From Publishers Weekly
High profile Washington economist Prestowitz (Three Billion New Capitalists) finds hope in the present economic collapse, which he believes will spur abandonment (however reluctantly) of "Laissez Faire Gobalization." As a campaign advisor to President Obama and a principal trade negotiator for Reagan, Prestowitz has repeatedly warned against disregarding foreign competition ("thinking of the United States as number one") as the U.S. suffers "a rapid erosion of its productive base." Overreliance upon capital markets that were actually "a corrupt, over-leveraged, house of cards" has shifted the global balance of power to Japan, China and Europe, regions with protectionist policies that the U.S. has failed to counter. The genesis of this downhill slide can be found in Cold War principles-low taxes, deregulation, privatization-necessitated by the times, but which have become enshrined at the expense of the New Deal "private sector-government partnership" that led to America's 20th century prosperity. An important contribution to the political debate, Prestowitz's volume suggests a number of solutions-abolishing the dividend tax, imposing a value-added tax, incentivizing foreign investment in the U.S., and doubling federal support of innovative technologies-all likely to prove controversial on both sides of the political divide.
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Has the economic vitality of the U.S. eroded so much that it cannot compete effectively against China, India, and other fast-growing economies? Prestowitz, consultant and former U.S. trade negotiator, thinks so, and he explains why in this challenging description of America’s fall from world leadership. Included among his reasons are the decline of the dollar, which has been the world’s main currency for carrying out international transactions; the “decisive shift in the global balance of power—away from the United States and toward East Asia and Europe . . . Brazil, India, Russia and Saudi Arabia”; and the scores of products and technologies against which the U.S. cannot compete. Prestowitz offers suggestions for restoring competitiveness, including instituting tax reform to increase government revenue; substantially revaluing “ a number of managed currencies versus the dollar and the euro over the next two to three years”; and reforming the World Trade Organization. All will not agree with the author, but his arguments are compelling. --Mary Whaley