Zingales who emigrated from Italy to the U.S., took his Ph.D. at MIT and is now a tenured professor (of finance) at the University of Chicago. He offers in this book an interesting perspective on manifold ills in the American economic system that, left unaddressed, will likely send this nation into a long-term decline not unlike what much of Southern Europe and South America, for example, have experienced. Just to mention a few, these ills include “crony capitalism,” growing corruption, creeping socialism, lessening competition, more rent seeking, greater wealth redistribution, more systemic risk, decreasing global competitiveness, winner-takes-all rewards allocation, diminishing trust, mushrooming regulatory complexity, growing government share of economic activity, etc. Zingales offers suggestions for a new economic framework, or at least an approach for reestablishment of meritocracy and competitiveness that fostered the individual, corporate, and societal success during America’s past. Note: Rep. Paul Ryan is among those who have read this book.
Big government is essential for socialism and crony capitalism to thrive. In 1900, federal government spending equalled 3% of U.S. GDP. Since then, the proportion has grown about eightfold. Power to tax and redistribute trillions is what drives hundreds of millions in election campaign spending. The state enjoys an “ultimate monopoly.” In the past, state monopoly power extended to the likes of the East India Company. More recently, it extended to Fanie Mae and Freddie Mac, for instance.
Elizabeth Warren was right about one thing—the system is rigged. Perception of rigging is enough to undermine the free market system, to discourage participation, risk taking, hard work, etc. Zingales notes that over half of Americans trust government little or not at all, and only about one-sixth trust large corporations. The number and size of taxpayer bailouts of corporations since 2008, LIBOR manipulation, and other developments have further eroded public trust.
This book is informative, entertaining, and instructive. A holistic view of America’s present state is just what the doctor ordered. Chapter 2 is titled “Who Killed Horatio Alger?” Many have said, as with Julius Caesar, many have blood on their hands.