Humanity's Ancient Grudge Against Prosperity

Plus: Ben Franklin, an Israeli hero, and a bearded baby.

Nov 12, 2023

This week, discussing the Federal Trade Commission’s grudge against private equity, this author veered into territory usually reserved for The Thoughtful Spot.

At InsideSources:

[FTC Chair Lina] Khan’s skepticism of private equity harkens to an old sensibility. Human beings seem by nature disposed to mistrust such financial industries as banking and investment. Without an immediately apparent, tangible product, economic non-sophisticates (i.e., most people, including many economists) disregard the critical economic contributions these industries make. Such thinking, which has remained prevalent for millennia, sees finance as fat cats extracting huge profits from their “victims” — without contributing anything productive.
But this viewpoint badly misunderstands markets. It stumbles blindly past the stratospheric economic growth that stable banking systems and readily available investment funds make possible. It further overlooks that financial institutions earn the profits they generate by assuming vast risks and performing many other necessary (though sometimes difficult to grasp) services.
Without these services, the industry would lose much of the capital it relies on; razing the financial sector would not produce some magical, unending supply of free and available money. Capital is, after all, a finite resource with many uses, and economic actors must compete for it.
Private equity invests prolifically in the American economy. The sector chipped in $4.5 trillion from 2018 to 2022. In 2022, it created $1.7 trillion, or 6.5 percent of U.S. gross domestic product. What’s more, almost 90 percent of public pensions involve private-equity funds, which generally provide highly profitable and stable returns.

Read the full piece here.

Some Wisdom

In the stuffy Philly summer of 1787, the Constitution sprung from the collective mind of an ideologically and geographically diverse convention. Its roughest draft — James Madison’s Virginia Plan — had undergone trimmings, tweaks, additions, and, in certain aspects, complete transformations. The final document morphed so far from the aforementioned Virginian’s personal ideal that, for a time after the convention, he privately despaired for his country.

In short, collaboration, negotiation, and compromise among a large group produced the greatest political document ever penned. No single individual, not even the Great Little Madison, could single-handedly have dreamed up something as good. (This is distinctly Hayekian and a direct rebuke to the collectivist taste for strongman-ism; but leave that for another “news”letter.)

Ben Franklin concluded the convention with these words (among others):

For when you assemble a number of men to have the advantage of their joint wisdom, you inevitably assemble with those men, all their prejudices, their passions, their errors of opinion, their local interests, and their selfish views. From such an assembly can a perfect production be expected? It therefore astonishes me, Sir, to find this system approaching so near to perfection as it does; and I think it will astonish our enemies, who are waiting with confidence to hear that our councils are confounded like those of the Builders of Babel; and that our States are on the point of separation, only to meet hereafter for the purpose of cutting one another's throats. Thus I consent, Sir, to this Constitution because I expect no better, and because I am not sure, that it is not the best.

A republic, indeed — if we can keep it.

Franklin truly had a way with words, as he had with French women.

Some Beauty

Human nature has many sides and complexities. Many are good but many others quite vicious and ugly.

This author disputes claims that Hamas’s recent crimes are “sub-human” or some such. They are all too human. In fact, historically speaking, rape, murder, torture, and general rampage are rote in warfare. Throughout time, soldiers and civilians have seen them as expected, unremarkable, normative. They’ve been established perks of otherwise thankless military service. Moreover, in many times and places, warring constituted the primary purpose and activity of the state. See the Aztecs, the Mongols, the Red Army — hell, see Putin’s army in Ukraine today and many other enormity-filled conflicts worldwide.

But neither should one ignore humanity’s wondrous and beautiful capacity for courage, kindness, nobility, selflessness, and goodness.

22-year-old Aner Shapira, an Israeli murdered by Hamas on October 7, displayed all of these beautiful traits. Juxtaposed against the evil, the good is all the more lovely and precious.

From a post by Aviva Klompas (who has done invaluable work in recent weeks):

Aner was at the desert music festival when Hamas attacked. He took cover in a shelter with more than 20 others and told the terrified group that he was a soldier and instructed them to lie on the ground.
Aner stood at the front of the shelter, catching grenades thrown by Hamas terrorists and throwing them back out again. The last one blew up in his hand, killing him.
His father said: “Aner was a person without ammunition, without a uniform, without orders and he understood that he had to offer a response and he put himself as the response.”

He died a better man than this author can ever hope to be.

May his memory, like his courage, be a blessing.