As we stand on the brink of the new millennium, MIT economist and New York Times bestselling author Lester Thurow addresses the critical issue of wealth creation. The result is an essential road map for how individuals, companies, and nations can and must build wealth in a knowledge-based global economy. What skills are needed to succeed in this new economy? What new rules must apply to the creation and protection of new ideas?How can marketable wealth be rising at ever-faster rates while productivity growth is slowing? How can nations create a social system where the entrepreneurial spirit can flourish without creating income and wealth inequalities that threaten the system? Professor Thurow addresses these questions and, finally, turns his attention to the three major economic sectors of the world: America, East Asia, and Europe. He provides a trenchant analysis of each as a significant competitor in the coming decades, and predicts the likely outcome of the complex forces that are presently shaping global society.
Building Wealth
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The world is on the verge of another industrial revolution, driven by knowledge this time, not the steam engine or electricity, according to noted MIT economist Lester C. Thurow. In his book, Building Wealth: The New Rules for Individuals, Companies and Nations, Thurow writes that "Knowledge is the new basis for wealth. This has never before been true. In the past, when capitalists talked about their wealth, they were talking about their ownership of plant and equipment or natural resources. In the future when capitalists talk about their wealth, they will be talking about their control of knowledge." This means that the Bill Gateses of the world will be on top, not the Rockefellers, Carnegies, or Morgans.
To ready themselves for this new economy, companies and nations need to build what Thurow calls a "wealth pyramid," using building blocks such as a solid social organization, entrepreneurial skills, and education that encourages creativity and curiosity. The United States is better positioned than Europe or Japan to do well in the new economy, Thurow contends, but he warns of weaknesses even here. He puts companies like Intel on top in the knowledge-based global economy and places a question mark next to firms like Wal-Mart. Will the traditional retailer fall to the onslaught of lower-priced Internet competitors, or will it survive because people's herding instincts make them still want to drive to a Wal-Mart store? Bulding Wealth is a worthwhile read for anyone concerned about the wealth of nations and individuals, by the author of such economic bestsellers as Head to Head and The Zero Sum Society. --Dan Ring --This text refers to an out of print or unavailable edition of this title.
From Library Journal
The rules of global economy from MIT economist Thurow.
Copyright 1999 Reed Business Information, Inc.
Copyright 1999 Reed Business Information, Inc.
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Most Helpful Customer Reviews
47 of 50 people found the following review helpful:
2.0 out of 5 stars
The ivory tower economist at work,
By hsmith3@ibm.net (Houston Texas) - See all my reviews
This review is from: Building Wealth: The New Rules for Individuals, Companies and Nations (Hardcover)
Lester Thurow has performed a service to non-academics by raising the blinds in his ivory tower and letting us peek in to see how academic economists such as Ravi Batra at Southern Methodist University and Harvard's Robert C. Merton and Stanford's Myron S. Scholes can make so many serious mistakes when they take their craft out of academia and into the real world. Batra has been predicting an imminent depression for fifteen years and Merton and Scholes threatened world bond markets last year when the lost billions of dollars at Long Term Capital Management. Thurow himself had a previous unpleasant confrontation with the real world when he predicted in his 1992 book, Head to Head, that Japan would rule the world economically and the U.S. would end up a third class economic power in the 1990's.The first insight Thurow provides into ivory tower economics is his open distrust of the real world when it contradicts numbers he has access to. He is unwilling to believe that America led the world in productivity in this decade. He trusts numbers showing that "total factor productivity has not grown at all" and wonders, "Which perspective is real: the rapid technological change we feel, see and smell, or the slow productivity growth we measure?" Instead of urging economists to spend more time in the outside world, Thurow argues that Americans should spend "the sums necessary to get better statistics." Thurow shows the same preference for numbers as opposed to reality when he rehashes the numbers that make it seem as if "real wages have been flat or falling" since the 1970's." Cox and Alm in Myths of Rich and Poor showed in great detail earlier this year that an accurate comparison of real wages requires looking beyond the wage and seriously flawed CPI numbers. Cox and Alm compare the real things