Vulture Capitalism

The real evil bankers are the government cronies.


Now that Mitt Romney is likely to be the Republican nominee, we can expect new attacks on his "vulture capitalism." That's how Rick Perry characterized his private equity work. Newt Gingrich's supporters ran an ad about Romney's firm, Bain Capital, that said, "Their greed was only matched by their willingness to do anything to make millions in profits."

Give me a break.

"Greed" means you want more for yourself. Fine. If you obtain it legally, without force or privilege—say, by buying a business and making it more efficient, or shifting resources to where consumers prefer them—that is a good thing. "Creative destruction" makes America richer.

Shifting resources does mean some people lose their jobs. That is sad for those who are fired.

But on balance, it's a good thing. Intuition tells us that it would be better if no one ever lost a job and that capitalists who close businesses are evil. But America would not be better off today if elevator operators and factory workers who made typewriters had their jobs preserved by a "compassionate" government.

America is richer today because those workers lost their jobs, because money once paid them is put to better use. In addition, most of those workers found new jobs where their skills better served consumers. Some even say they were glad that they were fired, because now they are more productive, and being productive makes people happy.

But we in the media almost never tell that story. That's because we only report what we see.

We can see, and interview, the sad people who get fired. We take pictures as they leave their jobs on that last day when the factory closes. We interview them about the hardship to their families. It's a sad and moving story. We tell it well. But we never tell the flip side, the creative part of creative destruction. That's because we don't see it. We don't see the better things that are done with capital that once went into the factory. We don't see what many of the workers do next.

None of us covered the first few weeks of Apple or Google or Staples or Domino's Pizza. We had no clue that those companies were about to produce cool new things, thousands of jobs and billions of dollars in value. Staples and Domino's, by the way, were funded by Bain Capital.

Not all bankers and private equity firms create wealth, because some make bad decisions. But if government does not bestow privileges, those that don't create wealth go out of business, and those that fund good ideas grow. Some may call that "vulture capitalism" and sneer at "hostile" takeovers, but if the takeover is not enabled by government force, it is likely to be a good thing. It makes America more prosperous.

Michael Moore says, "Capitalism has no moral core."

Is that right? Since the word "capitalism" is ambiguous, the answer depends on what we mean. If it's crony capitalism—well, yeah. It stinks. Handouts to Solyndra and special deals for Goldman Sachs and GM are not capitalism. That's "crapitalism."

Many people hate banks, private-equity firms and mortgage brokers. In light of the last few years, this isn't totally unjustified. I resent the bankers who got rich by taking foolish risks and then, when they failed, got bailed out with our tax money.

I guess I shouldn't blame bankers. I should blame the politicians. They gave our tax money away. If someone offered me money to cover my losses, I'd take it, too.

The real evil bankers are the government cronies, like those at Fannie Mae and Freddie Mac. They took our money by force, our taxes, then paid themselves fat salaries and promised us that none of our money was at risk. And then they squandered more than $100 billion, betting that housing prices would always rise and few people would default.

I resent them and their backers in government.

But in a real free market—no government privileges or barriers to competition—capitalism is great. It's the only system with a moral core because it's based on freedom, not force.

John Stossel (read his Reason archive) is the host of Stossel, which airs Thursdays on the FOX Business Network at 9 pm ET and is rebroadcast on Saturdays and Sundays at 9pm & midnight ET. Go here for more info.

NEXT: Updates and a Civil Suit From That 2011 Maricopa County SWAT Raid Starring Steven Seagal

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  1. I thought everyone knew this stuff already. Good writeup though.

    1. Stossel is not for us, but the not-yet-libertarians who stumble upon him.

      1. this is actually fairly well-written for John Stossel.

        1. I was only talking about the level of analysis, but I agree this is a well-written piece.

          Considering the intended audience, it could stand to be a little tighter. The tl;dr crowd is gaining strength.

          1. Meh, I usually enjoy reading Stossel’s stuff. At least he breaks it up into pages that are of reasonable length.

          2. tldr

          3. As someone with ADD who has real trouble with the tl;dr stuff, I think his writing style is perfectly paced. I’ve always been a big fan and it was only recently I discovered he was a libertarian.

