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Invisible Wealth: The Hidden Story of How Markets Work [Kindle Edition]

Arnold Kling , Nick Schulz
4.2 out of 5 stars  See all reviews (23 customer reviews)

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Book Description

The discipline of economics is not what it used to be. Over the last few decades, economists have begun a revolutionary reorientation in how we look at the world, and this has major implications for politics, policy, and our everyday lives. For years, conventional economists told us an incomplete story that leaned on the comfortable precision of mathematical abstraction and ignored the complexity of the real world with all of its uncertainties, unknowns, and ongoing evolution.

What economists left out of the story were the positive forces of creativity, innovation, and advancing technology that propel economies forward. Economists did not describe the dynamic process that leads to new pharmaceuticals, cell phones, Web-based information services—forces that fundamentally alter how we live our daily lives.

Economists also left out the negative forces that can hold economies back: bad governance, counterproductive social practices, and patterns of taking wealth instead of creating it. They took for granted secure property rights, honest public servants, and the willingness of individuals to experiment and adapt to novelty.

From Poverty to Prosperity is not Tipping Point or Freakonomics. Those books offer a smorgasbord of fascinating findings in economics and sociology, but the findings are only loosely related. From Poverty to Prosperity on the other hand, tells a big picture story about the huge differences in the standard of living across time and across borders. It is a story that draws on research from the world’s most important economists and eschews the conventional wisdom for a new, more inclusive, vision of the world and how it works.

Editorial Reviews


"Over the past decades, many economists have sought to define the differences between the physical goods economy and the modern protocol economy. In 2000, Larry Summers, then the Treasury secretary, gave a speech called “The New Wealth of Nations,” laying out some principles. Leading work has been done by Douglass North of Washington University, Robert Fogel of the University of Chicago, Joel Mokyr of Northwestern and Paul Romer of Stanford.

Their research is the subject of an important new book called “From Poverty to Prosperity,” by Arnold Kling and Nick Schulz."
&mdash David Brooks in the New York Times, Dec 22 2009

&mdash Newt Gingrich, former Speaker of the House, author of Real Change

"A fascinating blend of interviews and perspectives on where economics –and the economy—is heading. A must read for anyone who thinks economists are out of touch with today's reality or don't have competing compelling visions for the future."

&mdash Simon Johnson, Ronald Kurtz Professor of Entrepreneurship at MIT’s Sloan School of Management, former chief economist at the IMF

About the Author

ARNOLD KLING was an economist on the staff of the Board of Governors of the Federal Reserve System from 1980-1986 and served as a senior economist at Freddie Mac from 1986-1994. Kling is the author of several books, most recently Crisis of Abundance: Rethinking How We Pay for Health Care. He lives in Maryland.

NICK SCHULZ is DeWitt Wallace Fellow at the American Enterprise Institute and Editor of He is a columnist for The Mint newspaper in Mumbai, India. His writings have appeared in The Wall Street Journal, the Los Angeles Times, The Washington Post, Slate,, among others. He lives with his wife and children in Maryland.

Product Details

  • File Size: 745 KB
  • Print Length: 330 pages
  • Page Numbers Source ISBN: 1594032505
  • Publisher: Encounter Books (September 6, 2011)
  • Sold by: Amazon Digital Services, Inc.
  • Language: English
  • ASIN: B005GX1O4C
  • Text-to-Speech: Enabled
  • X-Ray:
  • Lending: Not Enabled
  • Amazon Best Sellers Rank: #274,135 Paid in Kindle Store (See Top 100 Paid in Kindle Store)
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Customer Reviews

Most Helpful Customer Reviews
55 of 60 people found the following review helpful
4.0 out of 5 stars Explaining Why Borders Matter December 7, 2009
In an era that pays homage to globalization and the supposedly "flat" world, it's an astonishing thing: Crossing the border from Latin America into the United States "appears to make the productivity of a low-skilled worker ten to twenty times higher, based on the wage differential."

So say Arnold King and Nick Schulz in their new book, which may make a lot of readers think differently about the importance of national borders.

The authors quote the director emeritus of the McKinsey Global Institute, William Lewis: "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 agricultural 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."

More differences as a result of borders: The book reproduces a chart of per capita GDP in 1997 that places North Korea at $700, South Korea at $13,590. Communist China's GDP was $3,130 per capita, while Taiwan's was $14,170.

What accounts for the differences between countries with similar populations or geographies? The authors chalk it up to a kind of "software" that encourages entrepreneurship and growth: property rights, the rule of law, a government that isn't too intrusive. A strength of this book, though, is that rather than offering exclusively their own ideas, the authors get out and do some reporting, interviewing professors who have thought about these issues, including four Nobel laureate economists: Robert Fogel, Robert Solow, Douglass North, and Edmund Phelps.

