Con is right again on the VC/Private Equity distinction.
Venture Capital is either public or private equity and involves high risk investment in emerging companies with new technologies. these funds assume they willl lose on most of their investments, but the successful ones are so successful they more than pay for the losses. There is a very substantiL VC industry in San Francisco that funds new technologies/firms often located in “incubator” buildings containing dozens or even hundreds of tiny tenants with 1-2 employees in very small spaces.
Private equity firms are just as they are labeled – private cash invested in any sector with a design on making money for investors. Private equity funds are an importNt part of the financing system and should not be demonized in the political process, and I do not think Obama is doing this.
Private equity funds that specialize in distressed companies with the intent of using the bankruptcy laws to protect investors, while liquidating the physical and financial assets of the companies, often including tapping the pension funds of the workers, are called “Vulture Funds”. again, I would not demonize these investors as they move cPitL from less productive to more productive endeVors.
These are some of the “creative” and “destructive” forces in the financial system that are the basis for Peter Scumpeter’s “process of creative destruction” that finance the overall wealth creation inherent in capitalism. But the capital formation system operates in a public policy context – a system of laws that protect property rights, enforces contracts, etc. But the political system in a democracy also protects the public interests such as environmental regulations and labor laws that protect children and rights of workers to organize unions to negotiiate working conditions, etc.
So a pure free market capital system, as sen by a libertarian, requires government to provide only those services that protect the capitalists. It is the democratic imstitutions that do the rest. Keeping these systems running side by side has been the key to our success as we have gotten the advantages of wealth creation inherent in the private market economic system, while managing the negative impacts such as pollution and caring for those unable to do so themselves.
But make no mistake, this system has proven over history that it will continue to maximize short term profits at the expense of the public interest. And Mitt Romney is a poster boy for this mentality. It is clear that Obama will make this the central issue in the campaign and after 30 hears of deregulation I would say it is about time.