January 23, 2019


John Bogle, the founder of The Vanguard Group who died earlier this month at age 89, got rich by giving his mutual fund customers a better deal.

The obituaries seem to have missed that point, dwelling instead on the theory that if only Bogle had chosen to rip off his customers, he could have been even richer. That claim is highly speculative, and based on a fundamental misperception: a view of capitalism as a racket rather than as a system in which the incentives of entrepreneurs and customers sometimes align with results that are spectacularly rewarding for both.

The tone was set with a New York Times obituary. “Vanguard managed its indexed mutual funds at cost, charging investors fees that were far lower than those of virtually all of its rivals,” the Times wrote. “Vanguard’s consistent growth produced riches for Mr. Bogle, but not to the extent that another ownership structure might have done. For example, Edward C. Johnson III, the chairman of Fidelity Investments, has a net worth of $7.4 billion, according to Forbes. Mr. Bogle’s net worth was generally estimated at $80 million last year.”

In case anyone missed the point, the lead headline in Friday’s Times business section read “Jack Bogle was no billionaire.” That ran over an article crediting Bogle with “giving up his chance at great wealth by eschewing ownership of the company,” and describing Bogle’s $80 million as “small change by the standards of money management.”

“Instead of making billions, helping millions,” was the Times inside headline. An accompanying Times article described Bogle as someone “who didn’t care about his own bottom line.”

Concurrently though, media darling Alexandria Ocasio-Cortez’s policy adviser Dan Riffle “believes billionaires are immoral even if they’re good people,” tweeting, “Important point here. Bill Gates’ money hoarding makes him greedy, but maybe he goes 6/6 on the other deadly sins and, on balance, is a good person. Still, he’s a policy failure. The acquisition of that much wealth has bad consequences. A moral society needs guardrails against it.”

With Oceania now being at war with Eastasia, I eagerly await the Gray Lady’s denunciation of Times savior Carlos Slim.

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