My blue-collar butcher father used to always tell me, “Son, I’d love to hate rich people. But no poor person ever gave me a job.”
Newt Gingrich and Rick Perry need a lesson in capitalism from my father. Their attacks on Mitt Romney this week are not just disgusting and insulting, they are ignorant. They’ve ruined their presidential ambitions and damaged their credibility as conservatives.
I’d expect that kind of talk from President Barack Obama and his Democratic friends in Congress. Democrat politicians hate businessmen. They’ve never run a business or created a job, so business is like a foreign language to them.
Most of them are jealous of anyone who knows how to make money, because they don’t know how. And because successful businessmen rarely support Democrats with contributions, politicians like Obama see them as the political enemy — a target to be demonized, punished and bled dry, so their money can be redistributed to buy more Democratic voters.
So we expect this kind of anti-business rhetoric and class warfare out of Democrats. But Newt and Rick? Now Republicans are turning on capitalism too? It’s time for a lesson in capitalism as it relates to Mitt Romney and Bain Capital.
In a capitalist society, businesses (large and small) can run into trouble and face bankruptcy. I know. I’ve run businesses my whole life. When that happens you can either close the business, or go to an investor like Bain who is willing to risk their capital, i.e., cold hard cash, to save your company.
So businesses like Bain Capital come along and invest tens, even hundreds of millions into your dream. They are pure risk-takers, like a Wild West gunslinger combined with a riverboat gambler. Now comes the hard part — turning your failing company into a winner.
Unlike government failures, failure in the private sector means the loss of hard, cold cash from the risk-taking investor’s personal pocket.
So what does Bain Capital do? They’ve got to work fast. They analyze every inch of the business. To give the most productive part of the company a chance to survive, the cost cutting begins. Nothing is off the table. Unproductive employees, fat-cat overpaid executives, failing product lines, and entire underperforming divisions are cut.
As painful as this may be to those whose jobs are eliminated, the alternative is closing the entire business and losing many more jobs. Unlike Barack Obama, Bain is actually saving jobs.
Even better, if the game plan is successful, the company will now be positioned to expand and create jobs. In capitalism you must often cut first to expand later.
It is that simple.
Which is better? Closing the business today, in which case everyone loses their job, or bringing in a Bain Capital willing to risk millions of their own money, in the hope that most jobs will be saved and the company will then be positioned to add many more?
That is the very essence of capitalism, accomplished with private capital, not some government program funded with money extorted (or as Obama calls it, "redistributed") from taxpayers.
Obviously few politicians — even Republicans — understand how business or capitalism actually works. And therein lies the problem for the U.S. economy.
Do risk-takers like Bain Capital make money? The answer: Not always. Although, like any business, if they don’t make more than they lose in the long term, they too will be out of business. Their winning gambles can be financial windfalls, but they often come at the expense of two, three, four, or more losers for every one winner.
But shouldn’t you be rewarded with a big payday for risking your own money to save and turn around companies that are failing, or under-achieving? If you think that is unfair, head to Cuba. Because without risk and reward there is no America. There is no capitalism.
Without risk and reward, you get 1956 Oldsmobiles and donkeys pulling carts to your ramshackle hut in Havana. Socialism doesn’t create jobs. Socialism doesn’t work. No, there aren’t rich people (if you don’t count the corrupt people who take charge of the country), but unfortunately there aren't jobs either. With socialism, the misery is shared by all.
Only people who have spent their lives working in the safe, sheltered world of government, with lifetime job security, bloated salaries, early retirement, and obscene pensions — those totally ignorant of profits, losses, and bottom lines — can deny Bain Capital is performing a positive function that should be praised, not demonized.
Do you know why government can afford to employ far more people than it needs (even if they are incompetent), pay them far more than they are worth, and keep them employed forever while losing billions of dollars? It’s because it’s not their money, so they don’t care. It's YOUR money.
When government bleeds losses, they just raise taxes, stealing more from the taxpayers, or borrow it from China, or just run the printing presses at the Fed (which steals from us all).
This is how the U.S. government has managed to employ an unfathomable 21 million employees, while building up an unsustainable $15 trillion debt, plus an additional $100 trillion in unfunded liabilities. This debt is so huge it can never be paid back. The fact is America is insolvent.
As a libertarian-conservative, I’m not a big fan or supporter of Mitt Romney. I find him to be a big-government, wishy-washy, liberal Northeastern Republican. Not my type. But as a capitalist evangelist, and passionate fan of free markets, I certainly defend Romney’s business career.
We need a president who will take a business-like approach to government. We need someone who understands how to cut a budget, downsize under-performing assets, kill off entire departments, and fire unnecessary employees.
That’s not a problem. It's a dream come true!
Wayne Allyn Root is a former libertarian vice presidential nominee who serves as chairman of the Libertarian National Congressional Committee. He is the best-selling author of "The Conscience of a Libertarian: Empowering the Citizen Revolution with God, Guns, Gold & Tax Cuts."
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