May 24, 2012

Should Romney get credit for job creation through Bain, if "any job creation was accidental"?

A NYT op-ed says no, but Jaltcoh implies that the answer is yes:
As [Thomas] Sowell points out [in "A Conflict of Visions"], we have a word for things in the "unintentional" + "harmful" quadrant: "negligence." We generally blame people for acting negligently. So, why shouldn't we praise people for doing the opposite — causing unintended benefits?

47 comments:

The Crack Emcee said...

Why shouldn't we praise people for doing the opposite — causing unintended benefits?

You can praise him all you want, but don't pretend that was his intention.

Ethics is NOT a strong suit around here,...

MartyH said...

Creating jobs is a lot like finding happiness-both are byproducts of other activities. If either one is your primary goal, you will probably fail to reach it.

Ann Althouse said...

Who goes into business for the purpose of creating jobs? It's a good that follow from the pursuit of self-interest, and that is a reason to approve of business. Elementary capitalism.

fizzymagic said...

I think the NYT is engaging in partisan obfuscation. Of course "job creation" is not the primary purpose of any business.

The Republican argument is that economic activity, left alone, results in job creation. As a result, job creation that was a side-effect of economic activity undertaken by Mr. Romney supports that argument. The NYT seems to be engaging in a classic "moving the goalposts" fallacy, by now claiming that if job creation was not the purpose of the activity any arguments about it don't apply.

It's sad to see the former Paper of Record resort to logical fallacies any high-schooler should be able to identify.

yashu said...

Who goes into business for the purpose of creating jobs? It's a good that follow from the pursuit of self-interest, and that is a reason to approve of business. Elementary capitalism.

Exactly. That's the whole point of Adam Smith's "invisible hand." If you're trying to create jobs by funding and instituting a centralized government program with "jobs" in the title that has the express purpose of creating jobs... you're doing it wrong.

The "unintentionality" of the benefits of capitalism is one of the primordial essential fundamental indispensable reasons that it works in the first place.

elkh1 said...

Of course not.

And Bush should get all the blames for the 800 billion "stimulus" failure passed by the Democrat Congress and Obama. Bush should be blamed for Solyndra's failure too.

bagoh20 said...

So is the implication that he didn't want those jobs created, but they happened anyway. He can't screw up up even when he tries to? That gets my vote.

bagoh20 said...

If you accomplish much in life, you realize early on that a lot of it is unintentional. If you don't realize that early, you are likely to fail a lot from being confused about cause and effect.

Luck is beautiful thing... if you're lucky.

JAL said...

You can bet your bippy that if that were BHO they were writing about he would get credit.

bagoh20 said...

The real problem we are faced with is the unintended consequences of liberal programs, not conservative ones.

That's really the whole point of this election, so by all means, lets have a dialogue on that, NYT.

Beldar said...

Foreseeability is a key legal and moral element of negligence. The exact happening needn't have been foreseeable, but only something of its general type.

If it's foreseeable that a company's conduct may proximately cause unintended good consequences, even if it wasn't foreseeable that a particular new job would be created, then I'd say yes, certainly at least at a moral level, that company should be able to claim credit for the accidental-but-favorable result.

wyo sis said...

It's astounding how liberals manage to get EVERYTHING wrong. Even their whining is self-defeating. They lose even when they declare victory. It's only surpassed by people, including conservatives, who fall for the never ending hat tricks.

Synova said...

Except that we don't generally care if someone's good intentions don't do anything at all, at all.

Yes, we call it negligence or some such if BAD things happen, but that's when we've got no choice but to notice.

Otherwise good-intentions are the end all be all of it all. Am I wrong?

Does anyone in government bother to *check* if programs actually do any good? Did anyone care if Annenberg, the part that Obama was involved in, had any success? Of course not!

The whole question of, should Romney or Bain get credit for something unintended, embeds the foundational assumption that intentions OF COURSE are more important than events. But are they?

I wouldn't think that intentions are more important than events to anyone but your mother and your God. But we center our entire public/social morality around people having the proper intentions, the altruistic sensibilities, and events can simply go hang.

Bender said...

Does he get credit? Yes.

Does he get any more credit than the hundreds of thousands of other people who run businesses and, therefore, employ people? No.

Romney did not do anything special or unique. Rather, it is inherent in operating a business that you are stimulating the economy and helping to provide jobs to people.

bagoh20 said...

OK, so if Obama gets reelected we get no growth or jobs, but it's not because he didn't try, it's because he knows nothing about that, so not his fault.

If we elect Romney we get jobs and growth but still not HIS fault - he was just lucky.

Still an easy choice. I pick good luck over bad.

