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In Praise of Hard Industries: Why Manufacturing, Not the Information Economy, Is the key to Future Prosperity Hardcover – September 9, 1999


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Product Details

  • Hardcover: 288 pages
  • Publisher: Houghton Mifflin Harcourt (September 9, 1999)
  • Language: English
  • ISBN-10: 0395899680
  • ISBN-13: 978-0395899687
  • Product Dimensions: 9.4 x 6.4 x 1.1 inches
  • Shipping Weight: 1.2 pounds
  • Average Customer Review: 4.2 out of 5 stars  See all reviews (13 customer reviews)
  • Amazon Best Sellers Rank: #704,167 in Books (See Top 100 in Books)

Editorial Reviews

Amazon.com Review

The supertanker is the image that has come to symbolize America's economic might over the last decade--rock solid and steady. Low inflation, high productivity, and a booming stock market have combined to help create one of the most prosperous periods in American history. But Eamonn Fingleton would argue that this ship is steering the wrong course, and that lurking just below the waterline are some troublesome leaks.

Fingleton argues that American business is sacrificing its once valuable manufacturing base in favor of the new economy, or postindustrialism--an umbrella under which he includes the service, software, information, and entertainment industries, among others. While he writes that he does not seek to dismiss the merits of postindustrialism--although he calls the financial-services industry a "cuckoo in the economy's nest"--Fingleton finds fault with the new economy in three areas: the mix of jobs it produces, its slow income growth, and the fact that postindustrial activities don't export very well. At the same time, he believes that modern manufacturing has become wrongly associated with low-wage or stagnant economies--Japan, in particular, which, he argues, is not the basket case that many believe it to be. At the heart of Fingleton's argument is the idea that postindustrial activities are relatively easy to pursue compared to manufacturing, which requires much more capital and know-how but offers far more upside in the long run. His prescription for revitalizing manufacturing includes boosting savings, directing much of it into industrial investment, and instituting a trade policy designed to allow manufacturing to thrive in the United States.

While Fingleton's dour assessment of the new economy seems overdone, his basic argument about the relative worth of manufacturing is well articulated. In Praise of Hard Industries is a good contrarian read for policymakers, managers, and anyone interested in a different view of both the U.S. and Japanese economies. --Harry C. Edwards

From Publishers Weekly

A former editor of Forbes and the Financial Times, Fingleton ably articulates a contrarian thesis, arguing that manufacturingAnot America's "postindustrial economy" based on services and information technologyAis best equipped to deliver high wages, low unemployment and a bedrock for future prosperity. His scathing, selective tour of the U.S. computer, financial services and entertainment industries turns up colossal waste, puny exports, mismanagement and hype. Noting that, since the dawn of the computer revolution in the early 1970s, America's rate of growth in productivity has actually fallen, Fingleton suggests that the Internet has done and will do remarkably little to benefit the U.S. economy. He joins a diverse band of critics of laissez-faire globalism, including James Fallows, Patrick Buchanan and Jerry Mander, adding his own unique slant on East-West relations and manufacturing conditions. He contends that, contrary to Western press reporting, Japan is not an economic basket case, but is instead an affluent dynamo poised to challenge the U.S. for global economic leadership (a theme he set forth in his 1995 book Blindside). Bolstered by close analysis and chock full of intriguing examples of manufacturing triumphs and untapped opportunities, Fingleton's sobering report deserves close scrutiny by CEOs, labor leaders and policy makers.
Copyright 1999 Reed Business Information, Inc.

More About the Author

Eamonn Fingleton is a former editor for the Financial Times in London and Forbes magazine in New York who is known for his early and outspoken identification of postindustrialism as a prime cause of American decline.

In Blindside in 1995 and In Praise of Hard Industries in 1999, he challenged the then consensus that a shift to an all-digital New Economy would propel the United States to a new, unchallengeably high level of competitiveness. He poured particular scorn on what he called financialism, a tendency for financial services to pre-empt an ever larger share of U.S. GDP and human talent. America's financial services industry, he argued, was "a cuckoo in the economy's nest." Writing from a base in Tokyo, where he lived for 27 years, he warned that if Washington failed to stop the erosion of manufacturing, America would rapidly lose competitiveness, incur increasing trade deficits, and sink ever deeper into debt to the manufacturing-based exporting economies of East Asia.

He calculated that, per unit of output, manufacturing businesses are nearly ten times stronger exporters on average than services. One reason is that manufactured products generally require little adaptation to sell abroad. By contrast such key postindustrial products as computer software have to be expensively adapted to meet different cultural needs in foreign markets and the costs are generally incurred abroad. In other cases, American postindustrial companies hire large numbers of foreign employees to provide direct services to foreign customers. Either way the net receipts transmitted back to the United States are minimal.

In Fingleton's view, those who have dismissed America's manufacturing base as the "Rust Belt" display deep ignorance of modern First World manufacturing. Advanced manufacturing these days is highly capital-intensive, which means that each worker's productivity is greatly leveraged by sophisticated production machinery. This creates ample scope for employers to pay high wages. Advanced manufacturers moreover require great accumulations of proprietary production knowhow - typically knowhow acquired over generations of "learning by doing" and often understood only by top engineers who incorporate them into secret machine settings - and this powerfully shields them from low-wage foreign competition.

