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Newt Gingrich and Capitalism, Mitt Romney and Bain Capital

Newt Gingrich’s recent criticism of Mitt Romney has landed him in hot water.

At issue is Bain Capital, a venture capital firm Romney ran, which made its money buying up troubled businesses and selling the assets at a profit. Gingrich questioned the validity of that business experience as it relates to qualifications for being President. Gingrich’s comments were labeled as anti-Capitalist and even compared to policies of Democrats and President Obama.

It was argued Bain did the things we advocated for during bail-outs. Didn’t we argue for letting failing businesses fail, be bought by investors like with the process governed only by Market forces? Yes, we did. How then, can Gingrich’s comments be seen as anything but anti-Capitalist?

The answer lies in asking where Romney’s business experience came from; not in simply acknowledging he has some and moving on. The question is “What sort of business experience are we talking about, exactly?”

Near my home is a property recently bought by a convenience store chain to build on. To build the new store an existing building was torn down. The key point here is that the company which demolished the building and cleared the land is not the same one building the new store.

Why? Because the skills and experience needed for the two tasks are very different and, while they may be lumped together under the general label “construction,” to suggest a skilled demolition company is automatically a good builder because it can tear down is readily seen as a flawed premise. Just so with Romney’s appeal to his business experience and Speaker Gingrich’s critique of that appeal.

Romney’s business experience certainly qualifies as Capitalist and Free Market just as a demolition company is a construction company. But his experience is in dismantling businesses, not in building them, creating jobs, putting people to work and the other portions of Capitalism and Free Markets that happen after old things are destroyed.

The President’s job will not be to tear America down like a vacant and derelict building. It will be to fix what has fallen into disrepair; to restore the values and and ideals that drove us to first place among the world’s nations. That was Reagan’s strategy after the disaster that was Carter. He didn’t tear America down or break her up as if some or all of her was past saving or no longer relevant. Instead he cast a bold, bright future of shining hilltop cities with their best days ahead of them.

Romney’s experience in dismantling things, as excellent as it may be, is better suited for an America at sunset; not for a time when it is morning in America.

Some may try to apply my analogy to the political and suggest Romney would be great at dismantling political things such as ObamaCare and the rush to Socialism we are seeing in Washington DC. But Politics and Business are very different enterprises. Skills in one may not readily transfer to the other.

Not even Romney is arguing his political experience better qualifies him for the Big Chair. There is a good reason for that.

If dismantling powerful political structures is the goal, no candidate’s experience compares to Newt Gingrich. He put the Contract with America’s issues front and center and forced votes on them. He led and oversaw the flip of the House from Democrat to GOP control. While Bill Clinton often takes credit for balancing the budget, spending bills originate in the House. Newt Gingrich was Speaker of the House during that time. No list of accomplishments is complete without remembering passing Welfare Reform. Again, Speaker Gingrich led that effort.

This is the context in which Gingrich’s comments need to be placed and evaluated. Not the frantic search for an easy sound bite driven by a 24 hour news cycle; but the thoughtful and honest evaluation of the actual skills and talents available to bring to bear on the challenges facing our Republic in the midst of difficult times.

Seen in this light, Speaker Gingrich and his comments and evaluation don’t seem anti-Capitalist or anti-Free Markets at all. In fact they seem wiser and more thoughtful than he is being given credit for.

What of Governor Romney? His business experience, as excellent and as Capitalist as it is, does not produce the best skill set for running a nation facing the challenges we do in 2012. The Governor is a fine man and successful businessman. He’s just not the best man for the job.

COMMENTS

  • freemarketmitt

    MICHAEL MOORE WAS APPLAUDING GINGRICH TODAY!!

    What Newt said is a direct attack on Capitalism and Perry doesn’t understand what he’s talking about. This is why MSNBC host are filled with glee and said Newt sounded like Elizabeth Warren.

    NEWT SAID ROMNEY AND HIS RICH INVESTOR FRIENDS SHOULD OF ONLY MADE A 90% RETURN INSTEAD OF A 200% RETURN.

    This is not conservative and it’s insane.

    First, it’s not just fat cat investors. Does Newt or Perry know whose the biggest investors at Bain is today? The California state Pension fund with 600 million dollars.

    Firefighter funds give to Bain and other private equity firms. Should they return any returns made from the vulture capitalist?

    Secondly, it’s not Romney or Bains job to dictate how much return I make because it’s MY MONEY!!

    How can Romney or Bain go back to investors and say well we could have gotten you 200% return but we’re only going to give you 90% return because we’re feeling compassionate and 200% return is too much.

    They can’t do this. It’s my money and I took the risk with my capital. It’s not like Solyndra where there’s zero risk because it’s tax payer money and if the company fails then more taxpayer money is just wasted. ROMNEY WAS DEALING WITH PRIVATE CAPITAL SO THERE’S RISK INVOLVED!!

    This goes to the heart of economic freedom. This will hurt republicans like O’Donnel said on MSNBC as he was praising Newt. He said the argument is stronger coming from someone who is supposed to be a leading conservative.

    This will damage the republican party and Newt Gingrich and Rick Perry’s words will be used by liberals to go after every industry where they feel they’re making too much money.

    THIS IS WORSE THAN NEWT AND RIGHT WING SOCIAL ENGINEERING WHEN HE WAS TALKING ABOUT PAUL RYAN!!

