Profits and Loss

Bill Murchison

5/30/2012 12:01:00 AM - Bill Murchison

Submerged, like soggy tennis shoes, beneath Barack Obama's attacks on Bain Capital lies a too-common presumption about the function of capitalism -- and human nature.

Follow along with the president: "Their priority" -- the priority, he means, of partnerships that buy and clean up other people's companies -- "is to maximize profits. And that's not always going to be good for communities or businesses. ... When you're president ... your job is not simply to maximize profits."

No, I guess we could reply, it's to maximize votes. However, would that lead us away from the topic at hand, which, simply stated, is what's wrong with maximizing profits? Or to put the question another way, you got a better idea, Mac?

Bain Capital -- Mitt Romney's former investment firm -- sought and seeks to "maximize profits" because profit is the great engine of capitalism, the great creator of wealth and jobs. Not to acknowledge this truth ought to be, but unfortunately isn't, to disqualify oneself from aspiration to high electoral office. The assumption with which we're left is that Barack Obama, a reasonably intelligent individual, understands the truth, in question, but won't admit he understands it. And so a country and people laboring to fire up their economy are treated to needless distractions like the Democratic attacks on Bain Capital.

Sadly enough, Democrats have conspicuous Republican company when it comes to bashing equity companies. John McCain levied similar attacks on Bain four years ago, as he contended with Romney for the GOP nomination. Rick Perry and Newt Gingrich -- this time around -- played the same, as they thought it, trump card. Both men, self-advertised conservatives, knew better. They played the card anyway.

Denigration of profit is a gambit best left to Democrats. It isn't that Democrats were fitted by nature to resist profit and Republicans weren't. It's that a substantial constituency of voters exists, with no better understanding of economics than the president himself professes in public. Wanting their votes, the president talks their language.

The high political crime of misunderstanding profit proceeds from the feat of misunderstanding the wellsprings of human action. The quest for profit -- money left over after expenses -- is viewed as a low one. A capitalist -- apparently -- ought to be risking his capital for the sheer fun of it.

Bain Capital makes a fetching target, from the perspective of the Democratic left, because one of its core activities is that of trying to make a profit from the woes of struggling companies. In other words, Bain, besides putting up venture capital, scouts for opportunities to buy companies founded by other people, sometimes making them more profitable, sometimes not.

The "sometimes not" is the unattractive face of profit seeking. The closure of an Indiana steel company that Bain failed, against high odds, to turn around is the theme of recent Obama ads decrying lost jobs and heartlessness. The quest for profit, in other words, can hurt. No voter, as a long line of liberal politicians sees it, deserves to be hurt. All deserve rewards and high old times.

Your government, of course, knows this! It won't stand for failure or "unfairness," the latter term meaning larger gains for a few (the likes of Mitt Romney) than for the great majority (the likes of you and me and Aunt Betty).

The messiness of the generally free marketplace -- its inability to thicken every voter's wallet to the same degree, planting violets in all our backyards -- is the basis of the liberal rap against capitalism. If Romney's offense against humanity were other than investing in the reorganization of laggard companies, he'd still catch it in the neck from the profit skeptics. It would be said he fought unions, underpaid secretaries, cut pensions, all for filthy lucre's sake. Profit's indispensable role in the creation of jobs and wealth for others -- we likely shouldn't count on learning much about that this year -- certainly not from presidential orations. The president has another line of inquiry to pursue: the recklessness and cruelty of moneymaking. "This is what this campaign is going to be about," he promises.

Gee, you reckon?