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.