advertisement
Forums

 

AAPL stock: Click Here

You are currently viewing the 'Friendly' Political Ranting forum
How does experience as a venture capitalist translate into making jobs as president?
Posted by: Ted King
Date: January 08, 2012 11:24AM
I don't get it. Romney claims that as a venture capitalist he was able to "net net" (whatever that means) creation of 100,000 jobs - a claim that many sources are finding to be dubious. But even if we were to grant that that is what happened, how does that translate into the kind of experience that matters as being a president?

Venture capitalists put forth a small amount of equity and borrow the rest of the money using the asset value of the company they are buying as collateral for the rest of the purchase price. Sometimes venture capitalists can go in and make changes that result in the company doing well in the long run in spite of the additional debt load caused by the borrowing by the venture capitalists, but too often those changes aren't sufficient to compensate for the additional debt and the companies go into a death spiral. Crafty venture capitalists gather up management fees at a prodigious rate whether or not the company survives, so for them it's a win-win whether the company thrives or dies. Romney's Bain venture capital company had a mixed bag of companies that thrived and companies that died, but they were crafty enough to almost always make large management fee money either way.

So, if Romney became president how does the methodology of the venture capitalist become one that he can use toward government action? Is he going to have the government buy companies using their assets as collateral to get loans to buy the companies? Of course not. There's just no way to make the connection between what he did as a venture capitalist - which was a mixed bag in terms of job creation anyway - and what a president can do.

So this claim of being a successful job creator as a venture capitalist is hollow even if it is true - it doesn't really mean anything in practical terms. But we can look to the kinds of policy statements he has made about what government can actually do to see what he is likely to try to do if he does become president. And when you look at those policies they are basically the same as Bush's in many respects. Tax breaks that mostly go to the wealthy. Tax breaks for corporations that are already sitting on huge piles of savings. IOW, trickle down economics - again. Less regulation of business; like that worked so well during the Bush presidency. The one thing he is likely to do that Bush didn't is make a bigger push to cut down on the size of government. Of course, if you reduce government you actually CUT jobs. Now, a true-blue, small-government, trickle down economist may say that those government job cuts will eventually lead to more jobs in the private sector than government jobs lost but I don't think you'll find any of them saying that that is going to happen quickly. And I don't think you'll find any of them saying that cutting taxes on the wealthy will quickly create a lot of jobs, either. Are the Republicans going to be upfront and admit during the campaign that their job creation strategies won't work quickly to create jobs? Of course not. (And, of course, there's a really big question of whether or not those strategies actually work all that well at all, much less in the short term - the empirical evidence seems to indicate otherwise.) Will a lot of deregulation readily create a large number of jobs? I haven't seen solid empirical evidence for that either.



e pluribus unum
Options:  Reply • Quote
Re: How does experience as a venture capitalist translate into making jobs as president?
Posted by: dad@home
Date: January 08, 2012 12:17PM
I have a problem with calling Romney a Venture Capitalist.

Venture Capitalists obviously want to make money but by providing the cash and expertise the venture needs to SUCCEED.

Vulture Capitalists (or in my day...Corporate Raiders e.g. Carl Ichan) could give two hoots about the venture...... as long at it pays-- put 'em out of business.

Job creator! What a laugh!

dad
Options:  Reply • Quote
Re: How does experience as a venture capitalist translate into making jobs as president?
Posted by: $tevie
Date: January 08, 2012 12:30PM
He's counting on the public hearing the word "capitalist" and assuming that they don't know and don't care what the "venture" in front of it means.



Options:  Reply • Quote
Re: How does experience as a venture capitalist translate into making jobs as president?
Posted by: Grace62
Date: January 08, 2012 12:32PM
Those are great questions you are asking Ted. I think you've hit on what will be the question voters have to ask about Romney: is Wall Street the answer to all our problems?

Romney's centerpiece leadership strategy will be that he has experience creating private sector jobs and creating enormous wealth, which is true, and Obama has none of that experience, also true. Interesting that Romney is downplaying his time as Mass. governor and his failed run for the Senate, preferring to describe himself as a businessman, not a politician. It's as if he's saying, look, I prefer business and I'm obviously very good at it, but our country needs help and I know how to help, so I'm volunteering my services to get this straightened out, because I love my country. You know, knight in white armor kind of guy. That Obama's a nice kid but he's over his head; Dad to the rescue!

I've read Romney's jobs plan, and the parts of it that are legitimate things that he could actually accomplish as President, Congress willing, are cutting corporate tax rates, revamping the corporate tax rules, and continuing the gutting of regulation that's been going on for decades. He says he'd leave individual rates as is, but would eliminate taxes on capital gains and interest and dividends for the middle class, so that's the bone he throws people who aren't one-tenth-percenters like himself. So his approach is pretty different than the tea party, which is about shrinking government as much as possible. He mentions cuts but that is not the centerpiece and he's pretty moderate with the "cut" talk.

The evidence to support the 100K jobs number might be a bit elusive, like Romney's tax returns. If you look at the companies in the portfolio of Bain Private Equity you see lots of familiar names of highly successful businesses that do employ great numbers of people, so I think he'll have no trouble with credibility around the job creation claims. If you're already in the camp that believes business is good and government has a role but just gets in the way of business, that experience of Romney's and his impressive personal financial success will look appealing.

