Venture Socialist Attacks Capitalism

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.

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10 Responses to Venture Socialist Attacks Capitalism

  1. notamobster says:

    Very effective.

    “it’s like watching an old friend bleed and die. ”

    You know, an old friend you just held captive and starved to malnutrition.

  2. R.D. Walker says:

    An email at NRO…

    I nearly choked on my Cheerios when I read that GST employees were blaming Bain for their downfall. I worked at GST Steel in Kansas City for four months in 1997 immediately after leaving the Navy.

    Why only four months? Quickly after I started, I surprised to learn that several of my fellow USW Local 13-represented employees, mostly millwrights and electricians, we’re making between $100-130k. This was mainly due union-mandated overtime which, at least on a few occasions, consisted of the employees bringing in sleeping bags and pillows and sleeping in the shop. It would be hard for any company to stay competitive while paying double-time union wages to get their beauty sleep, but that’s not the half of it. The union employees obviously didn’t think they had it easy enough, so they went on strike in March of ‘97. The plant shut down for a couple of weeks until it re-started under the operation of management and non-union workers. The strike lasted a couple more months. I had a family to support, so I couldn’t afford to wait. I took another (non-union) job with another company. They shuttered the plant for good a few years later.

    That’s Bain’s fault? Just classic.

  3. R.D. Walker says:

    Even MSNBC is disgusted with Obama’s demagoguery.

  4. James says:

    The only valid comparison is what would have happened to GST Steel without Bain Capital. GST would have failed sooner.

    This post isn’t about GST or Bain, anyway. It’s about habitual professional liars.

  5. R.D. Walker says:

    Professional liars is right: Mitt Romney left Bain Capital in 1999 to manage the Winter Olympics, two years before GST Steel declared bankruptcy.

    Who was managing director at Bain when GST went tits up? Jonathan Lavine was the MFIC at Bain at that point. What do we know about Lavine? This…

    Obama’s current bundler list is full of financiers.

    Among them is a managing director of Bain Capital, the firm Mitt Romney founded, and whose name Obama and Newt

    Gingrich have sought to make synonymous with vicious layoffs and predatory financial engineering.
    Jonathan Lavine, the managing director at Bain, raised more than $100,000 for Obama, according to the campaign.

  6. Uke says:

    So what’s the deal with Joe Scarborough? He was the GOP rep from the 1st district of FL in the US House. I’ve also heard him described as a Paleo-Conservative, which would put him in the ranks of folks like Barry Goldwater (if true). But if he is that, I can’t imagine how he can stomach being on MSNBC.

    Does anyone actually watch/listen to the guy enough to know what he’s really about?

  7. notamobster says:

    He’s there to pretend they give a shit about conservative view. They find a diet “conservative” and give him a job. It makes them feel like they’re inclusive.

  8. Uke says:

    So you’d say he’s really a moderate, or something? That’s what I figured he was for a long time, until I heard a libertarian call him a Paleo-Conservative. Which sorta made my eyebrow pop.

  9. messup says:

    Bessemer Process. 1980’s. EPA.

    Steel-making in the USA was a simple juncture of cheap energy and “modern day” manufacturing.

    Trouble was, Bessemer process and EPA collided head on…EPA won. Just like in so many other instances. See, EPA is anti-capitalist(Cass Sustein, anyone?).

    Yep, Steel industry was shut down by regulations. Last one closed in 1980. Just like some 100-odd coal fired electricity producing plants are scheduled for closing in 2012 by EPA. And some 14 or so, coal mines are also scheduled for closing in 2012.

    Nah! Bessemer process based steel-making was doomed by its own successes. After the last plant closed, “cold-rolled” steel was tried for awhile, with marginal successes.

    See, the major problem was: 1) cheap energy and ore, 2) lo-cost transportation, and 3) efficient, lo-cost process. These three elements defeated USA in restoring it’s dominance in steel-making.

    Reasons? 1) Energy cost sky-rocketed, 2) rail transportation costs and new “spurs” were prohibitive (EPA, again), 3) efficient, lo-cost process didn’t exist.

    Enter NUCOR Scrap Recycling in Decatur, AL. From scrap, they can make steel “to order” by:pouring, rolling, stacking and shipping in one day anywhere in the world. This is done with hi-intensity electrodes, and extremely hi- temps.
    Their scrap is never ending, consuming 1 ton every second.

    Skirting EPA rules and regulations is how best American ingenuity can win EPA’s socialism. God Bless America. Amen.

  10. R.D. Walker says:

    Romney responds…