Thank God For Capitalism

Photo: Korea.net Korean Culture and Information Service (Jeon Han)

How else could we possibly pay for this?

John Paul's visit to NYC in 1995 cost the city $4,401,714,  Benedict's visit cost NYC $6,584,637, the federal government's budget for "national special security events" is a mere $4,500,000.

Who's footing the bill?  Well as they said on Yahoo "The simple answer is everybody but the Vatican". 

To give you an idea of the logistics involved in events like this, the manning for John Paul's visit was: 36,713 people including 685 police lieutenants, 3,810 sergeants, and 32,218 officers.

The event in Philadelphia alone is estimated to cost $48,000,000 and to their credit the World Meeting of Families has set a fundraising goal of $45,000,000 so far they've raised $30,000,000.  The city itself expects a $12,000,000 dollar bill.  The Philadelphia Convention and Visitor's Bureau has estimated that the event will bring (okay, I'll stop with all the zeroes, I think I've made my point) $418 million and many think that's an overly optimistic and unrealistic estimate.  Even if dead on and all that money is spent solely in Philadelphia the city's take will still be well short of its estimated $12M cost ($8.36M based on the city sales and use tax).  Hopefully the World Meeting will pitch in and make up the difference.

When asked about the cost most of the government agencies involved at all levels simply respond with no comment.  How's that for transparency?

Now don't get me wrong, I'm not opposed to the Pope's visit but consider this... a Georgetown University study estimated that the Catholic Church's net Sunday rake each and every week here in the good old USA is $850,000,000 (Okay, I lied about the zeroes).

Fortune: Who will pay for the Pope's visit?

IB Times: How Rich is the Vatican

I'll leave you with this gem from the Fortune article:

NJ.com writes that some of the expenses will be covered by event organizers and the federal government, but taxpayers likely won’t be completely off the hook.

Uh...who do they think funds the federal government?

And to be honest, NJ.com didn't actually write that, Fortune did. 

So How About it Papa, care to go Dutch?
 

 

The Pain of Bain Falls Mainly on the Insane

Romney's time at Bain is the best, most defensible part of his record

Newt Gingrich, fresh off of making tens of millions as a DC insider access provider to the rich and famous, has a lot of chutzpah criticizing Romney, and by implication, capitalism. Operatic bloviator Gingrich sternly intones how Romney has some explaining to do, while laughably characterizing his gold-plated lobbying as "history consulting."  Sure, DC is constantly clamoring for the services of historians.

Romney made billions and saved companies while Newt danced and sang on the Good Ship Freddie Mac, and we are still paying for the malfeasance that went on there while The Great Historian was collecting his government-funded fees.  And only raw politics unencumbered by principle can explain why the inarticulate governor of America's free enterprise job engine would would join in on the gang attack.

Private equity is a route firms in trouble often take.  Usually, the only alternative left is going out of business, resulting in everyone losing their job.

First, a brief explanation of private equity from economy reporter Robert Samuelson. I recommend the entire article. It is a dispassionate, fact-based examination with blessedly lucid explanations:

Private equity refers to groups of investors buying the stock of an existing company, thereby “taking it private.” Because most purchases use borrowed money (“leverage”), these transactions are known as “leveraged buyouts.” Once the investor group has control, it tries to improve profitability by lowering costs and increasing sales. The hope is to resell the business at a huge gain; this usually takes three to 10 years. In 2010, private-equity firms invested $148 billion in 1,234 U.S. companies, says the Private Equity Growth Capital Council. (WaPo - Samuelson)

For those leftists of all parties still bawling about Bain, investment banker and Obama man Steve Rattner comes to Romney's defense.

Bain Capital is not now, nor has it ever been, some kind of Gordon Gekko-like, fire-breathing corporate raider that slashed and burned companies, immolating jobs wherever they appear in its path.

