Yesterday, Joe Biden derisively argued that Mitt Romney’s experience at Bain Capital no more qualifies him to serve as president than would experience working as a plumber. Why do Joe Biden and Barack Obama think business experience is irrelevant to the job of president? They argue the job of a business person is to “maximize profits” as opposed to “promoting the common good.” As Barack Obama has never even run a lemonade stand, it’s easy to understand how he comes to this conclusion. He read it in a text book.
The desire to maximize profits is not limited to the field of private equity. Every business person, including plumbers, looks to maximize profits. The desire to maximize profits has benefited the common good far more than any community organizer could ever imagine. If not for the desire to maximize profit, there would be no food on the table, clothes in the closet, or roof over our head. There would be no Apple, Microsoft, or Facebook.
No company is in business to create jobs, but it is a necessary bi-product of wealth creation. When a company is wildly profitable, it also employs lots of people, and provides wealth to its shareholders, all while providing goods or services we all desire or need.
The Obama campaign has issued a pathetic ad making the argument that Romney’s desire for profit cost hundreds of steel workers their jobs.
I suppose “promoting the common good” would have required Romney and Bain Capital to continue running the company at a loss in perpetuity. It apparently would have promoted the common good to dump capital into a failing business as opposed to invest in a new, profitable company. That’s what the president read in his text books.
Blockbuster recently declared bankruptcy. Their business model failed as people began using on line movie rentals, or mail services like Netflix. There just weren’t enough people willing to walk into the local Blockbuster to rent movies to cover the overhead. Should the investors in Blockbuster continued to dump money into this failing company for the benefit of the common good? Or perhaps, we the tax payers should have loaned or given Blockbuster the money to keep the lights on? After all, thousands of people lost their jobs as Blockbuster stores around the country closed their doors.
The answer to these questions is obvious to anyone who has worked a day in the private sector. It does not serve the common good to keep unprofitable, zombie companies afloat for eternity. Like Blockbuster, the steel company featured in the Obama campaign advertisement was a failure. Unprofitable companies do not employ people for very long. The capital would be better utilized at an innovative company that actually provides goods or services desired by the public at large. A plumber would understand this basic tenet of economics, but apparently a community organizer does not.