I hadn't heard of Edward Conard before, but apparently he worked with Mitt Romney at Bain Capital. So he should know a thing or two, being as how Bain was what you might call a corporate repair shop. Its job seemed to be taking in beat-up corporate jalopies and doing a complete makeover, before sending them back on the road, all fixed up and slicked up.
Conard's first book was Unintended Consequences, "which set the record straight about the financial crisis of 2008 and explained why U.S. growth was accelerating relative to other high-wage economies." In other words, it wasn't the banks' fault.
Now in The Upside of Inequality: How Good Intentions Undermine the Middle Class Conard shows how how pretty well all the standard nostrums won't work to get the economic moving again.
Yes, he says, inequality has been increasing, but only at the very top end. And how are the 0.0001 percent getting rich? We all know the reason. It is chaps like Steve Jobs and Bill Gates coming up with long-shot technology startups that can grow into $500 billion corporations with very little additional capital.
The thing to understand about today's knowledge-based economy, compared to the old manufacturing economy of old is that it doesn't take much to scale up to a global scale. In the old economy a Rockefeller or a Ford had to borrow money and/or sell shares to scale up; a Steve Jobs or a Mark Zuckerberg doesn't. He gets to keep all the value for himself and his startup buddies and early VC investors.
Aside: Someone once told me that they had encountered Bill Gates in a store just after Microsoft had gone public. He asked Bill why he did it. Gates answered: to share the company with the employees.
But who cares about the inequality? Zuckerberg isn't hurting anyone except when he is buying the houses close to his place in Palo Alto. He is making money just like an entertainment star does, because people all over the world love his product.
The basic proposition in the modern economy, according to Conard, is this. To succeed in the modern economy you need two things, "properly trained talent" and a capacity for risk-taking.
And the reason that the US has been growing faster that our high-wage pals in Europe is that we have been doing the knowledge economy thing better than they.
That doesn't necessarily mean "education." Most people going to college are majoring in things that have nothing to do with the new economy. And according to Conard, pretty well all the usual suspects to fix education aren't going to make a difference. Most useful training takes place on the job.
And most people don't want to put their savings at risk. That is why we have banks. Banks take risk-averse savings and lend them to people that are taking a risk. Of course, lending is supposed to be properly collateralized and credit-worthy. But sometimes you get a Black Swan and the banks go south.
So how do you mobilize risk-averse savings? You have to balance it with equity. That just means that the startup guys need equity capital to provide a cushion against failure for the risk-averse folks. The more equity out there the more risk-taking propositions the economy can address.
Here is where Conard introduces something I didn't know. Apparently one of the provisions of Dodd-Frank is to make it harder for the Fed to act as lender of last resort.
Rather than strengthening the Fed's ability to act more effectively as a lender of last resort in a bank run, policy makers have done the opposite. They have made banks more responsible for bank runs by intentionally weakening the Fed's ability to act in a panic. Banks pulled back by raising credit standards.Hello! The "Intellectual Yet Idiot" class provoked the Crash of 2008 because the Fed felt it could not rescue Lehman Brothers under current law. So the Fed is still stupid like it was in the 1929-33 crash. The whole point of the Fed is to be a lender of last resort that lends whatever it takes to keep the financial system afloat, as per Lombard Street by Walter Bagehot. And then worry about the fallout later. Period.
THE guardian of the conventional wisdom, Peggy Noonan, says that 2016 is "The Year of the Reticent Voter." Not after this CBS News item about rust-belt Democrats leaving the sinking ship. And not after yesterday. I was in line at the supermarket and a 50-ish white guy started rambling pro-Trump asides about Trump and Clinton. In the heart of Washington State's 7th Congressional District, one ...
LET'S start by telling it like it is. The last two nights were "The Charlotte Riots." Yet well into last night, September 21, the mainstream media were talking about "protesters." This is the result of our center-left ruling class allowing the rhetoric of the left to colonize our political discourse. It is simply misleading to characterize any street action as a "peaceful protest." All street ...
I was thinking deep thoughts in the early morning today. Or rather, deep thoughts were suggesting themselves to me, in the sense that Puccini meant when he said that the music of Madama Butterfly "was dictated to me by God." What came to me in the morning was this: Everything that the left advocates is poison for its clients. The Working Class. The left invited the working class to rise up ...
Download latest e-book draft here.
A New Manifesto
A spectre is haunting the liberal elitethe spectre of conservatism.
The Crisis of the Administrative State
It wasnt supposed to be like this.
Government and the Technology of Power
If you scratch a social reformer, you will likely discover a plan for more government.
Business, Slavery, and Trust
Business is all about trust and relationship.
Humanity's Big Problem: Freebooters and Freeloaders
The modern welfare state encourages freeloaders.
The Bonds of Faith
No society known to anthropology or history lacked religion.
A Critique of Social Mechanics
The problem with human society reduced to system.
The Paradox of Individualism
Is individualism the gospel of selfishness or something else?
From Multitude to Civil Society
The larger the government, the smaller the society.
The Answer is Civil Society
In between the separated powers.
The Greater Separation of Powers
If you want to limit power then you must limit power.
Conservatism Three by Three
Conservatism, political, economics, and cultural.
The Culture of Involvement
Imagining lives without the welfare state
The Poor Without the Welfare State
Can the poor thrive without the welfare state?
