Why would we want to be Bretless?

In my previous post I suggested that a study purporting the advisability of extortionate tax rates on the wealthy was an empty exercise in mathematical bling, concocted without any apparent reference to the real world, or any consideration of consequences therein.

Last week, the NYT carried a pre-publication review of “Unintended Consequences: Why Everything You’ve Been Told About the Economy Is Wrong", written by Bain venture capitalist Edward Conard. Who, since he is not just the 1%, but the 0.1%, clearly wants to make everyone except himself poor so they are free to sleep under bridges.

The idea that society benefits when investors compete successfully is pretty widely accepted. Dean Baker, a prominent progressive economist with the Center for Economic and Policy Research, says that most economists believe society often benefits from investments by the wealthy. Baker estimates the ratio is 5 to 1, meaning that for every dollar an investor earns, the public receives the equivalent of $5 of value. The Google founder Sergey Brin might be very rich, but the world is far richer than he is because of Google. Conard said Baker was undercounting the social benefits of investment. He looks, in particular, at agriculture, where, since the 1940s, the cost of food has steadily fallen because of a constant stream of innovations. While the businesses that profit from that innovation — like seed companies and fast-food restaurants — have made their owners rich, the average U.S. consumer has benefited far more. Conard concludes that for every dollar an investor gets, the public reaps up to $20 in value. This is crucial to his argument: he thinks it proves that we should all appreciate the vast wealth of others more, because we’re benefiting, proportionally, from it.

As it happens, Bret Wallach, one of The Great Guys is an entrepreneur: his company is engaged in designing a robot smart enough to automate pruning grape vines. In order to solve that very non-trivial problem, beyond a daunting amount of knowledge and talent, he needs two things: financial incentive to forego certain income now for more, but less certain, income later. That, and investors who see enough potential reward to make the risk worthwhile.

In other words, to make our society wealthy, we must allow people to become rich.

But never mind that. After all, equality is far better than having to suffer the success of the Brets and Conards.

Just ask the Cubans. Or the North Koreans. Or the Europeans.