Venture capital v. private equity

Conservatives frantically lie that an attack on private equity is an attack on capitalism, intentionally manipulating their half-wit constituency that has no grasp of such obvious differentiation.* Meanwhile President Obama has made clear the distinction between venture capitalism, which invests in businesses, and private equity, which guts them. And Romney complains that Bain also invested in companies like Staples, which was successful for everyone,** showing Bain wasn't just about private equity. So let's look at some facts.

Josh Kosman's Rolling Stone piece tells us that "Romney wants us to believe that critics of private equity are against capitalism. They’re not. They’re against a predatory system created and perpetuated by Wall Street solely to pump its own profits."

Bain's success stories, like Staples, were not private equity deals but rather venture capital investments. And it's true that these were good investments and generally good for the economy. But Bain neither owned nor ran those companies. But these types of investments is not where Bain made its profits (killing). Bain hasn't made that type of investment since its early days, instead focusing on private equity deals, i.e., levered buyouts. Kosman goes on to explain how these operate and I've provided numerous posts on this so no need to repeat it. He also gives several examples of those companies taken over this way and their resultant bankruptcy.

* For example, see this study. And many of those manipulators, while themselves relatively intelligent, are just caught in the grips of a failed ideology and hence refuse to accept evidence to the contrary of said dying ideology (see this).

** Was it good for the workers? See this tidbit, nothing that Staples in involved in 13 wage and hour disputes, one of which settled for $42 million for misclassifying employees and refusing to pay them overtime. Labeling stories like Staples a "success" leaves out how typical businesses of this type (also think WalMart) treats labor with part-time jobs and no benefits to maximize profits, etc. But that's another story.

Also see this Daily Kos story revealing the truth about Romney's involvement in the Staples investment. Romney opposed it, Bain invested very little and sold that investment long before Staples became successful. And Bain had absolutely nothing to do with running Staples or its "success."