Book Cover

Modern growth occurred where, and only where, activist government emerged.

# Review

On the Political Compass, I'm almost perfectly centrist, with a slight Right and slight Libertarian lean. I've always had the belief that government should exist only to serve the people by providing necessary functions for the greater collective good, such as upholding the law (human and property rights, security, etc.), building shared infrastructure (roads, internet, etc.), and maintaining efficient markets. I've always thought of the government as a symbiotic function of society; the government consumes resources of the society to provide value, often less than the resources consumed, but the value provided is oftentimes crucial to the effective function of the overall society. The government function thus becomes a balancing act, between the amount of resources required to maintain the government, and the value that the government can deliver to society.

Oftentimes I find that governments have a tendency to balloon in size, whether it's warranted or not, and in the process of growth, the original purpose of the government is obfuscated by the added layers of administrative bureaucracy. I think a government is most effective when it accomplishes its goals with as few resources consumed as possible; in that sense, one can say that I am a proponent of a small but lean government.

I wanted to read this book because it proposes an opinion contrary to mine; the main thesis of the book is that a government is most effective when it's the most active, and it can only be active when it is large.

This book is very well-researched with a plethora of different sources, many of them primary. When I began reading this, I feared that, since this book is written by two politics professors, it'd be overly academic, but I was pleasantly surprised at the authors have included many analogies and anecdotes to illustrate their point, making this book a surprisingly enjoyable read.

The book starts by illustrating the many important functions of government, such as providing collective goods and insurance, reducing negative and encouraging positive spillover effects from markets, protecting consumers and investors from predatory corporations and from themselves, and softening business cycles.

The book then covers the history of development in the US, and the government's role in said history. I liked how the book illustrates many of its points through analogies, such as the differences between the viewpoints of George and Mitt Romney, and between Eisenhower and Clinton, as well as using interesting facts, such as physical population height as a social wellbeing marker of a nation.

The main focus of the first half of the book is on how the government's actions led to the unprecedented growth in the US during the late 19th and most of the 20th century, and how straying away from government intervention has led the US to diminish its prosperity since the late 20th century. The authors cover many topics ranging from rent-seeking by "barons", technological and educational development, and economic mobility. The authors also explain many academic topics, such as the Solow residual and the Flynn effect.

There were many points I agreed on with the authors, in particular with regards to government's support for basic scientific research and education. I firmly believe that governments should dedicate as much resource as possible towards the scientific advancements of a society, in particular in areas of disinterest for corporations, such as the pure sciences; investing in science is investing in the future, thus it should be a major goal for any government. I am also a firm believer in education; I believe that more resources should be allocated towards education and educational institutions, whether it's a high school or a university, should be held accountable for their results. Government should do more to determine objectively what the drivers of educational success are, and schools should be accountable for meeting those benchmarks. Said benchmarks should ideally be determined in an idiosyncratic manner, based on specific situations of a school; predictive techniques such as machine learning can greatly assist in this process. I also firmly believe that government has a duty to ensure that education is obtainable for everyone and they can do so by discontinuing support for educational institutions' activities that are non-value-add for students, such as the bloating of university administration.

There were some things I disagreed with, however. Chiefly among them is the idea that the US can infinitely finance its spendings through debt; I'm probably more in the Ray Dalio school for national debt. I do believe that the US, as a reserve currency country, can probably afford to extend their debt more, but to suggest that the US can partake in unlimited deficit spending, I felt is probably not the right approach to effective governance of a country. I believe that a far more logical approach to improve governance is to instill transparency and accountability in the system and to remove the layers of bureaucracy. I believe that technology can help greatly in both respects.

I also disagree with the characterization of all large enterprises as rent-seeking and all union organization as positive. I believe that the times have changed greatly since the ages of the steel and railway barons. Many large companies today are only able to offer consumers their current value proposition through their size (network effect of social media) and scale (cheap server costs for cloud providers). Restricting a company's size and scale will, in most cases, directly harm consumers, thus careful consideration on the tradeoffs between diminishing consumer wellbeing and increasing market competition is warranted, and generalizations of all large companies as rent-seeking can be harmful towards productive discussions. This is especially true since, given globalization, there are numerous large international competitors more than willing to fill the void left by a diminished domestic company.

I also firmly believe that the future of employment in the US will shift more and more towards more professional and technical workers with higher knowledge and expertise thresholds. It is no longer a direct zero-sum game between employers and employees, as said knowledge workers oftentimes share directly in the success of employers (through means such as RSUs) and oftentimes, said employees' skillset will be desirable in other organizations as well, lessening employers' leverage over employees (atleast for now) compared with the unilateral employer-employee relationship described in the book. This new employer-employee paradigm requires newer forms of labour organization, perhaps one less pugilistic and more cooperative than in the unions of old described in the book. One area where the government can get involved, however, is to ensure that low-skill workers are well-prepared for when their jobs are inevitably automated or made redundant. This can come in the form of incentives or grants for employers or individuals to train and receive training for higher-skill work. This is perhaps the most sustainable way to empower low-skill workers for the future.

# Conclusion

While I don't agree with the entire narrative presented in this book, I gained a great deal of insight on opinions other than my own and it was an enjoyable read.

# Overall rating: 8.0

What does the rating mean?