Book Review: On Progress and Prosperity

On Progress and Prosperity: Essays 2019–2024. 2024. Laurence B. Siegel. Edited by Wayne Wagner. Montesquieu Press.

Suppose you rolled into one individual an intense curiosity about his field, a first-rate intelligence, decades of professional experience, a gift for lucid writing, and an irrepressible sense of humor. You would get something like Laurence B. Siegel, whose propulsively readable essays make up this volume. They were selected by Wayne Wagner, founding partner of Wilshire Associates and a man with the breadth of experience to match Siegel’s.

With two exceptions, the articles are Siegel’s book reviews from 2019 through 2024. The exceptions are a reprint of a Financial Analysts Journal article (co-authored by Siegel) and an interview about his book Fewer, Richer, Greener. The topics span almost everything a serious investment professional ought to know — not just to analyze securities but to grasp the economic, technological, and political currents that shape them.

Twenty-four articles are grouped into five sections: Progress, Investing, Technology, Political Economy, and “Provocative.” The questions they address are as ambitious as their titles suggest: What cultural ingredients stimulate innovation and growth? What intellectual tools sharpen investment insight? What must we understand about technology to navigate the forces reshaping markets? What principles of political economy clarify the swirl of policy and ideology? And how, finally, can we simply think better? On Progress and Prosperity has stimulating answers to all.

Siegel has the gift of condensing a book’s insights into memorable phrases and vivid images. The volume is scattered with aphorisms, some his, others borrowed. From Matt Ridley’s How Innovation Works: “Improbable arrangements of the world, crystallized consequences of energy generation, are what both life and technology are all about.” Or “It is the people who drive down costs and simplify the product who make the biggest difference.”

Siegel delights in such clarifying lines. He notes that the computer in your iPhone “has more computing power than a $30 million Cray-2 supercomputer from the 1980s — and 100,000 times that of the Apollo 11 craft.” Reviewing Andrew McAfee’s More from Less, he distills the argument: “Making more out of less is what much of the human enterprise is about.” On environmental priorities: “Everybody wants a clean environment, but poorer people want other things more –eating, for example.” As for advice to investors: “Don’t be lazy. Be very lazy.” (Darwin might have approved.)

Siegel’s review of Sebastian Mallaby’s history of venture capital captures the essence of that business with a single mordant line: “All of them involve unreasonable, maladjusted people who are a pain in the neck.” That, too, has investment relevance.

In his take on Brad DeLong’s Slouching Towards Utopia, Siegel writes: “Everyone was born into a world in which the basic ingredients of a decent life have already been invented. We should contemplate our amazing good fortune lest we squander it.” Elsewhere, quoting Roger Ibbotson, he reminds us: “Finance appears extraordinarily complicated, but when simplified to its bare essentials it relies on two prices: the price of risk and the price of time.” Kevin Coldiron adds the sequel: “Without positive real interest, therefore, there can be no capital. Without capital, no capitalism.”

Even the charts and tables are worth lingering over. A graph on page 38 shows global GDP taking off like a rocket around 1800. Others reveal when pollution began falling, how fertility patterns reversed, and how industries evolved over two centuries of US capitalism. It is like getting a visual refresher in economic history — without tuition.

Siegel never loses sight of his audience. He spells out why each book or idea matters to investment professionals: “Investors need to be keenly aware of the sources of, and obstacles to, innovation in their search for prospective returns.” Reviewing McAfee again, he notes: “Some companies and industries will be hurt while others will be helped immensely. Actively managed portfolios can benefit from this insight.”

From his Financial Analysts Journal reprint: “Most decision makers — pension trustees, consultants, and portfolio managers — are not aware of the tendency of mean-variance optimization to magnify the errors of the input assumptions.” A gentle reminder, and a useful one.

Siegel is no cheerleader. He praises generously but does not spare criticism. McAfee’s More from Less, he notes, is about one narrow aspect of technological progress, dematerialization, and readers seeking a broader perspective should check out McAfee’s previous co-written book, The Second Machine Age. Of DeLong’s book: “He imagines his restructuring proposal is liberal, but it is deeply reactionary, throwing sand in the gears of mobility and ambition.” On the limits of the market to produce happiness: “That’s because it’s not supposed to! The market is an economic system, not (pace Ayn Rand) a moral one.”

To say that Siegel’s reviews are a concise substitute for the books themselves would be unfair — to the books. Still, readers looking for sharp, well-informed insights into some of the most important ideas shaping economics and investing will find On Progress and Prosperity an education in itself, and an entertaining one. Some smart readers will undoubtedly refer to many of the chapters again over the course of their careers.