(183 Total References)
WSJ Reviews Ed Conrad's Unintended Consequences
Top Ten New York Times Bestselling Author
Edward Conard, a one-time partner of Mitt Romney's at Bain Capital, is having none of it.
"Unintended Consequences" is a full-throated defense of economic dynamism, entrepreneurial risk-taking and the rewards of success-with due recognition of the long odds that face any business or investor.
embraces economic Darwinism as not just the best but the only route to prosperity and economic growth-to more jobs and higher standards of living.
"Survival of the fittest," he
writes, "pits new ideas against existing alternatives . . . [and] ruthlessly prunes away less capable alternatives, ensuring that only the most valuable and robust remain.
book "Why Everything You've Been Told About the Economy Is Wrong," and much of it is indeed dedicated to knocking down bogus clichés.
Contrary to what the doomsayers contend, the trade deficit is good for growth, he
argues: Borrowing from China to buy cheaply made Chinese goods frees up money to be invested more profitably at home; in the meantime, China buys our debt and keeps interest rates low.
Our return on investments in innovation is greater than the cost of borrowing from abroad, so America comes out ahead.
Punishing banks for the financial crisis, he
argues, is counterproductive.
Instead, we should find ways to charge banks for the guarantees against failure that they receive from the federal government and then encourage them to put idle capital to work by investing in the next generation of American businesses.
In a similar spirit of contrarianism, Mr. Conard
says that income redistribution through high marginal tax rates hurts the middle class and the poor more than it hurts the rich who pay the taxes.
Through a series of calculations, he
shows that money invested by the well-to-do throws off more wealth to society-what economists call the "consumer surplus," or the value to consumers of the new products produced by investment-than the same amount of money when it has been taxed and redistributed.
Even charity is bad for the economy, Mr. Conard
says, because it diverts potential risk capital to less productive uses.
By Edward Conard
At the heart of "Unintended Consequences" is Mr. Conard's
contention that a successful economy requires outsize rewards for the able (and lucky) few who overcome very long odds to produce valuable innovations that others are willing to pay for.
However rich these "lucky risk takers" get from starting Google or Apple, or Wal-Mart or FedEx-or for bringing innovation to tried-and-true goods and services-we as a society, Mr. Conard says, reap much more benefit from their inventions than the risk-takers themselves.
Innovations in agriculture, for example, have allowed the percentage of our income that we spend on food to decline to about 10% today from 24% in 1950.
In that time, producers' profits have remained steady at about 10% of revenues.
If you do the math, which Mr. Conard
himself does in a footnote, you find that the split of value, over time, favors consumers by a ratio of 20-to-1.
A similar split, he
argues, can be detected almost anywhere one looks in our economy.
Far from mercilessly exploiting hoi polloi, even the risk takers who do spectacularly well-and Mr. Conard
emphasizes that failure is "almost certain" when entering into this Darwinian competition-end up, in effect, giving away most of the value they have created.
What is more, the competitive advantage that comes from innovation is fleeting.
Consider MySpace, if you can remember it at all.
But consumers benefit from invention no matter which competitor comes out on top, and the benefits we enjoy long outlast the profits reaped by the original inventors.
Thus we should do everything we can to motivate people to put their capital at risk on behalf of new ventures, including lowering their tax rates.
does not like the vogue idea of taxing consumption rather than investment.
Increased consumption, he
says, "is the return for investment."
Rewarding success with both wealth and status, according to Mr. Conard
, is how America succeeded in the first place, and it is the only way to return to strong growth and full employment.
puts it: "High payoffs for lucky innovators motivate others to duplicate their success and avoid loss of status from failing to do so.
© Copyright 2016 Edward Conard
· All Rights Reserved
Subscribe to Blog:
8/15 â€“ The Romney/Ryan Brain Type ticket | BrainTypes.com
As for the types of people Romney surrounded himself with in former days ... ""Romney challenged us to challenge each other," says Edward Conard, a partner of Romney's at Bain Capital from 1993 to 1997.
The true donor's identity remained hidden ...
The true donor's identity remained hidden until pressure from Democrats and the media prompted Ed Conard, a former partner of Romney's at Bain Capital, to reveal that he authorized the W Spann donation.
The New York Times Magazine's cover ...
The New York Times Magazine's cover story this week is about Edward Conard, a wealthy private equity titan and former business partner of Mitt Romney's, who has written a book arguing that income inequality is actually good for the middle and lower classes, because the promise of great wealth spurs more investing and… Read…5/02/12 12:15pm 5/02/12 12:15pm
The simmering debate over income inequality ...
The simmering debate over income inequality got a jolt of energy recently with the publication of Edward Conard's book Unintended Consequences: Why Everything You've Been Told About the Economy Is Wrong.
Conard is a former partner of Mitt Romney's at Bain Capital, so his book can be interpreted (rightly or wrongly) as the Bain View of the Universe.
Romney's critics have been gleefully attacking Conard's book and its elitist, trickle-down view of the economy-which plays right into President Obama's call for more fairness and higher taxes on the wealthy.
But this predictable argument over the diverging living standards for rich and poor-with liberals insisting that the rich have gotten too rich and conservatives arguing that more spending by the rich would make everybody better off-basically misses the point.
In fact, it does a disservice to hard-working people who need pragmatic guidance on how to plan for their financial future.
mounts an unapologetic defense of the 1 percent and the economic activity they generate, arguing that spending and investment by the wealthy is the main thing that keeps the economy humming and creates jobs.
The New York Times Magazine
argument this way: "If we had a little more [income inequality], then everyone, particularly the 99 percent, would be better off."