Wednesday, August 15, 2007

Financial Entrepreneurs. Are They Evildoers?

Robert Reich was probably the Senior Assistant Blogger's least favorite member of the Clinton cabinet. Still, it was fun to hear him rant about the private-equity moguls and the hedgies on Marketplace this morning:
America is the greatest entrepreneurial nation in the world. But there are really two kinds of entrepreneurs here — product entrepreneurs and financial entrepreneurs — and only the first kind really builds the economy.

Product entrepreneurs find new ways of satisfying customers. Financial entrepreneurs find new ways of. . . making money.

Thirty years ago, finance was the handmaiden of American industry. Now industry is run by finance and we're paying the price.

1 comment:

Jim Gust said...

Reich makes some sound points. Although he may exaggerate the evils of hedge funds, I also wonder about the policy reasons for treating manager compensation as capital gain. Hedge funds have been happy to pocket enormous gains in recent years, justified by their risk taking. Now that the risks are coming home to roost, they need to absorb them and not be looking for taxpayer bailouts.