Wall Street has its share of the “vulture capitalists” that Texas Gov. Rick Perry enjoyed mocking in South Carolina earlier this week. But Romney was almost the furthest thing from Larry the Liquidator. (Rattner - Politico)

Don't Blame Bain -- Blame Government Tax Policy

First, it’s fair game to question the amounts of debt that are sometimes used in leveraged buyouts. While higher debt usually means higher returns — because debt is cheaper than equity, thanks in part to its tax deductibility — it also means higher risk of bankruptcy.

Bain had less than its share of bankruptcies, but it had a few — it appears four — that are particularly troubling. In all those cases, when the portfolio companies initially showed signs of promise, Bain took advantage of their progress to borrow more money, which it took out as a dividend. Later, the fortunes of each company turned down, ultimately into insolvency.

When Bain “releveraged” those companies and took the cash out, the investment managers of course had no idea that the companies would later falter. But with the benefit of hindsight, taking a more conservative approach and refraining from squeezing these dividends out of the companies would certainly have been more prudent. (Rattner - Politico)

The liberal Rattner concludes...

It’s certainly fair game for any candidate’s opponents to dig into his record. But in Romney’s case, focusing on questions about his principles — and his current, staunchly conservative ones — could be more productive than trying to rewrite the firm’s history.    (Rattner - Politico)

Indeed.  Go after Romney on his liberal record and statist reflexes, but his Bain actions appear to be on the up and up.  Upon comparison, Obama is clearly the superior job-destroyer and money waster.

Which is worse?  Greedy Wall Street bankers making money by saving (or sometimes dismantling) sinking companies, or rapacious federal flying monkeys snatching tens and hundreds of billions from innocent citizens and blowing it on green energy  failures and government-funded car fires?

Finance is only one part of capitalism.  To put all of this in a larger context, I recommend Adam Davidson's excellent article in Atlantic, Making it in America, where he gives us insight into manufacturing in America.

Further Reading:

The Great Bain Diversion
The Truth about Bain and Jobs
The Battle of Bain Capital
Romney Doesn't Need to Apologize
Does Romney have the Right Kind of Business Background?

Why I Hate Politics

 (AP/CBS News) WASHINGTON -- First lady Michelle Obama is challenging assertions she's forcefully imposed her will on White House aides, saying she's tired of people portraying her as "some kind of angry black woman," adding with a dagger-sharp glance at the unfortunate reporter, “and I’m going to start kicking some honky ass if it doesn’t stop.”

GOP Contest Suffers from Leftist Rhetoric Infestation

In other news, Mitt Romney is taking heat for his predatory capitalism, being called a “Vulture Capitalist,” not by poop-throwing OWS monkeys, but by big statist Newt Gingrich and inarticulate Texas Governor Rick Perry.

It’s helpful to remember that Bain didn’t swoop down in their flying Greedmobile and gobble up these companies. When a company or an investor group is in trouble (and everyone's job is in peril) they often turn to a capital group like Bain as their last chance. Sometimes they can save the patient, sometimes they can’t. Sometimes it takes an amputation. Bain’s job is to look out for the investors that hire them, not unfortunately, for the poor schlubs who have the misfortune of being deck hands on a sinking ship.

Capitalists do not enter the market to “create jobs” or destroy jobs. That doesn’t put food on the table; making money does, and that is the goal of a capitalist, or a cab driver for that matter. Asking why Mitt threw all those people out of work? You may as well ask why cab drivers don’t give rides to freeloaders, why restaurants insist on charging for their meals, and why retail stores don’t give away free stuff. Why don’t you work for free?

Yes, it's true that unlike some Republicans, Democrats don't "enjoy firing people." They enjoy "investing" your money in exploding electric vehicles, bullet trains and other highly unprofitable but morally satisfying economic misadventures. Venture socialism is certainly empathetic. (David Harsanyi)

Unlike Mitt, Obama’s Job Destruction has Cost us Hundreds of Billions

Romney beats Obama because Romney’s Bain actions didn’t cost taxpayers any money. Obama’s “job creation” programs have cost us hundreds of billions, and his job destruction programs even more, ending in solar panel company scandals, green battery factories closing down, and government-funded car fires.

