|Contributed by: martingale |
Another excellent book by William Bernstein: The Birth of Plenty, How the Prosperity of the Modern World was Created.
I haven't included this one in the Book Reviews main list because it is not specifically about investing, it's more an economic history of the world. Explores the notion that the four factors which led to modern prosperty were property rights, scientific rationalism, efficient transportation/communication, and advanced capital markets. The fundamental question the book asks is, what happened around 1820, the year that modern economic growth appears to begin? It is not simply a matter of "the industrial revolution", but rather what caused that revolution, and what enabled first Holland, England, and America to translate their advances into sustained progress where previous civilizations failed.
Bernstein traces the growth (and lack of growth) of the world's GDP over time and shows how, throughout history, there are several key themes that enabled various nations to succeed, culminating in the economic revolution that began in Holland in the 1600's, and soon spread to England. The goal of this book is to explain what happened around the year 1820: the point in history when the Western economic miracle began: Since that time we've experienced an average of 2% GDP growth per year; prior to that date economic progress crawled. Why?
Bernstein doesn't just start from 1820 though. He works his way through every major world civilization and shows what they got right, and what they got wrong--why some nations succeeded for a time, and why eventually they lost their way. He shows that Greece and Rome had some, but not all, of his four factors of economic progress.
What makes this book excellent is the extent to which he has supported his statements with references to academic research, and yet he has managed to avoid writing a boring text book--it's an entertaining page-turner. There's a fascinating exploration of the interest rates that prevailed in various civilizations over the past several thousand years. There's an insightful and sociological look into whether our modern prosperity has made us happy. There are fascinating depictions of the lives of key people in history, and how they made possible, or were made possibly by the institutions that power life-changing GDP growth.
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