Tw0 items about the continuing war between the Democratic Party and the source of our nation’s prosperity:

First, James Pethokoukis:

President Obama is never more revealing about himself and his economic cosmology than when he talks off-the-cuff about innovation and market capitalism. Recall his theory that technological advances, such as ATMs, are killers of jobs.

But Obama probably best summed up his views yesterday when he said private equity firms such as Bain Capital have as “their priority is to maximize profits. And that’s not always going to be good for communities or businesses or workers.”

Profitable companies provide jobs, buy equipment, reduce debt, pay taxes, conduct research, and, yes, provide a return to shareholders. But profits, in Obama’s view, seem to be some sort of necessary evil. (Or, as many liberals think, an absolute evil when it comes to companies trying to make money in healthcare.)

Yet for companies to survive and prosper long term, they need to maximize profits over the long term. We want companies to be as profitable as possible, as long as those profits are generated by creating value and not through theft or by manipulating the political system.

Generating honest profits is the sole responsibility of business. …

It’s companies that forget about maximizing profits — or can’t quite figure out how to keep doing it — that really pose a risk to workers and communities and shareholders. Those companies are on the road to failure. And it’s those companies that are in need of a rescue mission from Bain Capital and or some other private equity firm.

I think the president doesn’t fully grasp how dangerous his words are. If he had a true grasp of economic history, he would realize that it was only when business and profits and innovation began to be valued by society that we got the economic takeoff in the West that improved our average standard of living from $3 a day in 1800 to more than $100 a day today.

Next, National Review’s Reihan Salam:

The Obama campaign’s strategy is starting to crystallize. Many of us have noted that the president and his allies have been careful not to condemn the private equity industry as such, and indeed that they are very happy to raise substantial sums of money from leading private equity investors. The recent attacks on Mitt Romney’s years at Bain Capital are being defended on the grounds that it is Romney who has claimed that his private equity experience will make him a better public sector leader, and so it is essential that the American public understand the “lessons and values” he learned from this experience. …

In a similar vein, Team Obama seems to have concluded that in light of the economic climate, Mitt Romney’s decision to represent himself as a post-ideological economic Mr. Fix-It really does represent a potent threat. It is thus crucial that the Obama campaign, organized labor, and other actors turn Romney’s business experience into a liability. …

They aren’t offering a policy critique of the private equity industry. Rather, they are suggesting that working in private equity dramatically raises the likelihood that one is a terrible person. Moreover, they are making the case that private equity experience is not relevant to public sector experience, as the public sector cannot be rationalized in the same basic ways, public sector leaders need to focus on the short term rather than the long term, and, as one of my interlocutors colorfully put it yesterday, we can’t simply sell Michigan if it has become an underperforming asset. …

One of the challenges in the public sector is that for a variety of reasons, including the sensitivities surrounding the functions being performed, there is a great reluctance to embrace trial-and-error. Instead, there is a desire to get things right in a very consistent, reliable way. Now, this might strike those of you who have had any encounters with the public sector as a set of goals honored mostly in the breach, but that is because bureaucracies that aren’t subject to the competition are vulnerable to the progressive decay of organizational capital and human capital. An ideal public sector bureaucracy is full of public-spirited individuals who care deeply about their work and who suffer more from the “guardian syndrome” than the “commercial syndrome,” as Jane Jacobs put it some years ago. …

Another way of looking at this set of issues is through the sets of managerial tools that are deployed in the private and public sectors, e.g., systematic performance monitoring, setting appropriate targets, and providing incentives for good performance, to draw on the categories identified by Nicholas Bloom and John Van Reenen. Public sector organizations tend to place heavy emphasis on performance monitoring and setting appropriate targets. Yet they tend to have a far more difficult time with providing incentives for good performance in a granular way, e.g., they tend to rely on rigid salary schedules that aren’t well-aligned with productivity. Moreover, the quality of systematic performance monitoring and target-setting is not uniformly high in the public sector for the straightforward reason that a lack of competition dulls the need to apply these tools in a rigorous, ever-improving way. …

This is why I suspect a certain kind of private sector experience is actually very valuable for reforming the U.S. public sector. As Rick Hess often argues, U.S. public schools actually do draw on best practices from the private sector. The trouble is that they draw on best practices established during the first half of the twentieth century, and a series of blocking coalitions have resisted organizational innovation in the decades since. To the extent that private experience teaches one how to think rigorously about the structure of service-delivery organizations, and how they can be made to work better, it might be far more valuable than, say, experience as a legislator.