Defenders of Mitt Romney who think the more sensational attacks on his work at Bain Capital pose the more serious threat to Romney’s candidacy may be focusing their defenses on the wrong target. More treacherous may be a media with such a shallow understanding of finance that Romney risks having to turn his campaign into a lecture series on private equity.
An article in today’s Washington Post is a perfect example. Supposedly in the paper’s “business” section, it offers a peek at what Romney is up against. Here’s a key paragraph, about one of Bain’s success stories, Staples:
Staples became a runaway business success in the 1980s and 1990s because it offered companies a smarter way of purchasing supplies, saving them money. As Staples grew, smaller stationery stores were shuttered. These losses are not counted in Romney’s jobs figure.
That last sentence is rather stunning, considering this is a business reporter. Of course job losses in companies Romney had nothing to do with are not included in Romney’s jobs figure. Blaming successful companies for being more successful than their competitors would be a very silly approach to evaluating businesses. But how does Romney refute this without (a) sounding like the enemy of mom and pop shops or (b) explaining that he’s not responsible for those job losses, only other job losses?
Likewise, Kevin Williamson has a post at National Review effectively refuting the suggestion that Bain took a bailout from the FDIC. What actually happened was that after Romney had essentially saved the company from bad management, some creditors, including a bank that had since been taken over by the FDIC, agreed to write down some of the debt. Here’s Williamson explaining the difference:
The free-market purists among you might believe that there should be no such thing as an FDIC, but that is, at this point, a philosophical question. The FDIC, as I have argued in National Review, is the best-performing financial regulator we have, and what it does is the opposite of bailing out institutions. Bailouts are retrospective, cooked up after a company gets into trouble. What the FDIC does is prospective, ensuring that banks can cover their deposits and providing insurance in case of insolvency. Bailouts involve transferring taxpayers’ money to banks; the FDIC charges banks a fee (essentially an insurance premium) for its services. It is, in other words, exactly the kind of institution we wish we had in place to prevent bailouts. The FDIC is not perfect, but it gets the job done.
Not exactly the stuff of rousing campaign rallies, but there it is. This type of misunderstanding is much more difficult to refute than, say, some of the appalling insinuations in the half-hour Bain video Gingrich has been distributing. My favorite line from the movie trailer has to be from this exchange:
Unidentified Woman A: “He’s for small businesses? No he isn’t. He’s not.”
Unidentified Woman B: “You’re gonna be on the hit list, you know that?”
Yes, that’s right: the trailer for Gingrich’s video approvingly quotes people warning of Romney Death Squads lurking in the shadows to silence any criticism of his business practices. Something tells me this will be easier to disprove than accusations the FDIC partially bailed out some Bain debt or that Romney is responsible for job losses at companies he never managed.
