clarifying the term "creative destruction" (a rant)

[Anonymous]

I just watched the whole King of Bain movie (highly recommended, because in addition to the standard LBO stories it documents Bain profiting from the type of market manipulation typical of the Internet bubble, with analysts hyping up to the public stock that they had huge reservations about in private).

In it they also talk about Romney's devotion to the quintessential capitalist idea of "creative destruction" as the motivation behind his Bain career and I beg to differ.
In B-school lingo, creative destruction is a buzzword thrown around to describe the traditional life cycle of a business or a sector of the economy. An entrepreneur comes up with a great idea (say, the ice-box in the late 19th century), starts a company, which attracts imitators, and pretty soon a whole industry is born, grows and reaches a plateau (maturity/saturation stage) when lots and lots of people own ice-boxes.
Then a smart Alec comes along and invents the refrigerator, and as people progressively switch, the refrigerator industry takes off while the ice-box industry declines and dies off in the absence of ridiculous government interference motivated by special interests to prop it up. While this does involve job losses in the ice-box industry, they are gradual and many come about through attrition, as younger and more mobile workers join the more promising industry rather than the declining one.
In this scenario, the world gets richer through technological progress which increases productivity and in turn creates jobs and wealth.

Bain's activities have never had anything to do with creative destruction other than creatively thinking of ways of destroying people's lives to enrich the firm. While they may have increased productivity in some cases through consolidation of less efficient companies, this is offset by the devastation to entire communities of companies that were dismembered and/or saddled with debt. Any wealth that was created and most of the wealth tranferred was transferred to a few individuals at the top echelons.
There are capitalists who create jobs and then there are vultures. For Romney to parade as the apostle of creative destruction is akin to ambulance chasers claiming they are defending the constitution.

[TheManWithAUsername]

Unless I'm mistaken, Bain has always been a for-profit corporation. It has therefore always been barred by law from seeking the public good as an end. Anyone claiming that Romney was acting out of some grand philanthropic ethic is accusing him betraying his fiduciary duty to the shareholders.

If instead someone wants to say that there's nothing wrong with what Bain did b/c it's part of a greater evolutionary system, that's reasonable enough. That makes Bain - and Romney while at the helm - akin to, say, sharks or HIV. I don't bear either of those organisms any ill will, but I don't want them running the government or generally becoming any more powerful.

[Anonymous]

So glad people are finally taking a closer look at this "job creator."

Never thought I'd be grateful Newt Gingrich is such a pitbull.