The 2008 financial meltdown led many to attack those who were deemed responsible for the expelling and impoverishment of thousands of Americans: bankers and rich experts in finance. The Occupy movement, which burgeoned in 2011, was an extension of this trend; OWS protesters hold the 1% accountable for the unfair and unequal realities in America.
But, amidst this climate of class warfare, one rare discordant voice has been Edward Conard, ex-Managing Director at Bain Capital and megadonor of Mitt Romney's campaign. Conard bluntly argues that there’s been a mistaken diagnosis of the current crisis. He says that the financial system which he navigated for years, shaped after the Reagan and Bush deregulatory policies, is completely wholesome. It is the federal government which immoderately promoted homeownership all over the country. The banks, the investors, and their dodgy derivatives and other instruments, have played a minor role in the crunch and were wrongly scapegoated. The massive bank panic and subsequent withdrawals from creditors and insurance companies have alone whacked the economy and ushered in the giddy hangover we're in.
He overtly supports the infamous 1%, under the assumption that rich people's capacity to innovate and take risks can pave the way for a faster recovery and a resumption of growth. Instead of regulating banks and stymieing innovation, Conard wants to spur up-and-coming innovators, by pushing the corporate and financial elite to take risks and invest. More innovation, more risk-taking is what’s badly needed to jump-start the sluggish American economy. Even though the short- and medium-term consequences might be unexceptional, the longer-term fallouts on the middle- and low-income categories will make everyone better off. According to Conard, what permits this innovative and entrepreneurial spirit to blossom is the widening of income inequality in the American society. Conard argues that income inequality is a win-win game because investors grow wealthy by creating products that benefit the 99 percent. As new products are invented and commercialized (Instagram, for example),groundbreaking innovations would contribute even more to enrich the middle and lower classes.
I don't personally buy into this counterintuitive narrative. It's been proven that societies where the degree of income inequality and wealth polarization is high are more prone to exacerbate class warfare and induce resentment instead of social progress. In addition, many of the top big earners Conard glorifies have hardly reached stardom and success by creating "wealth" that positively trickled down the social ladder. On the contrary, the traders and financial entrepreneurs' so-called innovations hardly benefited anyone but themselves. They rather cocked a snook at society and made money on the majority's backs.
What's more, counter-examples can be provided against Conard's thesis. The Bush-era tax cuts, for instance, were supposed to boost the economy and create additional jobs. Something Conard may have relished at the time. Instead, the tax cuts have been counter-productive and steepened the public debt to astounding heights. This fell short of sparking the boom period initially expected.
I admire the author's courage. Going against the mainstream is never an easy task. The book may become the most hated piece of the year. However, in spite of this unenviable reputation, many have heaped praise on Conard's in-depth and top-to-bottom analysis of the American economy and its uncharted flanks. Critically acclaimed for his financial acumen, Edward Conard's book could well reshuffle the cards between Obama and Mitt Romney, Conard's sidekick and presumptive Republican candidate. An excellent read in perspective, one that has the merit to present an unconventional panorama of what's really dogging America today.