The Power of Productivity: Wealth, Poverty, and the Threat to Global Stability

Rating:
Summary: A breakthrough in explaining economic success and failure
Review: Anyone who is interested in what makes our economy, and the rest of the world's economies, work and not work ought to read the Power of Productivity. Drawing on a decade of research by McKinsey into the productivity of major industries around the world, Lewis has been able to go far deeper into this subject than economists who are limited by official data. This is the first book I've ever read whose explanations of economic success and failure really ring true in light of my personal experience in business and government. Charles O. Rossotti, Washington, DC

Rating:
Summary: A breakthrough in explaining economic success and failure
Review: Anyone who is interested in what makes our economy, and the rest of the world's economies, work and not work ought to read the Power of Productivity. Drawing on a decade of research by McKinsey into the productivity of major industries around the world, Lewis has been able to go far deeper into this subject than economists who are limited by official data. This is the first book I've ever read whose explanations of economic success and failure really ring true in light of my personal experience in business and government. Charles O. Rossotti, Washington, DC

Rating:
Summary: A great contribution to the study of political economy
Review: Bill Lewis and the many peole at Mckinseys are to be congratulated for the immense work they have done over the past twelve years - and in bringing this book to fruition.

By taking a more exaustive and hence more informative "micro" approach to this critically important issue of economic performance, it is to be hoped that the example Lewis and his team has set, will precipitate a trend for further widespread research of this kind. We are more likely then to see much improved policy outcomes within rich and poor countries alike.

One of the attractive features of the book is the authors humility and obvious deep concern in attempting to find solutions to what are often extremely difficult problems to work through. If he doesnt know something, he says so. Something one finds rarely within the community of economists!

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Summary: INNOVATION IN ECONOMIC THINKING, HIGHLY ACCESSIBLE TEXT
Review: In this book, William Lewis sums up the conclusions drawn from ten years and a sequence of studies that try to determine what makes a country have better economic performance than another. In this innovative text, he argues that it is not the traditional macroeconomic variables, or even the traditional labor (education, hours worked, work ethic) and capital inputs, but rather the productivity of each of the major industries in those countries. Ok, so far, not an earthshattering finding. However, most interesting is his conclusion as to what leads to high productivity; not education, not access to finance, but good old free competition.

He shows how, in markets sheltered from competition by barriers or regulation, productivity remains low and so do the returns on capital and labor. The studies are drawn from developed (Japan, US, Europe) and developing nations (Brazil, India, Korea) and go in depth into particular industries in order to understand the factors that drive productivity. No book in recent publication is as insightful on the true engine that drives development.

The author was the leading partner at McKinsey in charge of the McKinsey Global Institute, McKinsey's thinktank. Using McKinsey resources, which are unique and unavailable to any other economist, Lewis was able to analyze conditions that could only previously be seen from afar by economists. His training as a physicist also helped him synthesize phenomena, drawing the overarching themes behind producitivity.

I highly recommend this book, it will breathe new life into economists that may be losing hope that development is not possible in certain places due to such factors as environment or culture. It is accessive to non-economists as well, so I hope policy-makers would have a chance to read it and follow some of its good advice.

Rating:
Summary: If you love Wal-Mart you'll love this book
Review: Maybe Lewis should stick to corporate PowerPoint presentations and McKinsey's client-funded research, where objectivity and persistence in probing uncomfortable questions are subsumed to other interests. Lewis carefully picks-and-chooses the cases, data, and questions which serve his point. He just as carefully avoids asking questions which do not fit his worldview. His portrayal of Wal-Mart as the ideal model is disturbing. The fact that he fails to address any of the best critiques of Wal-Mart's impact on broader communities makes this book of dubious value. (E.g. see "Hidden Cost of Wal-Mart Jobs," "The Hiden Price We All Pay for Wal-Mart", Business Week on "The 'Sins' of Wal-Mart", KLD and Domini reports, etc.)

Lewis' in-depth treatment of the broader benefits (as well as costs) of labor unions is... oh, completely absent.

His discussion of higher wages, as opposed to lower consumer prices, is... completely absent.

His treatment of the plethora of studies in the past decade showing the importance of community (as opposed to simply lumping together individual consumers) and human capital, social networks, etc. is... completely absent.

This book reads like some Connecticut Gold Coast (Greenwich, Darien, etc.) CEO's fantasy. Who actually paid for this research? Who paid for Lewis' salary and research budget while he was researching and writing this? Where did this funding come from, ultimately? Did he draw on McKinsey staff to do his research? What incentive-structures did they face, in presenting evidence which supports (vs. running counter to) his conclusions? Did he draw on McKinsey clients, and might they have a biased view of economics, politics, and business? Did he use McKinsey to market (publicize) this book? Might this book benefit McKinsey Consulting? The methodology in this book wouldn't pass muster for a graduate student, why did the University of Chicago Press print it? These questions are simply consistent with the incentive-response system with which Lewis is quite familiar.

On the positive side, Lewis' has good data and nice charts on the economic disparity between rich and poor countries, and he breaks with the Bush Administration and narrow-minded laissez-faire acolytes in pointing out how this disparity will ultimately hurt all countries. He also points out the importance of supporting education and international coordination -- again counter to the current (Bush) American presidency.