The alternative to Schumpeter’s creative destruction is malaise-filled stagnation, where a society of government-protected betamax and rotary phone manufacturers goes down the economic tubes.

Finally, to wrap it all up and put it in Election 2012 perspective, I ask you this question: Which is worse, a candidate saying “I like to fire people who give me bad service!” while empowering ordinary Americans to choose their own health care, or a sitting Vice President declaring “The Taliban is not our enemy?”

Jim Manzi has a cogent summation in his National Review Article, Romney and Bain.

Obama's "Jobs" Program: Government Money is Stupid Money

Money taken out of the economy via taxation is a net negative.  Beyond infrastructure and the enumerated constitutional duties, government does not and cannot spend your money more efficiently that you can yourself.  

Elizabeth Warren, the Democrat trying to unseat Massachusetts Senator Scott Brown, delivered a tart message with dictatorial undertones to the nation's greedy rich:

“There is nobody in this country who got rich on his own. Nobody. You built a factory out there — good for you. But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. . . . -- Elizabeth Warren

Despite such lectures by Ivy League professors who enjoy burning strawmen, conservatives are not anti-government nor anti-tax. It's all about proportion. Famed economist Henry Hazlitt says it best:

A certain amount of taxes is of course indispensable to carry on essential government functions. Reasonable taxes for this purpose need not hurt production much. The kind of government services then supplied in return, which among other things safeguard production itself, more than compensate for this. (Henry Hazlitt)

If government would limit itself to just funding that infrastructure liberals continually blather on about, we would not be having these arguments, and we would not be mired in this economic morass.

Elizabeth Warren's factory owners benefit not at all from the cawing aviary of special interest rent-seekers now roosting in thousands of government agencies and gobbling billions of dollars in taxpayer contributions.    Also, Warren's factory owner, along with Bill Gates, Steve Jobs, and even famous tax dodger Warren Buffet, paid far more for those roads than did the other 99% of America.

Taxes Kill Economic Activity

we took a look at British Chancellor of the Exchequer George Osborne's still new (2011) program of increased taxes directed at oil and gas companies operating in the North Sea. Amazingly, the chancellor's tax hike took a 52% year-over-year chunk out of the area's second-quarter drilling activity. (The Fastest Way – David Lee Smith)

According to the author, Global consultant Woods Mackenzie estimates Obama’s proposed tax and regulation on the gas and oil industry “would lop off about 700,000 barrels a day of oil-equivalent production at a cost of some 170,000 industry jobs.”

Let's Go All The Way

Obama wants to claw back the special exemptions, loopholes and tax breaks gas and oil lobbyists have cajoled and bribed out of congress.  Fine. But don't stop there. Do it across the board. Make GM, their union partners in crime, and Wall Street welfare queens give us back the tens and hundreds of billions in taxpayer money they've absconded with.

No loopholes, no special deals for any group. If the Obamacrats are not willing to do this, then they are not serious, but are instead demagoguing the issue for naked partisan gain.

It's a simple calculus:

When a corporation loses a hundred cents of every dollar it loses, and is permitted to keep only 60 cents of every dollar it gains, [...] its policies are affected. It does not expand its operations, or it expands only those attended with a minimum of risk. (Henry Hazlitt – Economics in One Lesson)

A better approach is to categorically and unapologetically remove all government loans, subsidies, tax breaks, loopholes and special exceptions. Period. Again, Henry Hazlitt explains:

Each private lender risks his own funds. [...] When people risk their own funds they are usually careful in their investigations to determine the adequacy of the assets pledged and the business acumen and honesty of the borrower.

But the government almost invariably operates by different standards. The whole argument for its entering the lending business, in fact, is that it will make loans to people who could not get them from private lenders.

This is only another way of saying that the government lenders will take risks with other people's money (the taxpayers') that private lenders will not take with their own money. (Henry Hazlitt – Economics in One Lesson)

And that is the crux of the problem, and that is why private sector spending is inherently more efficient than government spending.

Obama blew a trillion dollars and we've got nothing to show for it but more economic misery.  We would be stupid to give him one more dime, let alone another $500 billion.