I am probably the least political person you may meet, in every sense of that definition. And, I am not debating the merit of Mitt Romney’s overall political position here, but his understanding of economics is severely flawed. The clowns of politics have changed; the rhetoric has not.
Politics have no place in the establishment of an authentic meritocracy. And so I have no specific interest in following or taking sides in political debates (it is good and evil on each side of the aisle) that at best manage to appease no more than 30% of the U.S. population. The majority of us have already voted against the current political system as the system incapable of representing the American people. Yes, just like our economic system, our political system is in desperate need of a major overhaul too.
But when Republican presidential candidate Mitt Romney makes a statement that in his role as a venture capitalist (VC) he created all these jobs, I must correct him. It is a comment stemming directly from the playbook of the VC lobbying organization (the NVCA), which in unending attempts to legitimize the existence of Venture as an asset class, grossly puffs up the role of a VC vis-à-vis limited partners and entrepreneurs when there are credits to be had and hides behind the excuses of the macroeconomy when their trailing 12-year performance remains, on balance, a negative.
The bottom line is that VCs do not create jobs, ever.
VCs arbitrate the committed investment dollars from limited partners to be directed to the unrelenting and groundbreaking ideas from entrepreneurs. VCs are the matchmakers between the assets from limited partners (money) and the assets from entrepreneurs (ideas), as we have clearly described in our innovation primer and our State of Venture Capital. Meaning, if the amounts of money committed to venture by limited partners were not deployed via Bain Capital, the investment committee of an institutional investor would have used such allocation to some other VC firm.
The point is that in most cases, we the people generate the jobs for ourselves, as we the people accumulate the cash reserves that allow for reinvestment, and we the people come up with the entrepreneurial ideas to extrapolate to business success. A VC is merely a derivative of the creation of value, not the originator nor the inductor.
But Mitt Romney’s skills in VC puffery matches well with the puffery so prevalent in the broken system of politics. Venture capital and politics rely on similar old boys networks, void of transparency to all marketplace participants, and in blatant violation of free-market principles so that the people may never find out what happens. And for Mitt Romney and many other politicians, that may be the continuation of their role and satisfaction in life.
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