There has been much said recently about what Mitt Romney did while he was working in the business world. He ran a company called Bain Capital. Bain capital worked with and took over failing companies to see if they could turn them around. It could be said that we have seen recent examples of that from the U.S. Government. I would like to explain the difference between the two.
A venture, simply put, is an opportunity that when invested in it and nurtured could turn into a profitable entity. People invest in opportunities every day in a free market society. To me that's what makes the business world go around.
Mitt Romney worked for and even ran the venture capital company called Bain Capital. The sole purpose of this business was to seek out other businesses that had become weak or were close to failing. They would check out these businesses to see if they felt they had potential with enough money invested into it and the proper nurturing like a new management team or at least fresh ideas being pumped into it so it could be turned around well enough to begin making a profit again. Bain would invest in businesses of all sizes and either change personnel or work with the existing personnel to get it turned around. We are still talking about a human element so some times they failed and some times they would succeed.
Fortunately for Bain and Romney, the success rate for their company was much greater than its failure rate. They took over more companies that would eventually turn a profit and in turn employ more workers than those that failed and had to let workers go. In this sense you could say that the decisions that Romney made at Bain Capital allowed him to create jobs. In other words more people were working at these taken over businesses than what would have been had the business been allowed to fail on its own.
Businessmen like Mitt Romney and others invested their own money or money that they had raised from other people in the business world to invest in or buy out other companies. Once they made that investment obviously they wanted the business they invested in to succeed, make a profit and pay back the other investors with a dividend. If that investment turned a profit, that set of investors would be willing to invest in yet another business and do the whole process over again. The more businesses succeeded the more workers could be employed at each of these businesses. Some businesses, however would fail along the way and the people working at those businesses would lose their job. In a sense is was a gamble, a risk that investors were willing to take. One of the first axioms learned in any business school is the greater the risk the greater the return. Any time you have humans making decisions you still run a risk of making mistakes and failures do occur.
One thing we have seen in the past few years is something that has rarely ever been tried in American history. Where it has been tried in other countries it has failed. That is a government take over or bail out of a private company. Since the economy's slide in 2007, The united States government has "invested" in more companies probably more than any other time in its history. The largest take over would have to be buying out General Motors. But there have been many other attempts from the federal government to "invest" in other companies. One that was prominent in the news was the investment in a solar company called Solyndra. This is what I call Venture Socialism.
In a free market society, individuals or at least companies owned by individuals make a financial investment into a product or service that they hope will make money so they can do several things: Make more investment to make more money, provide a needed product or service to the market and employ workers. Note the main goal of a company is not to employ people, it's to make money. In the case of General Motors and Solyndra it was not individual people or even a business that was run by individuals that made an investment, it was the United States government that made the investment. The problem here is that the U.S. government does not by itself have any money. The only way the U.S. government has any money is if it takes it from individuals who actually go out and earn money.
Just as before in the Venture Capital investment of Bain Capital and similar companies, there was a risk taken by investing into these companies, such as GM or Solydra. Again the greater the risk, hopefully the greater the reward. There are two problems with this Socialist Venture though. One is that Solyndra had already collapsed before our government dumped a half a billion dollars down the Solyndra toilet. Where did that money go? It paid back contributors to the Democrat party. The other problem with this scenario is that Obama and his minions confiscated the money they put at risk from hard working tax payers. When a private sector businessman invest money and loses it's okay, because it's his money. When the federal government does anything with money whether it's build a road or make a stupid investment in a company like Solyndra, it's using other people's money that they confiscated in taxes. Any Socialist Venture is committing a crime because the money risked is some one else's money. It needs to be stopped.
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