Of course all this really shows is the NYT inability to understand economics. Some policy increases the odds in your favor and some policy does the opposite. That's all a President can really do.

Alex said...

I guess Instagram was really evil for being bought out for $1 billion despite creating only about 12 jobs.

MartyH said...

Bender-

He gets more credit than a guy who borrowed and spent close to $800 billion with the projection that unemployment would peak out at 8%. It's still officially above that, and would be much higher if discouraged workers would be counted.

yashu said...

But we center our entire public/social morality around people having the proper intentions, the altruistic sensibilities, and events can simply go hang.

Well, isn't that the whole point of Obama's "fairness" principle (or rather, "fairness" slogan, "fairness" rhetoric)?

Cf. that very telling moment in the Democrat primary debate, shown here, when Charlie Gibson points out that in each and every instance, history shows that when you drop the capital gains tax, revenues go up-- and when you raise the capital gains tax, revenues go down. Yet Obama would nevertheless "look at raising the capital gains tax for purposes of fairness.”

"For purposes of fairness." Even though this would mean, in effect, less revenue. Less revenue to do all the presumably good things you'd want government to do! Intentionality is more important than actual empirical effect. It's worth listening to Obama's full response here-- which clearly presages the Buffett Rule and all the other class warfare motifs we heard during his presidency and now in the 2012 campaign.

Synova said...

bagoh20: "OK, so if Obama gets reelected we get no growth or jobs, but it's not because he didn't try, it's because he knows nothing about that, so not his fault.

If we elect Romney we get jobs and growth but still not HIS fault - he was just lucky.

Still an easy choice. I pick good luck over bad.
"


Robert A. Heinlein: "Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded- here and there, now and then- are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty. This is known as "bad luck." —"

Richard Dolan said...

It's a mistake (some might call it a category mistake) to think of economics as an exercise in morality. Job creation is, first and foremost, an economic problem not a morality play. The economic measure of success is efficiency which, if maximized, promises the greatest good for the greatest number. Efficiency measures results; intentions are beside the point. An efficient market also has nothing to do with fairness (although efficiency often coincides with fairness). In practice in real-world markets, efficiency as a measure of success often suffers by ignoring externalites, common goods, and distributional effects.

At Bain Romney was acting, and his success was measured, in efficiency terms. The great strength of that approach is its focus on results, not intentions. By those standards he was a tremendous success, and his success necessarily contributed to achieving the greatest good for the greatest number (regardless of distributional effects). The 'greatest good for the greatest number' included the efficient allocation of labor -- i.e., jobs . Efficiency in that sense is essential to long-term job growth and economic security for workers. It also means that inefficient uses of labor (and capital) are dead-ends to be avoided and, when found, fixed. The fix often involves shutting down inefficient operations.

Romney didn't invent market economics; he deserves no special credit for the fact that, as theories go, it provides an excellent model for the workings of the world we live in. But he surely deserves credit for being an astute and careful steward of the economic resources that were at his command. That is quite praise enough, and much more than can be said about Obama.

yashu said...

From the youtube link in my comment above, NB classic Obama quotes such as "you can't take out a credit card from the Bank of China in the name of our children and grandchildren" and "I believe in the principle that you pay as you go."

I need a good internet acronym for my response to that. I guess "LOL" will do in the absence of anything else-- but those laughs are damn bitter and gloomy.

rcommal said...

I vote for hard work, of whatever type.

yashu said...

PS My use of the term "intentionality" @1:10 is inaccurate and too charitable. The distinction between Obama and Romney as POTUS doesn't consist in a distinction between intention and effect; obviously both are (would be) intentional actors with purposes they intend to effect.

The distinction between them would rather lie in (1) their intentions: NB intentions can aim as much at real world effects as at appearances others glean of one's "intentions"-- which have their own real world (political) effects (2) their theoretical knowledge (and/ or ideology) (3) their experience and pragmatic savoir faire, i.e. efficacy and results (4) their political and ethical conception of the role of POTUS vis-a-vis citizens of and corporations in a polity.

This calls for an extended comment I'm to sleepy to write right now. (NB there are many philosophical distinctions to be made here, involving meta-levels etc.)

damikesc said...

And Bush should get all the blames for the 800 billion "stimulus" failure passed by the Democrat Congress and Obama. Bush should be blamed for Solyndra's failure too.

Fast & Furious, too. That, too, was Bush's fault.

edutcher said...

Rattner's argument is disingenuous (remember this was our car czar).

Yes, the purpose of Bain was to make money, but it made money by turning companies around. The ones that failed were losses.

tim maguire said...

Why should Romney get credit? He is a republican after all.

