Open Thread: In Defense of Private Equity
Since Mitt Romney seems rather unable to mount an appropriate defense of private equity and its importance to capitalism, Wall Street Journal columnist Daniel Henninger stepped up to the task with an important piece today on why leveraged buyout firms like Romney's Bain Capital played a critical role for the American economy in the 1980s, one that helped the U.S. avoid the moribund state of affairs that's plagued Europe ever since. The far left (whose goal is to Eurofy this country) has never gotten over this:
Not only did Bain Capital save America, but no matter what turn Mitt Romney's political career takes, Bain Capital may stand as the best of Mr. Romney's lifetime contributions to the nation's economic well-being. If only he'd tell the story.
We are of course putting forth "Bain Capital" as not merely the Romney private-equity house but as the stand-in for the period of American economic history that ran from 1980 to 1989. Back then it was called the Greed Decade, with asset-stripping barbarians at the gate. Virtually everything about this popular stereotype is wrong. Properly understood, the 1980s, including Bain, were the remarkable years when an ever-resilient America found a way to save itself from becoming what Europe is now—a global has-been.
After centuries of First World status—and all the perquisites of prestige and power that came with it—Europe is watching its economic status slide inexorably toward new national powers in the East and elsewhere. Because of the modernizing change that Bain and others like it forced on U.S. corporations in the 1980s, we are not fading. Not yet.
Standard & Poor's credit downgrades aren't the biggest news about Europe's fallen status. A larger historic change became clear in the first two weeks of 2012, as national treasuries brought sovereign debt issues to market. The new world order was made plain in a Jan. 12 Wall Street Journal headline: "Reversal of Fortune in Debt Market." The story told how global investors who routinely bought the debt of Italy or Spain were now buying the 25- and 30-year bonds of Indonesia, Brazil, the Philippines, South Africa and other so-called "emerging market" nations.
Pimco global fund manager Curtis Mewbourne was explicit about the changing of the global guard in Barron's this past weekend: "There are a couple of very important changes going on. One, which is pretty broadly accepted, is that we are seeing a very significant shift of economic importance, away from the developed economies into the developing economies."
Read through S&P's justification for last week's downgrades of nine European countries. Along with the expected dumping on those countries' fiscal profligacy, one finds as well a blunt recognition of Europe's moribund "fundamentals," meaning their ability to produce "strong and consistent" economic growth.
Given that it's possible to mount such a solid defense of Romney's time at Bain, is it concerning that he's failed to mount a sufficient defense of himself? Or is he mounting it but it's just not getting covered sufficiently?