Sometimes, businesses fail. To survive, any business has to stay a step ahead of the competition, looking for ways to improve its products and services, get more out of its workers, and operate more efficiently. That is at the very heart of capitalism. Become effective and efficient, or disappear.
We’ve come to expect unions and big-government advocates to attack basic capitalist principles. But for private sector advocates like Newt Gingrich and Rick Perry to stoop to demonizing Mitt Romney’s business record is wrong-headed.
From 1984 to 1999, Mr. Romney headed up the investment firm Bain Capital. His record there was impeccable. Investing in fledgling firms and taking control of failing businesses that were at risk of total collapse, Bain during his tenure had a remarkable success rate. Mr. Romney and his company were behind the growth of companies like Staples and Dominos—and the creation of 100,000 jobs.
Experts have found that Bain’s record under Mr. Romney was excellent. Despite generally investing in riskier businesses than other firms, the success rate was as strong as any company, and growth was superior.
Mr. Gingrich and Gov. Perry, however, are both claiming that instead of creating jobs, Mr. Romney destroyed them.
Certainly, some of the businesses Mr. Romney invested in failed, as these attacks note. But that’s the nature of capitalism—some businesses fail, and all you can ask for is to get the best possible chance. If Mr. Romney and his company couldn’t turn a business around, then that business never had a chance in the first place. Bain had a lot more hits than misses.
And yes, as critics assert, Bain sometimes cut jobs at the companies it controlled. But this, again, is the nature of capitalism. Like I said earlier, if a business wants to stay alive then it needs to focus on the things that it does well and the things it does efficiently. Jobs are not cut just to gut the company and fire employees for the fun of it; they are cut because the business needs to run more efficiently—or else the company could fail, costing all the employees their jobs. Once the business is running efficiently again, it can then grow and expand, hiring more people.
The only way around this simple fact of business—that jobs must sometimes be cut in order to fix a company—is to put the government in charge of all businesses, with bailouts every time a business fails because of its inefficiencies. I’d be willing to bet that Gingrich and Perry wouldn’t be in favor of that.
The simple truth is that right now, Mr. Gingrich and Mr. Perry are desperate. They’re lagging far behind the leaders in the primary polls and they risk becoming completely irrelevant, so they’re doing anything they can to try to save their campaigns.
It won’t work. For politicians who claim to be pro-growth and supporters of the private sector, Mr. Romney’s record is one to emulate, not attack.