Back when it was published every other week, I used to treasure Fortune magazine. I looked forward to the iconic annual list of the largest companies.
I loved Fortune’s deeply analytical long-form journalism on industries, companies and long-term economic trends.
To cite just one example of excellence, more than any other publication, in my humble opinion, Fortune sounded the alarm on the housing bubble long before it burst.
I still subscribe, but the passion is long gone. The ubiquity of financial news a click away has eroded Fortune’s fortunes.
Frequency is now down to every third week with “an extra issue in November and two issues combined in May and at year-end” as the required postal statement puts it. I guess that works out to 16 issues a year.
I count on the Economist and Barron’s every week, on the Wall Street Journal and the Financial Times six days a week except on holidays, and the New York Times daily. Fortune? I find it hard to remember whether the issue next to my reading chair came yesterday or two weeks ago, or when the next issue is due to arrive.
Worse, Fortune now seems designed for people with very short attention spans. Reading the front of the book is now like surfing the web, with a lot of quick hits, not much depth. The design has been goosed to the point where it is often hard to tell where financial journalism leaves off and advertising takes over.
And the one Fortune columnist I make it a point never to miss is Allan Sloan. Along with the Washington Post’s Robert Sameulson, you can count on Sloan for common sense at the intersection of finance, business, economics and public policy.
All of this is a bit of a drum roll for Sloan’s latest column on private equity as practiced by Bain Capital, which seems to be in the news a lot for some reason or another.
Sloan says the debate over whether Bain creates or destroys jobs is a silly distraction. Here’s Sloan’s set up:
Democrats … 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.
And here’s Sloan’s coup de grace:
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.
All I would add is that that is pretty much true of business in general, despite the fact many business people profess otherwise.
Of the risky borrowing typically engaged in by Bain and its peers in private equity, Sloan has this to say:
This “financial engineering” feels yucky to non–financial types—and to some financial types as well. But it’s what buyout firms are paid to do. Both sides in the political game know this—Democrats have happily accepted funds from buyout magnates in previous election cycles and will resume their courting when the next cycle begins.
Sloan then repeats his point that there are no reliable statistics on whether private equity destroys more jobs than it create. He suggest we move on to more important policy questions, such as health care and taxes. I can’t hold a candle to Sloan. If I could, I would happily second the motion.