I don't see where there's anything more than that in the Times' thinking.

Matthew Sablan said...

"Who goes into business for the purpose of creating jobs?"

-- No one; if anything, people understand that if they do well in business, they will need to hire more people. What we should be asking is: Who goes into business for the purpose of destroying jobs?

Dante said...

So the wasted money on Solyndra, etc. was good wasted money because Obama's intentions were good, whereas Staples doesn't count because it was to make money.

Paying off government unions is good, since it's with the right motivations (nothing to do with political contributions, it's to take care of government employees).

Dante said...

Ann, you need a new tag: Press Bias.

The Crack Emcee said...

Ann Althouse,

Who goes into business for the purpose of creating jobs?

I've finally got a job with a company that seems to have that idea in mind:

Everything I enquire about it gives me the answer I'm looking for - good pay, good benefits, run totally from the perspective of the employee's interests - who is expected to give a decent day's work - and not a union member in sight. They just want to grow and everyone involved to be happy while doing it. Their biggest problem?

Finding "good" people.

Sorry, but not everyone is cynically out to make a buck, and there wouldn't be much to admire out there if they were.

I seriously wonder about you sometimes - the darkness dwelling under that blonde do can be frightening,...

The Crack Emcee said...

Ann,

This thought has occurred to me before, but your comment - and the fact you're a feminist - has really brought it home:

What was the point of bringing women into the workplace if all they were going to do/become is based on aping the worst aspects/ideas of men?

Ken said...

Crack,

You can praise him all you want, but don't pretend that was his intention.

Is this a serious comment? Ann's talking about giving someone credit for unintentional benefits and your saying not because then you'r have to "pretend that was his intention"?

Do you understand that unintentional benefits are by definition unintentional?

Rusty said...

I can't take this seriously until Bob weighs in. He has his hand on the pulse of economics. He knows.

Chip S. said...

Rattner's op-ed is just the latest in this weeks series of walk-backs of people's defenses of private equity firms against the Axelrod Strategy.

Apparently a new role of the NYT is to certify the satisfactory completion of a re-education program.

Pogo said...

If only the NYTimes employed an economist that the op-ed writer could have asked.

Worse, the author, Steven Rattner, "was a Treasury Department official in the Obama administration".

Holy shit! Obama hired an economics retard for treasury. Jesus H!

Pogo said...

BTW, by the Elizabeth Warren rule, I'm allowed to say "retard" because my family is 2/13ths retard.

This is how I live. This is my family. I am not backing off from my family.

Cedarford said...

No business is started or taken over with the stated goal of creating X thousand new jobs.

If you went back 40 years in a time machine and asked Steve Jobs why he was starting up Apple with the Woz - he would have said the idea was to change things, to make money, to sell home PCs far and wide. And if you asked what Apple would look like if it was successful, it would be that the investors were paid off, Apples flying off production lines and store shelves, and "needing lots more employees than we have now".

Same in any business's dreams for the future.
Jobs are a side part of the vision.

Peter said...

"You can praise him all you want, but don't pretend that was his intention."


"It is not from the benevolence of the butcher, the brewer, or the
baker that we expect our dinner, but from their own interest.
We address ourselves not to their humanity, but to their self-love,
and never talk to them of our own necessities but of their advantages."

-- Adam Smith, _Wealth of Nations_ (1776)



Few (when pressed hard enough) will dispute that capitalism sucks-- its just that the alternatives are so much worse. Which is to say, the best way to ensure that you will eat every day is to ensure that it's profitable to supply you with food.

If Bain Capital was in business to make money and not to create jobs, that's not a bug, it's a feature.

Chip S. said...

Strictly speaking, it's scarcity that sucks.

Capitalism is just brutally clear about that.

Dead Dog Bounce said...

Shouldn't the point be the jobs that were saved?

Bain was investing in companies with problems. Many jobs were saved.

David said...

The word the NYT wants is "incidental" not "accidental" and there's a world of difference.

Besides which, the basic assumption is wrong. During the entrepreneurial phase, businesses want growth more than profits and growth at that point always means more jobs. (And if you disagree with me, you're denying the science because I'm a scientist and this is what I study.)

Bruce Hayden said...

I knew what I wanted to say here, until I read the comments, and pretty much understood this so much better than the author of the article that Ann linked to. So, I will endeavor to not duplicate what others have said, but surely will.

This maybe has been a big difference between the left and the right. On the left, good intentions are what is important, and results do not matter. The President and the Dems had good intentions here, and should apparently be commended.

Yet - Keynesian economics never has worked, and never really can, no matter what Nobel Laureate Paul Krugman says.

