Fortune Favors the Bold: What We Must Do to Build a New and Lasting Global Prosperity [Hardcover]

Lester C. Thurow (Author)

Book Description

Publication Date: October 7, 2003

The new global economy is linking the fortunes of every nation on every continent -- for good or for ill. Its hallmark is a rising instability and a growing inequality between the first and third worlds, in spite of rising average incomes. The United States and other first world economies are finding it hard to recover after the boom of the 1990s and the bust of the early 21st century. Financial crises in the third world come frequently and are increasingly severe. Globalization is invoked to explain riots, civil disobedience, and as a factor in the rise of terrorism.

Lester Thurow argues now is the time to shape globalization into what we want it to be -- before it's too late. Today, he explains, we are at a critical crossroads in the development of the global economy. We can sit back and let it grow as it will, or we can "seize the moment and build economic systems that will minimize instability, allow second and third world countries to thrive, and protect and enhance our own American interests. In short, a win/win global economy that benefits all participants.

Globalization, says Thurow, can be shaped.

In "Fortune Favors the Bold, Thurow provides an insightful analysis of the ills of globalization and, more important, offers solutions. He tackles subjects such as: The dangers of the burgeoning U.S. trade deficit and the falling dollar
Solving the problem of intellectual property rights violations
Restarting Japan's stagnating economy
How best to help underdeveloped countries enter the global economy
Reforming the World Bank and the International Monetary Fund

Further, Thurow shows how the economic successes of Ireland and China provide a model forother countries to follow. He even proposes creating anew role for a "Chief Knowledge Officer" to help guide companies and governments in the developing global knowledge-based economy of the 21st century.

Globalization will continue whether we like it our not. We are at a critical moment; great challenges lay ahead, and our economic future is at stake. Now, with "Fortune Favors the Bold, we have a map and guidebook to a prosperous economic future.

Editorial Reviews

Amazon.com Review

With Fortune Favors the Bold: What We Must Do to Build a New and Lasting Global Prosperity, Lester Thurow follows on his bestsellers The Zero-Sum Society and The Future of Capitalism by addressing the path to globalization. Thurow--a Professor of Management and Economics at MIT's Sloan School--draws uncompromising conclusions: only a bold embrace of globalization will bring prosperity, and nations that fail to engage in global economics will fall behind the world's dominant powers.

He sees three simultaneous revolutions that fuel the rush to global business: the birth of knowledge-based industry, the creation of a global economy built on a worldwide information infrastructure, and the victory of capitalism. But Thurow is not naively optimistic about the prospects for prosperity in this new framework. The U.S. trade deficit, the Chinese export economy, the SARS epidemic, and the stagnating Japanese economy all offer real threats to short-term and long-term well-being.

Some readers will be frustrated that Fortune Favors the Bold does not deliver a detailed set of solutions to these impediments to global prosperity, despite Thurow's thorough research. The U.S. trade deficit, like the absence of international intellectual property rights, he labels a "dilemma": a problem that has no prescriptive answer. Crises will occur, he suggests. The challenge is to prepare for them and manage them well. Thurow urges the creation of new institutions to confront these dilemmas head on, notably the creation of a Chief Knowledge Officer (CKO) for governments and major corporations. The CKO will provide a central intelligence to steer nations and corporations through the difficulties of economic revolution. For Thurow, fortune will favor those leaders who boldly shape globalization and invest in emerging technologies. Those who stand by will be doomed to marginalization. --Patrick O'Kelley

