I'm looking forward to reading this book. My initial reaction on reading some of the initial reviews is to try and avoid thinking of engineering-led as "better" than lawyer-led or vice versa. Americas legal principles, individual and property rights, and rule of law have been undoubtedly tremendous in ensuring its greatness; I'm sure we can all think of engineering cultures that ignore these things for the sake of "getting things built" as delivering some pretty terrible outcomes - not least of all in China itself, as well as closer to home more recently perhaps with the event of social media.
What an amazing outcome it would be if we could see a strong, visionary, innovative engineering discipline and culture develop again, combined with respect for the rule of law enshrined with a robust set of legal rights and judiciary to back them up. Now thats an America we could all respect again (signed, a non-American).
> Americas legal principles, individual and property rights, and rule of law have been undoubtedly tremendous in ensuring its greatness;
I'm not really buying it that these general philosophical principles have much to do with lawyers vs engineers. Yes, lawyers in the US operate under a legal system that was based on them, but then so do Chinese lawyers operate under the legal system they are given.
Thanks for this review, Noah. I have to say, I find your explanation of this phenomenon - that it has to do with different "levels" of economic development - more convincing than Dan's engineer-versus-lawyer one. This is not to say that his observation itself is wrong: I think he makes a very good case for it, and it's almost self-evidently correct.
I'd disagree with his point about the impact, however, for two of the reasons you highlighted:
(1) The US has pretty much always been run by lawyers. Most western countries have been since they adopted constitutional governments. But they have been much better at building before than now, so what gives?
(2) The causality of the engineer-lawyer split, inasmuch as it exists, might run the other way: the can-do government selects for engineers, rather than the reverse.
The development argument makes more inherent sense, I think. When people don't have access to secure food, housing, and transport, this is what they prioritise. That means building the infrastructure to provide that. Once you do, your concerns move on to other things - especially all the noise, disruption, and possible environmental damage that building that infrastructure comes with.
I had a couple of additional thoughts too:
(1) Maybe an alternative thesis is that when, say, the US and UK industrialised, academic disciplines were less specialised, and it was more common to find well-educated people with interests in diverse fields. The west might have been run by lawyers, but the relative prevalence of polymaths meant those lawyers were more engineer-ey, and less lawyerly than now. Building a ton with 19th and early 20th century lawyers was maybe possible, in a way that it wasn't with late-20th century and 21st century ones.
(2) If the development thesis is right, is it possible for a country to go in the opposite direction? I.e. for the stasis in building stuff to cause such severe shortages of basic public goods that political support swings back towards can-do. This might be happening to a limited extent in the UK, but I'm not super convinced.
To your point 1, I think it has more to do with the overall level of democratic control over decision making in a society and lawyers are just incidental here as they are the tool used to exercise that power. My theory is that most people are fundamentally luddites and conservatives (in the traditional meaning of opposing change to the status quo) and that the people 100 years ago whose neighborhoods were developed to build apartments and factories were not one bit happier about it than the most diehard NIMBYs are today. The difference is that back then they didn't have the agency to stop it, but now they are able to file lawsuits against it.
Interesting arguments, I wonder if the shift towards this hyper specialization is actually a side effect of some form of state capture by academics/ educated elites rather than an actual need for this hyper specialization to effectively manage the government. In technology for example, we have had many founders and executives build huge businesses in industries where they had no previous experience since the 70s while in other fields it would seem we have gone down the rabbit hole of complexity. Maybe we need a „return of the generalist“ in key public institutions.
My initial response (having grown up in Michigan) is to recommend everyone who can to spend a day visiting the Henry Ford museum and Greenfield Village in Dearborn, Michigan. You will experience striking dissonance about how America has changed (and not changed) over time with respect to building things. A timely topic with counterintuitive insights into the similarities between the US and China.
I think the main driver is the financialization of the US economy and the focus on shareholder returns.
