Sunday’s New York Times Magazine contained a controversial article about a former partner of Mitt Romney’s at Bain Capital named Edward Conrad. Sounding a bit like the libertarian novelist Ayn Rand, Conrad argues, forcefully, that we are all better off because of rich people.
Rich people, Conrad says, do most of the saving and investing. They provide the capital that creates new businesses and industries, finances inventions and discoveries, and are willing to take many risks and lose a lot of money for every one that pays off spectacularly. If the rich didn’t do these things, we would all be worse off.
Conrad concentrates on rich people as investors. But the wealthy also provide enormous benefits as consumers. Think of all the inventions of recent years that were enormously expensive when the first ones came on the market: personal computers, high definition televisions, cellular telephones, tablets, and so many others.
I still remember the first time I ever saw a mobile phone back in the 1980s. My friend Wayne Valis, a lobbyist, had one. It was the size of a car battery and had to be carried with a strap over his shoulder because it was so bulky and heavy. I don’t think it was even a cellular phone, but a radio telephone. It undoubtedly cost several thousand dollars at the time, probably equivalent to about $10,000 today. Nevertheless, it was extraordinarily valuable to Wayne in his work to have instant contact with his office and clients back in the days of beepers and phone booths.
Today, of course, almost everyone has a cell phone. Basic ones with prepaid service cost less than $20. They are a Godsend to people in developing countries that would never have phone service if the only option was a land line. Fancy cell phones are like mini-computers with a staggering array of capabilities.
The point is that unless well-to-do people like my friend Wayne weren’t willing to pay exorbitant prices for early, primitive mobile phones, we wouldn’t have cheap throw-away phones today. People like him effectively underwrote the enormous cost of creating the first cell phone – not just the research and development and industrial capability of manufacturing one, but the enormous infrastructure of cell phone towers so that it can be used.