Conard’s first argument rests on an important point—that it is necessary to distinguish the financial system from the “real economy”—as well as financial regulation from other areas of the law. The financial crisis and the ensuing recession were not caused by low taxes, deregulation in other sectors of the economy, or other pro-market trends such as the collapse of labor unions. As Conard points out, American productivity increased rapidly from the ’80s to the ’00s—faster than in Europe and Japan—and a case can be made that this was at least partly the result of the American system of low taxation and light regulation—and not of technological advances such as the commercialization of the Internet, which took place in other countries that did not enjoy such robust growth. Nor did the trade deficit and the high rates of consumer debt detract from the economic accomplishments of the era. The trade deficit reflected the superiority of the American economy: foreigners did not buy American goods because they preferred to make profits by buying American investment assets. Meanwhile, Americans could be employed in more productive occupations because low-skill manufacturing jobs were outsourced to foreign countries where people make 75 cents per hour to produce goods for American consumption. The relatively low rate of income growth for lower-income workers since the 1980s reflected globalization, immigration, and technological change—not low taxes and deregulation.

Conard further argues that low taxation on the rich largely accounts for economic growth. Only the rich can spare the capital to make the long-term, risky investments that are essential to economic growth. When a rich person invests, most of the social value of the investment is enjoyed by the non-rich. Mark Zuckerberg made billions off Facebook, but the social value of Facebook to users is far higher. By contrast, the middle class and the poor use their wealth to buy goods, which generates fewer benefits for other people. High marginal tax rates that take from Zuckerberg and give to you and me will deter the Zuckerbergs of the future from making investments that will benefit us far more than the wealth transfer will. (Assuming that you and I consume the transfer we receive rather than invest it—but Conard also thinks that even if we invest, we will do a bad job, because, unlike the rich, we have not proven that we are any good at picking winners.)

But while Conard is right to distinguish taxation from financial regulation—and to emphasize that they serve different functions and respond to different problems—he will not persuade supporters of progressive taxation to abandon their position. The problem with his argument is that although he is correct that at some point high taxes will stifle economic growth, no one knows where that point lies. Sophisticated recent work by economists suggests that marginal rates over 50 percent would not hamper growth. Conard labors hard to defend his view that investment, which is necessary to economic growth, is highly sensitive to much lower levels of taxation, but the empirical evidence is ambiguous. Someone like Zuckerberg may act the same regardless of whether his return is $10 billion or $10 million. After all, what is Zuckerberg going to do with all that money, which he cannot possibly spend on houses and cars? Conard ends up relying heavily on his theory that people are motivated by status rather than income, and so they will work harder for more income because the marginal dollar will buy more status (“I am richer than you”) even if it will not buy new meaningful consumption opportunities (one can own only so many houses and cars).

Conard’s theory depends on rich people endlessly reinvesting their profits in new investments in a kind of joyless treadmill of capital-slavery. If they manage to consume their returns, then they benefit the economy no more than the non-rich. Indeed, Conard goes so far as to criticize rich people for giving away their money to charities when, according to Conard, they should use it for further long-term equity investments. Conard makes a good point that much philanthropic giving generates little social gain. Many rich people do not think very carefully when they give away their money—after all, they are buying status, not trying to maximize social wealth. But Conard does not realize that his criticism of the generosity of the rich contradicts his explanation for why tax rates on the rich should be low. The same factor that causes rich people to throw away their money on worthless philanthropic activities—that the value to them of the billionth dollar is zero, so one might as well give it away—will also prevent rich people from devoting the necessary time and effort to ensure that the marginal dollar is intelligently invested.