I don’t really want to get into the weeds of things with Marcy Wheeler on private equity, so let me just say that this view she sarcastically attributes to me is the reverse of the view I hold:
Capitalism is all about creative destruction, you see, so we must celebrate that creative destruction.
What I think is that in a market economy creative destruction happens, and that has terrible consequences for the lives of people who are adversely effected by circumstances beyond their control. My mother was a graphic designer in the days when copy and paste were not metaphors. The development of desktop publishing software radically degraded the value of the human capital she’d acquired over the first 30+ years of her life. That kind of thing happens to people all the time. Perfectly hardworking and consciencious people are buffeted by shocks beyond their control. New technologies can harm your earnings power in unexpected ways. Policy developments in other countries or jurisdictions (what happens to Las Vegas if California broadly legalizes casino gambling) can harm your earnings power in unexpected ways. Weird secondary shocks hit you—the decline of Kodak has been bad for all kinds of people who never worked there, but simply participated in a local economy of which Kodak was a key lynchpin—in unexpected ways. It’s not feasible to create an environment in which these shocks never happen, but it’s crucial both ethically and pragmatically to try to create an environment in which these shocks are endurable. That means we need:
a) Fiscal and monetary policy to stabilize the macroeconomy to ensure that people who lose jobs can get new ones, even if the full value of their previous human capital can’t always be recouped, and
b) Provision of social services so that people and their families can gain access to quality medical care, education, transportation, public safety, and a dignified retirement even if their incomes fluctuate in undesirable ways.
The message of creative destruction, when you understand it, is that the idea that “a rising tide lifts all boats” is a cruel lie. Growth is broadly beneficial over the long-term but individual human beings live out their lives on finite time scales and many individual people suffer from even generally positive economic trends.
