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While Romney’s job accounting has been the stuff of imagination and nice, round numbers, here’s something else I believe people are missing. This has been bugging me all day, and I finally decided that he’s a fraud - no matter how many jobs he claims he ‘created.’ Unless they were in the Bain office where he worked, and he made the decision to open a position and set the compensation, he didn’t create the job.

Romney and Bain Capital didn’t run the companies they bought on a day-to-day basis. They provided a) capital and b) “consulting expertise.”

Now, let’s say that we want to use the heroic Venture Capitalist facade that Romney and Friends would like to put up - ie, where Romney and Bain invested capital in some company and enabled them to grow and flourish, la-dee-dah, cue the swelling violin music.

I’ve met a bunch of real VC’s in Silly Valley in my days, and none of them ever tried to claim that they “created X jobs” in their target investments. None. They did brag about their ROI’s, the change in company growth or sales as a result of their advice or injection of capital, but jobs? Those were the responsibility and authority of the management of the target investment company. The VC’s didn’t make calls on that other than “Well, your burn rate is showing us that if you keep hiring at this rate, you’ll need another round in Y sooner months... and you’re not going to be ready for that milestone then... you’d better slow down your [cash] burn...”

Let’s take Staples as the example: Bain & Romney weren’t running that company, they weren’t making the hiring/firing decisions at that company. They put in a wad of early money and they got a ROI on their investment. OK, that’s nice... Anyone can write a check. Takes only minutes. His involvement is not like that of a startup founder who gets big - eg, Steve Jobs and The Woz started a company that became huge and employed a whole bunch of people. They were directly responsible for the decisions that increased or decreased employment. Likewise with guys like Bill Gates, or TJ Rogers, etc. Cisco today employs over 30K people around the world. You don’t hear Sequoia claiming credit for creating those jobs, do you? No. They’re on to their next investment.

An investor claiming that he “created jobs” by mere injection of money into a company is about as dishonest to me as a banker claiming that he produced “X bushels of wheat” because he made a farmer an operating loan to enable the farmer to buy fuel, seed and fertilizer for the season. The damn banker wasn’t out there in the tractor, pulling an air seeder across the plains in the mud of April, and they weren’t sitting in a combine for 40 hours straight as they got the crop off the field ahead of a storm. All the bankers did is sign some papers, punch some buttons on a keyboard and then demand the payments to be made on time.

The “job” that outfits like Bain do is maximize ROI on client funds. That’s it. They can do it buy buying and strip-mining companies, they can do it by spotting up-n-coming startups, they could do it by speculating or investing in markets. Hedge funds make large, levered-up investments in various companies... and I don’t hear hedgies claiming they created “100K jobs” at any point.

Romney is being dishonest here when he’s talking about jobs other people created. Contrapositively, I won’t hang the jobs that were eliminated by Schumpeterian destruction around Romney’s neck either. I will state again that I think his MO (and the MO of many PE/LBO firms) are unethical. They’re using clever accounting and “financial engineering” tricks to maximize their gain and leave others holding the bag. It’s legal, but then so was making mortgage loans to people who had no ability to repay, wrapping the crap paper into a CDO and getting a AAA hung on it.