You expect Democrats to accuse former businessman Mitt Romney of “putting profits over people — making a buck or a few million of them no matter what it took or who it hurt,” as Democratic National Committee spokesman Brad Woodhouse did in releasing a new Web video.
But it’s sad to see the economic ignorance displayed by Romney’s Republican rivals. Rick Tyler, long the closest aide to Newt Gingrich who is now running the pro-Gingrich super PAC, Winning Our Future, declares, “His business success comes from raiding and destroy businesses — putting people out of work, stealing their health care.” The PAC’s ad calls Romney “a predatory corporate raider.”
Gingrich himself says that Romney’s work buying and selling companies at the investment firm Bain Capital was comparable to “rich people figuring out clever legal ways to loot a company.”
Rick Perry ran TV ads in Iowa saying that Romney “made millions buying companies and laying off workers.”
Somehow the candidates of the party that claims to defend free enterprise and a dynamic economy are railing against economic change in action.
In a growing economy, companies succeed and fail every day. Technology changes. Consumer tastes change. New competitors offer a better product or a better price. Raw materials or labor becomes too expensive. Some companies just aren’t viable, and some investments turn out to have been mistaken.
That’s what the “creative destruction” of a market economy is all about. Companies constantly seek to serve consumers better. And often one company’s success means that other companies fail. Manufacturers of obsolete products often go out of business. Jobs and investments are lost, but what’s the alternative? Should we be keeping the firms that once made horse-drawn buggies, gramophones, and slide rules in business? No, we understand that the process of economic change makes us all better off, even though there can be short-term pain for the owners and employees of failed firms.
Republicans are supposed to know all this. That’s why they proclaim their devotion to free markets and oppose industrial policy, government subsidies, bailouts, and other schemes to override the market process and keep current firms in business even when they’re no longer meeting consumers’ needs.
But when a businessman runs for president, all bets are off. Republicans let fly with the same denunciations of normal business practices that Democrats do.
Think back to the 2008 campaign when Romney first ran for president. During a Republican debate at the Reagan Library on May 3, 2007, Sen. John McCain derided Romney’s leadership ability, saying, “I led … out of patriotism, not for profit.” Challenged on his statement, McCain elaborated that Romney “managed companies, and he bought, and he sold, and sometimes people lost their jobs. That’s the nature of that business.” He could have been channeling Barack Obama.
There are plenty of good criticisms of Mitt Romney. His health care mandate in Massachusetts was a model for President Obama’s national mandate. No one knows what he really thinks about abortion and same-sex marriage, after he dramatically changed his positions at age 57 as he prepared to run for president. He wants to increase military spending by $2 trillion. Many of his foreign policy advisers helped to get us into the disastrous Iraq war.
But the fact that sometimes he closed companies and laid off workers is not a good reason to criticize him. We’d never get new companies like Staples, Domino’s, Bright Horizons, and Sports Authority — companies that Romney helped fund and nurture at Bain Capital — if investment capital was locked into existing companies.
And sometimes, as the movie “Other People’s Money” demonstrated, it takes a “predatory corporate raider” to go in and shake up a company, moving the land, labor, and capital to places where they can be more productive.
Republicans should stop attacking Romney for his role in the dynamic market process and spend more time explaining how they would limit government and improve the environment for business and economic growth.
David Boaz is executive vice president of the Cato Institute and author of Libertarianism: A Primer and The Politics of Freedom.