            1. Well, being presented with a mile long page of text that appears to be two paragraphs instantly makes me think “I don’t have time to read that shit.”

              1. Exactly. I sometimes try to read it but after the third or fourth sentence with no line breaks I almost always just give up.

          4. it’s ok. I was only responding to your comment because it put me at the top of the comment list.

      2. I like Stossel; his short paragraphs are easy to read and make me feel smart.

        1. For when for the time ye ought to be teachers, ye have need that one teach you again which be the first principles of the oracles of God; and are become such as have need of milk, and not of strong meat.

          ~Hebrews 5:12

    2. Not sure what you mean by “everyone”. If you mean regular Reason readers, then sure.

      But in the much wider sense, no, everyone doesn’t know this already. Or they are ignorant of it. Or wilfully ignorant.

      Stossel’s target audience isn’t really us; it’s that other “everyone”. I sometimes wonder how successful he is at getting that audience since not being on 20/20 anymore.

      1. My vote is for willfully ignorant. Like I said earlier in Nick’s article, people aren’t being taught how to think anymore and things that make them think cause much stress. Easier to sit back and let someone else deal with the problems.

        1. I’ve been saying the same thing here for a while now.

        2. it’s not so much that people are not being taught to think, it’s that they refuse to do it. They refuse to question the obviously stupid or do the math to see how claims don’t add up if those claims are uttered by someone who echoes their belief system.

          1. I have two kids going through school right now. Believe me, they’re not being taught how to think. They’re being taught how to regurgitate facts that have been thrown at them. It’s awfully tough to break the laziness that sets in because of that.

            1. NCLB

              teach to testing standards

              1. And which political parties are responsible for NCLB?

    3. Only True Believers (either Communist or Capitalist) think that what we observe in the Capitalist world isn’t Capitalist behavior and outcomes, and what we observe in the Communist world isn’t Communist behavior and outcomes.

      Got any No True Scotsman?

      1. Capitalism is the UNKNOWN IDEAL
        Heaven is the UNKNOWN IDEAL

        Basically, Stossel, Marx, and Fundie preachers are spouting religio-economic doctrines that are in conflict with empirical data.

        1. Any converts yet?

            1. Needs more White Indian.

            2. No, I mean people who have read your bullshit and changed their minds to your way of thinking. Sorry, I forgot this kind of stuff needs to be spelled out for you.

        2. This is where you need to lose the articles and add the White Indian.

          White Indian say

          Capitalism is UNKNOWN IDEAL
          Heaven is UNKNOWN IDEAL

          Basically, Stossel, Marx, and Fundie preachers are spouting religio-economic doctrines that are in conflict with empirical data.

          Thus spake White Indian

          I added the last part. What do you think?

          1. John, are you just another of Rectal’s characters?

            If so… Brilliant.

            1. No. But I have figured out that Rather is really a comedian. We just haven’t been getting her jokes.

              Everyone on this board is very earnest. We do nothing if not take things seriously. So we really have a blind spot for humor and performance art. And that is what rather is doing with White Indian.

              In one sense it is really mean. She basically taking the ramblings of a mentally ill retarded guy named Jason Godesky she found on the internet and cutting and pasting his ramblings up here so we can make fun of it. But you have credit where credit is due. The stuff is so over the top, it is pretty funny, especially when it is being posted on Reason. I think Rather could really be onto something.

              1. The really funny part of the whole thing is that Jason Godesky probably has no fucking idea why he keeps getting hundreds of free catalogs at work.

                1. I kind of feel bad for the guy. His entire google search profile has been destroyed by all of his “posts” on Reason. You can just see him googling himself and going “WTF is Reason”?

                  1. You can just see him googling himself and going “WTF is Reason”?

                    Nice double entendre.

                  2. “godesky” and “jason godesky” don’t show anything from reason on the first pages

                    get over yourselves

                    1. Oh well we are just going to have to fix that, aren’t we?

                      Come on everybody! It’s post as Jason Godesky day!

