On "Fareed Zakaria GPS" this week: the global economy, China, the war on terror and a controversial defense of the 1%.
Fareed kicks things off with his Take: How Americans may have won the war on terror, but they don’t look like a people who have won a war.
The Financial Time's Martin Wolf and TIME’s Rana Foroohar help make sense of the U.S. jobs numbers, the recession in Europe and more about the global economy.
Then, exclusive to GPS, an unlikely defense of the 1%. Former Bain Capital Managing Director Ed Conard argues in a new book, “Unintended Consequences," that inequality is not necessarily bad. The rise of the 1% is good for the 99%, he argues.
Finally, the great historian Robert Caro on the years of President Lyndon Johnson, why he mattered and what we have to learn from him now.
All this on GPS Sunday at 10 a.m. and 1 p.m. Eastern. Excerpts below:
Conard defends the 1%:
ZAKARIA: Leaving aside the economics, do you see how the politics or the tone of the book is going to rub people the wrong way? Because it sounds like sometimes you’re saying, look, just let the 1 percent get richer and richer. They’re making investments that good for everybody, and it’s you middle class folk who actually are not pulling your weight in the economy.
CONARD: Well, "The New York Times" article is going to get everybody antagonized, which I suppose is great, because it will sell more books. It hardly says that the middle class is not pulling their weight. If anything, it says that the most talented people are not pulling their weight, because they need to take more risk and find more innovation to accelerate the growth in the economy.
ZAKARIA: How do you do that?
CONARD: I think one of the things you do is you don’t reduce the payoffs for risk taking. How do you get people to take the risk that 99 percent of the time what they’re trying to do is going to get pruned away, and they’ll be set back as a result? And that’s what we want to happen in our economy because the opportunity for innovation has changed dramatically.
We’re not exploiting the value of capitalizing on the value of cars today.
We are 13 guys and a computer can create enormous value. So when it comes to what happens to the distribution of income in the economy, we need a million Steve Jobs.
You know, getting one more of them or two more of them or three more of them in the short run causes some income inequality before we get enough of them where it changes course and goes to the other direction, I would say what’s the priority, getting the economy to grow faster? Getting more innovation to pump up employment and wages? Or dampening down income inequality?
I’d take the first over the second. That would be my priority and I think beneficial to the middle class and the working poor.
Conard on the 1%:
ZAKARIA: Explain to me – Why is the rise of the 1% good for the economy?
CONARD: Sure. It’s not really the central focus of the book, the book is about how to get the economy to grow faster, that growth in the long run is powered by innovation and risk taking, and part of what the book argues is that the payoffs for risking are essential to getting more risk taking and that’s good for the middle class and the working poor
ZAKARIA: So you want people to invest, take risks with their capital so that you spur innovation?
CONARD: Yes, although I think the economy has changed significantly from where it was in the 1950s, when capital investment to build an automotive industry and a highway system were essential growth to once a day where 13 guys on a computer can create Instagram and a billion dollars of value in two years.
It’s now much more powered by risk taking than it is by the funding of investment.
Conard on Romney:
ZAKARIA: What do you think of Mitt Romney as an executive?
CONARD: I thought he was an outstanding executive.
He’s everything that you could expect - and it’s hard to watch the cartoon portrayed on the TV. He’s brilliant. He has a deep understanding of how business works. He’s great at consensus building.
He’s decisive when he needs to be decisive. He’s surrounded himself with the most capable people. He encouraged those people to challenge him and to challenge each other so that there was enormous preparation when you went into the room to talk to him, and he had the highest level of integrity.
Bain Capital statement: "Ed Conard retired from Bain Capital in 2007 as one of over 50 managing directors, and he has no present role with our firm. The views he expresses in his book are his own. The personal views of one former employee do not reflect the views of our 900 Bain Capital team members who work every day to grow companies and build businesses. For example, Bain Capital and our employees are proud of our commitment to the communities in which they live and work, and they support hundreds of charities and serve on over 75 charitable boards."
There is a fine distinction between a true pioneer/visionary/innovator like Steve Jobs/Bill Gates and a financial intermediary like a private equity firm. The pioneer businessmen are the creators of great enterprises, while the later facilitate efficient asset allocation, which now-a-days is happening at a very high price. Let's not confuse the job creation done by innovative and creative folks like Jobs/Gates/Ford/Rockefellars with financia intermediaries whose actions sometimes result in job creation but more often in downsizing. Restoration of a firm's profitability is the immediate motive of any private equity firm, job creation that comes from eventual growth is a consequence. For that matter, Steve Jobs also started a company, not to employ thousands of people, but to build a product that will change the way things are done, improve productivity and in the process gain name and fame. No human endeavour is devoid of selfishness. Some businessman are philanthropic but so are some private equity investors...
All businesses need private equity at some point – venture capital or buy out. The arguments above are like who is important – the land owner or the share cropper? Both are important and are essential ingredients to a successful economy...
Where have we become where Conard believes that people even a little like Steve Jobs won't be incentivized by being left with 10s of millions after taxes or if more like Jobs, 100s of millions, or if another Jobs, 10s of billions, not that Jobs even cared about the money.
All about Steve Jobs?
The Global Public Square is where you can make sense of the world every day with insights and explanations from CNN's Fareed Zakaria, leading journalists at CNN, and other international thinkers. Join GPS editor Jason Miks and get informed about global issues, exposed to unique stories, and engaged with diverse and original perspectives.
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Obama as a foreign policy president?
Why Snowden should stand trial in U.S.
Hillary Clinton's truly hard choice
China's trapped transition
Obama should rethink Syria strategy
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