Private Equity and “Job Creation”

baselinescenario.com — Job creation these days usually refers to growing companies, making stuff people want, which tend to hire new workers. This is the kind of job creation that Mitt Romney (and the private equity industry, at least publicly) wants to be associated with. But private equity, as I wrote about last week, is just a way of taking over existing companies. The goal of a private equity firm is to make its companies more profitable: sometimes that means new products and new jobs, but it can just as easily mean the opposite — eliminating unprofitable product lines and fewer jobs.

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