In his May 22 column, Bob Martin says the Obama administration “does not understand market economics,” and is “lying for political purposes.”
The main thrust of his screed is that private equity firms, such as Bain Capital, are wonderful, and anyone questioning their goodness is a liar and a demagogue.
Many of us understand how private equity firms work. They typically buy distressed firms with the goal of shaping them up or bleeding them to death. And they typically don’t even use their own money.
They raise the money from wealthy investors.
Their loyalty is to themselves and their investors, not to the firms in which they take ownership.
If streamlining operations is not enough — closing factories, cutting benefits and laying workers off — the assets of the company go on the auction block while pension funds are looted and the obligations passed onto the Pension Guaranty Corporation.
The private equity guys make out either way and, through the “carried interest provision” they got written into the IRS code — they only have to pay taxes at the capital gains rate of 15 percent.
President Obama says of Romney that “his main calling card for why he thinks he should be president is his business expertise ... And when you are president, as opposed to the head of a private equity firm, then your job is not simply to maximize profits. Your job is to figure out how everyone in the country has a fair shot.”
Romney says he “enjoys being able to fire people” and he “doesn’t spend much time worrying about the poor.”
President Obama, after receiving an Ivy League education, went back to the inner city to try and make things better. Romney devoted his energy to shutting down factories and reducing wages and now outrageously claims those experiences prepared him to be president.
Americans know that private equity can make our economy more efficient.
But they also know it’s no way to prepare a leader to show the compassion and leadership that Americans need from their president.