                    2. I am sure Jason appreciates that you haven’t totally destroyed his online identity Rather. You are funny and all. But he doesn’t quite deserve what you give him.

              2. You know, I’ve always wondered if any of that was for real. I always did think it was so over the top that it had to be performance art of some kind. Either that or the rantings of a clearly mentally unstable indivudual.

                Kind of like the blog equivalent of the crazy homeless guy on the bus muttering gibberish to himself. Best to just ignore and avoid direct eye contact.

            2. JOHN = RECTAL
              JOHN = RECTAL
              JOHN = RECTAL
              JOHN = RECTAL
              JOHN = RECTAL
              JOHN = RECTAL
              JOHN = RECTAL
              JOHN = RECTAL
              JOHN = RECTAL
              JOHN = RECTAL
              JOHN = RECTAL
              JOHN = RECTAL
              JOHN = RECTAL
              JOHN = RECTAL
              JOHN = RECTAL

              1. Hah!

                That’s pretty close to a blatant admission, Rather. It’s pretty out of character for you.

                1. Yeah. If you laugh at her she comes out of character. Like I said, she is a comedian. It is kind of like when an actor starts laughing in the middle of a scene.

                2. performance art can sometimes be tough to comprehend; projection, on the other hand, is kinda easy to spot.

          2. Capitalism: The Unknown Ideal is a collection of essays, mostly by Ayn Rand, with additional essays by her associates Nathaniel Branden, Alan Greenspan and Robert Hessen. The book focuses on the moral nature of laissez-faire capitalism and private property.


            1. White Indian read Unknown Ideal

              White Indian say

              Capitalism unknown ideal..

              See. It still works. And it is still just as funny. I understand your point. You can’t publish someone else’ work without attributing it. You can’t just attribute it to White Indian.

              Good point. But you can work around it.


            2. How how how

      2. As I’ve said before, I really enjoyed your Thomas character more. He was entertaining.

  2. A statist was sitting at the bar, talking with a leech.

    Statist says,

    “People just don’t understand us. It’s in our nature to be parasitic. But we’re not evil, we’re really good creatures underneath, we really want the best for ourselves and our families, right?”

    1. your game is just about up

      The Final Empire: The Collapse of Civilization and the Seed of the Future
      by William H. K?tke

      1. You missed your chance here

        White Indian say your game is up.

    2. A free-marketeer capitalist was sitting at the bar, talking with a leech.

      Capitalist says:

      “People just don’t understand us. It’s in our nature to be parasitic. But we’re not evil, we’re really good creatures underneath, we really want the best for ourselves and our families, right? Self-interest produces the most efficient market outcomes, isn’t this what libertarians teach us? So this is why I scammed every low-IQ person I could find no that there are no regulations against it, used the money to buy my competition, and finally quadrupled the prices now that I have a monopoly in the market.”

  3. Leech says,

    “WLeeches are hermaphrodites. We don’t socialize. We fuck ourselves to reproduce. Yes, we parasite because it’s in our nature and we can’t get food any other way. But you have a choice. You can make things and are omnivorous, and therefore can create a complex social system of trade for mutual benefit. But you statists choose parasitism over symbiosis. That is evil.”

  4. “Talk about fucking yourselves, anyone that lets you human leeches to run things is asking for extinction. Trade is your primary means of survival. Without it, you can’t survive long. You’re too fat and slow and to compete with animals without complex tools and socialization based on trade and profit. I hope you bastards get de-selected this Fall, go back to wallow in misery and envy in your hole, and steal no more, but that your kids figure out how fucking stupid their parents were to become statists, and can unfuck their own heads. You’re like the son of a butcher who decided to hit the customers with meat cleaver. Fucking waste of atoms. Just talking to you makes me fucking sick. I gotta go. “

    1. JOHN = RECTAL

      1. Come on Rather. You were on roll. We are just trying to help.

  5. Leech leaves, and bartender says,

    “First time a customer had his ass torn out by a leech in here. That’ll be $81.50.”

