Romney and LBOs

There are things to be said both for and against leveraged buy-outs. The “for” case mostly involves economic theory, creative destruction, and the malign consequences of government regulation over the long term. The “against” case involves the near term, a profitable company moving its factory to Mexico, and a few men getting rich.

I don’t much care if Romney wins or loses, but the most effective way to deal with [this] criticism might be to embrace it: “I fired people I could do without, and outsourced work that other companies would do cheaper. I was a businessman, and I made money. Barack Obama is an intellectual, and his theories have bankrupted us. Vote for me and I will run Washington like a business, with lay-offs and privatization.”

Now that’s only half true; if Romney is elected the federal workforce will grow, the federal government will spend more money, and five years from now it will be bigger than ever and deeper in debt. But for whatever it’s worth, saying he’ll fire federal workers effectively exploits the politics of envy, and is more likely to win him the presidency than talking about Schumpeter and Pareto.

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