Friday, April 13, 2012

In Praise of Punctuality (... or Why I'm Not an Optimist)

We'll, I can't say I didn't ask for it. When you title your book The Coming Prosperity, you can expect to be called an "optimist" at minimum--even "Dr. Boom" or the "Permabull."
You also can't be surprised at a bit of reflexive skepticism, as evidenced by this announcement of a talk I'm giving on April 18 at Artisphere in Arlington, VA: "With a title like that, one should expect some 'happy talk...'"
Fine. But, just for the record, I don't see my book as being optimistic, nor do I regard myself personally as "an optimist." Why not?

Monday, April 2, 2012

Reconciling The Coming Prosperity with the Great Stagnation: Excerpt from my Interview with Richard Florida

Richard Florida and I have been friends, and at times colleagues, since the late 1990s. He was insightful and articulate back then, as he is now. Back when Richard first started working on the "three Ts"--talent, technology, and tolerance--he was just about the only economist seriously looking at the role of creative individuals in driving the development of regions and nations. That's changed ... though, as the continued fixation with industrial policy and clusters indicates, the technocratic tendency is still to relegate actual human beings to the footnotes.
Richard generously offered to write a blurb for The Coming Prosperity. A couple of weeks ago he interviewed me about the book, and posted the exchange to Atlantic CitiesRichard's questions were great. Here's an except that gave me that chance to reconcile my view of the next quarter century with the seemingly opposite view offered by my George Mason University colleague Tyler Cowen in his Spring 2011 bestseller, The Great Stagnation:
Why specifically do you disagree with economists and others who believe that we are entering an age of prolonged stagnation and decline?

Sunday, April 1, 2012

Growthology: The Neutron Book?

On Friday I posted a review of Acemoglu and Robinson's new book, Why Nations Fail to the Kauffman Foundation's Growthology blog:

Growthology: The Neutron Book?: "The advertised central thesis of the book (in contrast with what I think is the core idea in the book) is introduced a bit later, on page 42, when the authors state:
Economic institutions shape economic incentives… It is the political process that determines what economic institutions people live under, and it is the political institutions that determine how this process works… As institutions influence behavior and incentives in real life, they forge the success and failure of nations.
Institutions shape behavior, so institutions matter. Politics shapes institutions, so politics matters.

From that point forward, Why Nations Fail alternates awkwardly between lively storytelling and frequently unpersuasive attempts to shoehorn narrative nuance into conformity with The Point of the Book.

... As it stands, Why Nations Fail comes close to being a neutron book. It describes wondrous worlds full of clever people after then, after the detonation of The Point of the Book, leaves only the buildings standing... The people: gone."

Bottom line: Great (narrative) content, weak (conceptual) packaging.

Thursday, February 16, 2012

Taking the Scare out of Scarcity

Review of Peter Diamandis and Steven Kotler, Abundance: The Future is Better than You Think, New York: Free Press, 2012.

The human community occupies a planet of finite resources. As population grows, people and nations will necessarily compete with increasing ferocity. Scarcity-driven crises will provoke dramatic oscillations in human welfare, leading almost inevitably to a collapse of civilization.

Got that?

Welcome to the world of the Reverend Thomas Robert Malthus, author of An Essay on the Principle of Population. The core thesis of Malthus’s 1798 masterwork is neatly summarized in a line early in the book: “The power of population is indefinitely greater than the power in the earth to produce subsistence for man.” 

The logic behind the argument advanced by Malthus was compelling. For over two centuries  An Essay on the Principle of Population has not only been studied, but has been endlessly copied and revived in various forms. Early twentieth century eugenicists employed Malthusian arguments to justify inhuman controls on the reproductive freedoms of other people ... and worse. Malthusian fears came back in a widely read book by Paul and Anne Ehrlich published in 1968 and titled The Population Bomb; the Ehrlich's message was updated as recently as 2010 in a lead essay in Foreign Affairs titled "The New Population Bomb."  Woven throughout this two-centuries old body of work is a single unifying theme: the reproductive power of people is a paramount problem for society as a whole. Beware the future.

So much for the theory of demographic doom. What of the facts?

Monday, January 30, 2012

Collaborative Advantage

Here's the video from a panel I moderated at the launch event for Global Entrepreneurship Week 2011. The topic of the panel was "Collaborative Advantage: How Diaspora Entrepreneurs Are Creating Connections for Shared Prosperity." The panelists are:

You can decide for yourself after viewing how awesome these folks are. (Hint: Very.)