    Statist says,

    “What? For one beer?”

    Bartender says,

    “No, for the leech’s cup of blood. He said it was on you. Tough racket, that parasitism.”

    This joke was brought to you by malarial mosquitoes, killing 3 billion since 1900, and 50 million since the US congress banned DDT. Thanks malarial mosquitoes!

    1. America’s version of a “one baby policy.”

      Except this time…it’s for the children!

    2. It’s still being used worldwide for killing malarial mosquitoes.

      Way to put the FIB in Fibertarian!

      1. White Indian say DDT good.

      2. right…that explains the spots with the professional do-gooders asking for $10 in order buy nets. Because that makes so much more sense that killing the source of the damn disease.

      3. We influenced most countries to stop using it and lately several have started to use it again since they were tired of losing millions of citizens each year because of Rachel Carson.

      4. We influenced most countries to stop using it and lately several have started to use it again since they were tired of losing millions of citizens each year because of Rachel Carson.

  6. When the Tea Party, OWS, and Stossel agree that Bush’s TARP fucked this country’s collective mind up that is a story.

    And it wasn’t even his worst action.

    1. Wasn’t this the reason the Tea Party was started, i.e. in response to TARP?

      1. You FOOL! It was obviously because Obama’s black and the tea party is RAAAACIST!!!!!11111one


        1. nah, rick santelli ejaculated on-air which excited the old white homo…phobes


        LIVE IT. LOVE IT.

      3. Maybe, but the TP would never have organized against Bush the Least had he been in year 2 of 4 then.

        And the inept OWS people would have been 3 years late.

        1. Why didn’t MoveOn start before it started?

    2. How did the party votes break down on TARP? Maybe I’m mis-recalling, but I think a greater proportion of Dems voted for TARP than Republicans. In fact, it may be the last major piece of legislation that got true bi-partisan support!

      1. Yes. And one of the votes for TARP was from Obama. But in Shrike land Obama is the black Jesus. That just didn’t happen.

        1. But wait, if jesus was black 2000 years ago, that means this is the second coming, which means…

          Wait, that actually fits.

          1. White man had a Jesus. Why can’t the black man? I bet White Indian has some words of wisdom about this.

            1. White Indian say White Jesus appear as Man Cloaked in Holy Spirit. Holy Spirit appear as Leather Jacket.


      2. Which party controlled Congress at the time?

      3. maybe because so many, on both sides of the aisle, had so much to gain, personally, from TARP.

      4. Cut the bullshit. Treasury had all the information on the meltdown while Congress was in the dark. Paulson’s hair was on fire (for good reason) and he led the effort.

        Its like blaming the Iraq War on Dems because they believed Cheney’s lies and helped vote for it.

        If you want to say some Dems are gullible I would have to agree. But they did not create TARP or the Iraq War.

        1. They were gullible. Jesus fucking Christ shrike. The whole world was up in arms about TARP. Lots of people said it was a bad idea.

          And didn’t the Chairman of the Joint Chiefs say that it would take 10 years and 150,000 people to pacify Iraq.

          Fuck you shrike. You demented little fucking retarded hack. Take that horsehit somewhere else.

          1. Yeah, most forget Bush didn’t have a veto pen – the only Pres ever not to have one.

            You idiot.

            1. Then he is responsible too. But that doesn’t excuse the Democrats. Stop shilling for them you little weirdo.

              1. Give it up, John. Idiots like shrike never blame Team Blue for anything.

        2. the Dems are plenty culpable for the Iraq War, too. It was the president prior to Bush who proclaimed “regime change” as the US policy toward Saddam, and the record shows every Dem of stature being on the record as positively certain that not only did Hussein have those pesky WMDs, but that he had to be stopped.

          So, quit rewriting history. No one here claims Repubs are held harmless. Dems were all aboard the resolution to use force in Iraq and they held hte Congressional majority when TARP came up.

          1. 23 votes against in the Senate. After being lied to for months.

