Thursday, January 19, 2012

The argument Romney should be making

Daniel Henninger explains how the Decade of Greed, with Bain Capital as an exemplar, are what saved American capitalism from going down the road that European businesses have gone down.
"When large-scale hostile takeovers appeared in the 1980s," Messrs. Holmstrom and Kaplan write, "many voiced the opinion that they were driven by investor greed; the robber barons of Wall Street had returned to raid innocent corporations. Today, it is widely accepted that the takeovers of the 1980s had a beneficial effect on the corporate sector and that efficiency gains, rather than redistributions from stakeholders to shareholders, explain why they appeared."

....Thousands of Mitt Romneys allied with huge pension funds representing colleges, unions and the like, plus a rising cadre of institutional money managers, to force corporate America to reboot. In the 1980s almost half of major U.S. corporations got takeover offers.

Singling out this or that Bain case study amid the jostling and bumping is pointless. This was a historic and necessary cleansing of the Augean stables of the American economy. It caused a positive revolution in U.S. management, financial analysis, incentives, governance and market-based discipline. It led directly to the 1990s boom years. And it gave the U.S. two decades of breathing room while Europe, with some exceptions, choked.
Now if only Romney could passionately and succinctly make that same point. Just repeating over and over again that he has private sector experience and so knows how to create jobs, yadda, yadda, is not enough.

One of his aides should clip this column and get Mitt to memorize it.

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