The Backbone Hypothesis

I enjoyed Thomas Sowell’s column this week, South Carolina Message.

Sowell summarizes the surges in the multiple candidates against Romney:

The more fundamental message is that the Republican primary voters do not want Mitt Romney, even if the Republican establishment does — and it is just a question of which particular conservative alternative the voters prefer.

But, I think there is an additional message from South Carolina: Have Some Backbone!

Newt demonstrated backbone when he refused to accept the premise that he should feebly play along after the news media appeared to have manipulated and slanted the news against him.

“Sorry John, but you and your staff decided to lead a Presidential debate with this topic.  Don’t try to blame others.”

Mitt seems to have received the backbone message with his recent “I’m not going to apologize for my success” speech.  It’s unfortunate that he had to get this message though.  Newt had to test the backbone hypothesis before Mitt was willing to give it a try.

That’s not backbone.  That’s like standing up to the bully only after another bully has  intervened on your behalf.

Silly Gingrich

I wish I could advise Newt Gingrich not to attack Romney’s business record as the head of Bain Capital.  It should actually be applauded.

Gingrich can distinguish himself easily enough from Romney on their political records alone.  Gingrich brought financial accountability to the Federal government and reformed welfare under a Democrat President.  Romney basically implemented the liberal platform as Governor.

The Wall Street Journal reported today that Romney’s political opponents are stepping up attacks on his business record.

The attacks will center on Bain’s failures and portraying Romney as a “corporate raider” that acquired companies and fired people.

The journal tracked the results of the 77 companies acquired by Bain when Romney was in charge.  Here’s what they found:

1. “…22% either filed for bankruptcy reorganization or closed their doors by the end of the eighth year after Bain first invested, sometimes with substantial job losses.”

2. “An additional 8% ran into so much trouble that all of the money Bain invested was lost.”

3.  “Bain produced stellar returns for its investors”

4. “Bain produced about $2.5 billion in gains for its investors in the 77 deals, on about $1.1 billion invested.”

5. “Bain recorded roughly 50% to 80% annual gains in this period, which experts said was among the best track records for buyout firms in that era.”

6.  “If the Journal analysis were limited to bankruptcies and closures occurring by the end of the fifth year after Bain first invested, the rate would move down to 12%. “

It’d be tough to argue with this record.  It’s outstanding.  Criticizing this record is a bit like criticizing a major league baseball player who hit .350 driving in multiple game winning grand slams.

I agree with Romney’s response to Gingrich:

Doesn’t he understand how the economy works? In the real economy, some businesses succeed and some fail.

Many times in business, even if everything is done right, the business fails.  Consumer preferences change, competitors get a leg up, innovation obsoletes a product, new regulations put a crimp in the economics of a business.  Any number of things can happen. Sometimes they happen all at once.  Sometimes the best baseball hitters strike out.  Sometimes the most winningest professional teams coaches lose.

And to the argument that Bain fired people, they also created lots of jobs.  You don’t create $2.5 billion in gains without employing a few people along the way.

I realize that Gingrich is likely trying to appeal to voters who reflexively scoff as phrases such as “corporate raider” and “firing workers”, but for those of us who know better, this just makes Gingrich look silly.