LETTER: Private Equity Creates Jobs?

(Editor's note: The following is a letter submitted to Salem Patch. Send your letters to jake.odonnell@patch.com.)

Private equity uses other people money to help start up companies that they think are worthwhile, this kind of private equity is called Venture Capitalists. Many products we have today were financed this way. Other private equity companies buy up existing companies, and do drastic changes to make the company more profitable.

In some cases at Bain, 20 percent of the companies, according to Mitt Romney, go bankrupt after Bain left, taking large profits with them. When these companies go out of business the U.S. government is on the hook for pensions lost. In the case of GTS Steal in Kansas City we paid $40 million in pensions, while Bain took millions in management fees.

Let’s take a look at one of the companies that didn’t do well under Bain Capital's leadership, Dade Behring. The company in 1997 received a $3 million dollarf ederal tax break to promote job creation in Puerto Rico where Dade had a big facility. It also received a $4.1 million dollar tax exemption from Puerto Rico in 1997 in the name of job creation. Dade closed its Puerto Rico department in the first quarter of 1998.

In December of 2009 Mitt Romney said. “When you give people special incentives just to hire new employees, of course you give the incentive to let current employees go.” Bain Capital left Dade Behring taking millions for management fees and when the company could not pay its debts, it went bankrupt.

Marc Wolpow, former managing partner at Bain Capital during Romney’s tenure said in the LA Times, “I never thought of what I do for a living as job creation. The primary goal of private equity is to create wealth for your investors.”

While Romney was governor of Massachusetts his job creating record put the state atnumber 47, three from the bottom.

President Obama on the other hand has created over 4 million jobs on his watch and still climbing, some of those jobs are in the auto industry and related fields. If the country had been under Romney’s leadership they would not be here today.

Rebecca Fee

Salem, N.H.