When capital flees a city, ask who drove it out

National Review reports that Ken Griffin has made the largest private gift to American higher education in history, and he has given it to Miami. He did not give it to Chicago, where he built his fortune and where, one might have supposed, the accumulated goodwill of a life's work would naturally settle. The proximate cause, as reported, is the political climate he encountered there — a climate in which elected officials found it more rewarding to denounce large fortunes than to consider what conditions produced them or what conditions might retain them.

I want to be careful here. Wealth is not virtue, and the mere accumulation of a great sum is no guarantee that its holder has served the public well. In The Wealth of Nations I was at pains to note that merchants, left to their own devices, will as readily conspire to restrain competition as to extend it. The large fortune deserves scrutiny, not reverence. But scrutiny and denunciation are different instruments, and the statesman who cannot tell them apart will find, in time, that he has driven away both the honest investor and the dishonest one, leaving his citizens to bear the cost.

What I called the mercantile system was precisely this error in reverse: the sovereign courting the merchant class, granting it monopolies and exemptions, taxing the consumer to protect the producer. The progressive variant described by National Review makes the mirror mistake — performing hostility to capital as a substitute for governing well — but the structural consequence is similar. In both cases, the public interest is sacrificed: in one, to flatter the merchant; in the other, to flatter the crowd. Neither is political economy. Both are theater at the public's expense.

The deeper question is institutional. Capital — and, more importantly, the skilled labor that accompanies it — moves toward places where contracts are enforced, property is secure, public infrastructure is maintained, and the rules of the game are legible and stable. Miami has, by inference rather than my own recollection, offered some combination of these conditions. Chicago's political class has apparently offered something else: uncertainty about taxation, rhetoric that treats investment as predation, and a governing coalition more interested in distributional conflict than in the productive base that funds any distribution at all. I do not say this to endorse any party. I say it because it follows from first principles that I would have held in any century.

The gift to higher education is itself worth a moment's attention. In The Wealth of Nations I argued that the sovereign — by which I meant any governing authority — has a duty to fund basic education for the population at large, because the division of labor, for all its productivity, narrows the mind of the workman confined to a single repetitive task. Private philanthropy directed at elite universities is a different thing entirely; it does not substitute for that public obligation. But it is, at minimum, a public good of some kind — research, scholarship, trained minds — and a city that has made itself inhospitable to such gifts has impoverished itself twice over.

The institutional lesson, then, is this: if you wish to govern a city well, ask not how to punish those who have accumulated capital, but how to build the framework — honest courts, reliable infrastructure, legible regulation, genuine public education — within which accumulation serves the many rather than only the few. That framework is what makes markets honest. Without it, you will find yourself denouncing the very departures you have caused.