New Obama campaign ad. Go ahead and suffer through it. You need to see what the socialists are going to do.
First of all, let me point out this from Reuters.
Charles Bradford, an analyst at Bradford Research, blames the union, in part, for the failure of GS Industries to survive in the new global marketplace.
“If you look at the steel companies that went under at the time, all of them were unionized,” he said. “I’m not saying this was the only factor — these firms faced other headwinds such as cheap labor and a strong dollar … but the unions held them back.”
GST Steel was already in big trouble when Romney became involved. Bain Capitol was a private equity firm that specialized in depressed assets. That makes sense. You can’t really make money buying a business unless you bring some improvement to the table. If you attempt to buy a profitable business and run it just like the previous owners did, it is just about impossible to get any kind of return on investment. The sellers will want the productivity of the business baked into in the selling price. That leaves little opportunity for the buyer. No, to buy a business and make money, you have to improve the business.
Without an infusion of capital, GST Steel was goig to go belly up. Bain did their due diligence and acquired the business and worked to turn it around. It turns out, however, that they couldn’t get it done. First, the entire steel industry is increasingly depressed due to foreign competition and reduced demand. Secondly, the union at the plant has gone on a long, harsh strike. By the time the strike is over, cash is gone, sales aren’t forthcoming and the business is no longer viable. No one is willing to risk more capital on the firm.
Bain has to tell its investors that it failed to turn around the business. They go about salvaging what they can of the investment by selling off the assets. They end up making a fair, but far less than planned, return on the investment. They move on.
The workers are out of jobs and bitter as all hell. They blame Bain and Romney. Of course if Bain or some other private equity firm hadn’t injected capital into their business, the plant would have been shuttered and they would have been laid off three years earlier. Bain didn’t acquire a healthy business. They took a chance on a failing business. Market conditions and labor issues kept them from saving it. They did, however, extend the life of the business.
It happens. Businesses fail. It happens all the time. There are few blacksmiths, coopers, and cobblers left in the world. We can all feel sorry for them, but that is the way the world works. Creative destruction means economic growth and businesses exist to create and sell product, not to create jobs.
Furthermore, Obama’s venture socialism far worse than Romney’s venture capitalism. Recall that nobody is working at Solyndra or the other failed venture socialism boondoggles in which Obama has invested billions of taxpayer dollars. At least Romney used funds that were voluntarily given to him by investors who approve of his investment strategy. Obama uses funds that are taken from people without their consent and under color of law. Unlike in the case of Bain Capital, the people from whom Obama takes funds have no say whatsoever in how he uses them.
Furthermore, venture capitalists get only a few chances to succeed. Once they fail, few are willing to given them more money to invest. Jon Corzine isn’t likely to convince many to allow him to invest on their behalf in the future. Venture socialists can fail over and over and over and the funds never dry up. Since they aren’t given voluntarily, they just keep on coming.
Finally, a venture capitalist who fails spectacularly is shamed and, possibly imprisoned. Venture socialists may get voted out of office, but will go on to make millions in book deals and speaking fees.
It is ironic as hell that the author of job-killing venture socialism is running the above ad against a standard capitalist. Disgusting actually.