Edward Conard spent 14 years as a partner at Bain Capital, the most scrutinized company in America. But these days, he’s in the news for another reason. As the author of “Unintended Consequences,” Conard has challenged the conventional wisdom about the U.S. economy and outlined ideas that have resulted in scorn from the New York Times and Jon Stewart.
Conard visited Heritage this week to share his perspective at The Bloggers Briefing. He also sat down for an interview to talk about the book, media coverage of Bain Capital and why President Obama has such a poor economic record.
While working for Bain Capital, Conard headed the firm’s New York office and oversaw the acquisition of large industrial companies. He also worked alongside Mitt Romney. So as the Washington Post and other media outlets examine Bain Capital, Conard sees the coverage not just as a critique of private equity but American business as well.
“These are really attacks on business,” he said. “They pit employees against employers. It’s kind of old-fashioned union organizing in a sense. And they want to pretend that managers only work for investors, Bain Capital only works for investors. But they don’t realize we’re all working for the customer, first and foremost.”
He noted the vast majority of Bain Capital’s investments were successful, growing two-and-a-half times faster than the S&P 500. Even though those investments added about $100 billion of revenue relative to the S&P 500, Bain is portrayed as a “vampire” and “job destroyer.”
On Obama’s poor economic record — the unemployment rate stands at 8.2 percent — Conard attributes a “profound misunderstanding of what drives growth of the economy and what drives employment in the economy.” He continued:
I think that by misinterpreting the financial crisis for political gain and turning employees against employers for political gain, I think he’s done a great disservice to the economy. I don’t think he’s fixed the problems that have to be fixed, and then on top of that he’s loaded an enormous amount of regulation on top, which increases uncertainty and only exacerbates an already a difficult problem of trying to get our economy to grow in the aftermath of the financial crisis. … It’s hard to rate that anything but poor.
Despite the economic challenges facing America, Conard remains optimistic about the future of the country. He said workers in the United States are much more productive than their counterparts around the globe. That’s put tens of millions people to work.
“No other high-wage economy has done more for the middle class and working poor than this economy,” he said.
Critics have called Conard a defender of inequality. He responds by pointing to the absurdity of their arguments, which are often grounded in anything but economics. He said the likes of Joseph Stiglitz and Timothy Noah simply don’t see that the economy has shifted. His book is subtitled, “Why Everything You’ve Been Told About the Economy Is Wrong.”
Conard calls it an innovation-based, risk-oriented, individual, entrepreneurial economy. He pointed to the 13 people who created Instagram and sold it for $1 billion in just two years.
“Innovation is like looking for pieces in a jigsaw puzzle. You have to find a lot of pieces that don’t match to find the one or two pieces that match,” he explained. “And you have to motivate people to take almost certain failure to get a small amount of success, which has driven our economy forward. And if they don’t see high payoffs for success, it’s unlikely they will take the risk.”