Category Archives: Business
Private Equity
…and creative destruction:
Want to see what America would look like without private equity? Move to Detroit and contemplate the ruins of a city ruined by the placid conformity of auto industry executives. The economic impact of the corporate takeover business can’t be measured by the outcome of takeovers as such. Private equity transformed the way American business thought about the world. If managers did a lousy job, outside investors could raise money (a lot of it from trade union pension funds as well as university endowments) and kick them out.
Newt Gingrich and Rick Perry should be ashamed of themselves for bean-counting Bain Capital’s record on job creation. Any investment firm operating over decades of rapid employment growth will be able to show that the companies it bought added jobs over time. That’s what the academic studies on private equity show in any event, as Jordan Weissmann reports at The Atlantic. More relevant is the alternative. We’ve been there, done that, and don’t want to do it again. Corporate America in the 1950s and 1960s coasted on the postwar monopoly enjoyed by American companies after the destruction of European and Japanese industries. Detroit in the late 1960s had African-American neighborhoods stretching for miles with well-kept single-family homes and manicured lawns; by the end of the 1970s it had turned into a moonscape. The rust belt still hasn’t recovered from the laziness of American capital a generation ago.
Private equity takes money from institutional investors who otherwise would passively invest in public securities, and gives them the chance to exercise direct ownership of companies whose management fails to exploit their potential. It creates competition where no competition existed before. As in every business, there are ten wannabees for every visionary. A lot of the success of private equity derives from the fact that equity values rose steadily from1983 through 2000, and anyone who had a chance to own equity with borrowed money did exceptionally well. One can argue that many of the players who got rich during the boom years simply rode the big wave. (Bain Capital, though, was one of the first in, and throughout one of the smartest, and one of the least reckless about using excess leverage.)
You don’t create long-lasting jobs, or wealth by continually misallocating resources.
The Commercial Space Industry
There’s a story over at IBD about the new players. But has the Dragon flight to ISS slipped already? I though it was February 7th, not the 12th.
Let Them Eat Solar Energy
John Bryson cheers when your energy prices go up. So does Stephen Breyer. Bryson has been screwing Californians this way for decades, and he’s proud of it. And the Senate approved him.
The Yankee Institute Weighs In On Space Policy
There’s an interesting piece over at the American Enterprise Institute today bemoaning our lack of progress in space, but it misdiagnoses the problem. I may have an analysis over at Open Market later.
Is Barack Obama Merely Incompetent?
Or is he evil?
There’s no reason he can’t be both, of course, but if he is, it’s better to have an incompetent evil president than a competent one. Anyway, Kevin Williamson has some good advice for the Republicans.
Stuck In A High-Cost Box
Over at Open Market, I have some thoughts on the Air Force’s latest launch-contract award to ULA.
Lynx Development
…is XCOR ahead of schedule?
The first major piece of structure – the fuselage of the Mk1 version — will be delivered to Xcor the week of 16 January, said Andrew Nelson, chief operating officer and vice president of business development.
Next month, Xcor will tender work packages for building the cockpit pressure vessel and strakes in February, with delivery of the two subassemblies scheduled in April in May, said Khaki Rodway McKee, the Xcor programme manager.
Roll-out of the Mk1 is scheduled in July or August from Xcor’s hangar in Mojave, California, she said.
Taxi tests are scheduled to begin in October or November, which will be quickly followed by a short hop and finally a brief first flight by the end of the year.
When I was up there a few weeks ago, they were expecting the fuselage in February. And a rollout in summer?
Doing The Math
The latest Afterburner from Bill Whittle:
A Ten-Year Anniversary
…of science blogging, from Derek Lowe. Congratulations.