The scourge of America’s economy isn't the success of the 1 percent—quite the opposite. The real problem is the government’s well-meaning but misguided attempt to reduce the payoffs for success.
Four years ago, Edward Conard wrote a controversial bestseller, Unintended Consequences, which set the record straight on the financial crisis of 2008 and explained why U.S. growth was accelerating relative to other high-wage economies. He warned that loose monetary policy would produce neither growth nor inflation, that expansionary fiscal policy would have no lasting benefit on growth in the aftermath of the crisis, and that ill-advised attempts to rein in banking based on misplaced blame would slow an already weak recovery. Unfortunately, he was right.
Now he’s back with another provocative argument: that our current obsession with income inequality is misguided and will only slow growth further.
Using fact-based logic, Conard tracks the implications of an economy now constrained by both its capacity for risk-taking and by a shortage of properly trained talent—rather than by labor or capital, as was the case historically. He uses this fresh perspective to challenge the conclusions of liberal economists like Larry Summers and Joseph Stiglitz and the myths of “crony capitalism” more broadly.
Instead, he argues that the growing wealth of most successful Americans is not to blame for the stagnating incomes of the middle and working classes. If anything, the success of the 1 percent has put upward pressure on employment and wages.
Conard argues that high payoffs for success motivate talent to get the training and take the risks that gradually loosen the constraints to growth. Well-meaning attempts to decrease inequality through redistribution dull these incentives, gradually hurting not just the 1 percent but everyone else as well.
Conard outlines a plan for growing middle- and working-class wages in an economy with a near infinite supply of labor that is shifting from capital-intensive manufacturing to knowledge-intensive, innovation-driven fields. He urges us to stop blaming the success of the 1 percent for slow wage growth and embrace the upside of inequality: faster growth and greater prosperity for everyone.
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Creators
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Publisher
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Release date
September 13, 2016 -
Formats
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Kindle Book
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OverDrive Read
- ISBN: 9780698409910
- File size: 4479 KB
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EPUB ebook
- ISBN: 9780698409910
- File size: 4479 KB
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Languages
- English
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Reviews
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Tax the rich? Even out the playing field? Bad idea, writes a famously contrarian financier.It stands to reason that someone affiliated with the American Enterprise Institute would be inclined to mount a stout defense of the 1 percent, and Conard (Unintended Consequences: Why Everything You've Been Told About the Economy Is Wrong, 2012) does not disappoint. Add to this his one-time role at Bain Capital, which he co-founded with Mitt Romney, and the package would seem to be complete. However, the author's argument, calmly presented, has merits: it is true that, in general, the rich pay more taxes than they consume in government services and that a diverse knowledge economy offers more opportunities for wealth than a low-skilled one--and almost by definition produces inequalities. From these premises, Conard's policy recommendations do not necessarily follow, and some of them are politically toxic, such as the thought that giving the middle class a tax break is ill-advised. "Successful risk-taking that produces innovation and gradually builds institutional capabilities accelerates growth," he writes. "A middle-class tax cut will have no such effect." Some of the author's suggestions, if impractical, are intriguing--e.g., why not have the rich shoulder the burden of defense spending, since they're the ones who have the most to defend? The weakest sections of the book are the most formulaic, such as the tired mantra that students should not be rewarded for studying English but should instead be induced to study something "useful," never mind that many iconic business leaders (Steve Jobs, Bill Gates) have studies in philosophy and the humanities in their quivers. Conard also comes up short on specifics for the education reform that he argues is needed to produce a robust economy, noting weakly instead that "we should be running a multitude of experiments to find solutions that work." Unlikely to sway those for whom the idea of economic inequality is anathema, but a set of arguments worth considering. COPYRIGHT(1) Kirkus Reviews, ALL RIGHTS RESERVED.
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August 1, 2016
Tax the rich? Even out the playing field? Bad idea, writes a famously contrarian financier.It stands to reason that someone affiliated with the American Enterprise Institute would be inclined to mount a stout defense of the 1 percent, and Conard (Unintended Consequences: Why Everything Youve Been Told About the Economy Is Wrong, 2012) does not disappoint. Add to this his one-time role at Bain Capital, which he co-founded with Mitt Romney, and the package would seem to be complete. However, the authors argument, calmly presented, has merits: it is true that, in general, the rich pay more taxes than they consume in government services and that a diverse knowledge economy offers more opportunities for wealth than a low-skilled oneand almost by definition produces inequalities. From these premises, Conards policy recommendations do not necessarily follow, and some of them are politically toxic, such as the thought that giving the middle class a tax break is ill-advised. Successful risk-taking that produces innovation and gradually builds institutional capabilities accelerates growth, he writes. A middle-class tax cut will have no such effect. Some of the authors suggestions, if impractical, are intriguinge.g., why not have the rich shoulder the burden of defense spending, since theyre the ones who have the most to defend? The weakest sections of the book are the most formulaic, such as the tired mantra that students should not be rewarded for studying English but should instead be induced to study something useful, never mind that many iconic business leaders (Steve Jobs, Bill Gates) have studies in philosophy and the humanities in their quivers. Conard also comes up short on specifics for the education reform that he argues is needed to produce a robust economy, noting weakly instead that we should be running a multitude of experiments to find solutions that work. Unlikely to sway those for whom the idea of economic inequality is anathema, but a set of arguments worth considering.COPYRIGHT(2016) Kirkus Reviews, ALL RIGHTS RESERVED.
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