Is America a better place for all its massive income inequality? Most Americans would readily tell you that, no, to the contrary, this country is worse off due to its massive wealth gap. Many economists would agree. An ABC News/Washington Post poll last fall found that 61 percent of Americans think something needs to be done about the growing wealth gap. But one man proudly thinks we ought to keep things exactly as they are, for the good of society. He wrote a book about it, and sat down with the New York Times Magazine’s Adam Davidson to outline his argument, which, has its merits — even if it isn’t exactly convincing, especially coming from this guy.
His name is Edward Conard, and he was Mitt Romney’s partner in Bain Capital. His book, Unintended Consequences, outlines his views on the benefits of income inequality, which more or less boils down to this point: rich people are investors, not consumers, so by investing their money in the economy, everyone benefits. It’s the longwinded version of the compliment Republicans frequently pay to their benefactors: that the wealthy are not just wealthy, but they are also “job creators.” It’s basically a rebranding of Reagan’s trickle down theory.
To truly understand the man’s argument you ought to read the piece in its entirety. Here’s a choice quote to get you thinking, though:
Unlike Romney, Conard rejects the notion that America has “some monopoly on hard work or entrepreneurship.” “I think it’s simple economics,” he said. “If the payoff for risk-taking is better, people will take more risks.” Conard sees the success of the U.S. economy as, in part, the result of a series of historic accidents. Most recently, the coincidence of Roe v. Wade and the late 1970s economic malaise allowed Ronald Reagan to unify social conservatives and free-market advocates and set the country on a pro-investment path for decades. Europeans, he says, made all the wrong decisions. Concern about promoting equality and protecting favored industries have led to onerous work rules, higher taxes and all sorts of social programs that keep them poorer than Americans.
Tell that to Germany! You won’t find many Americans who pity Germans, Frenchmen and Swedes for being so destitute. Western Europeans have a quality of life envied all over the developed world: health care, paid maternity (sometimes paternity!) leave, and a good work-life balance. Danes are the happiest people on the planet, and it has little to do with their growth rate or the ability to strike it insanely rich.
The sound internal logic of Conard’s argument, as reported by Davidson, is what makes it so frustrating. Its flaws lie in Conard’s narrow definition of what is good for society.