A British economics professor is debunking again; this time, her target is the conventional wisdom that so-called wealth creators deserve to accumulate massive riches.
In the consequential battle of perception between the makers and the takers, Mazzucato (Economics of Innovation and Public Value/Univ. Coll. London; The Entrepreneurial State: Debunking Public vs. Private Sector Myths, 2015) sides with the actual makers, those who struggle in an economy tilted in favor of the ultrawealthy. The author mixes easily accessible lay language with technical jargon as she constructs her case that investment bankers, multinational pharmaceutical companies, and other billion-dollar enterprises—as well as small tech startups—actually create little of societal value but reap outsized benefits. Meanwhile, laborers continue to be shortchanged. The result is widespread income inequality. As Mazzucato builds her argument, she expresses specific incredulity about the banking sector’s self-serving statements about wealth creation. As recently as the 1970s, the author maintains, economists viewed financial institutions as merely transferring existing wealth rather than creating new wealth. The shift in emphasis caught on quickly, and suddenly, bankers were perceived as wealth creators. “If we cannot differentiate value creation from value extraction,” writes the author, “it becomes nearly impossible to reward the former over the latter.” She wants to convince those in power that so-called value-creating entities should be viewed as value-extracting entities and thus regulated accordingly. When Mazzucato cites specific corporations and individuals feeding at the trough of income inequality, readers will be able to see through the abstractions and grasp the theories dividing economists. She is especially eloquent when commenting on arrogant tech-giant billionaires such as Peter Thiel, who claims that his wealth accumulation occurred in spite of, rather than because of, government presence. Mazzucato characterizes the statements of Thiel and his ilk as “entrepreneurs good, government bad.” Actually, the author argues, national, state, and local government agencies offer countless incentives to corporate employers.
An accessible academic treatise worth understanding.