by David Warsh
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Product Description
A stimulating and inviting tour of modern economics centered on the story of one of its most important breakthroughs.
In 1980, the twenty-four-year-old graduate student Paul Romer tackled one of the oldest puzzles in economics. Eight years later he solved it. This book tells the story of what has come to be called the new growth theory: the paradox identified by Adam Smith more than two hundred years earlier, its disappearance and occasional resurfacing in the nineteenth century, the development of new technical tools in the twentieth century, and finally the student who could see further than his teachers.
Fascinating in its own right, new growth theory helps to explain dominant first-mover firms like IBM or Microsoft, underscores the value of intellectual property, and provides essential advice to those concerned with the expansion of the economy. Like James Gleick's Chaos or Brian Greene's The Elegant Universe, this revealing book takes us to the frontlines of scientific research; not since Robert Heilbroner's classic work The Worldly Philosophers have we had as attractive a glimpse of the essential science of economics.
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0 of 0 people found the following review helpful:
A story of Economic Discovery, 2008-07-31
David Warsh has given us a non-technical survey of the theories of developmental economics from Adam Smith's great work by a similar name down to the present day. Warsh's sweeping narrative is an eminently readable tale (okay, readable as far as books about economics go) about the historical settings, personalities and unique contributions to economic growth theory, culminating with an in-depth discussion of Dr. Paul Romer's revolutionary paper titled Endogenous Technological Change, first published in 1990.
I usually wince at things that present themselves as a tyranny of the or. Is something this or that? Is the world ruled by economics or religion? Secular economists, for example, might make the argument, and not without considerable merit, that economic development is the critical issue facing world leaders today. They might argue that:
1. Global Islamic terrorism is fueled by economic & political disenfranchisement - too many young Arab men, many from upper class families, have such limited economic prospects that they are easily seduced into joining schemes bent on overthrowing the current world economic system.
2. There is a growing divide between developed and developing countries as evidenced by the increasingly virulent rhetoric from such world leaders as Venezuela's Hugo Chavez and Iran's Mahmoud Ahmadinejad. Not incidentally, Iran's pursuit of a national energy program is viewed by the USA as a drive to obtain new terrorist weapons, while Iran views it as a necessary step towards their own economic development. (How you look at the debate seems to depend on what side of the chasm you are on.)
3. World population growth and drive for economic development in just a handful of developing countries (China and India) are placing huge strains on the global supply of energy and natural resources (c.f. recent shortages of and spikes in the prices for steel, concrete, to say nothing of oil).
4. Continued exploitation of natural resources is placing strain on the global ecology (pollution, destruction of natural habitats), giving serious support to the idea that traditional patterns of economic development (i.e. English 18th industrial revolution) are no longer viable for the planet. It's no longer a question of jobs vs. the environment; its development vs. the survival of the world.
And yet if you were to interview, say, a fundamentalist Christian or Muslim, you might hear a very different kind of rhetoric, such as "preserving the faith of our founding fathers", "restoring righteousness in the world", "being on the side of (or against) Israel in the end times", or "putting the Bible (Koran) in its rightful place in the center of culture and society".
Dr. Romer's work points to the connection between man's knowledge and his welfare, both personally and in creating the wealth of an entire nation. For those of us who are prone to a religious world view, perhaps Warsh's book can be a useful bridge over to the secular economic camp, to gain a greater appreciation of what these brilliant men have learned about how to make the world a richer and happier place for us all.
Read the entire review at http://insidework.net/resources/readinglist/entry-0000021957
7 of 7 people found the following review helpful:
 Pretentious , 2008-05-26
Despite its name, this book will not tell you very much about the wealth of nations. It is a history of economic thought rather than an economic history; specifically, the story of how English language theoretical economics came to develop mathematically tractable models of increasing returns to scale, as exemplified by David Romer and his 1990 paper "Endogenous Technological Change".
Within these narrower limits, the story is told well. Romer's intellectual journey is explored thoroughly, and attention is paid to his antecedents, both those who approached the topic intuitively (eg the "big push" theorists of the 50s) and those neoclassical economists who started down the same path as early as 1965 but were deterred by their elders (Uzawa, Shell, Akerlof, Stiglitz and Nordhaus, some of whom still bear grudges to this day). There are some fascinating asides on Nordhaus' work on the historical cost of lighting, and the fact that Bill Gates took a microeconomics course (focusing on patent races) under Michael Spence before dropping out of Harvard. (One wonders if this should count as a negative on the scorecard of economics education!)
Warsh is less successful at explaining why the general reader should care. "So there is a new economics of knowledge. What has changed as a result? . . . not much, at least not yet." Yet he is still willing to proclaim that this new economics is an "indispensable guide to the modern world", and even get up on a soapbox himself: while "by all means" we should fix intellectual property, "first rebuild the education system . . . in ways that emphasise the new reality of international competition".
