Among the criticisms of Mitt Romney’s business career is that it was never Bain Capital’s intent to create jobs, but merely to make money for its investors. Of course, the same goes for Bill Gates, Steve Jobs, Michael Dell, Warren Buffett, and just about every other successful entrepreneur and investor you could name. But that is the miracle of free-market capitalism. The pursuit of profits—by creating real value—benefits the rest of society through better products and services … and jobs and higher incomes.
See, entrepreneurs don’t set out to create jobs. Jobs are a wonderful byproduct. Here are the results from a 2009 survey by the Kaufmann Foundation on the motivations of entrepreneurs:
– 74.8 percent of respondents indicated desire to build wealth as an important motivation in becoming an entrepreneur.
– 68.1 percent of respondents indicated that capitalizing on a business idea was an important motivation in becoming an entrepreneur.
– 64.2 percent of respondents said they have always wanted to own their own companies.
– 66.2 percent said the appeal of a startup culture was an important motivation.
– 60.3 percent said that working for others did not appeal to them.
So yet somehow businesses are started and millions of people are employed—small business was responsible for 65 percent, or nearly 10 million, of the 15 million net new jobs created between 1993 and 2009—all without the actual intention of creating any jobs at all, other than for the owner. Just another miracle of free-market capitalism.
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I enjoyed reading this as it confirms many of my suspicions. As a small service business we deal with these startup issues on two levels: first is our own startup of course. Secondly though, because we focus our video production services on small, usually local business, it’s good to know how stable our customers are. Too many small businesses dropping by the way side today, and while they don’t exactly qualify as “startups”, it does seem that by looking for these “don’t do’s” you’ve listed this attrition rate can be slowed. I still believe that small business is the real backbone of our economy, but that’s a different discussion.
All businesses create jobs. This line of criticism of Bain or any other company is a sign of bizarre thinking.