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Where Is Romney’s Private Equity Pride?
For the last few days, we've been fighting over how involved Mitt Romney was in Bain Capital's business from 1999 to 2002. There have been some specific critiques of Bain's actions during this time -- that they were heavily involved in outsourcing jobs -- and Romney's response has been to insist that he left Bain in 1999 and had nothing to do with the company's subsequent actions.
But really, what Mitt Romney was doing in 2000 is beside the point. Romney founded one of America's leading private equity firms. What private equity does is take underperforming firms and make them more profitable, sometimes by closing facilities and sending operations overseas. If he can't defend Bain's 1999-2002 record on the merits, he can't defend its record from 1984 to 1999 either.
Romney tries to confuse this issue by focusing on a handful of firms he was involved in founding, like Staples and Bright Horizons. Essentially, he talks about his work as though he had been in venture capital, not private equity. But an essential part of private equity is shutting down things that don't work, or are too expensive. To succeed in private equity, you have to be comfortable being the hatchet man.
The funny thing is that, framed correctly, Romney could turn this into an asset. There are large parts of the government that don't work or are too expensive. There is a culture in government of continuing to do things just because we've always done them, and continuing to employ people because we have always employed them. This doesn't just make government expensive, it also crowds out resources that could be spent on improvements of public services.
A private equity mentality in the public sector could do a lot of good for making the government more efficient, and therefore serving taxpayers better. As I've written before, it's not the solution to all the problems in American governance, but it would be a good approach for some of them, and Romney could talk about why.
Romney's never going to convince people that he is likeable or relatable. He might be able to sell the idea that he's the heartless bean counter America needs. But first he'll have to drop the "Shocked, shocked, to find that outsourcing is going on in here" act.
(Josh Barro is lead writer for the Ticker. Follow him on Twitter.)
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