Romney’s Bain Capital Not Nearly as Good as Federal Government at Picking Winners & Losers

Posted on October 8, 2012 by Zachary Shahan

The following is a post mostly written by one of our wonderful CleanTechnica readers, with minor changes and additions by me.

Romney computer-generated image by don relyea

Romney has complained about the government picking winners and losers (which it’s actually doing quite well at, with a failure rate of ~1.4%, not 50%, despite what Romney says).

But let’s take a quick look at how well Romney and his solely-owned company Bain Capital has done in that regard….

Out of 77 companies in which Bain Capital invested other people’s money, 33 either failed or produced no earnings. That, my friends, is a 43% failure rate.

Out of 77 companies in which Romney invested, only 10 were really good investments. 70% of Bain’s earnings came from these 10 companies. And that, my friends, is only a 13% success rate.

Of course Romney/Bain made money from the failed companies as well. They stripped money out of those companies, money that should have gone to the people who actually put up the money. But that’s how vultures operate, by grabbing parts of rotting carcass.

Would the Romney administration do better than the Obama administration in advancing American industry, creating jobs, and investing in long-term winners? I think not.

h/t Hullabaloo

Zachary Shahan (2363 Posts)

I'm the director of CleanTechnica, the most popular clean energy website in the world, and Planetsave, a leading green and science news site. I've been covering green news of various sorts since 2008, and I've been especially focused on solar energy, electric vehicles, bicycling, and wind energy for the past few years. You can also find my work on Scientific American, Reuters, Think Progress, GE's ecomagination site, several sites in the Important Media network, & many other places. To connect on some of your favorite social networks, go to zacharyshahan.com or click on some of the links below.

http://www.facebook.com/people/Mark-Nguyen/100001918996924 Mark Nguyen

The difference is Bain Capital used money from investors who gave them money. Obama used tax payers money to pick winners and losers.
- Bob_Wallace
  
  That’s part of the difference. Let’s add in some more.
  
  1) The DOE investments went to create American jobs. Romney shipped American jobs offshore.
  
  2) The DOE record of supporting emerging US technology is quite good, a 98.6% success rate. Romney had a 43% failure rate.
  
  Looks to me as if Romney is a massive failure when it comes to picking winners and loosers. We need to keep him far from the federal decision making process.
  
  Romney could drive us back into the financial ditch we’re still struggling to get out from, the one allowed by our previous Republican president.
  
  Enough of these jerks who work to make their rich friends richer at the expense of the rest of us. I’m tired of being “trickled down” on.
  - http://cleantechnica.com/ Zachary Shahan
    
    that last line is awesome. reposting that on Facebook now.
nearly retired

I had a Mormon neighbor for 20 years. The father and breadwinner was a MBA for Lockeed. Some of the time he went to places where projects for the government were being conducted. He was involved in the F117 stealth fighter project. This I thought was productive. But most of the time, he was working on ways to reduce costs by transferring and downsizing manufacturing out of California. There use to be good union jobs in Southern California working for Lockeed. They were systematically removed, and about the only positions still here are people like himself. Our local congressman, “Buck” McKeon is at the head of the committee in Congress for weapons procurement for the Pentagon. He’s also a devout Mormon. I have an opinion that this religion has made it a major goal to supply product and services for the Federal Government at an inflated price, to benefit their own group of people in their religion. This, I believe is parasitical. Boeing is still trying, but if Romney gets elected, Lockeed will definitely have the inside track for billions of Federal money. Musk is putting a delivery ship to the space station, for about the same cost as one of Lockeed’s manned fighter planes.
fast eddie

I think so. You clearly do not understand that Bain Capitol was using there own money and not mine. It is not the job of our government to start up a new business. It is the job of our government to provide the infrastructure ie., laws, roads, etc. and then let the private system do its job. Basic laws of supply and demand will take care of the rest. You people think the government should be in charge of everything. If this really happens, we will be just like Spain and Greece. 25 % unemployment and riots in the street because the government is now forced to take away some of the free ice cream the liberal politicians promise people to get their vote. Romney is a common sense business man who understands the strengths of our economy and how to leverage it to grow it. If he is elected I think you will be happily suprised how well he will do.
Just so you know, I did not vote for O’Bama but I took the great John Wayne’s quote. I did not vote for him but he is my president and I hope he does well. I feel like I gave him a chanch but it became obvious he is a socialist and that model has been proven to not work. If Romney is elected,I hope you will also give him a chanch.
- Summer
  
  Agreed. Well said Eddie. Zach, while I appreciate the information you supply, your site’s bias is hurting your credibility.
  
  With recent studies showing Red is as green as Blue (http://dblinvestors.com/documents/RedWhiteGreen_PfundLazar.pdf), it’s wise that you realize who your audience is.
  
  Romney is a sharp businessman who, as many smart entrepreneurs do, research a product’s ROI before investing in it. You can’t slam business people who opt out of investing in markets that have a 10-15 year payback (depending on which market/state you’re in). I am an advocate of clean energy but not at the expense of common sense. Until EVs are priced more competitively and solar PV prices fall further, many Americans & smart business people like myself will stay on the fence about RE.
  
