Review: The Hidden Wealth of Nations

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5.0 out of 5 stars Beyond 5 Stars, a Cornerstone Book, Most Extraordinary Strategic Depth
June 30, 2010

David Halpern

Amazon has recently been allowing longer reviews by inserting a “Read More” line and I hope this entire review is allowed to stand. It will also be posted to Phi Beta Iota the Public Intelligence Blog, with links back to Amazon.

This is a Beyond Five Stars book. Although there is a fine literature emerging on collective intelligence and wealth of networks–and there is an increasingly robust Open Money movement that also includes local communities currencies that keep the wealth local–this book does something no other book has done–it connects economics to humanity and reality and the intangibles in all their forms.

This is not a book about underground economies, barter systems, alternative currencies, etcetera. It is one of the most profoundly relevant, erudite yet easy to read books I have ever read, with a direct bearing on every aspect of human life, and in particular the role of government as it should be.

The author specifically quantifies the financial and intangible value of “getting along” and being part of deep interconnections that define, drive, and develop (or not) the hidden wealth of nations.

The author has provided an extraordinarily well-organized book with a well-presented series of chapters that left me with so many flyleaf notes I fear I will not do the author and the intellectual tour de force he has provided, quite enough justice. Buy and read the book. Tell elected and appointed leaders about it–or send them a copy of this review. [I am stunned that there are no other reviews as this book was published in 2009.]


Having read quite a bit on resilience, I am much taken with the author’s emphasis on resilience as being founded largely in social trust, social savings, social capital accumulation, not financial. He uses the term “the economy of regard,” and also speaks of “affiliative welfare,” while noting that existing approaches to poverty do not work because they ignore the two thirds of the equation that is social rather than financial.

I am much taken with his discussion of the falling salience of government and the emergence of alternative forms of democratic engagement and I especially like the comparison of Gross Domestic Product (GDP, counts hospitals and prisons); Genuine Progress Indicator (GPI); and now Gross National Happiness (GNH). This is NOT a “giddy” book, this is a hard-nosed pragmatic look at what works and why happiness (including tolerable commutes) equals national economic growth.

The connection between a positive mood and both creativity as well as productivity along with a faster speed of decision-making, is well documented, as is the role of the community (and religions as forms of communities) in elevating the happiness of the group. The author makes the point that happiness is contagious but more among same-sex individuals outside the work environment.

Thirteen policy implications are listed early on; there is no substitute for reading the book to truly appreciate each of these:

1. Expand mental health investments
2. Teach children resilience skills
3. Avoid performance pay
4. Ban advertising for children
5. Increase redistribution (and empowerment of) the poor
6. Discourage gambling
7. Discourage commuting
8. Encourage residential stability (neighborliness)
9. Nurture work-life balance
10. Expand consumption taxes
11. Measure satisfaction
12. Strive to satisfy
13. Build social capital

As an intelligence professional now devoted to creating public intelligence (decision-support) in the public interest, something most governments refuse to do, I am much taken with the author’s definition of information as a public good and quote the following:

QUOTE: The benefits to the economy, as well as to the individual consumer, would be considerable of enhanced citizen-generated and utilized information.

The author goes on to say that most regulators are sitting on a gold mine of information that could and should be released to the public as a means of both allowing a lighter regulatory touch, and of harnessing the regulatory potential of informed citizens.

Key policies recommended in this section of the book:

1. Invest in information as a public good.
2. Broaden our concept of what it takes to be a successful citizen (e.g. social IQ)
3. Support the economy of regard
4. Government must take responsibility to lead on the environment, which does NOT make the cut among citizens or corporations as something they are willing to respect absent compelling incentives.

There are nuggets throughout this stellar work, and I just cannot itemize them all. This is certainly a book that merits reading more than once.

The media has a NEGATIVE effect on both happiness and economic development because of the way the media presents information.

There is a superb section on the difference between reducing crime (preventive) and delivering justice (reactive). “Reintegrative shaming” jumps out.

“Evidence-based” is a term one sees throughout the book, and this is of course consistent with demanding that politicians and appointed officials make decisions based on facts, not ideological fantasies and special interest briefs.

Immigration is very well treated in this book, the author beginning by breaking down immigration into five distinct sub-sets: legal, illegal, “visible minorities” i.e. race), terrorism, and service reduction. The author is both relevant and fascinating across the various issue areas including crime reduction and immigration policy suggestions, this section alone makes this book priceless.

