By Howard Fineman | July, 2012
Ed Conard’s book Unintended Consequences is onThe New York Times best-seller list, but it was hard to find at my neighborhood Washington bookstore, Politics and Prose, deep in what you could call Obama Country. I stopped by the other day to look for it. A salesperson checked on her computer, and we eventually located a single copy on a bottom shelf towards the back of the store. “Our best sellers don’t always match The Times’,” she said.
In this case, that’s too bad. Mitt Romney is running his campaign so close to the vest as to be nearly invisible. The theory is to disappear, leaving President Obama to run against himself and his record on the economy.
So if you want to know where Romney is coming from, as we said back in the day, you need to read not only the Book of Mormon and clips from The Boston Globe and his tax returns (OK, you can read just one of those), you also need to read Conard’s technical but fervent paean to the folks whom the soon-to-be Republican presidential nominee reverently calls “the job creators.”
That is: America’s wealthiest and yearning-to-be-wealthiest.
The gist of the Book of Ed is that the lower-income tax era that began 32 years ago with Ronald Reagan, and that has continued through the Obama Years, is a great thing. It nurtures the richest (and those who want to be the richest), which is also a good thing because they take the risks that spur job-creating innovation as they strive for the Big Score. Income inequality is not only inevitable, it is a blessing, he writes, in that we need these fat geese because their eggs are the most efficient way to hatch economic growth.
The “unintended consequences” in the title, Conard explained to me, are the unemployment and stagnation created by government policies that ignore the fundamental physics of risk and striving. “The economy is what it is,” he says.
The fact that this theory bestows social utility on the accumulation of wealth in general and the careers of investment bankers and take-over artists doesn’t make it wrong, though it does make it convenient for the likes of Conard–and Romney–and the partners of, say, Bain Capital.
Conard is not a weird guy with a soup-stained Adam Smith tie at a Grover Norquist rally. Conard is a presentable Manhattanite with an MBA from Harvard, which Mitt also attended. He and Romney are good friends–so much so that Conard gave a million dollars to an independent PAC supporting the former Massachusetts governor. Conard is a former managing director of Bain Capital. Romney hired him. Romney read a full draft of the book and made suggestions, including ways to cut it from 140,000 words to 80,000. “We’ve talked about a lot of the ideas in the book over the years,” Conard told me. “He told me I’m the new Ayn Rand.”
Actually, Conard isn’t. Unlike Randian purists, he worries about federal deficits and thinks we need an across-the-board tax hike to ameliorate them. “We’ve got spending at 25 percent of GDP and tax revenues at 16 percent,” he said. “We are not going to get that first number down fast enough.” It’s a view diametrically opposed to the one his friend and former boss espouses, at least these days. We’ll see what happens if and when he becomes president.
Conard is not a Ron Paul-style no-government man. He favors temporary limits on immigration to protect American jobs as we transition further into a “service economy.” He thinks that banks should be taxed for the privilege of being backstopped by the federal government, as they were in 2008.
But he and Romney do share a profound faith in what they see as a hardheaded, realistic and–to them, inspiring–view of how the world works.
By Conard’s calculations every dollar of successful risk-bearing investment produces at least five dollars in new wealth. “I used that number in the book because that is the generally accepted minimum,” he said, “but I the real number is closer to 20 dollars.”
Our superior culture of risk, he says, is fostered by comparatively low personal taxes and light government regulation. And that, in turn, has yielded growth rates way above those of Europe and Japan. “The Internet is the key and they have produced NOTHING–no Facebook, Google, Amazon, YouTube, Apple, Microsoft–NOTHING.” Bottom line: leave the market alone.
Romney has given the book a cautious endorsement. “Ed has some interesting ideas,” he said. “I don’t agree with all of them, but give him a listen. He is a very capable thinker.”
It is easy to deride Conard’s thoughts as nothing more than a redrawing of the Laffer curve from the dawn of the Reagan Administration in 1981. In the intervening years we have had growth, but also are leaving our posterity with crushing debt. And we have shredded our sense of common purpose as a country. In search of gold, we’ve bitterly divided ourselves into red and blue. The 2012 campaign is and will highlight that chasm.
But it would be a mistake for Democrats to underestimate the appeal of the Book of Ed, and of Romney’s preaching its core message at a time of economic stagnation. Greed may not be good, but sometimes it sells.