Romney?s 'creative destruction' did not create 100,000 jobs

MarketWatch?s John Ifcher makes an excellent point: Romney?s competitors lost jobs ? and Romney is as responsible for those losses as he is for any gains.

[Romney?s claim] only considers the direct effects and not the indirect effects of Bain Capital?s ownership and activities. For example, as companies acquired by Bain Capital expand, what happens to competitors? Consider Staples Inc., touted to be one of Bain Capital?s biggest successes. Sure, Staples grew from one store in 1986 to more than 1,000 stores in 1996, and in the process, hired tens of thousands of new employees (today Staples employs more than 90,000 people).

But did Staples? expansion create tens of thousands of jobs? The answer is no. Why? Because when you consider the indirect, or second-order effects of Staples? expansion, it becomes clear that as Staples expanded it displaced other retailers. That is, was Staples? dizzying expansion fueled by an equally dizzying increase in the market for office supplies in the U.S.? Or did Staples? expansion crowd out other retailers?

Data from the U.S. Census Bureau appears to support the latter. The number of retail establishments primarily engaged in the distribution of stationery, such as paper and paper products, declined by 25% (from 5,391 to 4,041) between 1986 and 1996.

As a business person, Romney?s claim to job creation is based on new employees hired by the companies Bain acquired. But the private sector measures only personal success ? it?s all about competition and if your competitors walk away from the market with a shiner, who cares? You only count the money you made, the employees you hired.

Government is a different animal entirely. And, from that perspective, Romney?s ?creative destruction? is a lot more destructive than it is creative. Government must consider the positions opened or closed by everyone and what Bain calls success is, in fact, job loss. Romney would loosen regulations to make it even easier for companies like Bain to practice their brand of ?creative destruction? ? and, as the numbers show, that?s not as good for the nation as Romney ? or just about any random Republican, for that matter ? would like you to believe.

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