  If elected, Romney is attempting to lead the U.S. into economic stability, thus you can understand how RE is a gamble. I love our progression towards becoming a cleaner energy economy, but it has to work economically or we could bankrupt ourselves before it goes anywhere.
  
  If you want to be respected as a valid news source, you should refrain from perpetuating your limited view (bias) in your articles. I appreciate your passion for cleantech but recognize “Red” is not the enemy nor is Romney. As we often say… United we stand. Divided we fall.
  - Bob_Wallace
    
    Summer, this site is all about clean tech and renewable energy.
    
    If you are for clean tech and renewable energy then that puts you in opposition to Romney and coal, drilling for oil in unspoiled areas, and all the other fossil fuel stuff.
    
    We need more people to be biased against fossil fuels and their supporters.
  - http://cleantechnica.com/ Zachary Shahan
    
    well, it seems every writer on this site has, on their own, gone ahead and spoken out against Romney.
    
    but i’m still flabbergasted that anyone would be surprised by that. Romney has very clearly spoken out against cleantech and for dirty energy numerous times. why would a cleantech site support him.
    
    we definitely do give props to GOP leaders who support cleantech — heck, the head of AWEA is a Republican! but current GOP leadership in Congress and the R&R ticket are basically 100% against cleantech. supporting them would be 100% illogical.
    
    as far as the economy: Bush’s relaxing of financial regulations basically crashed our economy. given that Romney is even more for such policies, i’d be concerned that we’d end up where we were 4 years ago (or worse) if he took office.
    
    RE creates a ton more jobs than the alternatives, it is actually cheaper if you look at true costs. and it has a great ROI for the country. this is why so many other leading countries are jumping ahead of us in this arena. it’s common sense.
- http://cleantechnica.com/ Zachary Shahan
  
  1- the government is doing with clean energy what it has done for dirty energy and plenty of other industries for over 100 years. that this is all of a sudden not what it should be doing is absurd.
  
  2- given that the investments have benefited the US as a whole (taxpayers), there’s really *nothing* to complain about. (yes, this has been confirmed by independent studies.)
  
  3- Spain and Greece are in a horrible situation for the same reason the US dove into a depression at the end of the Bush administration — horrible regulation of housing and financial markets. the citizens are actually now pissed that conservative policymakers are choosing the (less than logical) austerity route.
  
  4- i think there’s no way i would be happily surprised by Romney’s policies. every indication is that he’s for wealth distribution — giving more to the rich and taking more from the rest of the world. and that includes being wholeheartedly supportive of ancient dirty energy industries that need to see the door.
  
  5- please, if you’re going to discuss politics, learn how to spell the name of our president of 4 years (Obama), and don’t make completely absurd claims about him being a socialist. 100% nonsense.
- Bob_Wallace
  
  Actually Bain was using other people’s money. They were brokers, not investors.
  
  It has always been the job of the government to help new technologies and industries get started. It goes back to well before the transcontinental railway and extends into just about every technology you now use, including air travel, computers, the internet, satellite communication, GPS, ….
  Private industry will not do the heavy lifting of funding projects that are years away from creating profits.
  
  The reason Spain is in trouble is because they, like Americans, got caught up in the housing bubble and there banks, like US banks, were under-regulated.
  
  The reason Greece is in trouble is because their citizens to not pay their taxes. They “starved their beast”.
  
  Romney is not all that smart and understands a lot less than Fox News tells you. Look at the facts. Romney picked a lot of losers with his investments. The only thing Romney had going for him was very high leverage and no requirement to pay back his losses. If you had his access to other people’s money you could make a fortune at the race track. Just bet on horses. If the horse loses, other people loose their money. If the horse wins you take a big commission.
  
  If you think that Obama is a socialist then you don’t know the definition of socialism.
  
  Obamacare, the health care bill, for example is pure free enterprise. It puts health care in the hands of private insurance companies as opposed to a government run insurance company. All the health care bill does is set some guidelines so that insurance companies will no longer be able to screw us as they were.
- http://www.facebook.com/Damaclese Paul Baswell
  
  you clearly do not understand what the small business administration dose. providing loans and guarantees to small business as well as technical assistance on how to organize and operate successful business in the US.. it is staffed with talented people from all over the Country that have expertise in economics business and organizational administration. if anyone has the abilities to help out american businesses this part of our government has the best of the best. many of its employees are award winning authors in their fields of study highly regarded by their peers.
  - http://cleantechnica.com/ Zachary Shahan
    
    Thanks for the note. Many people simply do not understand that top professionals in their fields are put into these governmental roles. It is quite sad.
BillW

I think that should be “rotting carcass” rather than “rotting caucus”.
- Bob_Wallace
  
  Combine poor spelling skills, sloppy proof-reading, and deteriorating vision and one gets all sorts of interesting errors.
  
  Oh, and I wasn’t talking about Zach. Although he did have an opportunity to proof….
- http://cleantechnica.com/ Zachary Shahan
  
  ha, right you are.