"Romney’s Bain Capital did not create 100,000 jobs" by John Ifcher at Market Watch

[applegrove]

Romney’s Bain Capital did not create 100,000 jobs

Commentary: Calculations ignore competitors’ job losses

by John Ifcher at Market Watch

"SNIP...............................................

I am not disputing the fact that if you add up all the new employees who were hired by companies while owned by Bain Capital that you would get a number north of 100,000. Moreover, even if one calculates net new employees — the number of new employees hired minus those who lost jobs directly due to Bain Capital’s ownership and activities — I suspect one could still show that more than 100,000 net new employees were hired by companies owned by Bain Capital.
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No, my concern is that the above analysis only considers the direct effects and not the indirect effects of Bain Capital’s ownership and activities. For example, as companies acquired by Bain Capital expand, what happens to competitors? Consider Staples Inc., touted to be one of Bain Capital’s biggest successes. Sure, Staples grew from one store in 1986 to more than 1,000 stores in 1996, and in the process, hired tens of thousands of new employees (today Staples employs more than 90,000 people).

But did Staples’ expansion create tens of thousands of jobs? The answer is no. Why? Because when you consider the indirect, or second-order effects of Staples’ expansion, it becomes clear that as Staples expanded it displaced other retailers. That is, was Staples’ dizzying expansion fueled by an equally dizzying increase in the market for office supplies in the U.S.? Or did Staples’ expansion crowd out other retailers?

Data from the U.S. Census Bureau appears to support the latter. The number of retail establishments primarily engaged in the distribution of stationery, such as paper and paper products, declined by 25% (from 5,391 to 4,041) between 1986 and 1996.


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[SoutherDem]

1. I agree but isn't that the same as the Walmart effect?

Wouldn't we have to rethink capitalism completely to change this? We would also have to retrain the American consumer. We have given up service for price. We also have given up quality.

[applegrove]

2. I think the point isn't that capitalism should be illegal. It is that Romney cannot claim he is a

job creator.

[SoutherDem]

3. I wasn't disagreeing

Romney without a doubt hurt many.