From Publishers Weekly

With no viable alternatives to capitalism remaining, says Thurow, the "third industrial revolution" makes a global market economy inevitable. The only question is exactly how the globalization process will unfold. Thurow admits flaws in the capitalist system, but firmly believes the game can be handicapped to reduce some of the inequalities. As the former dean of MIT's business school, the author may be a master economist; his take on matters such as Japan's stagnancy in the 1990s is certainly sharp and insightful. But when he tackles other cultural and social issues, there are enough hyperbolic statements on basic subjects open to debate-such as the assertion that the music recording industry faces "economic extinction" and that the film industry may soon follow-that the reader is not always inclined to trust his judgment. Proposals for global financial reform, such as transforming the International Monetary Fund into international bank deposit insurance, read as pie-eyed rather than visionary. To ensure affordable medicine for the third world, for example, he suggests governments use the principle of eminent domain to scoop up pharmaceutical patents. He has an even more reckless plan for dealing with copyrights and patents, in which the American government would simply allow corporations to ignore intellectual property claims originating in countries that refuse to prosecute their own copyright pirates. Such shaky advice undermines the more effective historical and contemporary economic analysis.
Copyright 2003 Reed Business Information, Inc.

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Product Details

• Hardcover: 352 pages
• Publisher: HarperBusiness; 1 edition (October 7, 2003)
• Language: English
• ISBN-10: 0060523654
• ISBN-13: 978-0060523657
• Product Dimensions: 9.2 x 6.4 x 1.2 inches
• Shipping Weight: 1.3 pounds
• Average Customer Review: 2.4 out of 5 stars  See all reviews (27 customer reviews)
• Amazon Best Sellers Rank: #1,158,950 in Books (See Top 100 in Books)

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26 of 30 people found the following review helpful:

4.0 out of 5 stars Creating a Better Global Economy, October 7, 2003

By 

Donald Mitchell "Jesus Loves You!" (Thanks for Providing My Reviews over 109,000 Helpful Votes Globally) - See all my reviews
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This review is from: Fortune Favors the Bold: What We Must Do to Build a New and Lasting Global Prosperity (Hardcover)

Professor Thurow has written one of the better books on improving global prosperity as knowledge-based industries and third-world industrialization expand through broader use of capitalism and new communications technologies. He accurately points out the major risks (including not participating in global trade, the out-of-control U.S. trade deficit and plunging dollar, Japan's unwillingness to clean up its bankrupt borrowings, lethal global viruses, poorly protected intellectual property rights, and the need for less expensive drugs for poor people). His prognosis is grim. "Those who leap sometimes lose, but those who do not leap always lose. Fortune favors the bold."

The solutions he proposes are extreme and bold.

Countries that are opting out of globalization had better find some way to participate. This problem will be most difficult in sub-Saharan Africa. To help with this, underdeveloped countries should focus on improving education. The World Bank should focus solely on facilitating this shift towards improved education. The IMF should provide insurance for international liquidity rather than micromanaging individual economies. New growth should focus away from exporting commodity items based on low cost labor.

After an inevitable crash in the dollar, he foresees much manufacturing returning to the United States to take advantage of newly lowered costs (in dollar terms) here. Imports will be permanently more expensive, and the standard of living in the United States will fall by at least 20 percent. The only likely palliative is to create advance plans with the IMF to handle the crisis when it occurs. The other alternative is for foreign countries to stimulate their economies more than they are, and this is unlikely to occur.

Intellectual property rights should be adjusted to reflect the ability of the purchaser to pay and the country's track record in honoring intellectual property rights. In addition, global industries should get better at protecting themselves by making piracy harder to accomplish. The film industry should focus on this now.

Income differentials can be reduced through a combination of more education, skill enhancement and replacing payroll taxes for benefits with value-added (sales-based) taxes.

Cultural threats will be overcome as countries make more efforts to export their own cultures . . . creating a newly-merged global culture.

As for American hegemony, Europe and Japan have to be willing to commit people and resources to share the costs and efforts of solving worldwide problems . . . including military ones.

As an institutional mechanism for making these adjustments, Professor Thurow proposes adding Chief Knowledge Officers for countries and companies. While companies often have such roles, countries seldom do. The national CKO "provides honest intelligence about technology and its interaction with the economies and society." With thoughtful direction, he feels that countries can create national advantages as Singapore and Ireland have done.

