City Journal Winter 2016

Current Issue:

Winter 2016
Table of Contents
Tablet Editions
Click to visit City Journal California

Readers’ Comments

Nicole Gelinas
Capitalism for Financial Capitalists « Back to Story

View Comments (9)

Add New Comment:

To send your message, please enter the words you see in the distorted image below, in order and separated by a space, and click "Submit." If you cannot read the words below, please click here to receive a new challenge.

Comments will appear online. Please do not submit comments containing advertising or obscene language. Comments containing certain content, such as URLs, may not appear online until they have been reviewed by a moderator.

Showing 9 Comment(s) Subscribe by RSS
It’s unfortunate that the Nicole Gelinas and the Manhattan Institute lack the economic insight to see what Greg Mankiw described as, “far smarter than most books written on the economy;” what Tyler Cowan at George Mason and Kevin Hassett at the American Enterprise Institute called “one of the must-read economic books of the year;” what Steve Levitt said, “are an amazing number of good ideas;” and what Andrei Shleifer said was, “the most cogent and persuasive analysis of the financial crisis to date.” Perhaps Gelinas has deep economic insights that these leading economists superficially overlooked.

Contrary to Gelinas’s claim, I don’t argue that the government should subsidize banks. Quite the contrary; I argue the government should consider charging short-term lenders and borrowers for the guarantees it is, in fact, making. To reduce subsidies that currently leave guarantee unpriced, I suggest ways to price them more accurately. Gelinas may glibly assume that price alone will equilibrate the supply and demand for inelastic risk-averse short-term savings, but she hasn’t paused for a moment to consider the (lack of) elasticity and its effect on growth and unemployment.

I could go on...
Nicole Gelinas-

Thank you for clarifying the point. The way you wrote that passage made it sound (to me) like that was *your* characterization of those professions, not Conard's, even though you qualified it by attributing the characterization to him. It's common for me to see the literary style you used to impose one's own opinion on what someone else said. I've probably used it myself in things I've written. I now understand that you were paraphrasing his words.

I missed how he characterized computer programming as a "business science," saying it was "tedious." That's an interesting take on it, though I'd take issue with it as well. I've never heard of computer programming as a "business science." It's understandable that he would lump it in this category, as programming is now often used in business, but I hope he doesn't think engineering fits into a "business science" as well. The problem with grouping programming into a "business science" is programming is used in other disciplines as well. So it doesn't really fit.

It seems it's been popular for many years to take a "method" and call it a "science." Personally I wish people would stop using the term "science" this way. It's confusing to society.


The unfortunate thing about the computer revolution is it hasn't really happened yet. People just think it has. In the end, I think the computer revolution will be seen less as a means for productivity improvement than as a means for re-establishing reason and logic as a means for describing reality in a way that adds clarity to a situation, for one, and secondly, makes theories apparent as *theories*, not facts until tested, and thirdly, changes conversations about how we see the world, and our relationships to each other, hopefully in a humanizing way.

As it stands now, the computer revolution is confined to the hard sciences, and has made inroads into social planning disciplines. The planners need to "import" something from the hard sciences, though: testing their models before first, touting them as representing reality, and secondly, using their predictive capability on a wide scale. The big challenge in spreading the revolution is finding a way to make the principles of math and science central organizing principles in discussions among everyday people. Doing so will require a revolution in education that hasn't happened yet, either.
Pure idiocy, ranting and more. How anyone can take this kind of moronic nonsense seriously is the most salient and interesting aspect of this book which I am still not sure is not parody.
Gee, a world without Wall Street and mortgage broker criminals. Was he raised on "Atlas Shrugged" or "Fountainhead" ???

Also, lying to religious people that the Republican Party is going to stop abortion -- that's Conard's idea of brilliant politics. Governance be damned so his heroes can squeal out "Librul Baby Killer!" over and over.

The American Middle Class got scalped over the last 30 years and this toad even misses that his Holy Low Tax Rates put the country in hock for $15-trillion. He's a stupid materialist, of which there is no shortage. Same for his utter lack of patriotism. E pluribus unum, and that one for all.
Perhaps a different interpretation of Conrad’s message, assuming one is needed, is that the desultory growth within America’s labor force requires a realignment among younger workers into different vocations. At present, both Europe and the U. S. are experiencing slow economic growth, partly because demographic growth within the available labor pool is so low. In Japan, growth within the domestic labor pool has entered negative territory. And what this fact portends is a downward spiral in economic growth which will only accelerate during the decade ahead. The so-called “knowledge economy” can provide a comfortable, office building environment for workers, both liberal arts and business majors, but it isn’t providing dynamic new industries needed to spur growth – and the type of growth which feeds upon itself to create opportunities in related areas of the economy such as occurred within earlier eras.

