Thursday, January 19, 2012

Bain Capital Saved America

by Daniel Henninger - January 19th, 2012 - Wall Street Journal

Not only did Bain Capital save America, but no matter what turn Mitt Romney's political career takes, Bain Capital may stand as the best of Mr. Romney's lifetime contributions to the nation's economic well-being. If only he'd tell the story.

We are of course putting forth "Bain Capital" as not merely the Romney private-equity house but as the stand-in for the period of American economic history that ran from 1980 to 1989. Back then it was called the Greed Decade, with asset-stripping barbarians at the gate. Virtually everything about this popular stereotype is wrong. Properly understood, the 1980s, including Bain, were the remarkable years when an ever-resilient America found a way to save itself from becoming what Europe is now—a global has-been.

What a biased and self serving discourse on how the good things that resulted from free enterprise - purging its losers - justified the near elimination of competition from the marketplace and the creation of government regulations which banned new competition. The current system is dependent on government subsidies of big corporations doing things that government wants done so that businesses that collude with bureaucrats win no matter what the market does. Or at least that was the premise. However the massive failures of "green energy" companies proves that such delusions never work in the long run.

The problem is that Wall Street has abandoned competition because it desperately wants some security for big profits. I agree wholeheartedly with the premise - whenever there are "unused or poorly deployed cash and assets" it is not just the business that loses, so does society. This premise is the justification for companies like Bain that buy poorly performing companies and reorganize them to produce strong companies in their place. The well known creative destruction process of capitalism always means some get hurt. The value to society of free markets is too important to stop the process though. That does not mean the process can be corrupted and still claim it is doing good.

The problem is when the process is interfered with as has happened here in America. The true engine of free markets includes entry into the marketplace. That entry process has been severely constrained by big corporations and government conspiring to create subsidies, special deals, regulations and barriers to competition, under the guise of consumer and worker protection.

Wall Street and its defenders are extremely defensive about the corruption that has resulted from the elimination of competition and the protection of big corporations that has become the anything but free markets of modern America. That is the reason Wall Street attacks anyone who points out the flaws of the current system with such venom.

There was a lot of good done by companies like Bain Capital during the 1980s. It sure as hell did not save America though. What has occurred instead is a collusion with government that has damaged the free markets that will serve our nation best in the coming years. We must restore competition and end stupid regulations that only protect corrupt existing businesses if we want to see our nation prosper. A corrupt Wall Street is fighting against that with every ounce of its being. Wall Street is determined to use its power to promote the concept of risk free business. Government (through its power to tax) is expected to provide Wall Street bailouts whenever business fails. That is not free markets.


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