Republicans Acting Like Spoiled Children [or Democrats]

Newt Gingrich attacks Romney for being rich like a Democrat would.  William Jacobson at Legal Insurrection, a Newt supporter, cheers him on.  John Huntsman, the son of Jon Huntsman, Sr., founder of Huntsman Chemical  – a company built by acquisitions and divestitures- including layoffs and firings and a flirtation with bankruptcy says that he loves creating jobs… Rick Perry, a man who has spent the entire sum of 6 years in the private sector after 6 years in the Air Force and 27 years in elective office says that Romney never feared a pink slip because he had a rich daddy (sound familiar, Richard?) Rick Santorum claims to be THE conservative while having a voting record that includes “yes” votes on almost all big government efforts, spending 9 years as a lawyer/member of “think tanks” and 16 years in elective office.

I get it that the also-rans have to try to take down the lead dog to head up the pack but I hate it when a bunch of frustrated Republican candidates start attacking as if they were one of the Democrats.

Attack Romney for being successful in gaining a reward after putting his and his investor’s money at risk?

What about being pro-business? I guess that was only talk. After this performance, if I was any CEO, I would wonder if Newtie and Co. would turn on me after the election just like Obama did the bankers who supported him.

What about being for cutting spending and streamlining government?  Wouldn’t what we have been talking about for 30 years look just like a private equity/venture capital leaning out?

Get real. What a bunch a sissies. Newt looks and sounds like a pissed off kindergartner after someone stole his binky. Santorum may be a social conservative but he is no fiscal conservative – look at his voting record. Perry and Huntsman – the rich sons of rich fathers sound credible? You might want to know that the Huntsman’s not only had houses in Park City, Utah – they had a family COMPOUND, 25 acres on the side of a mountain in Deer Valley where the lots are sold by the square foot and the average home price was about $8.5 million…I know, I lived down in the valley with the po folks and the house help.

Remember when someone wrote this? I think it was last week:

If the words “I wish we had someone in office who understood business” ever came out of your mouth or you have ever condemned Obama for being an academic, a lawyer, a community “organizer” or a career politician, it would seem that to support anyone but Romney is hypocritical. There are “conservatives” who say that Romney is just like Obama and a if you are going to vote for Romney, just cut out the middle man and vote for Obama but the resume’s of the other Republican contenders look far more like Obama than does that of Mitt Romney.

Romney has spent the most time in the private sector and the least time as a politician of any other candidate in the race, including President Obama. Romney actually used his law degree in furtherance of his business acumen, not as a primary career or a prop for a political future.

This is not an election on social issues – it is an election about what socialist approaches to those issues are doing to our nation. Being anti-abortion or socially conservative won’t matter if we can’t get a bit in the mouth of government and pull back on the reins.

Romney is about to be attacked from the right and the left as a “job killer” at Bain Capital – but here’s the Catch 22 on that line of reasoning; the very reason that private equity firms exist is to invest in companies, streamline them for maximum earnings and sell the resulting value for a profit.

What the left and the right are currently pillorying Romney for are exactly the skills and drive necessary to cut government down to size. How many of us have complained about the inflation of employment in the public sector while the private sector continues to shed jobs?

How many conservatives have wished for someone with those skills to run for president?

James Pethokoukis at the American Enterprise Institute agrees with me and says that Romney has nothing to apologize for:

One of the oldest tactics in a political campaign is to try and turn an opponent’s biggest asset into a big liability. One of Mitt Romney’s supposed big pluses is that he’s a “conservative businessman” who knows how to fix the U.S. economy. But now Newt Gingrich (or at least his SuperPac) is launching an expensive attack to rebrand Romney as a Gordon Gekko whose “business success comes from raiding and destroying businesses.”

Well, the Wall Street Journal has just published its investigation into Romney’s record at Bain Capital. The paper “examined 77 businesses Bain invested in while Mr. Romney led the firm from its 1984 start until early 1999, to see how they fared during Bain’s involvement and shortly afterward.” And here is what it found:

– 22 percent either filed for bankruptcy reorganization or closed their doors by the end of the eighth year after Bain first invested, sometimes with substantial job losses.

