Private Equity Is Unpopular

One of the most shocking moments of media out-of-touchness that I’ve seen in my lifetime was the spasm of pundits acting as if Barack Obama’s criticisms of Mitt Romney’s business record were likely to prompt some kind of backlash from the public. Obviously a rich man who makes decisions that ruin some families lives in order to get even richer is engaging in behavior that the median voter is going to find disreputable.

A new poll brings the data, they read voters in swing states two claims about Bain Capital:

The first was: “Private investment and equity firms help the American economy grow. They launch new companies and rebuild existing ones, including some of the biggest employers in America. Their work has created millions of jobs and will help drive America’s recovery.”

The second was: “Private investment and equity firms care only about profits and short-term gains for investors. When they come in, workers get laid off, benefits disappear, and pensions are cut. Investors walk off with big returns, and working folks get stuck holding the bag.”

The overall result in these swing states: Forty-seven percent agreed with the “care only about profits” description, while 38 percent picked the “help America grow” statement. That’s a significant amount of anti-Bain sentiment.

On the merits one important thing to note is that these statements are not even contradictory. It can both be the case that private equity firms care only about short-term gains for investors and often damage the interests of firms’ existing workforces and also that this profit-seeking behavior helps raise medium-term economy-wide productivity. If that’s true, then one question you might ask is a policy question like should we make it illegal for investors in firms to make self-interested decisions about how the firms should be managed even when those decisions hurt individual workers. But another question you might ask is about how work in the private equity industry qualifies someone for high political office. Most voters seem to feel it indicates a disposition to selfishness and ruthlessness, neither of which are normally attributes we’re looking for in politicians.