We have the same thing with the War on Poverty. It was started and waged for all the right reasons, but, as usual with liberals, with no realistic expectation of success. They tried to pretend that the laws of economics and human nature did not work or apply, and as a result, trillions were spent destroying the family structure of the under classes, and esp. those of Blacks, resulting in fatherless families, those males filling our prisons, and the women having and raising the next generations on the public dole. The result? More poverty.

The Dems here, led by President Obama, had great intentions. But, after squandering some five trillion dollars, the result is that their actions have greatly deepened and lengthened the recession, turning a recession into almost a depression.

And, don't forget that the entire crisis was instigated by their insistence that home ownership be made more democratic, essentially forcing banks and agencies like Fannie and Freddie, to lend to people who could never be expected to be able to pay for their houses on their incomes. Again, great intentions, with fully expectable negative results. Somehow we are supposed to give them credit for their intentions, while cutting them slack for the misery they caused.

As RD pointed out, businesses make money by increasing efficiency, and that translates into job growth. Maybe a company itself doesn't create jobs directly, but if it is profitable, it will create jobs.

So, let us assume that Bain was one of those firms that bought companies, and made money by splitting them up, taking them through bankruptcy, etc. At first blush, that would look like destruction of jobs, and that is indeed what the Dems have argued with the companies that Bain did that to. BUT, the reason that they were able to make money doing it was that there was a lot of value locked up in inefficient usages of the capital invested.

Let us take the example of a steel company shut down because it could not compete with foreign steel companies. What we are talking about here is a lot of labor tied up making steel inefficiently, and a lot of plant being inefficiently utilized. So, sure, it looks bad that those workers were turned out. But, in the long run, our economy benefited, and many more than that number of employees were hired as a result. Besides, if a company is losing money, as our domestic steel companies were then, then where is the money to cover those losses going to come from? From more efficient utilizations of those funds.

Just think of the trillions of dollars that the Obama and Dems have squandered through their well meaning but feckless economic policies, and envision all the jobs that would have been created if they had just hibernated for a couple years instead, and maybe done some drugs to get their jollies instead.

Bruce Hayden said...

Maybe the better question is whether or not Obama should be held accountable for the millions of jobs that he lost, despite the best of intentions and the trillions of dollars he spent trying to create jobs instead of losing them.

Geoff Matthews said...

Maybe Romney shouldn't get credit, but his methods should.

Michael said...

Crack. Unless you are working for the Mormon Church you are delusional. No one runs a business for the employees unless it is the church or the Post Office. At least not for long.

The professor put it perfectly. And succinctly.

The Crack Emcee said...

Working the thread backwards:

Michael,

Crack. Unless you are working for the Mormon Church you are delusional.

Ha! How funny:

The first words my trainer spoke to me - to say he was decent and normal - were his name followed by "I'm not LDS." (That's how it is here in Utah. The rest of you will find out why soon enough,...)

Ken,

Ann's talking about giving someone credit for unintentional benefits and your saying not because then you'r have to "pretend that was his intention"?

I said "You can praise him all you want" - I never said not to, and you're twisting my words and meaning by suggesting otherwise - but not for desiring that outcome. He didn't. It was "accidental."

Peter,

All true, except for the last line (regarding Bain) and with this caveat:

The butcher, the brewer, and the baker are selling meat, beer, and bread. That is their intention, not an accident of their business, and I can legitimately thank them for it if it moves me to do so.

Romney, on the other hand, was selling nothing, and thinking of no one - he had no product whatsoever - so there's little for me or anyone else to feel anything about. Thanking serendipity is what's appropriate in this case - not Romney.

Imagine you're an employee of Romney's "accidental" job. What are you going to say? "Gee, Mr. Romney, I sure am glad you fucked up!" is about all that can honestly be said. And if he said, "Me, too!" it might eventually dawn on you that the fate of your family hung on this unforgiving LDS schmuck, for once, being a bonehead instead of a predator. Again:

Would you actually thank him for that?

Give me a break.

Marshal said...

So to take the liberal view, we shouldn't reward people for actual benefits, but we should reward them for good intentions with negative outcomes. The common thread is that people are rewarded for fantasy outcomes rather than reality.

So let's all recognize and cheer those members of the reality based community.

The greatness of capitalism is that it maximizes the reward to people for benefitting others, which results in that effect even when it isn't the primary goal. And no economic or political system has ever come close to matching its positive effects.

People who want to replace it are idiots. Not only are they enemies of the citizens they're dooming to a bleaker existence than necessary they're absolute monsters to those who will live a century or more in the future. Not only are they robbing those people of the benefits of progress, they attempting to force them to endure a lower standard of living than those alive today enjoy.