A lot of early stage industrial economies (especially mercantilist ones) focus on building/making things (often copying things initially) and then tweaking the manufacturing process. They often have government and banking activity oriented toward fixed capital investment and infrastructure. Most of the above was true of Japan and S Korea as well as China.
The US (as Noah noted) also was manufacturing focused for a good while.
Then US companies learned that financial returns don’t necessarily flow from continual product improvement but rather by improving financial returns (margins, ROE) and reducing volatility of earnings.
In the financially-oriented US economy amidst of world of global capital excess (and globalization of production), American companies learned that investors don’t like high fixed costs and capital requirements and cyclical manufacturing exposure.
Companies are paid more for IP than output. The primary focus has been on cost reduction and shedding high cost or low margin assets/processes. Outsourcing transfers those risks to the contract manufacturers and suppliers.
That is what shareholders want and pay high multiples for. The fact that large successful companies and entire industries become dependent on unreliable enemy states for their inputs and production is neither here nor there. For whatever reason, shareholders didn’t view this as a risk when applying multiples and the government is happy when US companies (and donors) are making money and the stock market is going up.
Obviously easy money and loose fiscal and monetary policy has helped shift the focus to asset prices and high margins as well.
While China has also been reckless with credit- the credit pipeline is mostly government directed toward property, infrastructure and manufacturing.
In contrast, a decent portion of the money sloshing around in the US (in part fed by trade deficits/capital account surpluses) has gone toward increasing multiples on existing assets rather than building new assets. Higher multiples/prices of course drives new investment, too, but usually in the flavors of the moment rather than things hard to build (houses).
The lawyer thing he raises is an interesting part, but this is an outgrowth of the regulatory state and tort laws and wealth rather than lawyers really running the economy. The financial sector runs the economy.
I think there's an argument to be made that the stakes of legal hedging are different between a low-income and high-income country (or neighborhood, etc). When you're low income, the environmental costs of building a project are far outweighed by the benefits. The hope of those benefits, along with the difficulty of life with a low income, mutes opposition.
As income goes up, the benefits of, say high speed rail in California, become more diffuse. The costs are closer to outweighing benefits, and higher income people have more leisure time and cognitive space to engage on the issue. And, as America has repeatedly shown us, if rich people don't have the kind of influence on events in their lives that they would like to have, they'll go looking for ways to gain that influence. So you end up more opposition and more careful weighing of the benefits of building.
As always, what you walk away with is the word balance. When countries become unbalanced, they stop working.
America is unbalanced. As has been nauseatingly receptive is the Abundance message and industrial planning message Noah has been slipping into most of what he has been writing. China plans, and China has planned many manufacturing facilities, but the Chart shows that it is failing to halt the decline.
Americans asked lawyers to plan our environmental protection. We got laws, too many laws and that is why NEPA prevents us from building anything, including that ridiculous money pit high-speed rail project that is hopelessly lost.
I don’t oppose industrial planning as a light touch for preferences. What I oppose is that the government can manage markets, especially consumer markets. Can manage social policy.
We are floundering, attempting to increase our birth rate.
Trump was stymied in his trade war with China due to concerns over national security. We need a vast amount of rare earth metals, including rare earth magnets, for our missiles and planes. China is the only place you can get them.
You would think a Warp Speed or Manhattan type project would have been started by Trump, by Biden....That somebody would be proposing a crash program to get US-made processed rare earth metals. Crickets.
I suspect that Trump, in his negotiations with China, is selling out Taiwan; it is the only explanation for why we are doing nothing about this critical and deadly exposure. The problem with industrial planning is politics. Noah doesn’t have a solution to the idiocy of our political class.
