In Defence of Howard Hughes

I got to be kidding me. For the kids, Howard Hughes was the very model of a rich twit. His father inmproved a drilling bit for oil wells making HH very very rich. He mainly horded his money. He never had (or never recognized) any children. He became reclusive, crazy (not a formal diagnosis) and pathetic.

It is relatively easy to defend people who obtain huge amounts of money by arguing that they made a contribution to total wealth and kept only some of it. This applies to people who just buy and sell financial assets who may make money while driving asset prices towards their fundamental values. HH basically inherited his (in the form of a firm which generated a high stream of profits given its book value).

It is easy to defend rich people who give money away while they are alive. HH gave money only in his will and, I have no doubt, only because he couldn't take it with him.

Conflict of interest disclosure: Due to absurdly strict NIH regulations on conflict of interest my father is no longer a member of the medical advisory board of the Howard Hughes medical foundation (no I can't see any possible conflict of interest between the HH and the NIH either).

I would defend HH even if he had left no will setting up the medical foundation. I think that the foundation spends money more wisely than the US government (war in Iraq anyone ?) but my argument would work if HH left neither will nor close relations and the money went to the US treasury.

I think rich people who pile up money, spend little of it and leave neither relatives nor wills are socially useful. Since they can't take their wealth with them, their existence makes us richer than we think we are. If they didn't produce the wealth, they don't make us richer but they create the illusion of poverty by making the rest of the world underestimate its true wealth.

Thus HH's wealth had an economic role roughly opposite to that of the national debt. Government bonds are not net wealth, but they create the illusion of wealth and distort consumption/savings decisions by tricking people into consuming more than they would if they understood. HH without a will would do the opposite. As I hate deficit spending (mainly because I hate Bush and disapprove of the late Ronald Reagan) I must conclude that, even without the strangely sane decision to set up a medical foundataion, HH made a useful contribution by hoarding and hiding wealth and balancing a tiny fraction of the grand illusion of wealth which is the national debt.

Now HH also consumed an absurdly large amount for a single person (which was an absurdly small amount compared to his wealth). Almost all of this consumption was, in my view, approximately pure waste. However I would guess that the benefit from correcting a tiny fraction of the distortion to consumption savings choices was much larger than the cost of his extra mansion or two.

Now rich people with rich spoiled offspring who keep the wealth in the family indefinitely are another matter. Still, I'd say rich people who are totally selfish (and childless) and can't take it with them are inadvertant stewards of the nations wealth and that they do a less awful job of stewardship than, say G. W. Bush.