in and sucked the life out of us.” That’s a direct hit on Romney’s “most vital asset”—his claim to be a competent businessman, said Jamelle Bouie in The American Prospect. In reality, he’s an amoral plutocrat who made Bain’s investors and himself rich, while throwing ordinary workers out on the street. 

Bain didn’t loot GST Steel—it gave “a dying steel plant an unexpected eight-year lease on life,” said Kimberley Strassel in The Wall Street Journal. Unable to compete with cheap Chinese steel, GST was facing closure when Bain bought it in 1993. The private equity firm poured $100 million into modernization, but after all that effort, it had no choice but to let the mill go bankrupt in 2001—two years after Romney left Bain. “This is the story of a failed rescue, not vampire capitalism,” said David Brooks in The New York Times. Firms like Bain are vital to our economy; they buy ailing companies with the aim of reforming outdated, inefficient operations and making them competitive again. Research shows that most companies taken over by private equity firms succeed, and become more productive than their rivals. So why not bring that principle of “creative destruction” into government, and bring some sanity and efficiency to our bloated public sector?

In this election, “American capitalism is on trial,” said Robert Samuelson in The Washington Post. Obama maintains that “capitalism has become more predatory and exploitative”; to restore some balance, he wants more regulation, higher taxes on the rich, and more protection for average workers. Romney and corporate leaders, on the other hand, say that taxes and regulation impede investment and job creation. By getting government out of the way, we’d get faster economic growth. “When Americans vote in November, they will unavoidably choose between these competing visions of capitalism. It’s a fateful debate.”

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