Heads I win, tails you lose

Malcolm Gladwell had a really nice New Yorker piece a few years back about how bold entrepreneurial risk takers actually are not so risky.   It fact, the really successful individuals find ways to minimize their risk as much as possible.

In this vein, the Times has a nice piece about Romney and Bain.  Now Romney is certainly a shrewd businessman, but he was not exactly putting a lot on the line:

The private equity firm, co-founded and run by Mitt Romney, held a majority stake in more than 40 United States-based companies from its inception in 1984 to early 1999, when Mr. Romney left Bain to lead the Salt Lake City Olympics. Of those companies, at least seven eventually filed for bankruptcy while Bain remained involved, or shortly afterward, according to a review by The New York Times. In some instances, hundreds of employees lost their jobs. In most of those cases, however, records and interviews suggest that Bain and its executives still found a way to make money.

Bain structured deals so that it was difficult for the firm and its executives to ever really lose, even if practically everyone else involved with the company that Bain owned did, including its employees, creditors and even, at times, investors in Bain’s funds. [emphasis mine]

Now, I’m not going to argue that Romney did anything “wrong.”  He played within the rules of the game.  But when this is the perverse result, I’d say there’s something wrong with the rules of the game.

About Steve Greene
Professor of Political Science at NC State http://faculty.chass.ncsu.edu/shgreene

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