Thursday, January 12, 2012

The capitalism excuse

Every scummy thing that a businessman does that is not illegal cannot be justified on the basis of free enterprise or capitalism. Many businessmen do have ethics. However, Mitt Romney has had some past ethical lapses. 

"As Henry Ford said, 'A business that makes nothing but money is a poor business.' While Republicans may love successful businessmen like Fred Smith of FedEx and even admire liberal entrepreneurs like the late Steve Jobs, the parasite and scavenger are not high on their list of respected professions. If Romney gets painted as a leech, he's done for, whether now or in the general election against Obama. "
-- Newt Gingrich "On the Record with Greta Van Susteren" said: 

I've raised the question, which I think is a totally legitimate question, what about some companies that Bain took over that went bankrupt. And all I've said is, you know, this isn't about free enterprise. I mean, this is one of those phony efforts to throw up a smokescreen. This isn't about capitalism. This isn't even about private equity funds. This is about one person who wants to be president of the United States."

There are two companies Bain Capital's acquisition of Ampad exemplified a deal where it profited handsomely from early payments and management fees, even though the subject company itself ended up going into bankruptcy. Bain bought the company for $4 million and used it for collateral for $20 million in loans before AMPAD went bankrupt with all of its employees losing their jobs. 

Dade Behring was another case where Bain Capital received an eightfold return on its investment, but the company itself was saddled with debt and laid off over a thousand employees before Bain Capital exited.

Dade Behring  subsequently went into bankruptcy, with more layoffs, before recovering and prospering.

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