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Home Publications Blogs Beat the Press Collateral Damage: Thoughts from Mitt Romney's Partner In Crime

Collateral Damage: Thoughts from Mitt Romney's Partner In Crime

Wednesday, 02 May 2012 21:19

Adam Davidson has a piece in the Sunday NYT magazine on Mitt Romney's former business partner, Edward Conard and his new book, Unintended Consequences. At one point, the piece cites me as saying that for each dollar earned by investors (corporations), the rest of society gets five dollars.

This should not sound surprising. This is simply the division of national income between capital and labor. The after-tax capital share of corporate income is roughly one-sixth of total income. This means that if GDP increases by $1 billion, then capital will typically get around $160 million, with the rest going to labor and corporate taxes.

Note that this does not mean that investors are responsible for this $1 billion increase in output. Their actions contributed to the growth of output in the same way as did the actions of workers and the government. The misleading part of the picture is Conard's implication that if not for the heroic investor, none of this wealth would have been created.

In standard economic theory if one investor had not put money to use, then another one would have. The difference in output would have been trivial.

(I have a review of Conard's book on Huffington Post.)

[Thanks to Arthur Munisteri for spelling correction.]

Comments (4)Add Comment
written by Arthur Munisteri, May 03, 2012 12:13
Conard's name is misspelled throughout. Do a search & replace. You won't gain credibility by making such a basic mistake. Your shorter critique on "Beat the Press" has the same error -- as do other web sites. Does no one pay attention any more? I figured that you'd have dozens of corrections in the first half hour after posting.
written by joe, May 03, 2012 5:34
The book makes one think of the word canard so the name wound up Conard rather than Conrad.

Canard -
a : a false or unfounded report or story; especially : a fabricated report b : a groundless rumor or belief
written by JSeydl, May 03, 2012 11:40
Conard is either being dishonest with his readers here or has some serious cognitive problems.

Priceless quote from the Huffpo piece.
it's the content not the spelling
written by mel in oregon, May 03, 2012 3:27
who cares if conard's name is spelled wrong? the point baker makes on this blog & his column is that conard & romney made their money through legal shenanigans.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.