Edward Conard makes sense — no wonder the Left hates him

The New York Times has a long article about Edward Conard, a former Bains partner, who makes the case — a compelling one, I believe — that in America, the wealthy aren’t parasites, they’re economically useful.  In a stagnant, agrarian class society, the wealthy simply live at the top, feeding off the poor.  In a dynamic marketplace, however, the wealthy don’t simply hoard their money in bags of gold and jewelry.  They spend as much as they are able (and, no matter how extravagant they are, it isn’t that much relative to their wealth), and they invest the rest.  In addition, because it’s their money, not other people’s money that they are investing, they invest it with an eye to market efficiency and profitability, rather than wasting it on political correctness and drowning it in bureaucracy.  It’s that last point that explains why the wealthy better than the government when it comes to creating wealth, not just for themselves, but for others.

Conard spells this out in his new book, Unintended Consequences: Why Everything You’ve Been Told About the Economy Is Wrong.  This may be a good vacation read for me.

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  • shirleyelizabeth

    Trying to read the NYT article and reader comments made my neck cramp up. It is amazing to me how there are so many adults that have lived and worked all their lives and yet have NO idea how a functioning economy “works.” What is especially sickening are the comments about greed and money stuffed in mattresses, or the complete ignorance of where entrepreneurial funding comes from. I wonder if these are the same lies that have always been told, or do people just accept whatever new lie absolves them of their own greed and envy? How is it these people believe absolutely things that are so obviously false, even in the face of all of the evidence?

  • Gringo

    That correlates with an observation I made after some time in Latin America. The wealthy landowners in Latin America had a monopoly on investment capital for centuries. They had little incentive to productively invest their money. After all, they already had enough money to live a pleasant life  strumming their guitars on the porches of their haciendas. Getting more wealthy? That was for vulgar Gringos!
     
    Donald Dell and Bill Gates became billionaires. The hardware and software they sold improved the lives of BILLIONS. Today we can purchase a desktop for $300 which has computing power exponentially better than computers which 40 years ago cost millions.  Neither Gates nor Dell were born with silver spoons in their mouths.
    [Granted, there was a somewhat predatory manner to the way that Microsoft ate up competitors, but since I personally paid only  ~$40 for  my XP Pro and MS Office discs, I am not going to complain much.]
     
    Recall all the brouhaha 20 years ago about the “digital divide”?  When computers cost $300, there is no such divide.
     
    Neither Andrew Carnegie nor John D. Rockefeller were born with silver spoons in their mouths. The rationalizations of the steel and oil industries which Carnegie and Rockefeller respectively spurred benefited us all.
     
    There is a constant turnover at the top in the US.  What do you hear about the descendants of JP Morgan or of the Vanderbilts?  Well, there is Anderson Cooper, a Vanderbilt heir, but what is he? Just another mindless talking head, whose claim to fame is labeling the Tea Party with the salacious meaning of the “teabagger” term.

  • Charles Martel

    In my town there’s a 17-acre parcel, a former nursery, that’s on its way to becoming an 85-home neighborhood. It took years of wrangling to get there, but a developer is clearing the land and prepping it for houses.
     
    As part of a deal with the city to get a go-ahead to build, the developer ceded some acreage for public use. Right now citizens are discussing what to do with the land. Suggestions range from a community center to a library to a skateboard park to a simple landscaped green area.
     
    An anonymous citizen has stepped forward and said he will donate $5 million toward the construction of a library. Our current library, a 4,500-square-foot space in our 100-year old seismically suspect city hall, needs at least thrice the space to meet local needs. The unknown donor’s offer would pay for half of a good new facility. 
     
    My good neighbor Phil, who’s worked closely with the library for years and years, tells me that some NIMBYs don’t like the idea that a wealthy donor might want to have his name attached to whatever new structure gets built. Can’t have that. How dare he steal the people’s thunder by attaching his got-bucks name to our precious civic treasure?
     
    I told my friend that he might want to point out that a rich Scots pig, Andrew Carnegie, had his named attached to 9,000 free public libraries that he caused to be built across the English-speaking world. Phil loved that datum, and promised me that he will use it as arguments over the new library unfold. 
     
    Damn people like Carnegie and Gates. The nerve showing up the rest of us!

  • Tonestaple

    Capitalism is not an economic system.  It’s how people behave.  People behave to benefit themselves, even if the benefit is purely emotional.  Yet half the country thinks that capitalism is something that can be modified or done away with entirely.  Anyone who looks honestly at how people act would see that anyone who acts against his own interest (not necessarily financial interest) ends up being miserable.

    The so-called law of supply and demand is also not an invention of economists; it’s how the world works.  You pay more for something, you get more of it.  If the supply of something decreases and people want it, the price goes up.  If people don’t want something, demand is down, then the price goes down.  This applies to things financial as well as everything else.

    I remain convinced that the source of hostility to capitalism is envy.  Everyone connected with the Occupy movement claims not to be envious, but their behavior says otherwise.  They don’t want to work to raise themselves to the level of those they envy; they want to bring the envied down to their level.

    And a PS to Gringo:  Gates was indeed born with a silver spoon.  Not a soup ladle, but definitely a spoon. Daddy was a name-on-the-door partner at one of the big local law firms and Mom was always busy with good works (and occasionally telling the rest of us how much time we ought to spend on good works) and carpooling Billy to the most exclusive private school in town.  And they lived in one of the most upscale areas in Seattle.  I don’t know anything about Donald Dell, but Bill Gates definitely got a very advantageous start in life.

  • Gringo

    Tonestaple
    And a PS to Gringo:  Gates was indeed born with a silver spoon.  Not a soup ladle, but definitely a spoon.
     
    Yes, Bill Gates was born into a high economic tier. A high school classmate of mine attended Lakeside through 8th grade. Lakeside is  the tony private school that Bill Gates attended. My classmate got in because his father taught there.
    While Bill Gates got a good start in life, he made his money on his own. Compared to Bill’s net worth, Dear Old Dad ‘s net worth is that of  a Mississippi sharecropper.

  • http://ymarsakar.wordpress.com Ymarsakar

    Don’t worry, come the Revolution you won’t have to worry about being poor or rich. Everyone will have the sam e standard of living, except for those who were born to rule, who will be given certain advantages commiserate with their sacrifices in making sure there is no profiteering.