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The Purpose of Spectacular Wealth

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Capitalism vs Socialism

The next presidential election is coming up.  It looks like the contest will be between Mitt Romney and Barack Obama.  These two folks could not be more different.  To exaggerate a bit, the contest will be between a confirmed capitalist and someone who has been identified as a socialist.

After one term in office we have an idea about what Barack Obama is all about.


But what about Mitt Romney?  What do we know about him?  Seems that, according to the popular press, what we need to know about Romney we can learn from Bain Capital.  To know how Bain Capital thinks is to know how Romney thinks.  Just like Obama’s “hope and change” the ambiguity of the meaning of these words allowed everyone to fill in whatever they wanted to hear.  Without clarity of terms, meaning, and intention, then we may fall prey to filling in our own desires for what is open and ambiguous.

Image Consultants

To get elected people have to like you and people need to see their self interests reflected in those for whom they will vote.  This is why people running for any office need to manage their image.  There are professional image consultants that help people manage their public image to some level of likability – no matter what one is, when the cameras and microphones are tuned off and the doors are closed.

Behind the image – from someone who has nothing to lose

Insight about what Romney might be like, when the cameras are off and the doors closed, might be gained from a partner at Bain Capital.  If Mitt won’t speak honestly in the interest of maintaining an image, maybe someone at Bain – with nothing to lose – will speak.  And so they have – Edward Conard.

From a New York Times article:

Unlike his former colleagues, Conard wants to have an open conversation about wealth. He has spent the last four years writing a book that he hopes will forever change the way we view the superrich’s role in our society. “Unintended Consequences: Why Everything You’ve Been Told About the Economy Is Wrong,” to be published in hardcover next month by Portfolio, aggressively argues that the enormous and growing income inequality in the United States is not a sign that the system is rigged. On the contrary, Conard writes, it is a sign that our economy is working. And if we had a little more of it, then everyone, particularly the 99 percent, would be better off. This could be the most hated book of the year.

With regard to my previous posting Be Greedy;  Be Patient … here is an interesting insight from Conard.

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. For proof, he looks to the market. At a nearby table we saw three young people with plaid shirts and floppy hair. For all we know, they may have been plotting the next generation’s Twitter, but Conard felt sure they were merely lounging on the sidelines. “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. In Conard’s mind, this includes, surprisingly, people like lawyers, who opt for stable professions that don’t maximize their wealth-creating potential. He said the only way to persuade these “art-history majors” to join the fiercely competitive economic mechanism is to tempt them with extraordinary payoffs.

“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.

Will greed and the lure of spectacular wealth make America a leader in the global economy?  Conard thinks so.


The problem is that many people have already given up.  The other problem is that the vote in America has been given to everyone.  The Constitution, as originally written, did not give the vote to everyone.  Part of the qualifications to vote was that you be a land owner.  Or to put a finer point on this, to vote, you had to have skin in the game.  Now, that is no longer required.  So, those who have “given up” form a powerful voting block.

What’s the danger? 

A democracy cannot exist as a permanent form of government.  It can only exist until the voters discover that they can vote themselves largesse [gifts] from the public treasury.  From that moment on, the majority only votes for candidates promising the most benefits from the public treasury, with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship — Alexandar Fraser Tytler (1747-1813)

So, at some point, there will be more voters in America that are content to “vote themselves gifts from the public treasury” than opt in for the lure of spectacular wealth.

This gets back to the question you can ask of anyone… Why do more rather than less?  The answer is a pre-rational decision.

At the margins of “doing less” is the welfare system and the largesse that supports this.  Many have seen this danger

From Franklin D. Roosevelt State of the Union Address of 1935

A large proportion of these unemployed and their dependents have been forced on the relief rolls. The burden on the Federal Government has grown with great rapidity. We have here a human as well as an economic problem. When humane considerations are concerned, Americans give them precedence. The lessons of history, confirmed by the evidence immediately before me, show conclusively that continued dependence upon relief induces a spiritual disintegration fundamentally destructive to the national fiber. To dole our relief in this way is to administer a narcotic, a subtle destroyer of the human spirit. It is inimical to the dictates of a sound policy. It is in violation of the traditions of America. Work must be found for able-bodied but destitute workers.

The future of America – Doing more or doing less; Pick your poison

For whatever you think of Greed – call it a narcotic if you want – which is better for America?  Greed or dependency?  Would a world of greed be better than a world of dependent americans?  It would seem that as dependency increases without limit you will run out of wealthy people to pay for it and the country will collapse.  What happens then, Altlas Shurgged?

Whatever you think, check of the interesting New York Times article on the interview with Edward Conard of Bain Capital to perhaps gain some insight on Mitt Romney

Other Resources

The Weight of the Poor…  and how to destroy America

Written by frrl

June 1, 2012 at 6:29 pm

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