  • WillWong

    Examining that record is fair game! Attacking the messenger is not going to help Romney against Obama in Nov!

  • quill67

    Capitalism is not doing everything you want just because you can. Yes, under capitalism you are free to make decisions regarding your property. HOWEVER, capitalism also requires a strong morality.
    We don’t think it is proper to make money by cheating someone–just because we can.

    We don’t think it is proper form companies to collude to reduce competition–just because they can.

    I do not think it is proper to pile up debt on a company, pay yourself huge dividends and then get someone to buy this not debt-ridden company—just because you can.

    Some of these actions we have laws against. Others such as what Bain capital did, it would be too difficult to write laws against. But that does not mean that those actions were honorable.

    I suggest you read Adam Smith, F.A. Hayek, Henry Hazlitt, and Milton Friedman. All free market believers but each understood the importance of individual morality and the usefullness of some limited laws by which to limit the more coarser elements of human behavior. These men were not anti-capitalist.

  • freemarketmitt

    Did you hear Obama using the language of Mitt Romney when he talked about streamlining the Government to make it more efficient.?

    Obama knows the message of economic freedom and opportunity is better than big government and class warfare.

    I WANT A WARRIOR FOR FREE MARKETS AND ECONOMIC FREEDOM NOT SOME THAT SOUNDS LIKE ELIZABETH WARREN!!

  • buddyp

    I’d add that it’s unfair for the diarist to characterize Romney and Bain’s role as analogous simply to a demolition company.

    First, tell that to all the shareholders and employees and customers of Staples, Sports Authority, and others they helped grow.

    Second, a relevant, transferable skill and insight here that many may overlook is the ability to understand how a business generates value and ROI, and what motivates potential investors. I want a president who understands such decision-making (the criteria and the process) so he can apply that insight to policy — fiscal policy, regulatory policy, etc. — to create positive conditions for investment and growth.

    Third, another relevant insight is a sense of efficiency vs. waste, of where sufficient value is being generated and where it is not. We need the federal government to be leaner and more efficient — to do less and to do more efficiently what it should continue doing — and I like the idea of a president who has a good general sense of what is worth keeping, what is worth getting rid of, and what can and should be made more efficient and how.

    We currently have a community organizer / law professor as president.

    We could replace him with a guy (Gingrich or Santorum) whose career has been in Washington, D.C., mostly as someone who talks and votes and has input into legislation (i.e, a member of Congress, albeit also as leader in Gingrich’s case), and the rest as a sort of D.C. influence peddler / political strategy adviser, and with no substantial executive experience, let alone, let alone in the private sector.

    Or we could replace him with a guy with strong, effective, successful executive experience in the private sector (for-profit and not-for-profit [Olympics]) and the public sector (albeit with some policies some can reasonably find objectionable — after all, it was MA). A guy with the insights I mention above.

    I can’t fault anyone for disliking Romney on the basis that he can’t be trusted to govern as conservatively as his campaign rhetoric, given his appalling record of flip-flops. But insofar as we consider his experience, skills and insights, vs. those of Gingrich or Santorum, I say BIG advantage Romney.

  • buddyp

    Meant my comment above to be as reply to freemarketmitt’s comment.

    This is my first time saying “kowalski”. Someone told me it’s when one “replies” to (follows up on) his own comment. Did I use it correctly? Or is there more to it than just a follow-up “reply” to one’s own comment?

  • shinglejim

    Well said good sir!

  • aesthete

    I really wish people defending Newt’s ad would watch it (or at least part of it), and realize that it is not nearly as nuanced as they would like for it to be. Methinks that the general tenor of the 30-minute ad can be ascertained within the first minute, and that people would do well to watch it before absolving Newt.

  • buddyp

    As freemarketmitt said, Michael Moore applauded it.

    From the NYT:

    ?I wondered who they stole from my crew,? Mr. Moore said in a phone interview. ?It was fun to hear what I have been saying for 20 years, not just by any Republican candidate, but Newt Gingrich.?
    http://www.nytimes.com/2012/01/16/business/media/romney-film-shows-hollywood-techniques-at-play-in-politics.html

    Now, there are times when people of very different ideologies and perspectives can agree on something, so I’m not saying something is always wrong if someone on the other side of the spectrum believes or likes it, but this case is NOT one of those exceptions.

  • buddyp

    Newt — himself and via his SuperPAC — started by strongly implying that Romney did something terribly immoral by hurting a great many people out of greed.

    When confronted and asked to defend / stand by the attack, Gingrich (1) makes the exceedingly general assertion that everyone should consider it obviously ok for one candidate to challenge the record of another candidate (as if the nature of the attack weren’t the issue here (which it is) and (2) shifts to basically “Well, the Democrats will use it, so it’s better for it to come out now than in the fall”, again skirting the issue, which is whether or not Newt will stand by the strong implication that Romney did something terribly immoral, and if so, what.

    And of course hosts of network news programs and other reporters are just so incompetent that they apparently don’t pick up on Gingrich’s evasions and press him to answer the real question at hand. It’s so lame.

    And by the way, we see Gingrich defenders (more accurately described as wildly anti-Romney folks) playing the same game as Newt on this matter. Also very lame.

  • Common_Cents

    It’s that simple.

  • acat

    null