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HappySqurriel on 26 October 2012
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Kasz216 said:

Well yeah.

The government's goal in saving company is to save the company no matter how much money it costs.

Meanwhile Bain capital's goal is to save a company to make a profit... and if they can't sell it for a lesser profit.

In otherwords... say you've got a crappy company that's going to fail... and they both throw money at it.

At a point, when it almost becomes a huge money sink not worth saving anymore,.. Bain Capital bows out and sells the assets... while the government would still throws tax money at it, until it either eventually finally succeeds.


It's worth noting the term "picking winners and losers" literally means "Picking who wins and who loses."


The government is interested in this.

Bain Capital isn't.   Bain capital is intersted in trying to save companies for a profit.

So i mean... if Bain Capital was better at it... that would make government even more incompetant then most people think.

Essentially this ...

 

It should also be noted that the government picks "Green Companies" in a very different way than a venture capital firm would. A highly profitable corporation (like GE) decides to go forward with solar power research and then lobbies the government to subsidize the research and development they were going to do anyways. In contrast, a man who's been producing bio-diesel from waste materials for him and his friends decides to scale his production to provide enough fuel for a bio-diesel gas station and approaches a venture capitalist for the start up capital.

GE will go forward with the R&D regardless while the bio-diesel gas station will likely only exist if a venture capitalist invests; and GE is a corporation which is unlikely to fail, while hundreds of those small bio-diesel manufacturers will fail until a handful grow into being able to produce enough fuel at a low enough cost to become giants of the industry.

Essentially, venture capital has high fail rates while government subsidies have high corruption rates ...