– An additional 8 percent ran into so much trouble that all of the money Bain invested was lost.

– Ten deals produced more than 70 percent of the dollar gains.

– Bain produced about $2.5 billion in gains for its investors in the 77 deals, on about $1.1 billion invested.

– Overall, Bain recorded roughly 50 percent to 80 percent annual gains in this period, which experts said was among the best track records for buyout firms in that era.

– Academic research has shown that buyout firms during this era exited their deals on average after 5½ years, but in a large percentage of cases were still involved beyond seven years. … If the Journal analysis were limited to bankruptcies and closures occurring by the end of the fifth year after Bain first invested, the rate would move down to 12 percent. That measure would exclude several cases that have brought Mr. Romney political criticism, where businesses filed for bankruptcy seven or eight years after Bain’s investment.

So what does it all mean? Well, Romney was really good at what he did. And what he did, initially, was venture capital, providing dough to promising young firms. Then he shifted to private equity, which is a) using investor money and debt to take over a business, b) attempting to improve its profitability (which may mean cutting the workforce), and c) selling the business and, as the WSJ, puts it, “extracting fees and sometimes dividends.”

That a small percentage of the Bain deals supplied most of the firm’s gains should not be surprising. Whether you are a private equity investor or a do-it-yourself stock picker, the key is letting your winners run and limiting the damage from your losers. Recall how famed Fidelity manager Peter Lynch always said he was on the hunt for “ten-baggers”—stocks where he could make ten times his original investment. A good investor is like a good baseball hitter. A .300 average gets you on the all-star team.

See, there is something called the Pareto Principle, which states that “for many events, roughly 80 percent of the effects come from 20 percent of the causes.” So 20 percent of customers, taxpayers, and investments often produce 80 percent of sales, revenue, and profits. Bain certainly seems to be another example of the Pareto Principle at play. A few big winners such as Staples, The Sports Authority, and Domino’s may well have provided a good chunk of the firm’s profits and the “over 100,000″ jobs created (which Team Romney needs to do better at substantiating).

Of course, Romney and Bain weren’t in the game to create jobs. They were in it to make money for their investors and themselves. Then again, the same would go for Bill Gates, Steve Jobs, Michael Dell, Warren Buffett, and just about every other successful entrepreneur and investor you could name. But that is the miracle of free-market capitalism. The pursuit of profits by creating value benefits the rest of society through higher incomes, more jobs, and better products and services. This isn’t “destructive creation”—like, say, crippling U.S. fossil fuel production before “clean energy” sources are viable—but “creative destruction” where innovation and efficiency sweep away the old and replace it with a more productive and wealthier society. This is one my favorite examples:

Through this constant roiling of the status quo, creative destruction provides a powerful force for making societies wealthier. It does so by making scarce resources more productive. The telephone industry employed 421,000 switchboard operators in 1970, when Americans made 9.8 billion long-distance calls. With advances in switching technology over the next three decades, the telecommunications sector could reduce the number of operators to 156,000 but still ring up 106 billion calls. An average operator handled only 64 calls a day in 1970. By 2000, that figure had increased to 1,861, a staggering gain in productivity. If they had to handle today’s volume of calls with 1970s technology, the telephone companies would need more than 4.5 million operators, or 3 percent of the labor force. Without the productivity gains, a long-distance call would cost six times as much.

Romney’s career as a free-market capitalist? No apologies necessary.

Gee, I thought we wanted someone who understands the free market, knows how to fire unnecessary employees, deal with unions in terms that they understand and fix a bloated organization, namely the federal government.

I guess I was wrong.

