Reality vs. Spin

Here are some questions that you need to answer:

1) If a company fails, is it always the fault of management?

2) If a company files for bankruptcy is it always a bad thing?

3) If someone buys a company and cuts jobs in order to return the company to profitability, is that a bad thing?

4) Does your answer to #2 change if you learn that had the job cuts not been made, the company would have gone bankrupt and all workers would lose their jobs?

5) If someone takes over a company and arranges to stop making a big part of the product mix with the result that many workers are laid off and many thousands of workers at suppliers and dealers of the company's products also lose their jobs, is that a bad thing?

6) Does your answer to #5 change if the company goes through bankruptcy as part of the changes?

7) Does your answer to #5 and #6 change if you learn that without the bankruptcy and the cuts, the company would have been forced to go out of business?

8) If someone buys a company which is losing money and invests millions of dollars trying to turn it around, is it the fault of management if the turnaround effort fails?

These are highly relevant questions recently. The Obama campaign has actually launched an attack on Mitt Romney because one of the hundred or so companies that Bain Capital invested in when he was there was a steel company that failed after a ten year effort by Bain to turn it around. Questions 1, 2, 3, 4, and 8 all mirror the Bain effort at this steel company. Questions 2, 3, 5, 6, and 7, of course, all pertain to the bail out of General Motors and Chrysler. The Obama effort in the auto industry which his campaign touts as a major accomplishment led to over 100,000 jobs being lost across the country. It also cost the taxpayers something in the area of $40 billion as of this writing (which we may or may not get back). The investments made by Romney while he was a leader at Bain Capital led to the creation of over 100,000 jobs even though his goal was earning profits for his investors rather than creating jobs. Even in this one investment that the Obama folks focus on, the employees of a failing business got to keep their jobs for an additional ten years while Bain put millions of its own money (not taxpayer funds) into the business to keep it afloat.

Of course, there are all the other points regarding this one investment that have been made in many places. Romney was gone from Bain for over two years before the steel company failed. The steel company was actually being run by a big Obama backer when it failed. There is more, but they are not the main points.