I kind of enjoy the way the Republicans are starting to beat up on each other. Two weeks ago, Newt Gingrich was the recipient of most the beatings. Now, it is Mitt Romney. He is getting hammered (here and here) over his time as chairman at Bain Capital. I suspect that in the coming weeks the American people will have an opportunity to look at venture capitalists up close and personal. Venture capitalists, more than bankers, are the personification of modern day supercapitalism. Bankers have regulations. Venture capitalists are free to do whatever they want to do with their money. Their only goal is to make money for their investors.

Venture capitalists make money in lots of different ways. Traditionally, venture capitalists invested in start-up businesses. They will take a business that is not much more than an idea and turn it into reality. Many businesses will fail. A few will be successful but not make tons of money. Then there are a couple that are hugely successful. They’re the ones that make the venture capitalists truckloads of money.

Another way for them to make their truckloads of money is one that we haven’t talked about much until recently and is less popular with the American people. Venture capitalists can spot a company that is terrifically undervalued. They buy the company, then they carve out what they believe is extremely valuable and cast off the rest of the company. The valuable portion of the company can be bought or sold for profit. This is the ugly side of venture capitalism. The venture capitalists make money, yes, but lots of people lose their jobs because they were working for the “nonprofitable” portions of the company.

Finally, the video (above) points out that Bain Capital took government money in order to make a profit on a couple of deals. This should be no surprise to anyone. The purpose of venture capitalists is to make money any way legally possible, including taking government money.