Interesting op-ed in the WSJ over the weekend: The Truth About Bain and Jobs …
The article’s punch line: Job creation and destruction are both relentless. The small difference between the two is what we call prosperity.
Painstaking research by economists Steven J. Davis and John Haltiwanger revealed a side of America’s dynamism that isn’t always pretty.
Between 1977 and 2005, years roughly overlapping Mr. Romney’s business career, some 15% of all jobs were destroyed every year, even as total jobs grew by an average of 2% a year.
Job creation and destruction are both relentless, the authors showed in paper after paper.
The small difference between the two is what we call prosperity.
Good point !
For me, a second point hit very close to home:
Nobody—not even those whose billions were earned in private equity —envisioned the astounding rise in business values in the gilded ’80s and ’90s.
When Mr. Romney was asked by his boss to start Bain Capital in 1983, the Dow was at 1086.50.
When he left on Feb. 11, 1999 to run the Olympics, it was 9363.46.
His is not the only recent fortune owed partly to this accident of timing (Warren Buffett’s and many others come to mind).
Indeed, if we’re being honest, Mitt here is representative of a generation of professionals whose serendipity it was to have spent the 1970s on our education and then to be spit into the job market just as one of history’s great economic liftoffs was taking place.
But, when private-equity investors sniff a profit opportunity, they are probabusually one step ahead of everybody else.
Of course, I like the swipe at Warren Buffett who, in my opinion, is way over-rated.
But, the author reminds me that I owe a lot to timing, too.
As Grandma Homa used to say: “Sometimes it’s better to be lucky than to be smart.”
The Homa Files 