From France to Romney: Gotcha!

Word on the ‘Nets is that that infamous “47%” video might well have been the coup de grâce that will ultimately ensure that Mitt Romney loses the 2012 presidential race. However, it never rains, but it pours: now another embarrassing Romney video has surfaced, and France’s Le Monde is all over it:

Une nouvelle vidéo embarrassante pour Romney


Le Monde

This one shows Romney back in 1985, addressing employees of Bain & Co. at the time of the creation of Bain Capital, the Bain “private equity” subsidiary of which Romney was placed in charge.

Hopefully you’re curious, and you can simply click through to be able to check out this 1:21-minute-long clip yourself – helpfully, with a full English (not French) transcription appearing simultaneously along the bottom.

In fact, you should go and do that, for there’s a strange thing going on here: Mitt Romney actually does not say anything on it that is remotely embarrassing at all, at least not to those who understand what “private equity” is all about. In fact, he basically provides a definition: you get a bunch of money together (here, $37 million, with around $50 million more “on call”), you invest in start-up and troubled companies, you develop those companies’ latent (often “hidden”) potential, then you sell them after a period of time, usually 5 to 8 years. The particular element of Romney’s address here that seems to particularly rile the Le Monde writer is his use of the verb “harvest” (“an [English] agricultural metaphor,” the paper explains to its readers) to refer to the cashing-out process after that 5-8 year period when the company is sold on to other investors – and the considerable risk and effort invested into it in those 5-8 years prior is finally rewarded with presumably a healthy profit.

What’s wrong with that? Sure, there’s plenty wrong when those efforts include firing employees, or sharply cutting their wages/benefits, or simply shipping their jobs to low-wage countries like China; there’s plenty wrong when the end-result is that the company closes down while the “private equity” fellows somehow come out of the deal with fat bonuses (which I understand was the case with some of the deals that Bain Capital took on).

But that’s not what we’re talking about here; what Romney is expounding on this video is a bare-bones definition of “private equity” activities, and “private equity” does not have to automatically mean “evil.” It can actually be a force for good – stop laughing, yes it can, when its activities result in what were moribund, down-in-the-dumps, uncompetitive firms (perhaps under original management that didn’t care anymore), companies on a slow assembly-line ride to extinction, being given a new lease on life. None of this is apparent to Le Monde, seemingly – with the result that the editors of France’s paper-of-record have put here an “embarrassing” video which, if they simply knew more about the subject, would clearly not be “embarrassing” (especially not to Mitt Romney) in the least.

To be fair, this video’s original source is once again David Corn, from Mother Jones magazine (i.e. the journalist who came up with the “47%” video – I bet he will not be on the Xmas-card list from the Romney household this year!). For that same publication now also features an article that excoriates Romney for what this new video supposedly reveals about him, along the same argumental lines as Le Monde does, and which includes a few other out-takes from a 1998 Bain & Company compilation CD-ROM as well. The point is, whether located in France or the US, by bringing forward this video these publications – far from further “embarrassing” Mitt Romney – are simply demonstrating their own ignorance of how the business world works.

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