by Pem Schaeffer
Mitt Romney has been taking a furious wire brushing for his years of leadership at venture firm Bain Capital, not only from the usual suspects on the Democrat left, but also from churlish challengers in the Republican primary competition. As some have observed, the latter have sounded more like occupier movement class warriors than free market capitalists, if not egoists beyond even political norms.
The critical reality is that venture statism is a far bigger threat to America’s future than venture capitalism could ever be. Venture statism, the specialty of Obama Capitol, is the surest threat this 235 year old republic has ever known. (note the subtle spelling difference)
The most important role of federal government is to protect and preserve our individual, inalienable rights to life, liberty, and the pursuit of happiness. Think about each of those words carefully; especially pursuit. Obama Capitol seems intent on changing this foundational trinity to just one: government provided happiness. The last place any venturing dare be tolerated is in the very structure that has defined and distinguished this great nation since its founding.
Capitalism’s most important role is to optimize the use of human and economic capital, and in the process, improve our standard of living and increase aggregate national wealth. This system has created the most productive and innovative society in all of human history, and common sense tells us it is, by definition a ‘venture.’
Risks are taken, entrepreneurial drive creates successes beyond imagining just a few years ago, the economy expands, and societal wealth grows. Think of the extraordinary digital revolution, flat screen TV’s, the internet, and more bubbling pots of start-up stone soup than you could have imagined just a few years ago. The private sector is precisely the place where such ‘venturing’ belongs and is free to prosper. It is one of the ways that our inalienable right to ‘pursuit of happiness’ takes form.
But there are failures as well, adding to collective knowledge, because ‘we learned what doesn’t work.’
Observers with a modest degree of business sense realize that some companies succeed, and some fall short. Reasons for failure include incompetent and/or inexperienced leadership; a flawed business model; inability to control costs; illogical or non-existent guiding principles; failure to grasp long-term decision consequences; fiscal practices in critical meltdown; and an unhealthy economic and regulatory environment.
When an enterprise suffers from too many of these weaknesses, it can be virtually impossible to save. Bankruptcy, liquidation, and the loss of jobs follow as night follows day. The hard work of the best turnaround experts can be futile here; the finest doctors cannot save every failing life.
No one wants to see jobs lost, but this is often a temporary effect of economic expansion that generates long-term job growth. In many failures, hindsight shows a collapse fits the pattern of creative destruction. As clichéd as it is, the buggy whip example applies. We take comfort that laid off buggy whip workers found better jobs in a growing horseless carriage sector; we are all better off because of the transition.
Brands beyond counting have come and gone: Kaiser, Packard, Studebaker, Bowmar Instruments, Commodore Computers, Sen-Sen, Oldsmobile, Edsel, TWA. Individual innovators and entrepreneurs have rolled the dice with private capital and equity; numerous fortunes have been made, and some lost; millions of stockholders have gained wealth, many saw it diminish.
This is how liberty, expressed as free market capitalism, works to increase a nation’s wealth, prosperity, and standard of living. Economies grow with many successes and some failures. Millions beyond counting continue to flock to these shores to share in our unique freedom and prosperity.
Romney and his colleagues surely did not revel in bankruptcy, liquidation, and job loss. Just as extraordinary medical procedures and resuscitation cannot save every life, the best efforts of corporate experts cannot save every business. Doctors and medical facilities are paid even when their efforts fail; Bain Capital is no different. When one considers the expansive successes Bain fostered, like Staples and others, this is utterly rational.
It is instructive to compare Romney’s resume in business affairs to that of Obama Capitol, the leading venture statism endeavor of our era. This ‘enterprise’ arguably suffers from all the causes of failure mentioned above.
The Obama team’s record to date shows no successes and numerous failures. They are venturing in, or more precisely, raiding entire economic sectors, not just individual companies. Energy discovery, delivery, and refining; health care; auto manufacturing; the so-called green economy; and other fashionable targets of the ruling political class are their focus. Some they work to diminish, some they work to encourage with other people’s money. Either way, Obama Capitol and their cronies are enriching themselves politically and financially.
More to the point, they are leveraging other people’s futures and equity to finance their gambles, printing currency and mortgaging the nation’s underpinnings. Raiding the most productive and innovative economic engine in human history is an epic blunder with global consequences. Ensnaring tens of millions in government dependency is human tragedy on a staggering scale, and shames their professed ideal of ‘social justice.’
An important discriminator between venture statism as practiced by Obama Capitol and the efforts of Bain Capital is that Obama is gambling with whole industries, and by extension, the national economy. Bain Capital dealt with one company at a time; Obama Capitol threatens major components of our GDP.
A Nation, its resources, its equity, and the human capital that propel it are terrible things to gamble in this game of venture statism. There are no demonstrable winners in this speculation; only failed social welfare states risking bankruptcy and liquidation at the hands of more veteran venture statists.
Obama Capitol is engaged in destructive destruction, leaving nothing new, better, and more productive in its wake. Bankrupting a free and innovative American economy does not have an upside. Liquidation has no benefit when the entire national enterprise is at stake. Job loss is a plague when statism replaces capitalism. Buy-outs are one thing; wipe-outs of public equity are calamity on a historic scale.
We should prefer creative destruction over a future prospect of being able to buy bread only one day a week, and watching unemployed mobs rioting, looting, and destroying.
Romney must make it clear that he understands how our nation of entrepreneurs works, stress how he will overturn Obama’s Venture Statism, and return us to economic greatness.
The alternative is too devastating to contemplate.
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Pem Schaeffer is a retired Defense Electronics Business Development Leader who lives in Brunswick, Maine. He blogs at http://othersideofbrunswick.blogspot.com/
