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August 10th, 2012
 

Creative Destruction

By Nathan Tucker

Priorities USA Action, an Obama super PAC, released an attack ad this week implicating Mitt Romney in the reckless homicide of the wife of an employee Romney never met.  The ad blames Bain Capital’s decision to close a GST Steel plant for the cancer death of the spouse of a former employee who no longer had health insurance.

The ad features Joe Soptic, the former employee, who tells the audience:

I don’t think Mitt Romney understands what he’s done to people’s lives by closing the plant. I don’t think he realizes that people’s lives completely changed.  When Mitt Romney and Bain closed the plant, I lost my health care and my family lost their health care. And a short time after that my wife became ill.

I don’t know how long she was sick and I think maybe she didn’t say anything because she knew that we couldn’t afford the insurance. And then one day she became ill and I took her up to the Jackson County Hospital and admitted her for pneumonia and that’s when they found the cancer and by then it was stage four. It was — there was nothing they could do for her. And she passed away in 22 days.

I do not think Mitt Romney realizes what he’s done to anyone.  And furthermore, I do not think Mitt Romney is concerned.

It is no doubt a tragic story, one unfortunately shared by far too many Americans in Obama’s third straight summer of unrecovery.  There are, however, a few significant omissions that the ad failed to mention.  First, as noted by Politico, the Kansas City plant did not close until 2001, several years after Mitt Romney had left Bain Capital.

Secondly, the Politico also reported that Mrs. Soptic did not die until 2006, Romney’s last year as governor of Massachusetts.  Third, in a random act of journalism by CNN, it turns out that Mrs. Soptic was employed, with her own health insurance plan, through 2002.

The ad also doesn’t describe what President Obama would’ve done for the Soptics.  Far from giving them free health insurance, Obama would’ve taxed them as “free riders” who bought food rather than insurance.  And rather than encourage Mr. Soptic to find a job, he would have continued to give him unemployment benefits and, when those finally ran out, provided him welfare without work requirements.

Nor does the ad mention that, under Obama, the real unemployment rate is 15%, or that millions of Americans will lose their current employer-provided health insurance under ObamaCare.  Surely an unhappy tale or two can be found among this mass of misery that occurred on Obama’s watch.

But let us assume that the ad was accurate—Romney personally made the decision to close the plant and lay off Mr. Soptic, whose wife died shortly thereafter from lack of early detection because they no longer had health insurance.  So what?  No employer has a responsibility, moral or otherwise, to retain an employee so he doesn’t lose his health insurance or house, plunge into bankruptcy, or face any other type of hardship.

To argue otherwise would produce a second Great Depression that would make that of the 1930’s pale by comparison.  Profitable businesses would lack the flexibility to allocate resources necessary to remain competitive and innovative.  Businesses operating at a marginal profit would be unable to cut expenses in order to stay afloat.

And no one would risk hiring new employees because they would then be shackled with them for life.  It would, in short, freeze current levels of employment until the economy collapses after thousands of companies suddenly go out of business because they cannot use their workforces profitably.

Interestingly, what the ad doesn’t say is that Mr. Soptic’s job was only created in the first place because capital was reallocated from old, unproductive jobs to new, productive ones.  Nor does it mention that Mr. Soptic’s job was eventually reallocated to newer, more productive opportunities that allow the creation of more jobs and lower the costs of products for consumers.

This is the circle of life in the free market—creative destruction.  While the short-term effects are painful and at times tragic for those laid off, their only hope for a better tomorrow is an efficient, productive free market that continually creates more capital, which leads to higher wages, increased jobs, new innovations, and a higher standard of living.

Economic progress can only be made through creative destruction.

 

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About the Author

Nathan W. Tucker
Nathan W. Tucker is a Davenport attorney and author of We The People: The Only Cure to Judicial Activism. He can be contacted at nathanwt@juno.com.




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