13 thoughts on “Republicans Acting Like Spoiled Children [or Democrats]

  1. Until he has some sort of public “conversion” (which he hasn’t), this STILL stands as his core beliefs – and from his own lips:

    NOTE: what we have now is NOT a “free market,” my friend, and the term “pro business” should be a clue. Pro freedom is NOT the same as pro-business, especially in a world where there is a clear partnership between corporate America and the government (there’s a term for that). I think I’ve commented on this twice before:

    https://therionorteline.com/2011/07/03/call-it-by-its-name/

    https://therionorteline.com/2011/10/25/defending-the-language-crony-capitalism/

    Now, so as to do what I can to soften this comment (it really isn’t meant to be an attack – honest), wouldn’t it help if we had someone OTHER than Ron Paul in this race who is talking about something as mundane as individual rights and liberty, not how he will create jobs (a “big govt. – NOT “free market” argument, btw)???

    • Then vote for Paul.

      You may not like Romney but when what is left to pick from is one nut-bag anti-Israel conspiracy theorist and a bunch of anti-business Obama imitators, we are all screwed.

      I’m sorry – you are full of it if you don’t think that venture capital is pure capitalism – it is about as pure as it gets. Having worked for a private equity company, it is perform or get out and if you perform the rewards are great…

      You are my friend, a smart guy and I know that you mean well but in a political sense, I think that you spend too much time in a theoretical world where everything is clear cut, definable and backed up by a quote from a Founding Father.

      It isn’t that way. It never was. There are universal principles but how societies have understood and reacted to them has differed greatly over time. There is also no such thing as a perfect classical liberal – not a single person can possibly meet that exacting definition – there are varying degrees just like in every ideology.

      Politics has always been a game of trade-offs – Solon and Pericles in the Athenian democracies understood that. Plato, Aristotle, Socrates and Pliny the Elder understood it, too. Diogenes wandered a lifetime and died before he found an honest man.

      And until they have a public conversion (which they haven’t) Newtie and Company are a bunch of bitchy little school girls and Ron Paul is simply a cantankerous old crank. There is not a single candidate that is running that can meet your definition of a classical liberal.

      Hell, with my record in business, I’m no better than Romney. I’ve fired and laid-off people, too. I’ve taken advantage of tax reducing strategies, I’ve accepted community development grants, low interest loans for equipment and negotiated tax holidays for building new plants in new locations. I did what was in the best interest of the businesses, the owners and the stockholders because you see, if a business can’t make a profit it can’t pay salaries, taxes and vendors…period. The only reason for a business to exist is to make money. That’s it. That’s all, the ONLY reason.

      I must be a communist or at the very least a RINO.

      Fact of the matter is that we have to choose someone and defeat the bigger danger to America, Obama and it is one of these guys because they are the only game in town. Said it before and I’ll say it again, anyone on our side is better than Obama, even Captain Ron and I will support the nominee and vote for the Republican. It is easy to pick at each one of them and tell me why they aren’t acceptable, so I’ll ask again – who is it? Who will you support? What trade offs are you willing to accept?

      I say this in all good humor, Professor Black3Actual – since you will either have to accept some trade-offs or not vote at all and by not voting, support Obama – who gets the Black3 stamp of approval?

      • LOL, points all well taken. And fear not, there is a very practical side to my nature. Unfortunately, the time has not come for the form of politics to which I am best suited, and I pray it never does as I negotiate best in 5.56 mm ball.

        As for my comment about what we have now not being capitalism, IT IS NOT! Venture capitalism is, yes. But what you call venture capitalism and the free market today is actually a hybrid of the collective where the stock holder is used to socialize the risk for the corporation backed by government promise to further extend the socialization through govt. subsidies and bailouts. You may try to argue with me as to the reality of this situation, but this is EXACTLY what we have.

        In truth, the historic record is such that corporations – as we know them – were once VERBOTEN! Lest we forget the trouble our founders had with the east India Tea Company (among others). I do not see how the economic system we have now can or even should be allowed to continue. It threatens individual liberty, Utah. Plain and simple.

        We have turned corporations into perpetually immortal PEOPLE, only with GREATER rights than those who supposedly own them. Sound familiar? It should. It is essentially the same problem you and I share with the way our govt. operates today in relation to the citizens.