Rating:
Summary: GDP isn't everything
Review: The author is too focused on the fallacy that GDP growth being only measure of a societies success. What annoys me the most is that on surface there is some wisdom in his theories but he totally throws this out the window in his misguided argument that GDP growth is the only indicator of well being in a society and the only good is increased efficiency at whatever price.

My favorite example in the book is a section describing

Rating:
Summary: Extremely insightful and informative
Review: This is certainly one of the most thought-provoking and significant books I have read in the last 10 years. As a retailer, I found it to be an enlightening vindication of price-competition and the consumer (as opposed to producer) mentality. It is a well-researched testament to how important retailing productivity really is to the health of our economy, and to why the US economy is so much more productive than other, seemingly as advanced, economies like Japan and Germany. The difference, Lewis concludes, is that while Germany and Japan have arguably more refined and productive manufacturing industries, the United States is light years ahead in terms of productivity and efficiency in retailing, which comprises a huge part of any economy. I can certainly understand why some reviewers might be upset by his conclusions, because Lewis does gore a few oxes in the process: big goverment, mom-and-pop retailers, and any entity that would seek to control or maintain prices are likely to be upset by this book.

The most provocative conclusion is probably Lewis' refutation of Robert Reich's thesis in The Work of Nations: that education on and of itself will lift lesser economies out of poverty. Lewis, professionally trained as a physicist, very astutely and rationally argues that it is not education, but productivity, both in manufacturing and in retailing, that will lead these economies out of darkness, and productivity in a given job is a skill that can be learned quite easily without any formal education whatsoever, simply by imitating best practices from around the world; the example used most convincingly in the book is that of Mexican home-builders working in Houston, TX.

One surprising footnote, however: in his conclusion, Lewis actually DOES make a rather strong argument for the need for liberal education in the poorer nations, but not for the reasons you might suspect. The linchpin of his argument is that competition- free, unfettered, unrestrained, unadulterated competition- is what drives economic growth, and that the only way it really develops without tampering or interference by special interests is when a culture develops a mindset that the consumer, not the producer, comes first. Most Americans take for granted that the whole world thinks this way, but Lewis reminds us that this is not at all the case, and that education and the cultivation of critical thinking may be the only way to shift the focus from producer to consumer in poorer nations.

One thing a reader may find a bit odd about this book is that it was apparently dictated, for the most part, using voice-recognition software, and it shows. It acutally helps the book flow more seamlessly, but I sometimes found the conversational air to be a bit off-putting and longed for "harder edges" in the text. That, however, is a very small complaint in comparison to the outstanding quality of the scholarship, research, and thought contained in this volume.


Rating:
Summary: Great Insights
Review: This is truly a remarkable piece of work, for its singular focus on productivity and its impact on the welfare of mankind. The presentation is balanced, thoughtful, and reflects a thorough understanding of issues facing countries, companies, industries, and policy makers.

What makes this work truly exceptional is the fact that:

1) The resources and the brains that went into collecting and analysing myriad data -- countries, industry segments, "best practice" corporations -- is impressive, and makes it all worthwhile

2) The empirical evidence is all around us, but it is simply beautiful to see the quantification, by segment, inspite of the limitations. I was impressed by the depth of knowledge displayed in the examples ranging from the productivity of Russian oil fields, to agriculture in India.

3) The spectrum: A great companion for those trying to understand and invest around the world. It covers a decent sample of the developed economies, to the middle income countries of Brazil annd Russia, and finally low-income India.

After having lived in the worlds poorest and richest countries, and being a keen student of economic and political events, while purchasing Japanese automobiles, and disliking the high cost of living in Europe, awed with the generally high labor and capital productivity (and the resulting superior financial performance) of US businesses, it finally all makes sense: productivity.

I hope Lewis comes up with an update on this every decade or so, and grows his analysis to include UK and China. The dynamics are constantly changing. The world economies are constantly evolving and playing catch up. I would have loved to see a chapter on China. But, I can understand that getting good data on the Chinese economy is difficult. This is a great start, and I hope they can cover China in future.

This should be required reading for the key political leaders and policy makers in the developing world. I can't think of a better self help guide.







Rating:
Summary: it's the productivity stupid!
Review: Very well written, easy to read, very well documented. Finally somebody wrote, in a comprehensible way, what economists can not explain through "models". Lewis touches the core points that should be addresed by the citizens of the third world if they ever want to leave poverty. It will not surprise you what has to be done, but you will understand the strong forces that have to be bent before ever starting the path to prosperity.
Sometimes repetitive (due to the constant comparisson among countries) but definetivelly worth reading.

Rating:
Summary: it's the productivity stupid!
Review: Very well written, easy to read, very well documented. Finally somebody wrote, in a comprehensible way, what economists can not explain through "models". Lewis touches the core points that should be addresed by the citizens of the third world if they ever want to leave poverty. It will not surprise you what has to be done, but you will understand the strong forces that have to be bent before ever starting the path to prosperity.
Sometimes repetitive (due to the constant comparisson among countries) but definetivelly worth reading.