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11 of 11 people found the following review helpful:
5.0 out of 5 stars
America and the Global Economy: Excellent Book, 16 Jun 2005
Ignore the title of the book, it is not just about Asia, although Asia plays an important role here. This book attempts to do the impossible, that is, it attempts to do an economic analysis of the US economy and then predict the future, especially international trade, trade imbalances, and finances. That is all but impossible to do, but there are clearly some trends which are food for thought and discussion. The book is a 300 page discussion of the problems, the competition in the marketplace, transportation, America's love with the automobile, communications, finance, and then his ideas for solutions. In summary, the world is smaller with faster deliveries of materials and instant communications; globally we might have price deflation for labor but inflation for natural resources; more economies are interconnected and there is less resistance to trade. This is bound to cause changes in our systems of supply and demand, and it follows that there will be permanent changes in our economy. The author does not present stunning, or radical, or even new ideas. Many of his points have appeared elsewhere in print. It is not a question of connecting the dots to get an economic picture... the trade deficit is huge, and China is on the rise placing new strains on the world's resources, especially oil. Service and manufacturing jobs have moved offshore. That is not speculation. Most of his comments and ideas are sound. I bought the book after a careful inspection since it lays it out all the story in one neat package - 300 pages long, with lots of detail. The book is divided into 12 chapters that cover the costs of goods, the financing, the competition, the dollar as a world currency, express deliveries, high tech, China, India, etc. It is not limited to Asian countries. He has a final chapter - which seems short and a bit weak - on solutions. Overall, the book is written in a chatty informal style. It is not crammed full of statistics or charts and graphs like a Niall Ferguson book. For years America was financially strong, living within its means, or even with a trade surplus: it was the world's biggest creditor nation. The country could outsource manufacturing, import as much oil as it wanted, and then offset this with exports of food products, jet planes, computer and telecom hardware, tobacco, mining and oil drilling equipment, military hardware, movies, printed matter, etc. It is a free market. Shocklingly, America has become a net food importer with a staggering total monthly trade deficit and there are no signs that it will reverse soon. The US has slipped to become the largest debtor nation, something that we laughed at when it was Brazil or Mexico or elsewhere. This is all compounded by high US consumer spending, inefficient large gas guzzling trucks replacing cars, while being in the indefensible position of being the world leader in greenhouse gas emissions. The author calls this elaborate trade system a "Ponzi Scheme Economy" since it is an unsustainable one way net flow of goods and services into the US in exchange for promissory notes. To make matters even worse, the US is now losing the education battle, and producing fewer engineers and scientists than places like China. The author quotes MIT president Hockfiled who worries that "we're falling behind in science and engineering". China itself just woke up about 25 years ago from a deep slumber - see China Inc. by Ted Fishman - and it has no place to go but up with its 1.3 billion people. To put things in perspective, the author reminds the reader that until the 19th century China was previously the world's GDP leader. Its economy fell dramatically at that time, but more recently it has jumped from the Great Leap Forward - a disaster by any measure - to manned space flight, high tech universities, cars, and traffic congestion and smog - sound familiar? The situation is not like Singapore that has just a few million people or Japan with 125 million, China has over a billion, about four times the US population. It is already a world leader in steel and concrete consumption and is building a highway system called the "National Expressway" that will eventually dwarf the US Interstate road system. According to a Chinese Government web page, it is already the second biggest road system in the world, so it is not just a lot of talk. Jobs have been transferred to China and India with little hope of returning. The author quotes Andy Grove who fears that even software develoment could become an "endangered species" in America. Most people know the problems and the solutions, but the inertia to change is large. In Washington, the reality is high federal government spending with nobody about to change. In fact some politicians seem to love deficit spending. Also, we have too much oil consumption, the manufacturing base has shrunk, and there are too many trade imbalances. Nobody has the strength of will or courage or leadership to make the country energy self sufficient or make real changes starting with education. Also, the decline is moving very slowly taking decades, like the proverbial frog in the hot water. It has yet to become a crisis, especially with foreigners investing here to take up the slack, and with OPEC having the ability to increase production - so far. Good book. 5 stars. Also, if you get a chance take a look at China Inc. by Ted Fishman. That is an excellent and easy to read book on just China and how its economy works.
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by Duncan Hewitt
by James Kynge
by Susan Shirk
