I’ve admired and supported Newt Gingrich for decades. I certainly did not want to publish this criticism. But to ignore his attack on Mitt Romney and Bain Capital would be to diminish the credibility of this website. So, here goes.
Considering the sum total of Gingrich’s life, he has done more than almost any modern politician to advance the cause of limited government and greater economic liberty. For these accomplishments, and for his sincere contrition, he has earned a measure of forgiveness for some of his sins, including his inexplicable but apparently expired romance with the global warming/climate change movement, his association with Freddie Mac and his personal moral failings.
But with his attack on Mitt Romney’s tenure at Bain Capital Mr. Gingrich has crossed the line. A week of innuendo ended with release of a half-hour video smear of Romney and Bain. The subtle-as-a-jackhammer video includes all the lurid, emotion-evoking techniques ever used in the most vile, leftist propaganda.
To the right are some samples of the 2 – 5 second, grainy, flickering, clips showing:
- an attache case full of cash, like the one the hit man receives as payment in a movie about the mob;
- several vacant and boarded-up industrial buildings (with no connection to Romney);
- a junk yard;
- an ugly closeup of a man (not Romney) smoking a cigar;
- a closeup of someone’s hands counting hundred dollar bills;
- scary winter snow storms (Did Bain control the weather?);
- Unflattering, black and white photos of Romney, with grainy effects added to make him look sinister, with the voice-over alleging he defrauded investors and gleefully, sadistically laid off hapless employees;
- absurdly out of context, Romney soundbites, five to eight word sentence fragments snipped from TV interviews and speeches.
These crude devices surround brief clips of individuals who lost jobs, describing their misery and blaming Romney. There is of course no effort whatsoever to present relevant facts or data or context. And no testimony from people whose jobs were at risk but saved by an investment from Bain Capital.
Appearing on Sean Hannity’s radio show Gingrich said, in part:
There are three or four places where the record is pretty bad and [Romney] needs to explain…I’m totally pro free enterprise, I’m totally pro entrepreneur, I’m totally pro the Capitalist model. It’s the only one that works. We’re not talking about defending the model. were talking about the character, the judgment of one particular person who seeks to be the President…I’m not questioning free enterprise…It’s his character, his judgment his decisions that I find it interesting that he’s so unwilling to talk about.
But the video does attack free enterprise by ignoring the way markets discipline business owners and investors. The video supports the false narrative of the Left, that business owners are not subject to market discipline and thus are free to abuse customers, investors and employees without consequences. But no business owner can survive and attract more investors by buying a business and then willfully destroying it.
In fact if this video weren’t such naked propaganda, if it were a bit more clever, one might mistake it for the Obama campaign’s 2012 strategy of shifting from hope and change to demonizing American business as the weapon of “the top one percent.”
When Romney was in charge of Bain Capital it was (and still is) a private equity (PE) firm. PE firms combine the resources of several investors to buy a business and manage it, usually for several years. The goal is to make the business more valuable so it can be sold for a gain, which is then split between the PE firm and the investors. Businesses become more valuable when their sales, profits and future potential improve. More often than not value-adding improvements involve hiring additional employees. But sometimes there are obsolete product lines, inefficient production processes or unprofitable divisions that reduce the value of the business and must be streamlined or shut down, resulting in layoffs.
Sometimes PE firms buy seriously troubled businesses that are at risk of imminent bankruptcy that would force layoffs of the entire work force. The PE firm will employ some combination of investment of new capital and limited downsizing/layoffs to bring the business back to profitability, thus preserving the jobs of the remaining workforce.
It’s not easy to find objective data about Bain’s investments during Romney’s tenure, party because a private equity firm was not required to publish quarterly financials as are publicly traded corporations. But the only reasonable conclusion one can reach from what information is available is that Bain took risks on dozens of companies and tried to profit from improving their performance.
Drew, an adviser, occasional contributor, and good friend to Liberty Works is a partner in another private equity firm and knows the business from an insider’s perspective. When asked his opinion of Bain he replied:
The truth is Bain is a tremendously successful and well regarded PE firm and was one of the few that employed the combination of operational and financial expertise. Great returns. We all wanted to work for Bain. It will never ever be portrayed in the press correctly because of the narrow focus on a few unsuccessful transactions, but Bain was and is one of the best.
Obviously, people who are laid off and suffer varying degrees of hardship may become bitter. The former employees in the video are posed with insufficient light and other video techniques used by propagandists so they come across as pathetic sad sacks.
The underlying message is that the net result of business operations in a free market is misery. The viewer is left with the impression not only that Romney is a bad man but there is too much liberty in America, and businesses must suffer even more draconian regulation, justified by the false promise that bureaucratic control can somehow keep them all profitable and thus make layoffs unnecessary.
On a personal level, I’m deeply troubled by the GOP primary campaign and Gingrich’s attacks. I realize he has been the target of Romney’s ruthless and relentless smear campaign, sanitized by the media that gave it the innocuous “negative ad” label. But Romney’s political record is target rich with material for critical ads. There was no reason to give aid and comfort to the anti-free market progressives and their current leader, Barack Obama.