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Why Ron Paul Does Not Attack Romney on Bain Capital

Written by Gary North on January 11, 2012

Mitt Romney said that Bain Capital had to fire people after it bought unprofitable companies. He has been attacked savagely by his opponents for that practice. But Ron Paul came to his defense.


Because he believes in the free  market.

Speaking Tuesday on Laura Ingraham’s radio show, Paul said his GOP rivals former House Speaker Newt Gingrich and Gov. Rick Perry (Texas) sounded “like Democrats” in blasting Romney’s record with the company.

“I think it’s a big distraction,” Paul said. “And they’re picking up on this and those who are condemning him for it, I think, are arguing like Democrats.

“You know, they come in and say, look, restructuring in the free market is a good idea, and I don’t know anything about Bain, so I’m not taking a position on that, and I haven’t looked at it and I have no idea what he did or didn’t do, but the principle of restructuring is a good thing in the marketplace,” he said.

Paul knows that competition benefits the customers. Capitalism is about benefiting customers.

One of the best explanations of this is the final speech in Other People’s Money, a movie about a Bain-like take-over of a failing company. Danny DeVito is the bad guy throughout the movie. He is the take-over artist.

The head of the failing company, played by the beloved Gregory Peck, is a plea for standing by the old values. DeVito follows an act that is hard to follow.

Ron Paul understands this. So does Mitt Romney. The other Republican candidates do not.

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7 thoughts on “Why Ron Paul Does Not Attack Romney on Bain Capital

  1. I think the other candidates do understand the importance of restructuring. They just know that most Americans don't and are playing to that ignorance.

  2. Jon, I disagree with half of you. I agree that the Machine Candidates (let's be honest, that's what they are) understand that restructuring can be good, but they are scared of it. They understand or maybe just get an uneasy feeling that if they back this kind of thinking, then eventually Patriots will ask why they aren't "restructuring" The Machine. That, of course, would be undoable as The Machine is what got them there and the onslaught from the left would be unbearable (just ask the Gov of Wisconsin).

  3. Doug Heger says:

    I always show the shareholder meeting portion of the movie OPM to my stock market game students – it is right on the money. & it is interesting to see how the world has changed the last 25 or so years…..

  4. Kevin Beck says:

    Do the other candidates for President understand restructuring? Does the Republican Party Establishment understand the same concept?

    There are some restructurings that are horrific; an example would be Barack Obama's current restructuring of America into Amerika. There are also good restructurings. Many times a business becomes obsolete because they refuse change until it is imposed upon them. Other businesses accept that change is needed, and embrace it before they become useless. Many big-box retailers are slowly becoming obsolete because they hold to the same business model that brought them into existence: People will always want to and be able to come to their stores. Nowadays, many people are doing their shopping from home, instead of driving to a mall.

    Right now, the political class is enjoying the ill repute they deserve. There is a part of every politician that believes they are needed to "lead the sheep along (to the slaughter)." And there are people out there who believe their will needs imposed upon everyone else. Will the Republican party accept this as their future, or will they be able to break away from the pattern of sucking-up to the sheep?

  5. nobody_but_paul says:

    I agree with all that. But, correct me if I’m wrong, my problem with most investment firms is the cushy relationship they have with the Fed which lets them act like commercial banks. And I don’t care if it’s been “legal” since Glass-Stegall repeal, mark-to-mark etc. It’s a stacked deck against the small banks and the middle-class saver.

  6. I would agree that restructuring is a necessity in a free-market, and there is nothing wrong with it, and Ron Paul is right to defend Romney on this point.

    With that said, I also think there is no doubt that the Federal Reserve distorts the marketplace and makes restructuring both more common and more profitable than it would be sans Fed.

    A very large firm can fund a takeover with below-"real"-market interest rates. They can then afford to pay more than what would likely be paid in a true free market to the shareholders of the failing firm. They then restructure the company — usually breaking it into pieces — such that smaller entities can qualify for their below-"real"-market interest rates to buy the pieces. Often, the new owner is an investment group who tries to take the newly created company, pump up revenues by any means necessary and flip it to another rube who can get a below-"real"-market interest loan.

    Again, there is nothing wrong morally with this. It's just that the whole process is greatly distorted by the Fed. Sans Fed, you'd probably have fewer investment groups buying whole companies and splitting them up, and more companies buying pieces of the failing companies directly without the "middle man."

  7. Blair Franconia, NH says:

    Bain Capital's the bane of Romney.