The potential solutions in many cases are not developed in much detail. Many readers will wonder why take those directions, rather than some other ones. The basic logic seems to be to enhance the global economy in ways that more fairly reward all countries and companies than the current system does. Such balance, while desirable, will probably have to be created by tough negotiations and competition rather than greater international cooperation.

I found the proposed solutions to be naive about how willing countries, companies and financial institutions are to change. I suspect that these potential compromises would only occur after a long period of global problems . . . such as an extended global depression, breakout of wars using weapons of mass destruction, or population-decimating epidemics.

A more realistic direction is to focus on what to do when the U.S. economy crashes after the dollar plunges. Companies will probably continue to look out for themselves. For U.S. companies, the advantages of selling more abroad will be irresistible when nondollar earnings become so much more valuable. Those who depend on exporting into the U.S. will have big problems. Professor Thurow is probably right that we are headed for a period of weak global economic growth. Currency instability will probably get worse before it gets better. Who's going to pay for stability in an impoverished world? No one, I suspect.

I graded the book at five stars for identifying important issues, and three stars for the proposed solutions and their explanations. Those two grades averaged to four stars for the book.

I do recommend this book. It will help you grasp the difficult times and choices ahead. Forewarned is forearmed. Get started now!

Let me share one final caution about this book. Although there are no misspellings, it has an annoying number of misused words (principle for principal and vice versa). It could have used some more careful proof-reading.

11 of 11 people found the following review helpful:

4.0 out of 5 stars For Whom Did the Author Intend This Book?, November 17, 2003

By A Customer

This review is from: Fortune Favors the Bold: What We Must Do to Build a New and Lasting Global Prosperity (Hardcover)

Let me first confess: I have retired from a career as a physicist/engineer and approach economics for the sole purpose of guiding my investments. Up front, this book provides the most crystal clear explanation I have ever seen of the interplay between trade deficits, dollar exchange rates, foreign investments (in US debt & equities), and US budget deficits. There is also an inspired, if brief, explanation of the advantages accruing to the US by having the US dollar as the principle medium of international settlements. For this perceptive and lucid discussion of international trade and payments, alone, this book is worth its price. The author's view that we are on a slippery slope to prolonged recession is widely if not universally held among economists of sound reputation.

The book lays out some ideas for averting the worst of possible economic futures. I would agree that many are idealistic and probably unworkable. But if this book does no more than prime an intelligent public dialog on the subject of deficit financing, it will have helped this democracy function with it's collective eye on the most important questions.

The reviewer who gave this volume such a low score is himself a "part of the problem." Everywhere I wander in search of economic enlightenment, I find doctrinaire petty political philosophers who are captured by this or that "school" of economics, finding truth exclusively in Keynes, M. Friedman, Laffer/Gilder or some other. The problem is that none of these "schools" or their mindless proponents would recognize a real dynamic model capable of prediction. Economics has not yet become a mature science: it has no equivalent to quantum mechanics which can predict the outcome from a set of initial conditions. So almost all economic writings are anecdotal and filled with special terminology that poorly substitutes for mathematical precision. One can comfortably adopt any particular "school" that fits one's world view because there is no predictive test to say that one or the other is wrong. I have the intuition, admittedly unschooled, that both Keynes and Friedman contribute to an accurate set of expectations.

Thurow certainly does NOT advocate prolonged US trade deficits of the sort we have now. But his view that foreign investment in the US drives our trade deficit, and not the other way around, is supported by none other than the libertarian, Ayn Rand disciples at the CATO Institute. See, for example, work of Daniel Griswold. The CATO work also sees global economic health in a balance which favors capital investment in the US and a constrained non-zero trade deficit.