Interesting reflection. It is worth noting that a possible point of excess simplifiction re Engineers vs Lawyers is particularly relative to Anglo but especialy American legal culture more than say Civil Code legal culture, the American which is much more weighted to the entrepreneurial-adversarial (i.e. lawyer advocate driven versus judge). Pros and cons there but post-70s orientation for US I think heavily incentivizes legal action that is very much blocking (and 'entreprenurial' speculative gaming) - although Anglo legal code overall more flexible and yes-possible. Curing the 1970s progressives backed Stop Them legal routes would probably heavily mitigate the negative downside of lawyer driven.
Engineering culture on other hand has a tendency to rigidity - which if you're building bridges, turbines within tight tolerances is spot on. But not so great for policy design perhaps. On other hand policy execution may be something quite different (less lawyers at policy appliction more engineers.... separating design and execution).
But I think re the comment about the perverse incentives - I have to say that is more something us Financial Economists catch than lawyers....
As an engineer who has studied a lot of the law connected to robotics and autonomous vehicles, there is actually not that big of a difference between the two professions. The legal system is just the "software" which runs the "operating system" for society. In many ways, going from engineer to lawyer is the natural progression....since the legal system has to deal with more abstract concepts.
It seems clear that his thesis for the current-day situation is correct (ie US bad because too many lawyers), but that he’s wrong about the historical roots.
The US got much worse at building at about the time our per capita lawyers shot up. The problem isn’t that our politicians are lawyers (that’s always been true), it’s that are populace are now too.
Way less of our human capital goes to productive fields (eng) than China, so we’re worse at producing. At the same time, a glut of lawyers has made our society litigious that even the engineers we have can’t get much done.
Luckily, the last can’t be changed so doesn’t matter much. The gov can fix the lawyer : engineer imbalance if it chose too (although this is where having a government made of lawyers probably will get in the way!)
Great review of a fantastic book, and yes, Dan's clear style and excellent anecdotes are the best part. (I'll be post a review of the writing next week.) Good here to go past the engineer v. lawyer framing and look at the implications. I found the later chapters more sober and somber than the exciting early ones. Good comparisons with Japan here in your review too. Will watch the video!
I'm looking forward to reading this book. My initial reaction on reading some of the initial reviews is to try and avoid thinking of engineering-led as "better" than lawyer-led or vice versa. Americas legal principles, individual and property rights, and rule of law have been undoubtedly tremendous in ensuring its greatness; I'm sure we can all think of engineering cultures that ignore these things for the sake of "getting things built" as delivering some pretty terrible outcomes - not least of all in China itself, as well as closer to home more recently perhaps with the event of social media.
What an amazing outcome it would be if we could see a strong, visionary, innovative engineering discipline and culture develop again, combined with respect for the rule of law enshrined with a robust set of legal rights and judiciary to back them up. Now thats an America we could all respect again (signed, a non-American).
> Americas legal principles, individual and property rights, and rule of law have been undoubtedly tremendous in ensuring its greatness;
I'm not really buying it that these general philosophical principles have much to do with lawyers vs engineers. Yes, lawyers in the US operate under a legal system that was based on them, but then so do Chinese lawyers operate under the legal system they are given.
Thanks for this review, Noah. I have to say, I find your explanation of this phenomenon - that it has to do with different "levels" of economic development - more convincing than Dan's engineer-versus-lawyer one. This is not to say that his observation itself is wrong: I think he makes a very good case for it, and it's almost self-evidently correct.
I'd disagree with his point about the impact, however, for two of the reasons you highlighted:
(1) The US has pretty much always been run by lawyers. Most western countries have been since they adopted constitutional governments. But they have been much better at building before than now, so what gives?
(2) The causality of the engineer-lawyer split, inasmuch as it exists, might run the other way: the can-do government selects for engineers, rather than the reverse.
The development argument makes more inherent sense, I think. When people don't have access to secure food, housing, and transport, this is what they prioritise. That means building the infrastructure to provide that. Once you do, your concerns move on to other things - especially all the noise, disruption, and possible environmental damage that building that infrastructure comes with.
