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Robert MorleyColumnist

Mitt Romney, Bain Capital and American ‘Creative Destruction’

January 31, 2012 | From theTrumpet.com

Could a private equity president save America?

Venture capitalists are really vulture capitalists, says former presidential candidate Rick Perry. And Mitt Romney’s Bain Capital was a venture/vulture capitalist. Such firms swoop down on sick companies, devour them, and leave only bones and lost jobs behind. Getting rich off destruction is deplorable, Perry said.

Are venture capitalist/private equity firms really devouring America? This might be a good time to ask that question, since one of the men who might be president was an innovator in this industry that has become increasingly influential in American-style capitalism.

According to Mitt Romney, venture capitalism is what makes America’s economy so dynamic. “The reality is in the private sector that there are some businesses that are growing and thriving, and we were fortunate enough to be able to be a part of that in a small way,” he said. But “there are some businesses that have to be cut back in order to survive ….”

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Featured Comments:

Are you sure you can use Bain Capital as representative of the American venture capitalist sector in general? My first job out of college was at a research and development center funded by Energy Ventures, a venture capital firm specializing in upstream oil and gas technology. As such, I was under the impression that, even allowing for a few bad apples, venture capitalism was one of the driving motors of American innovation.

Andrew—Texas, USA

Response:

Hi Andrew, Thanks for the comment. Your absolutely right that not all venture capital companies operate like Bain apparently did with KB Toys. I did try to qualify that part when I wrote: “Yet, even if you believe Mitt Romney’s job creation numbers, his description of venture capitalism is not how many private equity firms—including Bain Capital—actually work.” Also Bain’s work with Dominoes Pizza and Staples seems to have been a win-win for everyone. But there are many companies that do work that way when opportunities present themselves. See https://www.thetrumpet.com/5755.4113.0.0/economy/blackstoned-how-america-killed-itself for an example of how prevalent this kind of action is. Giant firms like Blackstone, Carlyle, KKR, Cerberus, and others often use the same techniques as Bain.

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