18 of 22 people found the following review helpful:

3.0 out of 5 stars Recommending that bureacrats be bold .and save the world, October 8, 2003

By 

Craig Matteson (Saline, MI) - See all my reviews
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This review is from: Fortune Favors the Bold: What We Must Do to Build a New and Lasting Global Prosperity (Hardcover)

Let me begin by saying that I admire and like Dr. Lester Thurow. I would love to have had the opportunity to take a class or two from him. He writes well and he has had some impact on the public economic policy debate over the past couple of decades. I am willing to consider what he has to say not only out of respect, but because I believe one should seek to understand a range of opinions and not just those that endorse our own prejudices and even our own considered conclusions.

Are you waiting for the "But"? Well, here it is. My problem with this book is that I can't find a structured argument for its proposals and even its proposals aren't all that specific. It seems to me that serious proposals also need to consider the expected best criticisms to their plan. Great chess players don't make moves hoping their opponents will not see their plan. They make their moves believing that their plan will defeat even the best moves of the opponent.

Here, Dr. Thurow makes some anecdotal analysis of the economic problems of the United States, Europe, and Japan (which are not bad, as far as they go), and winds up with a call bold government action being needed to turn things around. Given all his public writing, wouldn't his desire for more government be predictable? He tackles a variety of issues, but comes back to the solution being some kind of government action. Given the mammoth bureaucracies we take for governments nowadays, is it really likely that they will even desire bold action let alone be able to overcome their massive inertia even if they desired act?

The way he defines some terms frustrates me as well. I find his describing capitalism being based upon greed a biasing argument, glib, and unpersuasive. Certainly, socialist bureaucrats, tyrants, and anarchists can be greedy as well. Saying that Capitalism is based upon competing self-interests rather than using "greed" would have been a more useful term with a bit more subtlety in making the debate.

Also, he lumps big corporation executives into the capitalist class. That could only be true if they actually believed in private enterprise. However, most mega corporations today work hard to use the government to protect them from competition or failure (both required under capitalism). They want to use the power of government to enhance their rewards and distort markets. That isn't capitalism, but it is human nature. While he does touch on this phenomenon on page 42 vis-?-vis the California electricity crisis, I think he sees it as a part of capitalism rather than a corrupting human tendency that needs to be managed and guarded against in any economic system.

But this big-government big-business monstrosity is what we have now. However, this is another topic and a debate that is not really germane to this review.

His notion of a Chief Knowledge Officer (chapter 9) is, I think, a pipe dream. I cannot conceive of a real world political way for such an office to exist successfully in a decision making process. What would make this person's view of the future any better than anyone else's? Who would anoint such a person as effective? And if they were, wouldn't they seek the CEO role? And if they weren't why would anyone listen to them? He or she would be marginalized quickly and ignored in practice. Dr. Thurow does cite Bill Gates, but Mr. Gates has a unique position as a founder and owner of a huge portion of the company's stock. Mao also ran China after stepping down as Chairman and resigning from the party. That is also not a typical way for a despot to wield power. Both are exceptions that serve to prove the rule rather than provide models for others.

Only those on the extreme right would deny a role of the government in creating and enforcing property rights and in promoting competitive markets. And only a few would argue that government ownership of the means of production makes much sense. The debate we all really participate in is the proper role of government in this process and Dr. Thurow states his beliefs and his reasons for them with clarity and energy.

However, I don't believe this book is going to persuade anyone on the right. It may be useful to those who agree with Dr. Thurow on the need for more International Government and want to have some more debate material. But I really would have liked to hear more debate on the horrors of the Terror, The Great Leap Forward, and the Cultural Revolution rather than simply saying Socialism is good on infrastructure investment, but poor on infrastructure maintenance. To me, that just seems to be an odd conclusion.

Don't get me wrong. Just because I read the book and found myself disagreeing with Dr. Thurow doesn't mean I didn't find things of value in the book or that I don't think you should read it. There are things to think about that will force you to flesh out your position. I am willing to state that he may well be right and I might be wrong, but of course I don't think so. However, I do believe the book could have used a somewhat tighter focus and a more explicit structure to its argument and conclusions. There are footnotes citing reference materials for further reading.