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Private Equity and Creative Destruction

There are plenty of things about which I disagree with Mitt Romney; I entirely agree with Governor Huntsman's warning that Romney's rhetorical blasts against China would lead to a trade war, and I also agree with Newt Gingrich's sensible views on immigration against Romney's hard line. In both cases, it seems to me that Romney is pandering to prejudice. But there is no question that his record at Bain Capital qualifies him to make better economic policy. Obama's economic advisers, by contrast, think in terms of such abstractions as "aggregate demand," and blundered into a stimulus program that failed to stimulate. Romney understands that the American economy runs from the bottom up -- that risk-taking and innovation and the stubborn desire to win are what make companies succeed.

One wonders at the pettiness of Romney's opponents. One of the problems that Republicans have in the primary is that the Reagan consensus -- cut taxes and roll back regulation -- holds sway over all the contenders, except, of course, for Ron Paul, who is a throwback to an ugly era of American isolationism -- Charles Lindbergh without the airplane. In 1980, the differences between Reagan and the establishment candidates were enormous -- "voodoo economics" against conservative Keynesianism. Now that supply-side has become the mainstream Republican doctrine, the practical differences between Romney and a Gingrich or Perry are small in economic policy. Perhaps the reliance on personal attacks stems from lack of substantive differences. If that is true, there is hope that once Gingrich and Perry come to understand that they are not going to be the Republican candidate, then the party will unite behind its candidate and this whole miserable discussion will be forgotten.

S&P 500 Companies--Annual Total Employees By Sector
Industry classifications20062007200820092010 Change-2009-2010 (%)
Consumer discretionary4,277,4454,396,3844,254,5783,531,9914,257,873   20.6
Co  nsumer staples3,718,8423,964,9793,941,5643,769,6823,926,4404.2
Industrials2,859,5352,970,2893,046,9722,765,4962,885,4774.3
Financials2,132,1491,999,9802,324,9992,165,6222,533,59817
Information technology1,082,4321,165,6021,366,8641,336,1111,595,80419.4
Health care1,118,6901,095,6491,128,6671,190,5831,218,2582.3
Energy660,386619,464661,226562,214696,72723.9
Materials609,635654,227655,641601,832614,0692
Telecommunications632,274627,742606,478581,905551,505-5.2
Utilities386,195385,417393,190373,455386,3733.5
Total17,477,58317,879,73318,380,17916,878,89118,666,12410.6
Source: Capital IQ.