Presidential hopeful Mitt Romney argues that his success in private business is a major qualification to run the country. In 1984, he co-founded Bain Capital, a private equity firm that has invested in or acquired many well-known companies, such as Burger King, Domino’s Pizza, Staples, and The Weather Channel. Bain now has total assets of over $66 billion.
Private equity firms, like Bain, consist “of investors and funds that make investments directly into private companies or conduct buyouts of public companies that result in a delisting of public equity,” according to Investopedia. The role of these firms is not without controversy. It is ironic that two of Romney’s GOP contenders, Rick Perry and Newt Gingrich, argue that firms like Bain are “vulture capitalists” rather than venture capitalists. In quote widely circulated on the web, Perry said, “They’re just vultures. They swoop in, eat the carcass and leave the skeleton.”
That’s ironic because free markets and unfettered capitalism are stereotypical Republican positions. Such criticisms are usually expected from Democrats, not from strong conservatives like Gingrich or Perry.
Romney counters their claims by saying that he was mainly a job creator, not a job destroyer. By investing in new technologies, strengthening a company’s financial resources, or helping companies run more efficiently, private equity firms strengthen the economy and create jobs. Of course, the hope of all private equity investors is that they will make a fortune in the process.
The weight of public opinion appears to be on Romney’s side. Fifty-five percent of voters say his business record is a good reason to vote for him, according to a new poll by Rasmussen Reports. Only 20% say it’s a good reason to vote against him. And, 57% of voters believe that venture capital firms are better able to create jobs than the government. Only 25% say government programs are better.
Putting aside the brouhaha over Bain Capital, this Republican-led debate raises a deeper question: What’s the purpose of business anyway? The classic answer, of course, is to maximize shareholder wealth. By focusing on that, the standard line goes, everyone will be better off.
Another view is that the purpose of business is to benefit society, not to maximize shareholder wealth. This view was espoused by a CEO of a large manufacturing company. This view, he told me, often sparks a heated debate with his CEO peers.
What do you make of the brouhaha over Bain and Romney?
What is the purpose of business anyway?
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Originally published at www.OurValues.org, an online experiment in civil dialogue.