FORTUNE -- There are plenty off silly, time-wasting political arguments going on as the 2012 political campaign mercifully approaches the homestretch. But perhaps the most foolish and time-wasting involves Bain Capital, the private equity firm that Mitt Romney left a dozen years ago, but from whose investments he still draws a hefty income.
Democrats, as you know, claim that Bain is a job-destroying vulture operation, which echoes what some of Romney's Republican competitors said. By contrast, Romney and his campaign claim that Bain is a noble, job-creating enterprise. Let's settle this once and for all, okay? Who's right? Neither. Despite buyouts being a numbers-intense business, there are no reliable statistics about jobs created or destroyed by private equity; no one in Buyout Land knows or wants to know about it. Bain and its fellow buyout barons don't care in the slightest about whether they create jobs or destroy them. All they care about is making money for their investors and themselves, not necessarily in that order. (Also bogus: the debate over whether Romney presided over Bain's purchase of outsourcing firms, as my colleague Dan Primack has pointed out on this site.)
If the managers think there's money to be made by expanding and improving a business that they've bought, they will try to expand and improve it. If they think they can make more money by loading additional debt onto the company and sucking out the proceeds in dividends and fees, they'll load and suck. If they think there's more money to be made by firing all the U.S. employees and moving operations to China, they'll do so in a heartbeat. They're neither moral nor immoral when it comes to U.S. jobs and U.S. society. They're amoral—they don't care one way or the other, as long as what they're doing isn't illegal.
I've been watching private equity at work since the 1980s, when it was known by the more accurate name "leveraged buyouts," or LBOs. "Leverage" means using borrowed money. That's why I prefer "leveraged buyouts"—buyouts funded by borrowing—to the meaningless "private equity." The LBO industry adopted the private equity moniker in the mid-1990s when "LBO" came into disrepute because some large buyouts cratered. Buyout companies didn't change what they did; they changed what they called it. More
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