On this first in the nation primary day, the “Nomneys” on the attack, trying to score votes by blasting Mitt Romney and his tenure as the head of Bain Capital, a private equity firm.
Here's a portion of a recent ad by “Winning Our Future”, a pro-Gingrich Super PAC, that'll give you the flavor of these attacks:
“A story of greed, playing the system for a quick buck… a group of corporate raiders led by Mit Romney, more ruthless than Wall Street. For tens of thousands of Americans, the suffering began when Mitt Romney came to town."
Sounds scary, right?
Is Bain in particular and private equity investing in general morally bankrupt?
Is Romney a corporate raider more ruthless than Wall Street?
To answer the question, you first have to understand what private equity is, which the critics clearly don't.
Private equity firms look for companies that have lost value.
They buy those companies, and then invest more in them.
That means everything from new strategy to new equipment to new paint on the walls.
That investment costs more money, and usually that leads to borrowing, but it is borrowing the company could never have gotten in its previous state.
Consider Axle Tech -- an manufacturer in Michigan that supplies our soldiers in Afghanistan.
Since Carlyle Group took over the company in 2005, it has doubled both production and employment, 30 percent of which is a unionized workforce.
Likewise, the "victims" of Bain were out of favor and performing poorly.
Which is to say, if Bain hadn't come along, these companies might have closed their doors and shut down entirely.
Not a recipe for job gains.
What about the charge that Bain was a hit and run investor -- in it for a quick buck?
Not if you look at the facts.
The Wall Street Journal analyzed 77 of the companies Bain invested in - their relationship lasted as long as eight years.
That ain't short term to me.
Look, the real critics of private equity believe the targets of private equity firms would have been better off struggling along on their own.
But doesn't it make more sense to transform a business into a thriving entity rather than watching them hang on by their fingernails hoping things get better? That's really what the critics are talking about. Wishing, hoping, and waiting. The charge that private equity firms fire people is true.
Often, the first out the door is senior management. Others may follow.
But if the firm is successful more people are hired.
Even the Federal Government knew enough to try slim down the automakers they bailed out three years ago, pressuring them to slim their bloated dealership networks.
Slashing thousands of jobs.
I don't have a problem with critics discussing how well Bain performed -- 22 percent of its investments went belly up.
But the firm also launched Staples, Dominos Pizza and Sports Authority.
Today those companies employ a total of nearly 116 thousand people.
And, Bain investors tripled their money.
Other companies that have benefitted from private equity investors include the following that you might have heard of GNC, Burger King, and HCA.
So was Bain greedy? Maybe.
Ruthless -- well -- in their quest for profits, yes.
But many people benefitted from their efforts.
In other words, I'd say companies like Bain do more good than harm.