Re: An Example of ‘Vulture Capitalism’?

by Ramesh Ponnuru

Rich remarks, “It will strike a lot of people as grossly unfair that Bain failed to run this steel company, G. S. Industries, successfully, yet still made money.” When Gingrich is framing his case narrowly, that’s the issue he raises. But keep in mind that if Bain gets nothing if it tries to turn around a company and fails, it will have a smaller incentive to try to turn it around in the first place. It seems like the socially optimal incentive structure would give Bain something for taking on the company and then something more for succeeding.

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