The computer revolution may appear exciting but it didn’t or, so far, hasn’t produced the phenomenal growth of earlier eras. Communications and entertainment have been the primary products in recent decades but the silicon chips didn’t live up to their original billing of entirely revolutionizing our lives. It’s true we’ve gone from an 8 inch screen to a 90 inch mega home entertainment monster complete with cable, surround sound, DVD and remote control. But true innovation spurring growth across the economic spectrum is decidedly lacking. We’ve simply created refinements upon refinements. And without exciting breakthroughs in new technology, more refinements won’t require much risk capital or mechanical engineers to utilize that available capital.

If we’ve become wealthy to the point where our younger workers needn’t worry about forcing their intellects to master difficult technical vocations then isn’t that what we, as a society, claimed we’ve always wanted? Wasn’t a technological civilization providing us with the leisure time and the means to pursue more esoteric interests the goal all along? Whether it was or not, adding a few nifty, additional features to our cell phones every six months doesn’t require much capital. Presumably, our problem isn’t a lack of capital, it’s a lack of new and revolutionary breakthroughs to spend the money on.

For Mr Conrad not to understand, that for capital to invest it needs to perceive that equity is cheap, is truly extraordinary.

With asset prices falsely upheld by artificially low interest rates, equity is inevitably more expensive than it should be. So investors don't want it.

How a Private Equity man cannot see that is beyond me. And for someone with his life experience and, presumably, credo of free market capitalism to then advocate government interference in finance surely means the man should be kept well away from managing anyone's funds but his own.
Dear Mark,

Thank you for your comment.

I hope I do not have the "opposite bias." I have great respect for scientists and engineers. I was simply using Conard's words.

Conard specifically mentions the "business sciences" as something he considers to be superior to the liberal arts, and he uses the word "tedious" to describe such business sciences, implying they are far less interesting -- that is, that they employ less thinking, because thinking is never tedious or dull.
Edward Conard is an idiot and his several of his prescriptions would lead to the destruction of the nation. It's difficult to know where to start, but his willingness to continue to depend on Saudi oil is the mark of a man with no knowledge of military history. His willingness to write-off the half of the population at the bottom of the income distribution is the mark of a man with no knowledge of social history. Most of all, his stated desire to shift the tax burden from the top income earners to the middle class suggests he is prepared to live in a society like the two-bit oligarchs in third-world countries hiding behind locked gates and armed guards and waiting for the volcano to erupt again and put a new set of oligarchs is power.
"Other than maintaining low taxes, Conard’s main economic prescription is for people to read, write, and think less. 'Many liberal-arts majors choose selfish solipsism ... They study literature and art history rather than computer programming and engineering.'"

This passage is unclear. You apparently believe that programmers and engineers "think less" than liberal arts majors, and that is unjustified, though I can buy that they generally read and write less. You further confuse the issue by equating programmers and engineers to "MBAs." Though the combination is not impossible, I don't know any programmers or engineers who also have a Masters in business administration. It's not something they usually pursue.

While you pillory Conard for having a bias against the liberal arts, it seems to me you have the opposite bias, against the sciences, engineering, and perhaps MBAs.

Thomas Sowell has made the same observation that Conard has re. what most students choose to study in college, but he approached it differently. He didn't accost the people, but rather lamented that most U.S. students are not pursuing math, science, or engineering, but rather the liberal arts, which, as Conard says, does not generally lead to high-value, high paid careers. Sowell further observed that the same thing happened in Europe as has been happening in the U.S.: In the 19th century, many of those who could, went into the sciences and engineering, and produced Europe's Industrial Revolution. In the 20th century their descendants chose not to "get their hands dirty," and went into the liberal arts, which led to economic decline, and social/political instability. There are consequences to these choices, which is probably the reason Conard stressed it so much, though from the way you describe this, it seems he protests too much.

Other than this, I agree with your criticism of Conard's analysis. My read of your analysis of him is he seems to endorse socialism, with the government manipulating the market in a big way in an effort to achieve desirable outcomes. There's a good reason companies are holding on to their cash, and we ought to listen to it. I think this is more of an issue of political philosophy--one that Conard is espousing. It's in line with what the government is already doing, and we should take that as a cue as to the approach's prospects for success.