War is not the answer! War has never solved anything except ending slavery, Nazism, Communism, and freeing the victims of genocide, death camps, and gulags.

So it must be said that Bain Capital has never created any jobs except at Staples, Domino’s Pizza, Sealy, Brookstone, The Sports Authority, Burger King, Burlington Coat Factory, Dunkin’ Donuts, and Toys “R” Us.

The National Bureau of Economic Research has published a paper on Private Equity and Employment. Here is a digest of the paper written by Lester Picker:

Do private equity transactions result in job losses or create new employment opportunities? In Private Equity and Employment (NBER Working Paper No. 17399), authors Steven Davis, John Haltiwanger, Ron Jarmin, Josh Lerner, and Javier Miranda analyze data from the U.S. Census Bureau’s Longitudinal Business Database for the period 1980 to 2005. They track U.S. private equity transactions at 3,200 target firms and their 150,000 establishments — that is, specific factories, offices, retail outlets, and other distinct physical locations where business takes place — before and after acquisition, comparing outcomes at target firms to outcomes at “controls” that are similar in terms of industry, size, age, and prior growth.

The authors find that relative to a control group, employment at target establishments declines 3 percent over the two years following a buyout and 6 percent over five years. The job losses are concentrated among public-to-private buyouts and among transactions involving firms in the service and retail sectors: the largest employment losses occur at firms engaged in retail trade.

In contrast, independently owned firms exhibit large employment gains relative to the controls in the wake of buyouts, mainly because they undertake more acquisitions. There are more private equity buyouts of independent firms than public-to-private transactions, and they account for a larger share of jobs.

While private equity buyouts accelerate job losses at target firms relative to controls, they also lead to the more rapid creation of new job positions, particularly in the form of new jobs at new establishments. In fact, the sum of gross job losses and gross job gains at target firms exceeds that of the controls by 13.5 percentage points over the two years following a buyout. About 43 percent of the extra job reallocation reflects a more rapid pace of employment adjustments; the rest reflects acquisitions and divestitures. Overall, net relative job losses at target firms are less than 1 percent of initial employment. These findings provide evidence that private equity buyouts catalyze the creative destruction process as measured by both gross job flows and the purchase-and-sale of business establishments.

The term “Creative Destruction” was first coined by Joseph Schumpeter in his classic Capitalism, Socialism and Democracy (1942). The term denotes replacing something old with something new, the basis of economic progress. Countries that do not have sufficient free market institutions experience less creative destruction than those with robust free markets. Thus, in Egypt I saw donkey carts taking produce to market and in Syria I was forced to relieve myself in a stinking room with a hole in the floor [worse than an outhouse, not even a seat] that was overflowing with a disgusting mass of human excrement [dogs not allowed in that country because they are considered to be dirty].

In America the buggy whip industry was destroyed by the creation of the automobile and the main frame computer industry was destroyed by personal computers and servers.  Of course, the creation of the personal computer and automobile have given rise to higher levels of employment than could have ever been reached in the industries they destroyed.