I had a couple of additional thoughts too:
(1) Maybe an alternative thesis is that when, say, the US and UK industrialised, academic disciplines were less specialised, and it was more common to find well-educated people with interests in diverse fields. The west might have been run by lawyers, but the relative prevalence of polymaths meant those lawyers were more engineer-ey, and less lawyerly than now. Building a ton with 19th and early 20th century lawyers was maybe possible, in a way that it wasn't with late-20th century and 21st century ones.
(2) If the development thesis is right, is it possible for a country to go in the opposite direction? I.e. for the stasis in building stuff to cause such severe shortages of basic public goods that political support swings back towards can-do. This might be happening to a limited extent in the UK, but I'm not super convinced.
To your point 1, I think it has more to do with the overall level of democratic control over decision making in a society and lawyers are just incidental here as they are the tool used to exercise that power. My theory is that most people are fundamentally luddites and conservatives (in the traditional meaning of opposing change to the status quo) and that the people 100 years ago whose neighborhoods were developed to build apartments and factories were not one bit happier about it than the most diehard NIMBYs are today. The difference is that back then they didn't have the agency to stop it, but now they are able to file lawsuits against it.
Interesting arguments, I wonder if the shift towards this hyper specialization is actually a side effect of some form of state capture by academics/ educated elites rather than an actual need for this hyper specialization to effectively manage the government. In technology for example, we have had many founders and executives build huge businesses in industries where they had no previous experience since the 70s while in other fields it would seem we have gone down the rabbit hole of complexity. Maybe we need a „return of the generalist“ in key public institutions.
My initial response (having grown up in Michigan) is to recommend everyone who can to spend a day visiting the Henry Ford museum and Greenfield Village in Dearborn, Michigan. You will experience striking dissonance about how America has changed (and not changed) over time with respect to building things. A timely topic with counterintuitive insights into the similarities between the US and China.
Good well-balanced review.
I think the main driver is the financialization of the US economy and the focus on shareholder returns.
A lot of early stage industrial economies (especially mercantilist ones) focus on building/making things (often copying things initially) and then tweaking the manufacturing process. They often have government and banking activity oriented toward fixed capital investment and infrastructure. Most of the above was true of Japan and S Korea as well as China.
The US (as Noah noted) also was manufacturing focused for a good while.
Then US companies learned that financial returns don’t necessarily flow from continual product improvement but rather by improving financial returns (margins, ROE) and reducing volatility of earnings.
In the financially-oriented US economy amidst of world of global capital excess (and globalization of production), American companies learned that investors don’t like high fixed costs and capital requirements and cyclical manufacturing exposure.
Companies are paid more for IP than output. The primary focus has been on cost reduction and shedding high cost or low margin assets/processes. Outsourcing transfers those risks to the contract manufacturers and suppliers.
That is what shareholders want and pay high multiples for. The fact that large successful companies and entire industries become dependent on unreliable enemy states for their inputs and production is neither here nor there. For whatever reason, shareholders didn’t view this as a risk when applying multiples and the government is happy when US companies (and donors) are making money and the stock market is going up.
Obviously easy money and loose fiscal and monetary policy has helped shift the focus to asset prices and high margins as well.
While China has also been reckless with credit- the credit pipeline is mostly government directed toward property, infrastructure and manufacturing.
In contrast, a decent portion of the money sloshing around in the US (in part fed by trade deficits/capital account surpluses) has gone toward increasing multiples on existing assets rather than building new assets. Higher multiples/prices of course drives new investment, too, but usually in the flavors of the moment rather than things hard to build (houses).
The lawyer thing he raises is an interesting part, but this is an outgrowth of the regulatory state and tort laws and wealth rather than lawyers really running the economy. The financial sector runs the economy.
I think there's an argument to be made that the stakes of legal hedging are different between a low-income and high-income country (or neighborhood, etc). When you're low income, the environmental costs of building a project are far outweighed by the benefits. The hope of those benefits, along with the difficulty of life with a low income, mutes opposition.