This is meaningless drivel. What exactly are these "ways" and why does this system need "rebuilding" in the first place? Obviously if high school graduates are functionally illiterate this is a problem, but it is hard to see what the new growth theory adds to the subject. And what does "international competition" have to do with anything? Even if there was a one world government, or if the United States was transplanted to another planet, the importance of education would be the same. Indeed, it would be greater since there would no longer be any hope of free riding off other countries' innovations or stealing their educated labour.
The big question remains, though: Should anyone who can't understand the original paper care? Warsh borrows Krugman's analogy with the map of Africa in the 18th and 19th centuries - getting emptier as vague rumors and hearsay were expunged, before it was filled up again with more accurate data. This does not seem valid. The newer maps illustrated with greater precision things that were actually there. The new growth models are simply mental constructs, better than unaided intuition at checking logical consistency, but in the end only useful if they illuminate aspects of reality previously hidden. It is hard to see education and intellectual property as previously hidden. And the "precision" of theoretical parameters estimated by fancy econometric techniques has yet to translate into reliable control of economies, to put it mildly.
If this book was just called "The Genealogy of Romer 1990" or something similar, I would have given it three or ever four stars. But "The Wealth of Nations" is not a title to be claimed lightly.
4 of 4 people found the following review helpful:
Underwhelmed, 2008-05-16
Short version: you'll enjoy this book if you already are an economist. Otherwise, you'll get little out of it.
Potential reader beware: at the end of the day this is more about economists-as-rock stars than it is about economics itself. I really wanted to like this book and learn something. And I somewhat did. However, two points stand against it to my mind:
1) The fawning tone. Warsh idolizes economists and the practice of economics itself. I found myself regularly asking, when confronted with yet another series of passages about who is teaching whom, and who is friends with whom, "So what?" Does it really make a difference who taught whom, and where? Does it matter if so-and-so is on the edge of their seat because some other so-and-so is giving a lecture he disagrees with?
I suppose it CAN make a difference, if you're trying to trace the intellectual lineage of theory, but Warsh prevents the reader from doing this with ease. Which brings me to my next point...
2) Lack of transparent "meat and potatoes." Because Warsh spends so much time talking about economists and how they pursue economics, it gets in the way of discussing the actual arguments and theories themselves in an intelligible manner. Further, Warsh swings wildly between focused and clear explanations that advance the intellectual narrative and bland, excessively technical explanations; he also inadequately explains some of the new twists in thinking as they develop. Such an approach is probably not helpful for the lay reader; I had a hard time following on occasion, and I still couldn't tell you what the big deal was other than "Romer figured out how to quantify knowledge and technological change."
Because of this, I felt like I learned little that I didn't know already. Warsh doesn't really bring the reader along. I don't see how this will be helpful for others like me who are not technically trained already. Ultimately, this isn't about new growth theory so much as how ideas become conventional economic wisdom (in academia, not the real world).
4 of 4 people found the following review helpful:
 A Shaggy Dog Story, 2008-04-04
If you want to know the present state of the art in economics, this book reads like a shaggy dog story. I was drawn in by Warsh's excellent writing skill, but half way through I got tired of the personal details and hungry for some economics. Too much James Lipton-style fawning over the actors and not enough meat on their ideas. I'd rather read the 30 page abridgement, "What We Think We Know Today about Knowledge and the Wealth of Nations."
Warsh's conclusion is a clunker, considering the fate of Socialism over the last 100 years: "human and technological resources require a degree of active management by the state." (at 406) Google "Lysenkoism".
2 of 4 people found the following review helpful:
Okay If You Have the Right Expectations, 2008-03-30
You will be disappointed if:
a) you expect a general summary of the history of economics
b) you are a technical economist
c) you expect layman's prose
The book filters economic history and the economic "scene" through Romer's work, so it doesn't necessarily address all of the ideas of a given economist. Adam Smith is given a couple of chapters. Keynes gets some air time, but folks like Coase, Schumpeter, Hayek, and others probably get much less exposure than their fans would like. This is because Warsh is interested in explicating the antecedents of Romer's ideas, not the antecedents of modern economics.
As others have pointed out, Warsh is a journalist who covers economics, not an economist who happens to write. He is trying to produce a work for lay audiences, but he doesn't insult the intelligence of his readers. As a result, there is some technical jargon, though he does try to keep it to a minimum, and he tries to explicate it clearly. However, if you are expecting novelistic prose, read a novel.
There are important concepts underlying this book, and as the author argues, the implications of these concepts are profound. Well worth reading.
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