Thursday, July 26, 2012

Bain is a Winner for Romney

Recently, the Obama campaign unveiled a new set of commercials that emphasized President Obama's accomplishments and gravitas. This was a stark contrast to a few weeks ago when the campaign blanketed the airwaves of swing states with many ads criticizing Romney's tenure at Bain Capital.

Despite the shift in focus from Romney to Obama, the Democrats still think they have a winning issue with Bain. They're using a classic tactic: turning an opponent's strength into a weakness. There is no doubt that both sides will continue to fight over Romney's business credentials between now and November, but I think the Republicans ultimately have a winning issue with Bain.

1. The Debates -  There is no doubt that the issue will come up during the debates. But this is where Romney can really shine. The reason is extremely simple: informational asymmetry. Simply put, Romney knows a hell of a lot more about Bain Capital than President Obama does. He ran the company for 15 years.

Obama has to rely on what his advisers tell him, and he doesn't know nearly as much about business as Romney does. This will allow Romney to gain the upper hand on any confrontation about Bain. He can explain his side of the story in greater detail than Obama's critiques, and then counter on Obama by saying a person only with superficial understanding of how businesses work would make that criticism.

2. The Company - Bain Capital is a highly regarded firm and was one the first prominent success stories in the fields of venture capital and private equity. Many VC and PE firms today are modeled on Bain Capital. And the company isn't like a investment bank's prop desk, which only seeks to create profits for the firm. Many investors have a stake in Bain's funds and have experienced extraordinary gains over the lifetime of the firm.

Again, all Romney has to do is explain that when people save money and invest it into good companies, they can make a lot of money. He can then indict the Federal government for spending money it doesn't have, and, if he has the guts, claimed that if firms like Bain Capital had managed the Federal government's money, the country would be in vastly better financial shape.

 3. Class Warfare - The Democrats have one overarching message on Bain: Look at how rich this guy is, and he did it by screwing ordinary people over too. But it's not hard to look at the success stories of Bain: Staples, Bright Horizons, Domino's Pizza, The Sports Authority, Steel Dynamics. Even Michelle Obama praised Bright Horizons (Romney invested in the firm when it started up in the 80s, Bain Capital currently owns it now) for its work in child daycare.

Nobody holds a gun to a customer's head and tells them to buy a product. And plenty of people have bought goods and services from companies owned by Bain. Buying from the private sector gives consumers choice, whereas they have to accept a government's word as law. A Republican message crafted on associating the voter as a consumer (who is empowered) who voluntarily buys stuff from Bain-owned companies can counter the Democrats' message that the voter is like an employee that got laid off by Bain.

Strengths are strengths for a reason. And Romney's tenure at Bain is a net plus for the Republican campaign.

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