Sometimes the people the authors interview say interesting things.
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23 of 24 people found the following review helpful
5.0 out of 5 stars Innovation and the Future December 27, 2009
In the 20th century, whenever markets failed, the temptation was to impose a big-government intervention to address the situation. In "From Poverty to Prosperity", Arnold Kling and Nick Schulz argue for an approach that they describe as "Economics 2.0", an approach in which free markets and even more innovation should be used whenever markets fail.

The authors believe that, in the future, the greatest improvements in living standards will come from ideas and inventions. They emphasize the role of innovation and describe some of the societal conditions that encourage it, such as strong property rights and the rule of law, and also describe other "rent-seeking" activities that stifle innovation, such as lobbying and the propping up of obsolete functions, activities that introduce distortions into the economy.

Trends in modern economics are examined, such as the move away from hard mathematical models toward a more sociological-based approach.

Because advances in the future will be innovation-driven, the question of intellectual property rights and how strongly they should be protected will come to the fore, and Kling and Schulz look at that important debate.

A great part of the book consists of interviews that the authors conduct with leading economists discussing these developments and issues, and there are numerous charts concerning GDP per capita, health, leisure, and life expectancy that show how well-off we are compared to the past. The book is a good study of where economics is going and is an important reminder of the importance of free markets, private property, and innovation.
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44 of 51 people found the following review helpful
5.0 out of 5 stars The Book Hayek Should Have Written December 20, 2009
It is the best book I've read all year, and the best book of interviews with economists ever written. 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. If you're going to read one nonfiction book of 2009 from cover to cover, it should be FP2P.
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10 of 12 people found the following review helpful
5.0 out of 5 stars From Poverty to Prosperity: A Wonderful Book December 28, 2009
Format:Hardcover|Verified Purchase
This is a wonderful book, profound, eloquent, and easy to read. Everyone should read it.

The tables in Chapter 2 show how dramatically human wealth and welfare have improved over the past several centuries. The rest of the book explains some of the reasons for the improvement. In between the chapters are interviews with various economists, all of which are fresh and stimulating.

Ultimately the book makes a powerful case for viewing the economy as far more dynamic and creative than most of us appreciate. Wider understanding of the ideas in this book would go a long way toward improving the quality of our political discourse and our future prosperity.
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7 of 8 people found the following review helpful
5.0 out of 5 stars Intangible wealth and invisible constraints January 5, 2010
Format:Hardcover|Verified Purchase
I read this book after reading David Brooks column in the NYTimes recommending it in December 2009. I didn't regret reading it. I am not an economist and found the book easy to understand yet highly insightful. It was my first exposure to the pwerful concept of intangible wealth and its importance in raising general welfare and alleviating poverty. I've always been aware of the importance of social capital and strong and benevolent institutions but not packaged together the way intangible wealth is. I've spend most of my career overseas working in lesser development countries and after reading the book I have a new analytical way of looking at things and why things the way they are. The chapter on financial intermediation provides a new insight on the financial collapse of September 2008. You will also be surprised at what the authors consider to be the primary challenges for continued economic growth and wealth creation in the future.
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Most Recent Customer Reviews
3.0 out of 5 stars as advertised
as advertised
Published 21 days ago by L.W. Brittian
4.0 out of 5 stars Good read
I have not fully read this book all the way through but I have read so far I am impressed with some of the knowledge and insight I have gained by reading it.
Published 18 months ago by Terry
5.0 out of 5 stars Excellent Book
The items are somewhat outdated but the fundamental concepts still hold valid. Glad to buy this product from This product does what it is suppose to! Read more
Published 19 months ago by Elvis
5.0 out of 5 stars Excellent book
Great views on what is important in bringing economic growth. Also great to hear more from a number of economic minds of today.
Published 19 months ago by Stephen
5.0 out of 5 stars Accessible Exploration of Innovation and Economic Theory
The authors do well in describing the contributions of intangible capital to the poverty and prosperity of nations, and the implications thereof. Read more
Published on January 17, 2011 by Paul Carbone
5.0 out of 5 stars great ideas
i am a loyal reader of arnold's on his blog. There is a lot here that he doesn't post on econlog. I really enjoyed this.
Published on December 26, 2010 by David Wright
5.0 out of 5 stars Interesting and Informative
Modern economy has become a very complicated and complex affair. It has been argued for many years that the categories and concepts that have been used for centuries to describe... Read more
Published on October 21, 2010 by Dr. Bojan Tunguz
5.0 out of 5 stars Human Ingenuity and the Triumph over Scarcity
Let's say there's an apple. I want to eat the apple and you want to eat the apple. Both of us can't eat the same apple. We can divide it. We can determine who is more hungry. Read more
Published on June 29, 2010 by Joseph Sunde
2.0 out of 5 stars Outdated
I found this book largely irrelevant to today's economic reality. Authors write a lot about people living much better now than hundreds of years ago and this is because of... Read more
Published on April 17, 2010 by Alexander Gorobets
5.0 out of 5 stars providing prosperity needs universal support
If you care about relieving poverty, it is critical that you work on the roots in order to create prosperity - this book is the best guidebook that I have encountered.
Published on April 14, 2010 by Douglas Metcalf
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