Ed Conard is a former partner at Bain Capital and a friend/public supporter of presidential candidate Mitt Romney. So it’s no surprise that he’s staunchly supportive of the super rich, and has written a book on why.In “No Consequences”, Conard argues that the super wealthy actually help society by investing money into technologies and companies that will allow people to become richer and live more efficient lives, according to a New York Times Magazine profile of the businessman.
He reasons that for every $1 investors earn, the public gains $20 of value, citing examples such as how the agricultural revolution help lower food costs and how technological progress has made computer products cheaper and more accessible for everyone. For example—
“The Google founder Sergey Brin might be very rich, but the world is far richer than he is because of Google.”
But the most controversial point Conard makes within the book is perhaps the argument that the financial crisis was not caused by financial firms’ exotic financial instruments or excessive risk-taking but by a run on the banks. Banks were just doing their job, but excessive withdrawals made them lose a ton of money unexpected, according to Conard. From the NYT Magazine—
In 2008 it was large pension funds, insurance companies and other huge institutional investors that withdrew in panic. Conard argues in retrospect that it was these withdrawals that led to the crisis — not, as so many others have argued, an orgy of irresponsible lending. He points to the fact that, according to the Financial Crisis Inquiry Commission, banks lost $320 billion through mortgage-backed securities, but withdrawals disproportionately amounted to five times that. This stance, which largely absolves the banks, is not shared by many analysts. Regardless, Conard told me: “The banks did what we wanted them to do. They put short-term money back into the economy. What they didn’t expect is that depositors would withdraw their money, because they hadn’t withdrawn their money en masse since 1929.”
Also, if Conard’s name sounds familiar, it’s because he’s the “mystery donor” that gave $1 million to a Romney super PAC last year.
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