I think it will boil down to whether you trust Wall Street to run our country via their proxy Mitt Romney, or if you think that while our country supports free enterprise, government is there to protect people from its excesses.
Options:  Reply • Quote
Re: How does experience as a venture capitalist translate into making jobs as president?
Posted by: rjmacs
Date: January 08, 2012 01:35PM
If Romney's so great at creating private sector jobs, perhaps he should stay there and keep doing that! It's a great irony to me that conservatives do nothing but crow about how terrible the government is, yet continue to clamor to be in charge of it. Paul comes the closest to intellectual honesty here - i think he'd be the most likely to subdivide and rent out sections of the White House to private interests, sell off government property, and generally try to put the feds out of business. The rest? Hypocrisy is rife.



rj
AKA
Vreemac, Moth of the Future
Options:  Reply • Quote
Re: How does experience as a venture capitalist translate into making jobs as president?
Posted by: mattkime
Date: January 08, 2012 02:45PM
he's not a capitalist until we see him in a monocle and a top hat!



Options:  Reply • Quote
Re: How does experience as a venture capitalist translate into making jobs as president?
Posted by: JoeH
Date: January 08, 2012 02:52PM
Romney and Bain Capital made a lot of their money by acquiring companies, stripping out assets in many cases, and then dumping them. Many of the companies then ended up filing for bankruptcy. Some managed to work their way out of it, but not all. In the process many jobs were lost, and what replaced them were positions in low wage states or outside the country. So a surface analysis might show a number of jobs at the successful companies they kept ownership of, but there are a lot of losses behind that facade.
Options:  Reply • Quote
Re: How does experience as a venture capitalist translate into making jobs as president?
Posted by: Spock
Date: January 08, 2012 03:24PM
Quote
mattkime
he's not a capitalist until we see him in a monocle and a top hat!

Nuts to that ...





Comedy Central: Best news channel that isn't a news channel.

Fox News: Best comedy channel that isn't a comedy channel.
Options:  Reply • Quote
Re: How does experience as a venture capitalist translate into making jobs as president?
Posted by: cbelt3
Date: January 09, 2012 07:52AM
It does more than being a lawyer. Or a "Community Activist". However, Mr. Romney hasn't been a 'venture capitalist' for many years. Note that the correct term is Investment Banker, but them folk are considered the Spawn of Satan these days.

Then again, a President can only 'make jobs' by hiring people into Government (assuming he has the funds for it).

CONGRESS, on the other hand, can 'make jobs' by creating and funding government projects ("shovel ready, blah blah blah, defense, etc..) and by incentivising employment.


I have an uncle who created and ran a small venture fund out of Berkeley. He's retired now, but he had fun with it.
Options:  Reply • Quote
Re: How does experience as a venture capitalist translate into making jobs as president?
Posted by: mattkime
Date: January 09, 2012 09:31AM
>>It does more than being a lawyer.

you mean aside from studying law before you create it?
Options:  Reply • Quote
Re: How does experience as a venture capitalist translate into making jobs as president?
Posted by: $tevie
Date: January 09, 2012 10:36AM
Being a lawyer didn't seem to be such a weak background for John Adams, Thomas Jefferson, James Madison, James Monroe -- and oh yeah, Abraham Lincoln and FDR: presidents who I think served during two of our nation's most difficult periods.



Options:  Reply • Quote
Re: How does experience as a venture capitalist translate into making jobs as president?
Posted by: cbelt3
Date: January 09, 2012 11:09AM
$tevie-

None of those highly intelligent individuals went to a 'law school', took a "Bar Exam", or anything of the sort.. for which we can be grateful. Their innate intelligence and ability to learn from the works of others (philosophy, natural history, commentary, etc..) were not corrupted as a result.

I will retract my comment about community activists... many of them actually work very hard to create jobs in their communities, through attracting businesses, working to build cottage industries, and so forth. My comment was factless and snide. Mea cupla.
Options:  Reply • Quote
Re: How does experience as a venture capitalist translate into making jobs as president?
Posted by: Ted King
Date: January 09, 2012 11:15AM
Quote
cbelt3
It does more than being a lawyer. Or a "Community Activist". However, Mr. Romney hasn't been a 'venture capitalist' for many years.

Romney was a governor after being a venture capitalist, so you'd think he would be touting his experience as the chief executive of the government of Massachusetts to show how well he could translate his skills toward creating jobs as chief executive of the whole country - except as the governor of Massachusetts, the state had some of the most anemic job growth of any states in the country at the time. I'd say that is evidence that the experience he had as a venture capitalist either can't be translated into using government to create jobs as he claims or he doesn't know how to do it - as he claims he does.



e pluribus unum
Options:  Reply • Quote
Re: How does experience as a venture capitalist translate into making jobs as president?
Posted by: $tevie
Date: January 09, 2012 11:17AM
"Job Creation" is such a BS platform for a presidential candidate to run on. The President can't walk in and "create jobs". It's such a dumbed-down way to discuss complex economic problems.



Options:  Reply • Quote
Sorry, only registered users may post in this forum.

Click here to login

Online Users

Guests: 127
Record Number of Users: 186 on February 20, 2020
Record Number of Guests: 5122 on October 03, 2020