The most important questions of economics have, for too long, been left to people who look at economies from the top down, looking for the magic relationships between such things as money supply, employment, human capital and investment. For more than a decade, however, William Lewis and his colleagues at the McKinsey Global Institute have been trying another approach, using the data and experience gathered by McKinsey consultants at real companies around the world to build a picture of economies from the ground up. The Power of Productivity (Chicago) is a masterful summary of what they found. Lewis's central point is that factors such as education levels and access to capital are overrated when analyzing why some nations are richer than others. At the same time, most analyses grossly underrate the degree to which an economy has truly competitive labor and product markets, unfettered by corruption or competition-restraining regulations meant to favor politically powerful interest groups or further otherwise laudable social goals. From the United States and Europe to Japan, India and Brazil, Lewis lays out anecdotal support for his conclusions in clear and simple English. Even if you don't agree with his prescription for smaller government and lower taxes, the analysis is well worth the ride.

-- S.P.