            So 23/26 vs a unified War Party and President.

  7. If someone offered me money to cover my losses, I’d take it, too.

    No reasonable person would.

    Also, drink.

    1. er, any reasonable person would. Woops. I r smart.

      1. Its spelled S-M-R-T

  8. The picture of Paulson looks like an outtake from the ’78 Body Snatchers.

  9. GET IN MA BELLY!!!!

  10. Good write up. Sounds very.. Stosselly. I’m assuming it’s a transcript of his monologue. However, I’d fixed one line:

    If you obtain it legally, without force or privilege

    1. ? Is any white person‘s right an individual or collective right?

      ? Is the right to take a negative or positive right?

      “[The Native Americans] didn’t have any rights to the land … Any white person who brought the element of civilization had the right to take over this continent.”

      ~Ayn Rand, US Military Academy at West Point, March 6, 1974

      1. White Indian sayeth Civilization Bad.

        I think the Rand quotes. They really add to the humor.

      2. RE-RUN!

        1. White Indian get angry when people laugh at him. White Indian may leave and deprive us of his wisdom if Reasonites continue to laugh at him.

      3. White Indian get angry when people laugh at him. White Indian want to be taken seriously. White Indian might leave and deprive reasonites of his wisdom if people continue to laugh.


          1. Notice how Godesky always shits on white people, yet leaves out the fact that Indians owned black slaves.

            Yep. Mighty suspicious.

  11. This reads a bit like the bare-bones script for Other Peoples Money. I like it.

    1. JOHN = RECTAL

      1. Now you have gone manic rather. We still think you are funny. Really.

  12. While humans find vultures repulsive and disgusting because of the niche they serve in an ecosystem (as well as the appearance that servicing that niche demands), that doesn’t mean their function is unnecessary or harmful. Exterminating vultures because we thought they were yucky would be disastrously stupid.

    Just a random point to bring up when arguing with pro-environment, anti-capitalist lefties.

    1. We should leave vultures alone, and exterminate snakes.

      In fact, maybe we could FEED snakes TO the useful, noble vultures.

  13. Why do people pick on John so much?

    1. No one picks on me. I am the only one who gets your humor rather.

  14. it’s so sad that anti-capitalist banter is what works so well in politics.

  15. John Stossel and Milton Friedman are the Beatrice’s to libertarianism: Hayek, Mises, and Rothbard make up the Primum Mobile. Just keep in mind that some haven’t ascended as far and try to be understanding. Hell, I voted for McCain four years ago, there’s no river Styx to wash away that memory.
    …Divine Comedy? Really good read.

  16. Fannie Mae and Freddie Mac employees were not government employees. Both of those companies are publicly traded companies with an assumed, but not legislated, government backing. They did get bailed out, but I do not see how it is any different from Citibank or BofA. If you can’t blame the latter, how can you blame the former?

    Additionally, much of the profits from PE comes from the favorable tax treatment of debt vs. equity financing and financial success may not be linked to success of the firm (for an illustrative example of this, see: Marvel or Simmons). This leads to over-leveraging and can cripple a successful enterprise. Remove the favorable tax treatment of debt financing and see how many PE shops close up. Not to mention you’re conflating venture capital (a minuscule proportion of Bain Capital’s AUM), when they are two very different businesses.

    Give me a break.

  17. Once again, Stossel drives the nail home. Is anyone listening to this guy? He’s the only one talking any sense!

  18. “Shifting resources does mean some people lose their jobs. That is sad for those who are fired.

    But on balance, it’s a good thing. ”

    That said by a made-man who will never again in his life be in a position to look for a job to take care of his family.

    The truth is, I understand that people will lose their jobs when a company goes out of business. However, using the companies pension as collateral for a loan, then taking the proceeds of this loan and giving yourself and your friends a Bonus, then defaulting the company so that the creditor goes after the pension IS THE PROBLEM!!!

    Simply put, this should not be allowed.

