I want to second Reihan Salam's recommendation of The Venturesome Economy, by Amar Bhidé. It's a tremendous book; I probably learned more from Bhidé's book than any book I've read in several years (save possibly for Power and Plenty). Bhidé examines in detail how innovation actually occurs in modern economies, and demonstrates how little successful innovation has to do with high-level scientific research. Bhidé eviscerates the arguments of people like Thomas Friedman who claim that America has to start churning out people with math and science degrees in order to maintain our "competitiveness" with countries like China and India. The book is essentially an extension of Paul Krugman's famous Foreign Affairs essay, "Competitiveness: A Dangerous Obsession." That was a classic Krugman essay, on par with "The Myth of Asia's Miracle" and "The Great Capitol Hill Baby-Sitting Co-Op." (The "competitiveness" essay was, in case you're too young to remember, one of several in which Krugman absolutely shredded Robert Reich.)
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