I am stunned by all the controversy surrounding presidential candidate Mitt Romney’s time at Bain Capital (the private investment company that he founded). What’s even more amazing is that the controversy was started by Republicans running against him for the presidential nomination.
These Republican candidates have accused Romney of buying several businesses and then laying off or firing employees so he could reduce costs and then turn around and sell the businesses for a profit. Wow, imagine that—a businessman who wants to make a profit.
Now, radical liberals like Al Sharpton and Larwrence O’Donnell, etc. are having a field-day with this issue. The first question you should ask radicals like them is, “how many private sector jobs have you ever created?” I think we all know the answer to this question—none, zero, nada!
Their arguments have absolutely no intellectual underpinning whatsoever. So, allow me to give these radicals a simple lesson in economics. Last year two friends of mine became engaged to be married and ultimately did get married. They both owned their own home. They couldn’t afford to keep both houses, two sets of furniture, etc. So, they decided to sell one of the homes and combined all the items from both houses and got rid of the duplicate or unnecessary furniture (to reduce costs).
So, when companies like Romney’s decides to buy a company, in most cases they have determined that there are inefficiencies that need to be eradicated. Thus, tough, but necessary, decisions have to be made. Why are they necessary, you might ask?
Again, to the radical liberals who have never created a job, lesson two in economics. The first responsibility (legally and morally) of a business owner is to the shareholders or investors; not to the employees! Now, every smart business-owner knows and understands that having happy employees are the keys to making money; therefore no business owner takes joy in having to reduce his workforce. But, in order to provide jobs for the many, you sometimes have to cut jobs for the few.
An entrepreneur starts a business, not to create jobs, but to make money. Every business owner hopes he will have to hire employees. That means there is a growing demand for his product or service; but that is not his raison d’être—making money is.
Legally, management can be taken to court for mismanagement if they do not safeguard the capital of investors. So, be weary of those who think that creating jobs are the reason people start businesses.
Here is something else to think about. Have you ever wondered why companies agreed to sell to Romney’s firm (Bain Capital)? This may come as a surprise—but to make a profit!
Romney has absolutely nothing to be ashamed of and there is no need for him to justify his desire to make a profit in his deal-making. If anything, Romney’s experience at Bain Capital proves he is able to make tough decisions without allowing emotions to cloud his judgment. This is a great quality for any strong leader to possess.
This controversy provides a sharp contrast in the fundamental difference between Republicans and Democrats in how they view capitalism. Republicans believe that increasing shareholder value is the primary goal of business ownership. Democrats believe that increasing employee value (i.e. giving them a job) is the primary goal of business ownership.
When you decide to become an employee, you necessarily also decide to put your future in the hands of your employer. There is never any security in anything that you don’t own. If you are on any government program, they decide the rules of engagement. If you are on welfare, they can mandate you taking a drug test. If your parents allow you to borrow the family car, they can decide what time you have to return the car. If you join the Catholic Church, they decide what your belief system is.
Republicans understand that there is no fundamental right for an employee to have a job; Democrats believe that people have a constitutional right to a job. If Obama and Democrats want this to be one of the key issues during this presidential race; then I say bring it on. Republicans will win this debate any day of the week.
There are many liberals in Congress who want to put restrictions on the buying and selling of private enterprises. To them I say, “this is a Capitol offense.”