  19. Is this a repeat episode? I think I saw a Christmas tree.

  20. Laws designed to protect a special interest and punish its competition? Say it ain’t so!

  21. What, we’re going after blue laws? Everyone knows just because it is on the books doesn’t mean they’ll charge you with it… unless

  22. David taking a shot a lawyers. Easy targets. Who are going to sue him.

  23. Prosecutions as resume padders? I just can’t believe that.

  24. “When the government gets between my mouth and my throat, that’s an invasion of privacy.”


  25. Oh, Meme. I would love to have a ditsy blonde in the libertarian club, but you ain’t in.

  26. Ha, Meme wishes sugar didn’t taste good instead of wishing it was healthy.

  27. Tobacco rules applied to soda. Jesus Christ.

  28. Meme wouldn’t serve her kids soda. That’s fine, BUT YOU CAN FUCKING STOP THERE.

  29. She is all over the place.

  30. Fatties should pay more for insurance. Doesn’t that happen already?

  31. The law against salt in NYC beaten back because even legislators can’t abide bland food.

  32. Oh no not this drug guy again

    1. I don’t remember him but damn he was infuriating.

  33. Paul Chabot, good thing there’s no audience tonight. You’d need an umbrella for the boos raining down.

  34. Ha, cops who are against the drug war are anti-law enforcement.


    1. After it was decriminalized

  36. Paul has children. For fuck sake, HE HAS CHILDREN.

  37. Paul thinks recreational drugs should be illegal because they are illegal.

  38. Those SWAT teams only go after the violent doper’s……..

  39. I don’t want my attention gotten by Stossel saying sex at me.


  41. Ha, John stumped her by asking why.

  42. Its illegal because its illegal

  43. Public. Policy.

  44. Boom, suddenly Stoss switched debate teams.

  45. “Some food isn’t legal.”

    Freudian slip.

  46. Dumb lawyers. Don’t back pedal, Stoss. Lis is either stupid or vindictive.

  47. I don’t have an argument so ill just keep talking over you

    1. Pretty much. Also, small town!

  48. “Size shouldn’t matter.”

    Stossel makes a sexually suggestive comment to an attorney. Hopefully Fox has something in their contracts about one on-air personality suing another.

  49. She was asaucy looking whore

  50. D’amato…….another whore

  51. I wonder what Al thought about the prohibition of recreational drugs when he was in the Senate.

  52. “Because I saw the opportunity to buy votes at the ATM.”

  53. Individual freedom, but on Congress’ terms.

  54. D’amato is a vile piece of slime

  55. HOLY FUCKING SHIT. If he wasn’t looking for votes he wouldn’t have fucked us over with his shit legislation.

  56. Stossel’s regulations fort.

  57. Greed is when other people want things for themselves. When I want something for myself its cause I deserve it.

  58. “But in a real free market?no government privileges or barriers to competition?capitalism is great.”

    This begs the question- when has anyone, in any society anywhere, actually seen this theoretically pure capitalism where interpersonal interactions don’t bias business decisions? Isn’t this equivalent to expecting humans to become rational to the point of being robotic? Isn’t there evidence (in the borrowing decisions of your average Joe leading up to the financial crisis, for starters) that people make short-term, irrational, emotionally-influenced financial decisions all of the time, and that those decisions influence almost any business policy you can name in ways big and small? This is human behavior – why does Stossel expect it to change?

  59. An Alternative to Capitalism (if the people knew about it, they would demand it)

    Several decades ago, Margaret Thatcher claimed: “There is no alternative”. She was referring to capitalism. Today, this negative attitude still persists.

    I would like to offer an alternative to capitalism for the American people to consider. Please click on the following link. It will take you to an essay titled: “Home of the Brave?” which was published by the Athenaeum Library of Philosophy:


    John Steinsvold

    “Insanity is doing the same thing over and over and expecting a different result.”
    ~ Albert Einstein

    1. Economic growth is driven by scientific advancement. So naturally there is an alternative to capitalism: clone geniuses or create new geniuses in-vitro from the genetic materials of geniuses, and condition any kind of welfare payment to you on raising the genius babies and foregoing having your own.

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