FP2P: The Book Hayek Should Have Written
I zoomed through Kling-Schulz’s From Poverty to Prosperity. The honest truth: It is the best book I’ve read all year, and the best book of interviews with economists ever written. If you’re tempted to discount my recommendation because Arnold’s my co-blogger, please recall the many times I’ve publicly attacked my dearest friends. I don’t do nepotism.
What’s so great about FP2P? Quick version: It’s the book that Hayek should have written to convince critics and fence-sitters of the dynamic virtues of capitalism. Kling and Schulz elegantly weave together their original observations with truly awesome interviews. What amazed me the most: There were several incredible interviews with people I’ve either ignored or never heard of – especially William Lewis. My eyes bugged out of my head when I read this:
AK & NS: One finding that might surprise some people is that the education level of the labor force isn’t nearly as important for the overall economic performance of a nation as commonly thought… How did you reach that conclusion?
WL: … [W]e got the first hint of this when we were studying Japan back in the early 1990s… There were many disparaging comments made in the U.S., and maybe even stronger ones made abroad (especially in Japan), about how the U.S. labor force was getting what it deserved because it was lazy, uneducated, and maybe even dumb. But of course, the Japanese – the capable, competent Japanese manufacturing companies – showed that this notion was wrong by coming here, building their own factories, managing American labor, and taking a lot of other local inputs and coming within five percent of reproducing their home country productivity.
The great bulk of the evidence about education came from competent multinational corporations of any nationality, who showed that they could go virtually anywhere in the world and take the local workforce and train it to come close to home country productivity. The clinching evidence [came when] we looked at some other industries. We compared the construction industry in the U.S. with construction in Brazil and found that in Houston, the U.S. industry was using Mexican agriculture workers who were illiterate and didn’t speak English. They were not any different than the agricultural workers who were building similar high rises in Sao Paolo, say. And yet they were working at four times the productivity.
…Uneducated people can be trained on the job to accomplish quite high skill levels and quite high levels of productivity. And that’s good news, because if the World Bank and everybody else had to wait until we revamped the educational institutions of all of the poor countries and then put a cohort or two of workers through it, we are talking about another fifty years before anything happens. That’s not acceptable and it’s not necessary, thank God.
The book is packed with gems like this. I’m going to be blogging the highlights for quite a while. But don’t cheat yourself. If you’re going to read one nonfiction book of 2009 from cover to cover, it should be FP2P.