Nothing tugs at the political heartstrings like parading hard luck stories out in front of the camera and placing blame for them at the feet of your opponent. Both sides have already employed this technique, but I have to say that team Obama has done so in a more dramatic way than team Romney. One dramatic moment in particular comes during a campaign ad in which a former steel worker from the late GSI Industries, a firm that was purchased by Bain Capital in 1993 and went bankrupt two years after he left in 2001, described Mitt Romney as an economic “vampire."
It’s a fantastic image: Romney and Bain Capital stalking the working man and the industries for which he works before pouncing on them and deriving sustenance from consuming their blood.
It’s also utter nonsense.
In a free market economy, failing firms like GSI Industries are allowed to die. It’s a feature of the system, not a bug. Upon death private equity and venture capital firms will often squeeze their components to extract all of the value they can out of them, allowing the factors of production and other capital to be sent back into the economic bloodstream where they can be put to more efficient use.
In other words, nature is allowed to take its course.
This is far from the totality of what Bain Capital did while Romney was at the helm, but these are the activities that he seems to catch the most flack for and what Romney’s opponents would like to focus on.
But while it might be politically popular to call these activities parasitic, it couldn’t be further from the truth. On the contrary, this efficiency mechanism is the lifeblood of the free market system and is precisely what gives it an edge over all other economic models. It prevents stagnation and allows for growth. It might not be pretty, but it's the real world of free market capitalism.
Now let’s compare Romney’s world of economic reality to the fantasy world in which the present administration would like us to believe we can live in. If only we surrender enough power, money, and give Barack Obama another 4 years in office, death and all of the unpleasantness that come with it will become a thing of the past. It seems like a nice fairytale on the surface, but unfortunately it’s a world that has more in common with George Romero than it does Mother Goose.
Rather than allowing old and decaying firms to die natural deaths, they are instead kept alive through means of government intervention to wreak havoc on the economy long after their expiration date. In short they become…the undead.
One after another they emerge from the grave and wander aimlessly without concern for efficiency. They hemorrhage capital and accruing new debt in the hope that political winds will see to it that it never has to be paid. Their sole purpose becomes the consumption of the flesh of the living in the form of cash from the public treasury and favors from politicians.
The living will seek refuge and flee before the undying hordes. They barricade themselves behind tax shelters holding out as long as they can before eventually being driven out or joining the ranks of the undead themselves.
In this economic model, the Obama administration sees itself as something of a necromancer (magicians that bring the dead to life for those of you who were popular in high school). The state becomes the arbiter of life and death, as companies are rewarded not for efficiency and good service, but for political patronage.
But it’s not just a matter of reanimating dying firms. The state, under the preferred Obama model, believes it can breathe life into startups that provide services that are in questionable demand. Companies like Solyndra, Beacon Energy and others are brought to life through artificial means only to collapse and die when the administration’s green magic wears off.
This is president Obama’s economy that is “built to last”. It will indeed last but it will do so at the expense of the vibrancy and life that built this nation. It will be a hollow, shiftless, rotting corpse, kept alive by a government that is willing to trade the free market for something ugly and political.
I’ll take Romney’s reality over Obama’s horror flick any day.