Editor’s Comments: You must bring at least an interest in economics to this reading or it’s pretty tough. I’m not business trained for economics but have interest enough to have passed a few courses and I eagerly read every issue of the Economist. The reason I read Economist is the same reason this book fascinated me: the political, social and policy implications of how economies run are massive. Haskell and Westlake hypothesize in fact that the rise in populism and tribal responses both in the USA elections and in England’s “Brexit” are fueled by frustration and misunderstanding. The big transition both the US and England are experience is from tangible capital to intangible capital. In 2006, for example, Microsoft was worth $250 billion, only $3 billion of which was tangible capital, assets such as buildings, manufacturing lines and cash. 99% of Microsoft’s worth then was in intangible capital including their technology, innovation (patents, research and development) and such things as branding and business models. This could change not only the definition of our economies but capitalism itself. The hardest to understand for me are the four affecting impacts the authors describe.
Favorite Excerpt: “While we might expect to see venture capital develop further in an increasingly intangible economy, it is not clear that governments can or should do much more to promote it than they already do. As Josh Lerner showed in The Boulevard of Broken Dreams (2012), once tax breaks or subsidies for venture capital get beyond a certain level, they tend to encourage dumb investments (since the tax gain on its own is enough for the investors to profit); since the entire point of venture capital is smart investment, very large tax breaks are self-defeating.”