Efficient Frontier
William J. Bernstein
Efficient Frontier
William J. Bernstein
Bigger Than a Breadbox Bigger Than a Breadbox
It’s time to let the cat out of the bag. Several years ago, I came across Angus Maddison’s epic, Monitoring the World Economy 1820-1992, which charted the course of modern world economic growth. This little gem was published in 1995, then sank into obscurity like a stone. And for good reason. The author, while a first-rate economist, possessed the prose ability of . . . a first-rate economist. Further, the story was told largely in tabulated form. And finally, the publisher (The Organization for Economic Cooperation and Development) saddled the layout with an effort that would have made a 1960s doctoral dissertation look slick.
But for those willing to take the time, the story was riveting—before about 1820, the growth of average per-capita world GDP was more or less zero. And after, it was much greater than zero, generally between one and two percent per year. Which may not sound like very much until you realize that this means a doubling of standard of living every generation or two on a planet that had seen no dramatic improvement in the lot of the average inhabitant since the dawn of history.
What happened? More importantly, why did it happen when it did? Maddison himself was nearly silent, mentioning improvements in technology and "growth accounts." Most readers found that the book raised more questions than it answered.
For the past two years, I’ve been plumbing this mystery—The Greatest Story Never Told—and, as a result, shirking my Efficient Frontier duties. My humble offering on the topic, entitled The Birth of Plenty, attacks the subject from three angles. The first and largest section of the book discusses the prerequisites for prosperity—property rights, scientific rationalism, capital markets, and effective communications and transport. The second section describes how these factors played out in the winners, runners up, and laggards in the global economic sweepstakes. The final section explores their present-day significance.
Since Efficient Frontier readers are a "capital-markets" crowd, my publisher, McGraw-Hill, has graciously allowed me to post Chapter 4 excerpts that might interest them. For those who are intrigued, the book is due out in May 2004 and will run about 350 pages. If you are interested in preordering, Amazon.com is currently offering a generous discount on first-edition copies.
