No, my concern is that the above analysis only considers the directeffects and not the indirect effects of Bain Capital s ownershipand activities. For example, as companies acquired by Bain Capitalexpand, what happens to competitors? Consider Staples Inc., toutedto be one of Bain Capital s biggest successes. Sure, Staples grewfrom one store in 1986 to more than 1,000 stores in 1996, and inthe process, hired tens of thousands of new employees (todayStaples employs more than 90,000 people). But did Staples expansion create tens of thousands of jobs? Theanswer is no. Why? Because when you consider the indirect, orsecond-order effects of Staples expansion, it becomes clear thatas Staples expanded it displaced other retailers. That is, wasStaples dizzying expansion fueled by an equally dizzying increasein the market for office supplies in the U.S.? Or did Staples expansion crowd out other retailers? Data from the U.S. Census Bureau appears to support the latter. Thenumber of retail establishments primarily engaged in thedistribution of stationery, such as paper and paper products,declined by 25% (from 5,391 to 4,041) between 1986 and 1996. If these displaced retailers were as efficient as Staples, then foreach new employee that Staples hired theoretically one job was lostat a displaced retailer. However, if Staples was in fact moreefficient on average than the displaced retailers, then more thanone job might have been lost for each job that Staples created. So, Staples expansion may have reduced net jobs in that industry. Again, data from the U.S. Census Bureau appears to support thelatter. Between 1986 and 1996, the number of employees working atretail establishments primarily engaged in the distribution ofstationery declined by 35%. In all likelihood, we would see a similar story emerge for othercompanies that Bain Capital acquired, such as Burger King, HospitalCorporation of America, The Sports Authority, and Toys R Us. This discussion is admittedly far from complete and certainly doesnot consider all the effects labor market and otherwise ofBain Capital s acquisitions. Further, this discussion is notintended to pass judgment on Bain Capital s activities or otherprivate-equity firms activities. Determining whether such firms are good or bad for theeconomy is beyond the scope of this piece. I simply want to pointout that counting the number of new employees hired as a result ofa firm s activities is a misleading measure of job creation atbest. John Ifcher is an assistant professor of economics at Santa ClaraUniversity. I am an expert from suspended-platforms.com, while we provides the quality product, such as China Construction Material Hoists , China Suspended Platforms, Suspended Platforms,and more.
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