that workers owned in 1971 with what they enjoy today, such as air conditioning, automobiles, washing machines, dishwashers and hours of leisure. In the real world, the poor today are living better than the average worker was in 1971. And the average worker is enjoying a life his 1971 peers could not have hoped for. Thurow shows us the ivory tower economist in his lab treating economics the way a chemist or biologist does research. If a chemist runs an electric current through water, hydrogen and oxygen will appear. If governments provide the right amount of education, infrastructure and research money, Thurow suggests, new, big companies will appear. He seems to be unaware of the little deal makers, salespeople and distributors who make things happen: the plumber or printer bidding on a job; the salesperson building relationships and educating customers about new products and the owners of warehouses and trucks without which even Internet commerce would be impossible. Thurow's ignorance of the world outside his ivory tower is equally apparent in his view of the past. He maintains that, "For all of human history, the source of success has been the control of natural resources." He ignores traders such as the resource poor Phoenicians, Venetians and Dutch who built wealth with their knowledge of navigation, deal making and by developing mathematical models to improve record keeping and calculate compound interest. Because there were no government economic programs or public schools Thurow asserts that "for a long period of time (500 to 1150 AD) technology was regressing." In fact, the improvement of harnesses in the eighth century, introduction of iron shoes for horses, the horse's replacing of slow oxen and especially the invention of the wheeled plow changed the medieval rural resident from a subsistence farmer to an entrepreneur. The invention of the camshaft around 970 AD enabled millwrights to mechanize industries which had been operated by hand or foot and the invention of the mechanical clock probably changed western Europe more than the steam engine. Certainly the economic catastrophe that Batra and Thurow see right around the corner may actually appear, but Building Wealth should be a warning to government and corporate leaders not to depend on ivory tower economists to find a solution.
27 of 29 people found the following review helpful:
2.0 out of 5 stars
badly dated, often wrong, but worrisome in the right ways,
By Robert J. Crawford (Balmette Talloires, France) - See all my reviews (TOP 1000 REVIEWER) (REAL NAME)
This review is from: Building Wealth: The New Rules for Individuals, Companies, and Nations in a Knowledge-Based Economy (Paperback)
Before the high tech stock meltdown last year, techno-boosters breathlessly proclaimed a "third industrial revolution," that of the "knowledge-based" or "new" economy. Unlike revolutions one and two - the steam engine and then the electric power tools that liberated us from dependence on muscle labor - this time it was the human mind, somehow magnified by dazzling new gadgets and software, that was supposed to generate economic value: knowledge workers, engineers, and scientists would control data, the structure of matter, and even of life itself for our benefit. For all its seductive hype - and the cult status of Wired magazine illustrates how extolling the third industrial revolution has become a cottage industry in itself - this vision remains controversial and unproven, now perhaps fatally flawed. In "Building Wealth," Thurow wanted to examine it all by applying a formula he honed to perfection in previous bestsellers: he articulates, and to a degree analyzes, trends that we find confusing and frightening, tying them together in coherent form. Only this time, while swallowing the fashionable rhetoric of info-revolution whole, he played a kind of booster who also wants to be a critic. Barely able to contain his enthusiasm for the enormous fortunes then being amassed in the name of high technology, Thurow was mesmerised by "glittering eye" atop the "wealth pyramid" on the back of the dollar bill. "Wealth," Thurow writes, "is the only game to play if you want to prove your mettle...If you do not play there, by definition you are second rate." But he is also worred about the direction of American capitalism, which he portrayed as dangerously imbalanced in wealth distribution and opportunity. The result is an awkward book that tries to do too many things at one time. Thurow is at his worst as a techno-booster pundit, and in retrospect he appears to have been as gullible as the rest of us. That makes this book dated - badly. Moreover, except for some vague references to the growing importance of knowledge in wealth creation, he never clearly defines what is new about the so-called knowledge-based economy. Is it the systematic application of science to business problems? The emergence of new technologies? Or sheer computing power? Rather than addressing these questions, Thurow presents a series of faintly illustrative anecdotes, such as the use of seismographic tests in the search for oil, which have