        His support for this system disqualifies Romney in my eyes as much as Newt’s support for other Progressive ideas does him, and the nutter’s refusal to acknowledge the threat of Islam does his. What I can’t understand is your opposition to Santorim. He would seem the better choice. Romney has PROVEN he is at least as “big govt.” as the rest, but Santorim comes with the advantage of NOT having explained why he did what he did (which returned real results – the compromise you always tell me I must accept) while NOT having ever claimed to be a progressive.

        I’ll keep repeating this (as it seems to keep getting lost in the fray). I can force myself to vote for Santorum, but NOT Newt or Romney – sorry. I refuse to vote “lesser devil” when I KNOW I am facing that choice. At least with Santorim I do not KNOW he is Progressive (least not at this time).

      • “The only reason for a business to exist is to make money. That’s it. That’s all, the ONLY reason.”

        The Protestant work ethic is what made the free market work. Without it, the left’s attacks on the market become legit. So if this is the ONLY purpose of a company, then I guess I disagree.

        I had the foolish notion that the best way to run a successful business was to SERVE my fellow man by providing a good or service he/she found valuable enough to pay for. Now that I know the ONLY purpose is to make money, I will start a farce corporation and start feeding at the public trough – knowing full well that you and the rest of the conservative crew will agree and praise me for the purity and virtue of my profit – however so attained (if that is the ONLY purpose for a company to exist).

        • Then what you propose is not a “business” – at least not by any definition that I know.

          When you can tell me how a business can survive by being a perpetual break-even or a money loser, then maybe I’ll rethink 30 years of successful management.

          And you are foolish if your notion that the best way to run a successful business is to SERVE your fellow man by providing a good or service he/she found valuable enough to pay for – if the business doesn’t turn a profit. Businesses do not exist to SERVE our fellow man, they exist to conduct economic transactions for a gain. They can only do that if they have something that a buyer wants to buy at a price were the buyer is willing to pay and the seller is willing to sell. If they don’t then they are charities…or bankrupt.

          And as much as you marginalize my choice based on the business acumen of Romney, you just made a choice based on pure social conservatism. Other that that, what does Sanatorium have to offer? 9 years as a lawyer? 16 years as and elected politician? What did he do in his terms in the state or federal government that lead you to believe he is the one? Was it endorsing RINO Arlen Specter over conservative Pat Toomey or was it his vote for a tax increase for public financing for the new stadium for the Steelers – public financing for a private business – that led to your decision that he is the closest to perfect?

          I’ll vote for him if he is the nominee but I simply think that he has just as much baggage as Romney with not near as much upside. He’ll sure ban gay marriage and late term abortions (positions I support) but I have a hard time seeing a President Santorum leading an economic resurgence.

          But then I’m probably not an authentic Christian, either…

          • First, it IS a business: how well it does depends on the product/service and the abilities of the particular businessman. Again, if the ONLY purpose is to make money, then the left is correct and business as you describe it is IMMORAL! Period, end of story, concede the field and of argument and consign yourself to trying to force your will over theirs as it is the only thing you have left. Now, I understand you think theory is of little account in the real world, but I would STRONGLY caution you that most of the things Obama is doing and to which you and I BOTH object is APPLIED THEORY!

            As for being foolish about my idea of serving my fellow man: you just told TJ and old Ben to stuff it and dissed the founders’ ideas as to how the economy should operate. Forgive me, but I’ll stand as far away from the ground upon which you’re treading as I can on this count. But I’d suggest you might want to re-read Leviticus and God’s command to do business FAIRLY! I should think there is a notion of something other than profit in that command, but that’s just me. 🙂

            As for the idea that one must be a businessman to know how to run the country: again, what business did TJ run, or many of our founders for that matter? Were they unqualified to the business of governance? The idea that we have to have “experts” is PROGRESSIVE – whether they are government or business, they are STILL experts. I would suggest that, if he was NEVER employed but the man KNEW the ideals and principles of LIBERTY, then WHOEVER he is (or she, ladies) would be INFINITELY more qualified than ANY of the current candidates. This argument that a person MUST have business experience to be good for the country doesn’t wash with me. IT IS FALLACIOUS REASONING!