I have a note midway through the book: CORNERSTONE!

In dealing with minorities, the author is compassionate, intelligent, and objective. Specific recommendations include:

1. Engage minorities in dialog
2. Encourage more open inclusive debates
3. Create more opportunities for assimilation
4. “Brand” aid in a clear and positive manner
5. Arrive at common understandings of what comprises acceptable behavior for citizens.

The author emphasizes how the politics (and philosophy) of virtue must go far beyond mere respect and accommodation and instead dive deeply into caring and the giving of caring services and behaviors. The discussion of care currencies, trust and social capital, and how design matters in creating caring communities are all priceless. This is a “sustainable design” book for humanity.

There is a deep discussion of how national and tribal identities split between being willing to fight for one’s country and being willing to care for one’s country with positive reciprocity, rights, and responsibilities.

The author very properly identifies inequality with LOST TALENT and this is precisely the point of C. K. Prahalad’s The Fortune at the Bottom of the Pyramid, Revised and Updated 5th Anniversary Edition: Eradicating Poverty Through Profits, and itemizes the following different kinds of inequality:

1. Income
2. Home ownership
3. Education
4. Social skills
5. Job openings
6 Cultural capital.

The author stresses the importance of being pro-active on poverty, on pulling people UP from poverty, not just on eliminating barriers. Specific recommendations are made that I will not itemize here.

The author is in harmony with Lee Kuan Yew of Singapore and the general Confucian view that the FAMILY is the basic building block for social capital, and that to further democracy, we must do much more in nurturing families, communities, and direct democratic practices.

The book’s bottom line for me appears on page 122:

QUOTE: At the very least I think it means shifting policies in the direction [of] promoting virtue rather than squeezing vice.

The timeframe of this book and this author is measured in decades and generations, not in political election cycles, a major reason why the wisdom of this book must became pervasive enough to moderate the ideological idiocy of most political parties.

The author is strong in emphasizing that politics should not be managed as power sharing, but rather as a process that integrates the fullest diversity of view and need and knowledge.

Speaking further to politics and policy the author distinguishes among the classic state (protect); the practical state (public goods); and the paternalistic state (promotion of a way of life).

He observes that significant changes in politics include the relative decline in the importance of politics; the collapse of membership in mass parties; the change in social composition (rich more active, poor less so; and the raw fact that more often than not the government does NOT know better than its citizens.

He is close to Ralph Nader on the need for electoral reforms, but does not observe that despite the increase in political parties, there has been no increase in their ability to gain ballot access-in the US the two-party tyranny has disenfranchises just under half of the eligible voters.

The final pages of the book are very exciting.

QUOTE p. 197: …power is not a zero-sum game. The democratic innovations discussed above have the capacity to simultaneously increase the power of citizens and the state.

QUOTE p. 241: The `101′ of behavior change, and co-production of outcomes, is information plus incentives.

QUOTE p. 251: A key role of the modern state is to unlock and nurture the hidden wealth of its citizens.

There is so much more to this book, I can only ends this lengthy but inadequate review with one concept and seven lessons from the author.

CONCEPT: Government competence equals citizens’ trust

LESSONS:

1. Get money where it is needed: health, education
2. End user choice, contestability, commissioning
3. Nurture public sector markets
4. Measure and reward five key drivers of satisfaction
5. Specify and meet performance and investment targets
6. Achieve “joined up” [Whole of Government] services
7. Incentivize multi-generational local and family trusts

An amazing book. Beyond five stars. Such extraordinary strategic depth merits prolonger repeated reading, Parliamentary and Congressional investigations and hearings, and wide public discussion. This book MATTERS, very much, and I hope the author is widely aclaimed and invited to lecture.

The ideas in this book can be immediately implemented at virtually no cost at any level from cul de sac to region.

See also (limited to ten total links, see the other 1600 non-fiction reviews in 98 categories at Phi Beta Iota, the Public Intelligence Blog):

Statecraft as Soulcraft
Ecological Economics: Principles And Applications
The Compassionate Instinct: The Science of Human Goodness
Nonzero: The Logic of Human Destiny
The Tao of Democracy: Using Co-Intelligence to Create a World That Works for All
Reflections on Evolutionary Activism: Essays, poems and prayers from an emerging field of sacred social change
Conscious Evolution: Awakening Our Social Potential
Collective Intelligence: Creating a Prosperous World at Peace
INTELLIGENCE for EARTH: Clarity, Diversity, Integrity, & Sustainaabilty

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