As income goes up, the benefits of, say high speed rail in California, become more diffuse. The costs are closer to outweighing benefits, and higher income people have more leisure time and cognitive space to engage on the issue. And, as America has repeatedly shown us, if rich people don't have the kind of influence on events in their lives that they would like to have, they'll go looking for ways to gain that influence. So you end up more opposition and more careful weighing of the benefits of building.
Shakespeare was right. Kill all the Lawyers
As always, what you walk away with is the word balance. When countries become unbalanced, they stop working.
America is unbalanced. As has been nauseatingly receptive is the Abundance message and industrial planning message Noah has been slipping into most of what he has been writing. China plans, and China has planned many manufacturing facilities, but the Chart shows that it is failing to halt the decline.
Americans asked lawyers to plan our environmental protection. We got laws, too many laws and that is why NEPA prevents us from building anything, including that ridiculous money pit high-speed rail project that is hopelessly lost.
I don’t oppose industrial planning as a light touch for preferences. What I oppose is that the government can manage markets, especially consumer markets. Can manage social policy.
We are floundering, attempting to increase our birth rate.
Trump was stymied in his trade war with China due to concerns over national security. We need a vast amount of rare earth metals, including rare earth magnets, for our missiles and planes. China is the only place you can get them.
You would think a Warp Speed or Manhattan type project would have been started by Trump, by Biden....That somebody would be proposing a crash program to get US-made processed rare earth metals. Crickets.
I suspect that Trump, in his negotiations with China, is selling out Taiwan; it is the only explanation for why we are doing nothing about this critical and deadly exposure. The problem with industrial planning is politics. Noah doesn’t have a solution to the idiocy of our political class.
Interesting reflection. It is worth noting that a possible point of excess simplifiction re Engineers vs Lawyers is particularly relative to Anglo but especialy American legal culture more than say Civil Code legal culture, the American which is much more weighted to the entrepreneurial-adversarial (i.e. lawyer advocate driven versus judge). Pros and cons there but post-70s orientation for US I think heavily incentivizes legal action that is very much blocking (and 'entreprenurial' speculative gaming) - although Anglo legal code overall more flexible and yes-possible. Curing the 1970s progressives backed Stop Them legal routes would probably heavily mitigate the negative downside of lawyer driven.
Engineering culture on other hand has a tendency to rigidity - which if you're building bridges, turbines within tight tolerances is spot on. But not so great for policy design perhaps. On other hand policy execution may be something quite different (less lawyers at policy appliction more engineers.... separating design and execution).
But I think re the comment about the perverse incentives - I have to say that is more something us Financial Economists catch than lawyers....
As an engineer who has studied a lot of the law connected to robotics and autonomous vehicles, there is actually not that big of a difference between the two professions. The legal system is just the "software" which runs the "operating system" for society. In many ways, going from engineer to lawyer is the natural progression....since the legal system has to deal with more abstract concepts.
It seems clear that his thesis for the current-day situation is correct (ie US bad because too many lawyers), but that he’s wrong about the historical roots.
The US got much worse at building at about the time our per capita lawyers shot up. The problem isn’t that our politicians are lawyers (that’s always been true), it’s that are populace are now too.
Way less of our human capital goes to productive fields (eng) than China, so we’re worse at producing. At the same time, a glut of lawyers has made our society litigious that even the engineers we have can’t get much done.
Luckily, the last can’t be changed so doesn’t matter much. The gov can fix the lawyer : engineer imbalance if it chose too (although this is where having a government made of lawyers probably will get in the way!)
Great review of a fantastic book, and yes, Dan's clear style and excellent anecdotes are the best part. (I'll be post a review of the writing next week.) Good here to go past the engineer v. lawyer framing and look at the implications. I found the later chapters more sober and somber than the exciting early ones. Good comparisons with Japan here in your review too. Will watch the video!