Mitt Romney's Business Experience

There has been a lot of criticism over Mitt Romney's tenure at Bain Capital, a private equity firm.  Private Equity firms generally take over another company, either private or publicly traded.  They generally pay a significant premium for that company.  Once the private equity firm takes control, they usually pile on a lot of debt on the company's balance sheet and try to trim the fat on the costs of operating the company.  Trimming the fat is a euphemism for laying off a lot of workers since labor costs are generally a large portion of the costs of production.  Good private equity firm managers such as Mitt Romney try to find opportunities to cut jobs costs without sacrificing revenue or growth opportunities.



Mitt Romney is a job-killer and profit maker.  If you truly believe in capitalism, there is nothing wrong with that.  What Mitt Romney did was increase efficiency in the economy.  Romney tries to achieve the same output with fewer employees resources.  That is good for the economy.  Theoretically, this is good because it frees up more workers to do other productive activities.  A innovative and growing economy needs private equity firms to help enforce efficiency.

Mitt Romney constant jokes about how he is going to bring his business experience to the Presidency.  I think he "jokes" because if he is telling the truth -- it means that we are going to have 25% unemployment in the short term and that's political suicide even if it is a good thing to do in the long term.

One's opinion on Mitt Romney's business experience has to do with one's preference for economic outcomes:
1. $1 trillion in business profits and 4% unemployment
2. $1.2 trillion in business profits and 7% unemployment
3. $1.4 trillion in business profits and 10% unemployment

Whats my take? That depends on what's my equity stake and am I one of the people being laid-off.