McNabb Versus Krugman

http://www.futureofcapitalism.com/2010/09/mcnabb-versus-krugman

USA Today has an interview with/profile of Bill McNabb, CEO of Vanguard, which has $1.3 trillion in assets under management. It sure sounds as if Mr. McNabb doesn't buy Paul Krugman's Keynesian argument that tax cuts shouldn't go to the "rich" because they would just save the money rather than spend it. From the article:

McNabb argues that increasing savings will benefit the economy far more than short-term efforts to boost economic growth. Instead of trying to encourage consumer spending, McNabb says, "We should be talking about savings rates and getting people to live within their means."

"The downside of oversaving is tiny compared to the downside of undersaving," he says. "Is it easy? No. Is it possible or realistic? Yes."

This is a self-serving argument by Mr. McNabb, because his company makes money by earning fees that are based on the amount people save or invest with his firm. But just because he is making a self-serving argument doesn't necessarily mean he is incorrect about the basic economic policy.

USA Today gives Mr. McNabb a free pass by not pressing him in print about his failure to disclose his executive compensation to the fund shareholders he claims to work for, but the article is still worth a look if, like I do, you have money at Vanguard.

Among other tidbits: "McNabb gets up most days at 5 a.m. and arrives at the office by 5:45." I think someone else has observed already that it's rare to see a chief-executive profile that reports the person rolls out of bed most mornings around 11 and arrives at the office by noon. The early-rise anecdote is a staple of the genre. It's also rarely coupled with any information about a bedtime. Does the guy go to sleep at 9 p.m. and get eight hours of sleep? Or is he one of those rare folk who can get by consistently on little sleep?

by Ira Stoll  |  Sep 27, 2010 at 9:59 am Related Topics:  Capital Markets Regulation, Paul Krugman, Press receive the latest by email: subscribe to the free futureofcapitalism.com mailing list