Fingleton argues that American opinion leaders have been blinded by dogma in believing that when American factories close, this is dictated by the "wisdom of the market." In reality, American manufacturers are competing in a globalized marketplace that is comprehensively rigged against them. The fact is that almost as soon as American corporations invent new, more efficient production technologies, they come under pressure from foreign governments to transfer these out of the United States. If they don't do so, they face non-tariff barriers in the relevant foreign markets. By contrast by moving their best technologies to overseas operations, they improve their foreign market access while retaining their ability to sell into the American market. The net effect is that it is increasingly foreign workers, not American ones, who benefit from corporate America's innovation.

In his most recent book In the Jaws of the Dragon, published in 2008, he identified a policy of suppressing consumption as a main driver of China's rise. The policy - implemented through, for instance, ultra-tight zoning policies which have forced housing costs through the roof and created huge profits for landowners - generates a vast surplus of savings which Chinese leaders then direct, via a state-owned banking system, into equipping industry with ever more efficient production technologies.

Born in Ireland in 1948, he is a graduate of Trinity College Dublin. He is working on a new book entitled Sandcastle Empire: American Decline and the Crisis of Individualism.

Customer Reviews

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Most Helpful Customer Reviews

19 of 20 people found the following review helpful By James B. Brinton on March 14, 2002
Format: Hardcover
Fingleton's book has been out for a while now (it is March 2002 as I write) and the new economy has indeed proven to be a mirage, as he forecast. Interestingly, the key review of this book was from the Industry Standard, a new economy magazine which was forced to close. Its reviewer says: "Economic success continues to flow to nations with advanced manufacturing bases. And what looks like a sustained boom for information-based economies will in the end turn out to have been a mirage." He should have told his publisher. So--Fingleton is a prophet, right on the money, yet this insightful book has been largely overlooked. Too bad, because it could have saved investors billions if taken seriously, and it still should be on the reading lists of policy makers in NYC, DC, and Silicon Valley. I can't praise this book strongly enough, or its author.
Addendum:
It is now mid-2004 and Fingleton's book is still on target. Over the past four years, additional forcing factors have weakened the US economy: Outsourcing of manufacturing and -- increasingly -- service-sector jobs (weren't those supposed to be 'our future'?); tax cuts which have led to socio-economic polarization, huge amounts of federal borrowing (mostly from abroad), and a national debt that now appears difficult or impossible to retire. Meanwhile, our trade deficits have grown as our own ability to manufacture and satisfy our domestic needs has declined, just as Fingleton said they would. See Fingleton's most recent book, Unsustainable, for major insights into this. We would do well to remember that no nation is proof against failure; none of the great ancient or modern empires survive today, and most died because of failures of insight or leadership.
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14 of 15 people found the following review helpful By Kameisama on December 1, 2004
Format: Hardcover
I've lived in Japan for over 5 years and worked in both the manufacturing and sales/marketing side for a technology company. I also speak and read Japanese. I know this culture - particularly the aspect that Japanese are both proud of and recognize as vital to prosperity - manufacturing, or, to include the craft trades, "thing making".

Reading "In Praise of Hard Industries" had me cheering, out loud sometimes. This guy hits it right on the head on every single aspect and effortlessly argues away the myths that Americans like to cling to as the economy falls into ruin - the viability of America's "service economy", superior American creativity, American wealth - all illusions that persist because Americans aren't educated enough or in the right way to be able to see the flimsiness of the financial channel commentators' arguments.

Were's so far out of the game in manufacturing technology - both in terms of skill and mindset - that I don't know if we can ever get back in. Throw on top of that the skills in market resesarch and product marketing and sales and the prospects look even worse. Japanese companies have honed all these razor sharp and are super competetive. And our measures would certainly be complicated by the fact that the strong penetration of Japanese companies into our country as *employers* brings them strong political influence within our own borders. It's the Trojan Horse! But whatever the measures, we have to start with an honest discussion of the facts - a look in the mirror, a wakeup call. This book, along with Fingleton's others and his website, are just that.
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5 of 5 people found the following review helpful By karl b. on November 1, 2000
Format: Hardcover
Fingleton's illuminating and detailed study takes a practical and anecdotal look at some of the New Economy's accepted wisdoms. Are we really in a boom economy. Many residents of the First World take that as a fact with little evidence from their personal lives. In many cases middle income families are working longer and harder to maintain their living standards. They work much harder than their parents but without the same job security and benefits. Big winners seem to be of windfall gains in a bloated and increasingly fragile stock market.
Nothing is more central to the vast expectations of the post industrial economy than those associated with software, telecommunications or financial services, which form its bulwark. Fingleton's analysis clearly shows that software is inherently transitory and unstable. Telecommunications is touted as a vehicle for a vast expansion of consumer markets, yet as became painfully clear in the dot.com collapse, there is little proof of that potential. Gambling and porn remain the internet's most profitable commodities. Financial services has devolved into deregulated boutiques speculating in exotic currency and equity instruments, in markets trading at unheard of multiples and expansion. All these 'industries' employ a specific type of intellect and skill set, which might apply to a highly educated 20% of the labour force. Nothing is reviled more than the old 'rust' belt industries in the free market ethos. Steel, ship building, textiles, that can offer capital intensive high technology enterprise integrated into well payed, labour intensive associated manufacturing are disappearing from the First World's economic arsenal.
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