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Good Capitalism, Bad Capitalism - and the Economics of Growth and Prosperity

Recorded on May 10, 2007

Location: The Heritage Foundation's Lehrman Auditorium

Imagine this: a mere century ago, the purchasing power of an average American was one-tenth of what it is today.  But what will it take to sustain that growth through the next century?  And what can be said about economic growth to aspiring nations seeking higher standards of living for their citizens?

In this important book, Robert E. Litan and Carl J. Schramm (as well as their colleague William J. Baumol) contend that the answers to these questions lie within capitalist economies, though many observers make the mistake of believing that "capitalism" is of a single kind.  The authors dispel that myth, documenting four different varieties of capitalism, some "Good" and some "Bad" for growth.  They identify the conditions that characterize Good Capitalism - the right blend of entrepreneurial and established firms, which can vary among countries - as well as the features of Bad Capitalism.  They examine how countries catching up to the United States can move faster toward the economic frontier, while laying out the need for the United States itself to stick to and reinforce the recipe for growth that has enabled it to be the leading economic force in the world.  In short, this new view of the wealth of nations offers a guide to economic policy in all countries from the richest to the poorest.