Glenn Hubbard and Tim Kane’s BALANCE: The Economics of Great Powers from Ancient Rome to Modern America is an entertaining overview of a number of civilizations, ancient and modern alike, and why these civilizations’ economies eventually faltered. Covering such disparate countries as Rome, Ming China, Spain, Ottoman Turkey, Great Britain, and the United States (with two sections, one on the state of California alone), Hubbard and Kane make the case that all of these countries’ economies failed for simple and systemic reasons — albeit not necessarily the same simple and systemic reason in every case.
However, there are some things that tend to crop up whenever nations start to decline, including the ossification of political elites, the substantial obstacles to any form of new technology or new way of doing anything, and in some cases — like Ming China — where a change in rulership means economic policy may make U-turns for no good reason whatsoever. This is mostly because an Emperor, like contemporary Prime Ministers or Presidents, wants to put his own, individual stamp on something — and oft-times, that means a change in policy for the sake of change alone rather than doing whatever is in the best interest of the country.
One interesting thing Hubbard and Kane discuss is the theory of “rent-seeking,” a term coined by economist Anne O. Krueger in an article for the American Economic Review back in 1974. Rent-seeking, according to Hubbard and Kane, is when “a group of people have the power to make money by manipulating the rules of government to their own advantage.” (Ms. Krueger came up with this term to discuss the corrupt nature of many Third World officials, who often took bribes to circumvent burdensome government regulations — this after first setting up the obnoxious regulations to begin with.)
But Hubbard and Kane go further in their discussion of what rent-seeking is, including economic protectionism on the part of lobbyists and labor unions — something that’s somewhat controversial, to put it mildly — and monopolistic restrictions or policies, which are far less so.
The most interesting points Hubbard and Kane make are those of political ossification — that is, when a system has hardened into a non-functional mess and is perpetuated by the bureaucrats, for the bureaucrats. When you add in the potential for self-enrichment by those self-same bureaucrats, such as what happened with the recent United States Farm Bill (where many seated legislators came out ahead, financially, because of the policies they enacted), you can see why nations might tend to decline.
There are some historical inaccuracies, however, with some of the overviews of other countries. Spain’s economic problems, for example, weren’t as simplistic as Hubbard and Kane want everyone to believe — they’re right that chasing the Jews out hurt the economy, they’re right that most of the rulers didn’t understand then-contemporary economics, but they minimize one of the biggest problems that caused Spain’s decline — the defeat of the Spanish Armada by Great Britain in 1558. Having a whole fleet of ships suddenly disappear certainly impacted the Spanish economy to a great extent . . . why this wasn’t discussed hardly at all is quite vexing, especially as one of the main reasons Ming China failed, according to Hubbard and Kane, was the dismantling of Zheng He’s fleet after Zheng He died (ships were actually burned in the harbor, partly due to isolationism on the part of the then-Emperor, partly because the ships were starting to rot anyway).
That being said, much of BALANCE is an entertaining overview of politics, economics, and history. It’s interesting, albeit not deep, and many of the high points are discussed.
Bottom line? If you like history, politics, or economics, and are looking for a quick, fast read that hits many high points, BALANCE is entertaining and will probably hold your interest.
But I’d have preferred a little more authenticity along with the entertainment value, thanks.
–reviewed by Barb