The 1% – are they really that much different than the rest of us? Income disparity is obviously a huge issue in this country but at least one 1%er feels proud, justified, and like everyone else – especially art history majors – are doing it wrong. Edward Conrad -a Bain Capital retiree – is not just a 1%er but an .1%er, his wealth is estimated to be in the hundreds of millions and he is ready to evangelize his theory of economics in his soon-to-be-published new book, ““Unintended Consequences: Why Everything You’ve Been Told About the Economy Is Wrong”. He sat down with Adam Davidson at the New York Times to explain. From the article:
In a competitive market, all that’s left are the truly hard puzzles. And they require extraordinary resources. While we often hear about the greatest successes — penicillin, the iPhone — we rarely hear about the countless failures and the people and companies who financed them.
A central problem with the U.S. economy, he told me, is finding a way to get more people to look for solutions despite these terrible odds of success. Conard’s solution is simple. Society benefits if the successful risk takers get a lot of money.
Conrad sees tons of solution to problems and not enough investors willing to take risks like he did and does:
“It’s not like the current payoff is motivating everybody to take risks,” he said. “We need twice as many people. When I look around, I see a world of unrealized opportunities for improvements, an abundance of talented people able to take the risks necessary to make improvements but a shortage of people and investors willing to take those risks. That doesn’t indicate to me that risk takers, as a whole, are overpaid. Quite the opposite.” The wealth concentrated at the top should be twice as large, he said. That way, the art-history majors would feel compelled to try to join them.
Conrad tries to give cover to 1%ers, claiming that they are benefactors for rest of us – measuring in dollars. He claims that for every $1 invested by a risk taker, the public reaps up to $20 in returns! He uses the example of the tapered in part of the soda can at the top and how it saves everyone so much money:
“It saves a fraction of a penny on every can,” he said. “There are a lot of soda cans in the world. That means the economy can produce more cans with the same amount of resources. It makes every American who buys a soda can a little bit richer because their paycheck buys more.”
It might be hard to get excited about milligrams of aluminum, but Conard says that we live longer, healthier and richer lives because of countless microimprovements like that one.
Conrad has a point that there are limitless potential “improvements” and investments, but he doesn’t measure anything except in terms of the market. He may be an admitted devotee to “The Market” as God/moral guidance as was described in Monday’s post, True Religion of the Free Market, his characterizations certainly fit into that pattern. He does not consider for a second that soda is not healthy and that consuming more creates more problems, or that creating more cans adds to the waste stream. In fact, these are the trickle down jobs he would likely point to in that scenario – more work for dentists! more work for nutritionists! more diet pills and programs can be sold! more psychologists will be hired to help people deal with obesity!, more XXL clothes to be made! more doctors will be needed for the host of issues that addiction to high fructose corn syrup can create.
Conrad acts self righteous about the fact that folks like he are willing to take risks that benefit society and society owes the 1%ers even more. He does not mention the costs to society for all of the industriousness of business. He doesn’t recognize that the rest of us have no choice but to assume the health, financial, environmental, and security risks that are created by industry.
Conrad even applied a market based formula to choosing his wife complete with evaluating demographic data, calculating probabilities in geography, calibrating the quality of women available, selecting and ending up with your best statistical probability.
The author notes that Conrad has a mean streak at times even during the interview. He disparages the table of twenty-something strangers that were socializing at a cafe at 2:30pm:
“What are they doing, sitting here, having a coffee at 2:30?” he asked. “I’m sure those guys are college-educated.” Conard, who occasionally flashed a mean streak during our talks, started calling the group “art-history majors,” his derisive term for pretty much anyone who was lucky enough to be born with the talent and opportunity to join the risk-taking, innovation-hunting mechanism but who chose instead a less competitive life.
He is also irritated with Warren Buffet and sees his charitable contributions as arrogant and meddlesome in his view of proper economics:
During one conversation, he expressed anger over the praise that Warren Buffett has received for pledging billions of his fortune to charity. It was no sacrifice, Conard argued; Buffett still has plenty left over to lead his normal quality of life. By taking billions out of productive investment, he was depriving the middle class of the potential of its 20-to-1 benefits. If anyone was sacrificing, it was those people. “Quit taking a victory lap,” he said, referring to Buffett. “That money was for the middle class.”
Many more interesting tidbits like this sprinkle the article. It is assumed that he wants to help his former Bain Capital partner with his election campaign, but some of the statements are so outrageous that he may do just the opposite by affiliating himself. Take this gem:
“God didn’t create the universe so that talented people would be happy,” he said. “It’s not beautiful. It’s hard work. It’s responsibility and deadlines, working till 11 o’clock at night when you want to watch your baby and be with your wife. It’s not serenity and beauty.”
What Conrad does not figure into any of his equations is humanity. He seems to have very little empathy and obviously puts making money as a top priority. He doesn’t seem to understand that people are not obligated to create wealth for others – those “art history majors” have every right to do what they enjoy, and building community with a group of friends not only has value in the warm fuzzy category, but it could even be argued that it builds security – financial or otherwise. When you’re down and out, who will lend you a hand, come help you with car troubles, or give you a ride to work. Conrad doesn’t recognize the value of community at all. Perhaps because his community – Bain Capital – endorses a community of like minds that are focused on money over time with friends, family, serenity, beauty, love, caring, discovery, health or peace. Like other financial “conservatives” (what does that even mean anymore?) Conrad is supremely obedient to the value of authority and his authority is “The Market”.
In my personal opinion, I feel a bit sad for Conrad. I wonder if he’s seen joy in a child’s eyes after discovering something, or if he can enjoy a simple walk in the woods? Does he ever go dancing with his friends, offer a shoulder to cry on, or have one offered to him if he needed it? Making and modifying widgets will eventually fill this planet with garbage (if they’re not biodegradable), production is not always the answer to prosperity and value is not inherent simply because large dollar figures are being exchanged. I’ll close with this quote from Adam Davidson, Conrad’s interviewer after spending some time with him:
This constant calculation — even of the incalculable — can be both fascinating and absurd. The world Conard describes too often feels grim and soulless, one in which art and romance and the nonrenumerative satisfactions of a simpler life are invisible. And that, I realized, really is Conard’s world.