replaced the old-style wildcatters who simply drilled holes. This leaves a huge gap at the core of the book, allowing Thurow to avoid legitimate questions about whether the revolution exists as of yet (it doesn't) or whether the Panglossian visions of the Wired crowd simply conceal traditional, extremely conservative economic views (they do). In addition, the thirteen New Rules of his subtitle fail to add to the text. For example, Rule One states: "No one has ever become very rich by saving their money. The rich see opportunities to work and invest in situations where large disequilibriums exist..." Such observations, which in my opinion are way beneath Thurow's dignity and talent, are sprinkled abruptly throughout the book as if some editor added them to mimic the banality of the "Seven Habits of Highly Effective People." It would be pathetic if it wasn't comic. It would have been far more useful for Thurow to step back and ask whether this booster rhetoric is premature or if it is even "revolutionary." As events have shown, the industries that techno-boosters celebrated were built on far shakier ground than was commonly acknowledged, even those like Cisco that supplied "Internet plumbing." Almost all of those hot new internet companies failed or remain stubbornly unprofitable, some disastrously. In defense of these industries, techno-boosters invariably (now lamely) argue that it is too early to judge (or "accurately measure") these results and that extremely high failure rates are typical of "embryonic" industries. Which is precisely my point. Even the booming PC and telecommunications industries, which accounted for nearly 35% of the growth in the U.S. economy, were vulnerable. At any rate, an information-technology recession could finally put the sector back into realistic perspective: it has improved productivity in certain limited applications, but overall its impact has been modest. Nonetheless, Thurow is a very good worrier. Sensing that something may be amiss in the U.S. economy, he returns with conviction to his familiar themes of education reform, the impact of social systems on economic well being, and the need for government investment strategies to create long-term advantages. Though more traditional economists disdain Thurow's willingness to plunge into messy subjects that transcend their basic algebra, it is here that he has the most to contribute to the national debate. That glittering eye on the greenback, he says, must be supported by a solid base in the "wealth pyramid," that is, in order for any economic revolution to take hold, workers have to benefit as well. Unfortunately, this is not happening. There it is. I am sorry to say that this is a mediocre book, as I have gotten a great deal about Thurow's perspective in the past. It is now so dated - after only a few years - that I would not recommend it.
15 of 15 people found the following review helpful:
5.0 out of 5 stars
How Rich Countries Get Rich,
By newchapter "newchapter" (Atlanta, GA USA) - See all my reviews
This review is from: Building Wealth: The New Rules for Individuals, Companies, and Nations in a Knowledge-Based Economy (Paperback)
Overall, it is a fascinating read for anyone interested in economics, or how rich countries become rich. Lots of good facts which reflect on the competitive, and opportunistic capitalist paradigm we currently live in. 1) There has been significant change in the economic landscape, and that change continues to accelerate. Before the industrial revolution, 98% of the world's population had income only from farming. Now less than 2% are farmers. 2) The world is increasing a global market. Coca Cola gets 80% of its revenues from outside the United States. 3) The gap in wealth continues to widen. 4) We are all busier. With the invention of electricity, the average hours of sleep dropped from 9 hours to 7 hours a day. 5) Old companies must destroy themselves (re-invent themselves) in order to stay competitive and grow. Also, individuals must constantly change and grow to remain competitive. If not, they will fall behind. 6) Capitalism is a tough game. The number of businesses failing (88% a year) is almost as many as new business are formed. Wealth is constantly being transferred from one group ~ to another. 7) There are many basic ingredients to create wealth. Some are cultural (like entreprenuership), some are created and enforced by the government (intellectual property, law and order, infrastructure), some are learned by the individual (skills, knowledge) 8) Each country, and region has its strengths and weakness. In order to build wealth for the future, each country must act differently: - Japan: Clean up the banks, bring in professional management, restore government credibility, and create internal growth. Japan is too big to play the export game anymore. 9) Wealth is created when there is a disequillibrium (imbalance) in technology, or society. When there is change, there is opportunity ~ because wealth is being transferred. 10) Know your weakness and go where that weakness is not important.
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