Private equity firms typically play their cards close to the vest and resist public scrutiny, but with the presidential candidacy of Mitt Romney, Bain Capital has become a matter of public discussion. Romney and his allies argue that his work at Bain “created jobs,” and that he is therefore well suited for the job of president, who, by popular assumption, is charged with creating jobs in the nation. President Barack Obama and his allies have responded that, in fact, Bain’s actions often led to the selling-off of companies and the destruction of jobs. How should we think about this—and what would Catholic social thought have to say? The issues here go far beyond campaign rhetoric to the basic morality of our economy.
From a social-science perspective, Howard Anderson, a lecturer at MIT’s Sloan School of Management, accurately responded to the Romney camp’s assertions that private equity creates jobs. “No,” Anderson replied in an interview in May, “you guys build wealth.”
Sometimes you build jobs. Sometimes you eliminate jobs. What private equity is—and what Bain and the other guys do—it’s the best of capitalism and it’s the worst of capitalism.... Capitalism doesn’t try to do the right thing. Capitalism can be very destructive.
That is, both Romney and Obama are right about Romney’s background at Bain: he both created and...