The Middle Class Without The Welfare State
How would the middle class live without all those middle-class entitlements?
Liberals and the Welfare State
Liberals, the ruling class of the administrative welfare state.
From Freeloaders to Free Givers
The path to the future lies through moral movements.
The Real Meaning of Society
Broadening the horizon of cooperation in the last best hope of man on earth.
Andrew Coulson, Market Education
How universal literacy was achieved before government education
Carl Kaestle, Pillars of the Republic
How we got our education system
James Tooley, The Miseducation of Women
How the feminists wrecked education for boys and for girls
James Tooley, Reclaiming Education
How only a market in education will provide opportunity for the poor
E.G. West, Education and the State
How education was doing fine before the government muscled in
Hernando De Soto, The Mystery of Capital
How ordinary people in the United States wrote the law during the 19th century
F. A. Hayek, Law Legislation and Liberty, Vol 1
How to build a society based upon law
Henry Maine, Ancient Law
How the movement of progressive peoples is from status to contract
John Zane, The Story of Law
How law developed from early times down to the present
James Bartholomew, The Welfare State We're In
How the welfare state makes crime, education, families, and health care worse.
David Beito, From Mutual Aid to the Welfare State
How ordinary people built a sturdy social safety net in the 19th century
David Green, Before Beveridge: Welfare Before the Welfare State
How ordinary people built themselves a sturdy safety net before the welfare state
Theda Skocpol, Diminished Democracy
How the US used to thrive under membership associations and could do again
David Stevenson, The Origins of Freemasonry
How modern freemasonry got started in Scotland
David Aikman, Jesus in Beijing
How Christianity is booming in China
Finke & Stark, The Churching of America, 1776-1990
How the United States grew into a religious nation
Robert William Fogel, The Fourth Great Awakening and the Future of Egalitarianism
How progressives must act fast if they want to save the welfare state
David Martin, Pentecostalism: The World Their Parish
How Pentecostalism is spreading across the world
After a year of President Obama most Americans understand that the nation is on the wrong track. But how do we find the right track? Americans knew thirty years ago that liberalism was a busted flush. Yet Reaganism and Bushism seemed to be less than the best answer.
But where can we turn? Where are the thinkers and activists of the old days? Where do we find the best ideas? And how do we persuade our present ruling class to loosen its grip on power so that we can move the locomotive of state back onto the right track?
With all of our problems it seems like the worst of times.
In fact, this is the best of times. Under the radar a generation of great thinkers have been figuring out what went wrong and conjuring up visions of a better future. This book, "An American Manifesto: Life After Liberalism" is an introduction to their ideas, and to the great future that awaits an America willing to respond to their call.
Although this book is addressed to all Americans, conservative, moderate, and liberal, and looks to a nation that transcends our present partisan divide, I must tell you that liberals will have the most difficulty with the book. The reason is simple. I am asking liberals to give up a lot of the power they have amassed in the last century. But we are all Americans, and we must all give up something for the sake of the greater good.
I am Christopher Chantrill and I am writing this book in full view. I'll be blogging on the process and the ideas, and I'll be asking you, dear readers, to help. Read the blog. Read the articles as they come out on American Thinker and ponder over the draft chapters here on this site.
Then send me your reactions, your thoughts, and your comments. You will help more than you know.
[W]hen I asked a liberal longtime editor I know with a mainstream [publishing] house for a candid, shorthand version of the assumptions she and her colleagues make about conservatives, she didn't hesitate. Racist, sexist, homophobic, anti-choice fascists, she offered, smiling but meaning it.
Harry Stein, I Can't Believe I'm Sitting Next to a Republican
Families helped each other putting up homes and barns. Together, they built churches, schools, and common civic buildings. They collaborated to build roads and bridges. They took pride in being free persons, independent, and self-reliant; but the texture of their lives was cooperative and fraternal.
Michael Novak, The Spirit of Democratic Capitalism
[To make] of each individual member of the army a soldier who, in character, capability, and knowledge, is self-reliant, self-confident, dedicated, and joyful in taking responsibility [verantwortungsfreudig] as a man and a soldier. — Gen. Hans von Seeckt
MacGregor Knox, Williamson Murray, ed., The dynamics of military revolution, 1300-2050
For [the left] there is only the state and the individual, nothing in between. No family to rely on, no friend to depend on, no community to call on. No neighbourhood to grow in, no faith to share in, no charities to work in. No-one but the Minister, nowhere but Whitehall, no such thing as society - just them, and their laws, and their rules, and their arrogance.
David Cameron, Conference Speech 2008
Imagining that all order is the result of design, socialists
conclude that order must be improvable by better design of some superior mind.
F.A. Hayek, The Fatal Conceit
[Every] sacrifice is an act of impurity that pays for a prior act of greater impurity... without its participants having to suffer the full consequences incurred by its predecessor. The punishment is commuted in a process that strangely combines and finesses the deep contradiction between justice and mercy.
Frederick Turner, Beauty: The Value of Values
[The Axial Age] highlights the conception of a responsible self... [that] promise[s] man for the first time that he can understand the fundamental structure of reality and through salvation participate actively in it.
Robert N Bellah, "Religious Evolution", American Sociological Review, Vol. 29, No. 3.