"Collaborative Advantage" is also the title of chapter 11 of The Coming Prosperity. Here's an excerpt:

Saturday, January 7, 2012

The Coming Prosperity (cover)

In case you were wondering...

Fear Itself

From chapter 13 of The Coming Prosperity (forthcoming from Oxford University Press, March 2012)

Among the items in the back of the hardware store, right next to the lime, is ammonium nitrate. Ammonium nitrate is good as fertilizer; it’s also pretty good for making explosives. In fact, regular old agricultural fertilizer was the operative ingredient for the bomb used in the 4/19 attacks. Doesn't ring a bell? That was the bombing of the Alfred P. Murrah Federal Building on April 19, 1995. It killed 168 people. At the time it was the most severe terrorist attack on US soil.

Of course, the Oklahoma City bombing isn’t forgotten. But it’s not exactly remembered, either. Now, granted, the toll from the attack on the Murrah Building was about 5 percent of the toll from the destruction of
the World Trade Center towers. And the Oklahoma City bombing wasn’t broadcast live on TV, it didn’t involve a pair of national landmarks (I’m including the Pentagon, which as you recall was also attacked on 9/11), and it didn’t result in $30 billion in insured losses.

That said, would we remember the 4/19 attacks in the same way if they had been carried out by a posse of Koran-thumping extremists rather than a couple of homegrown ones? Let’s be honest: despite (or perhaps due to) the fact that domestic groups have perpetrated the overwhelming majority of terrorist attacks in the US, head scarves make more of an impression than baseball caps on the cable news feed. At the end of the day, the story behind the Oklahoma City attacks just didn’t sell—politically or otherwise. Terrorist attacks perpetrated by self-proclaimed ultrapatriots from the Midwest—well, they must be an aberration. The attackers? Dumbed-down Unabombers. No real information there. Just noise.

But how about this, from former Senator Rick Santorum in 2006: “In World War II we fought Nazism and Japanese imperialism. Today, we are fighting against Islamic fascism.” Now that’s more like it. From that eloquent starting point, security screamers can cut and paste the usual language of external menace. Our very way of life is at risk. The line is drawn. The struggle against terrorism is equivalent to World War III. And so forth.

What does any of this have to do with reality? Not much. Comparisons of Islamic fundamentalism to fascism in the 1930s or communism in the 1950s may have sounded good from the podium over the past decade, but they areare almost entirely empty when considered from both economic and historical standpoints. Germany in 1930 was a country with demonstrated capacity as a global economic leader whose steady development had been halted at the start of the twentieth century only when the Treaty of Versailles brought a pointless war to its conclusion through a bankrupting peace. Even Japan, greatly underestimated in the West before it attacked Pearl Harbor, had steadily built its economic foundation and technical capabilities over a period of almost a century by patiently investing and strategically imitating Western techniques. Even in a worst-case scenario (much worse for the countries affected than for us) the countries that might conceivably be susceptible to the sway of Islamic fundamentalist ideologues today do not even have the economic capability of the Soviet Union in the 1950s; they do not compare at all with Germany or Japan of the 1930s.

Of course, innovation and technical change have also created new modes of attack that make small groups potentially threatening today in a way that only an entire nation could have been threatening in the past. But a historical perspective is valuable here, as well. Consider that, worldwide, over sixty million people lost their lives during World War II. Among armed combatants, the United States could count itself lucky in having lost only 290,000 of its sixteen million service members. Such losses are inconceivable today in the context of an attack by a terrorist adversary, touting Islamic fundamentalist ideology or not—even when we consider the truly nightmarish scenario of nuclear attack. Yet even eight decades ago, the democratic institutions, including the decentralized markets, had a remarkable capacity to adapt and respond following World War II. For what reason might we believe that capitalism and democracy are any more fragile today than they were back then? By what measure can any present threat, posed by even the most malicious nonstate adversaries, compare with the combined industrial might demonstrated by the German, Japan, and other Axis powers during World War II, or by the Soviet Bloc during the Cold War? Our respect for the capabilities of foes and our recognition of the reality of potential threats must be matched with an equally realistic appraisal of our society’s resilience and capacity for recovery.

The simple reality is this: terrorists of various types exist, they are dangerous, and they will almost certainly be responsible for further deaths of innocents in the United States and elsewhere in the world in coming decades. But there is basically zero prospect that such attacks will alter the forward trajectory of global history—unless, of course, political leaders dramatically increase their impacts through exaggerated responses.