Reading List

Last week one of my pals over at the Day Job introduced me to The Five People Shaping My Worldview by John Mauldin. Mauldin has assembled the writings of five bright individuals to help us better understand the trends shaping the future of financial markets, and our economy.  I got sucked-in.  This is good stuff.   

In Essay 2 George Gilder correctly points out that a thriving entrepreneurial environment requires predictable carriers such as the rule of law, the maintenance of order, the defense of property rights, the reliability and restraint of regulation, the transparency of accounts, the stability of money, and a level of taxation commensurate with a predictable role of government.   

Gilder continues with the premise that in order for innovation to thrive and living standards to rise over the coming decades, we must return to a “low-entropy" legal, regulatory, tax, and monetary policy. Too much noisy interference from governments and central banks distorts market signals. They also increase the hassles of doing business, which stifles innovation and discourages entrepreneurship. Ultimately, this makes the country less wealthy and prosperous.  

Is the supposition that all government activity is noise begs the question.  It is sometimes surprising how little good or effective governance is needed to keep an economy running.  As one of the commentators observed it is useful to consider the before and after conditions for Iraq when Saddam Hussein was deposed.  The average Iraqi, if being truthful, will tell you he was better off under Saddam than the U.S. backed government.  

In Essay 3 Karen Harris advances the theory that technology, automation and the declining cost of distance – a topic which fits hand in glove with automation, and has profound implications for investors and entrepreneurs.   

Consider this: the declining cost of distance has the potential to trigger a major lifestyle shift away from city centers, similar in scope and impact to the US suburban exodus between 1950 and 1980. Based on that scenario, we would expect the move out of US urban centers between 2010 and 2025 to rise to about 6% of the population per decade, or up to 24 million people in total by 2025.”  A move of this magnitude would have massive implications for the economy and the employment landscape.  A mass exodus to rural areas on this scale could create a boom in the construction industry, akin to what took place in the 1950s. Conversely, urban real-estate prices, which are notoriously high across the globe, could plummet as demand falls.   

Like I said - this is good stuff.  Curl-up with a glass of wine in front of the warming glow of your laptop and be sure to follow the five essay series here.