Mitt keeps trying to portray himself as a venture capital guy, but we need to remember that he was a leveraged buyout guy and the difference between them when it comes to job creation.
From “Mitt Romney: The Man Without a Past,” Michael Hirsh, The Atlantic:
“Mitt Romney has an identity problem. He is running for president by making promises about America’s future, but as a man who is largely without a past. Not only has Romney renounced many of his previous positions — on abortion, immigration, gun control, climate change, and the individual mandate he once championed as Massachusetts governor. He also refuses to divulge many details about what even he has said is his main qualification for the White House in a faltering economy: his successful career in ‘private equity’ from 1984 to 1999 (or thereabouts).
“What is it about the private equity world that Romney doesn’t appear eager to bring up? … The term ‘private equity’ sounds respectable, but it is a euphemism for the old leveraged buyout deals we remember from the 1980s, the era of corporate raiders like T. Boone Pickens and Henry Kravis. After junk-bond king Michael Milken, who funded a lot of those takeovers [and whom Mitt worked with], went to jail, the industry decided to rename itself in order to remove the taint.
“This is Mitt Romney’s true world. As the founder of Bain Capital, Romney became a brilliant LBO buccaneer who specialized in buying up firms by taking on a lot of debt, using the target firm as collateral, and then trying to make the firm profitable — often by breaking up or slashing jobs — to the point where Bain and its investors could load up the firm with even more debt, which Bain would then use to pay itself off. That would ensure a profit for Bain investors whether or not the companies themselves succeeded in the long run.
“But job creation is irrelevant to Bain’s business model, which is all about paying back investors. Nor does the long-term fate of the companies that private-equity firms buy up matter crucially to Bain’s bottom line (though of course success is better). The only real risk for Bain is that these companies fail to make enough initial profit in order to permit Bain to pile on more debt and extract a payout, so that it can make back its investment quickly.” Emphasis added.
If people understand what Mitt did, and they want to vote for him anyway, that’s fine. I just hate to think of all the people who will vote for him without really getting the Bain business model and the source of Mitt’s extraordinary wealth.