In his last book, "Running Money" Andy Kessler underscored his arguments with breezy historical accounts that demonstrated the quirks of history and what made the industrial revolution go. "How We Got Here" is a book length version of that history and pulls it more fully what has been happening to intellectual property and capital markets during the past decade.
Kessler tells these stories because he wants his readers to understand the importance of intellectual property, of scaling those ideas to serve the needs of large populations, and of free flowing capital markets to find and support the best ideas. A by-product of these is lower prices for everyone, which leads to an increased standard of living. The author notes that he wishes he had been taught these things as a young man, and I agree that every young person (and everyone else, for that matter) will be better off taking these ideas into their bones. Why? Because we human beings don't always understand specific events all that well. We need broader principles to see our local life as part of a larger whole and the principles that are governing what is happening. Our untrained instincts are quite bad in assessing statistical outcomes (hence the thriving business of casinos).
This is a very entertaining read. It is similar to James Burke's famous "Connections", but this actually has a more focused purpose that Mr. Burke's wonderful vignettes. Kessler is strongest at the end when he is telling about the development of our computer based world because he is talking from his personal experience. Not only does he bring the world of Wall Street into sharp focus, he demonstrates the role of the military in funding the development the networks we use everyday.
For me, the thing I would hope readers would take away from this book is how unpredictable the future is and how things come along that confound all experts, bureaucrats (whether private or public), and projections. Industries are born, they grow, and then they are killed off. Just as there are no old animal homes in the wild (despite what "Bambi" has been telling folks for decades), it is the natural order for people to find work doing new things and people to be put out of work that should no longer be done. These dislocations are hard and painful, but these changes are vital in the improvement of the standard of living for everyone.
One of Kessler's complaints about our current economy is its risk averse allocation of capital into less efficient and less productive portions of the economy. It baffles him and he thinks it has more to do with out of date accounting practices than reality. For example, we don't give a fig about the trade deficit between North Dakota and California, but are losing our minds over our trade numbers with China. Yet, we don't properly account for the value of the intellectual capital we send to China that gets put into the products they ship back here. In fact, the value of that intellectual capital is likely the most profitable aspect of the product and yet our accounting assigns all that value to China incorrectly.
The more widely this book is read the better off we will be. So, please read it.