            If Romney is the nominee, I suggest you PRAY! Obama can and will beat him. Mark my words.

            Now I am puzzled by something. What’s with the “authentic Christian” comment? Brother, i sure hope that is intended for someone else as I have NEVER questioned your faith. I “try” not to do that with ANYONE as we are commanded NOT to do so.

  2. Huntsman may not be the Republican’s cup of tea, but he at least has a plan for dealing with the mega-banks that wrecked our economy…

    From that bastion of cogent political discourse, The Bangor Times, comes this….

    Jon Huntsman, the former Utah governor, wants to impose higher fees on those top six banks: “We can no longer tolerate banks that are too big to fail,” Mr. Huntsman said, an assertion that should get universal agreement.

    His plan, though, is not merely to punish banks for their success. The funds generated by the fees would be directed at reducing corporate taxes on companies outside the financial sector. Mr. Huntsman, who was U.S. ambassador to China from 2009 to 2011 and who speaks Mandarin, bases his economic strategy in large part on opportunities he sees in Asia.

    Time magazine columnist Joe Klein wrote recently about Huntsman’s economic vision, saying it “seems more sophisticated than the plans put forward by any of his opponents — or the cautious pro-Wall Street policies pursued by Obama.”

    Mr. Huntsman told the columnist that he believes the best and brightest college graduates are lured by Wall Street and other banking jobs rather than starting their own businesses or joining other entrepreneurs. “What we are losing is a generation of innovators,” Mr. Huntsman said, “a generation of new products and technological breakthroughs.”
    There is precedent for government intervention in limiting the size and reach of some businesses; media, utilities and telecommunications top the list. So preventing banks from becoming so big that their troubles become everyone’s troubles is a reasonable step to take after this worst recession in 75 years. Doing so in a way that also boosts domestic manufacturing is a stroke of brilliance. It puts regulation on one sector of the economy while unfettering another sector.

    Mr. Huntsman and his economic ideas deserve more attention from GOP voters.”

    Maybe not perfect, but as a place to start the debate, it ain’t bad.Unfortunately, as with all concrete ideas put forth in the silly season, he will be ignored. Maybe once a pol has stated his position clearly, he is no longer news, there is no mystery; time to move on the next pretty face.

    • “His plan, though, is not merely to punish banks for their success. The funds generated by the fees would be directed at reducing corporate taxes on companies outside the financial sector. Mr. Huntsman, who was U.S. ambassador to China from 2009 to 2011 and who speaks Mandarin, bases his economic strategy in large part on opportunities he sees in Asia.”

      Redistribution – No wonder the Bangor Times likes him.

    • The banks had a LOT-O-HELP messing things up, and much of it came in the form of a creature with a “D” behind its name. This is an issue that Party OWNS. It can only claim minor assistance from the right.

      As for Huntsman, he was a no-go from the word go. The “R’s” know a REAL “D” when they see one. He can’t even claim to be a RINO.

      (see, Utah, I ain’t gone totally over to the dark side. I still know where the majority of the blame game goes 😉 )

      • Jon Huntsman, Jr. is a weird guy. I lived in Utah during his terms as governor and he governed the state as a conservative but that is actually pretty easy in Utah. The only non-conservative parts of the state are downtown Salt Lake (big gay and artist communities) and Park City (So-Cal expats).

        I can’t figure him out. The fact that he worked for Obama and then can turn around and run against him sort of grates on my sense of loyalty, I guess. I just find that a little off-putting.

        His tax plan was ranked the best of all of them by the Tax Foundation with a B+ grade, Santorum got a D-.

  3. Well, I’m done being a dick tonight – it is almost 1 am here in Edinburgh and I’m about to watch LSU/Bama on ESPN America – no sleep tonight.

    Just imagine the high quality commentary coming tomorrow night after 36 hours of no sleep… Should be stellar…

    • Dick? You must be seeing something I’m not. In my estimation, you’re just making your case as best you know how (which is a darn sight better than most, my friend).

      ROLL TIDE!!! (sorry, Utah)

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