Three Billion New Capitalists: The Great Shift of Wealth and Power to the East (Hardcover)

by Clyde Prestowitz (Author) "As the headlines listed in the prologue attest, many world figures now fear that a crisis scenario may no longer be a fantasy..." (more)
Key Phrases: billion new capitalists, capitalist road, United States, Silicon Valley, European Union (more...)

Editorial Reviews

From Publishers Weekly
Ex-Reagan administration trade official Prestowitz follows up his critique of U.S. unilateralist foreign policy in Rogue Nation with this perceptive diagnosis of the nation's economic decline under globalization. While China and India focus on trade and industrial policies and turn out competent workers who put in long hours at a fraction of American wages, the U.S., Preston argues, struggles with crushing trade and budget deficits, a zero savings rate, failing schools, dwindling investments in scientific training and research, a collapsing dollar and a debt-dependent economy that will face an "economic 9/11" once foreign creditors bail out. The argument echoes Thomas Friedman's The World Is Flat (Forecasts, Apr. 4), but Prestowitz's analysis is more thoughtful than Friedman's pro-globalization cheerleading. He criticizes, from firsthand experience, Washington's cavalier embrace of free trade and aversion to industrial policy ("they'll sell us semi-conductors and we'll sell them poetry," notes one Reagan administration economist) and argues cogently that the research and development apparatus and high-tech entrepreneurship that is supposed to save America's economy is likely instead to follow the manufacturing base offshore. It's a lucid and sobering forecast.
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved.

From Booklist
Prestowitz, economic trend-spotter, reports, "Over the past two decades . . . China, India and the former Soviet Union all decided to leave their respective socialist workers paradise and drive their 3 billion citizens along the once despised capitalist road." These new capitalists symbolize the threats to end 600 years of Western economic domination as America's lead role in invention and technological innovation lessens and the Internet allows jobs to be performed anywhere. The author foresees the possibility of an "economic 9/11," which won't kill but will cause great hardship. To prevent what he sees as an accident waiting to happen, Prestowitz offers a wide range of solutions relating to the dollar's role in today's global marketplace, addressing the reality that Americans consume too much and Asians save too much, and facing energy challenges in the U.S and problems confronting our educational system. The author offers valuable insight into these important topics currently being debated in government and corporate circles. Mary Whaley
Copyright © American Library Association. All rights reserved

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Product Details

• Hardcover: 336 pages
• Publisher: Basic Books; 1 edition (May 3, 2005)
• Language: English
• ISBN-10: 0465062814
• ISBN-13: 978-0465062812
• Product Dimensions: 9.3 x 6.3 x 1.3 inches
• Shipping Weight: 1.2 pounds (View shipping rates and policies)
• Average Customer Review: 4.2 out of 5 stars See all reviews (47 customer reviews)
• Amazon.com Sales Rank: #369,778 in Books (See Bestsellers in Books)

Customer Reviews

Most Helpful Customer Reviews

105 of 115 people found the following review helpful:

5.0 out of 5 stars Strategic, Economic Fundamentals, Compelling, Cannot Ignore, June 25, 2005

By	Robert D. Steele (Oakton, VA United States) - See all my reviews (TOP 50 REVIEWER)

Before writing this review, I reflected carefully on the thoughts of those who say that the author, who is known to me, was wrong about Japan, that he emphasizes the best points of the new competitors (China and India) while neglecting our best points. There is certainly something to what they say, but as one who studies the entire world for our US Government clients, with a special familiarity with Chinese operations in Africa and South America, and a business familiarity with what is happening in India, I have to say that on balance, the author is more correct his critics will admit, and this is a book that we simply cannot ignore.

His most important point is made in one line: America does not have a strategy. America does not have a strategy for winning the global war on terror, it does not have an energy strategy, it does not have an education strategy, it does not have an economic or competitiveness strategy. The government is being run on assertion and ideology rather than evidence and thought--a media cartoon has captured the situation perfectly: as the VP tells the President that we are "turning the corner" the two walls behind them are labeled Incompetence and Fantasy. As a moderate Republican and a trained intelligence professional with two books on the latter topic, I have to say that this book by this author, a Reaganite businessman and senior appointee in the Department of Commerce is right on target. We *are* out of touch with reality, and we do not appreciate, at any level from White House to School House, the tsunami that is about to hit us.

The author makes two important points early on in the books: first, that information is the currency of this age, replacing money, labor, and physical resources; and second, that the best innovation comes from the right mix of sound education across the board, heavy investment in research & development, and a co-located manufacturing bases that can tinker with R&D and have a back and forth effect. America lacks all three of the latter, and is not yet serious about investing in global coverage of all languages, 24/7.

There is a great deal of commonality between this book and Tom Friedman's The World Is Flat: A Brief History of the Twenty-first Century both written and published in the same time frame. Both authors agree that the Internet has put an end to time and space constraints, and both agree that American labor is very much at risk because our basic education is flawed and we have no strategy for demanding continuing education from employers. The author excels at drawing the connection between poor education, "it's been twenty years since anyone at Bell Labs received a Nobel Prize," and the massive increase in outsourcing of knowledge work, not just scut work.

I do have to say, having called Friedman's latest book a massive Op-Ed in my review of that book, that this author is more thoughtful, provides more historical context, and delves into more basic important detail that Friedman--put bluntly, his book is more serious and more valuable than Friedman's, as in this is the meat, where Friedman is the sauce. Prestowitz addresses the core issues of the value of the dollar, the central place of energy, the role of demographics, and the fundamental macro-economic and structural imbalances that will weaken America, that are weakening America, over the passage to of a century of time--this is not a "snap-shot," this is a *deep* look into the soul of America.

Chapter 12, the author's recommendations, is alone worth the price of the book and should be required reading in every comparative economics and national security policy classroom. I won't list these recommendations but will highlight just a couple that struck me as immediately actionable: declaration of energy independence; DoD as a catalyst for socio-economic recovery by taking the lead in energy, education, and intelligence, learning how to wage peace; end to subsidies (the author uncharacteristically fails to note that we can increase government revenues by $500B a year if we not only eliminate subsidies, but stop import-export tax fraud and demand that corporations pay taxes on the profits they declare to their shareholders rather than the falsified and manipulated balance sheets they present to the IRS); join Japan and India to NAFTA--this is an outrageously brilliant idea.

Clyde Prestowitz is one of the most insightful, balanced, *sane* voices on national competitiveness today. He would make an excellent Secretary of Commerce in the transpartisan Administration.

See also (with reviews):
Rogue Nation: American Unilateralism and the Failure of Good Intentions
The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits (Wharton School Publishing Paperbacks)
The Battle for the Soul of Capitalism: How the Financial System Underminded Social Ideals, Damaged Trust in the Markets, Robbed Investors of Trillions - and What to Do About It
The Global Class War: How America's Bipartisan Elite Lost Our Future - and What It Will Take to Win It Back
The Politics of Fortune: A New Agenda For Business Leaders
The Wealth of Networks: How Social Production Transforms Markets and Freedom
Revolutionary Wealth: How it will be created and how it will change our lives
Infinite Wealth: A New World of Collaboration and Abundance in the Knowledge Era
THE SMART NATION ACT: Public Intelligence in the Public Interest

69 of 79 people found the following review helpful:

5.0 out of 5 stars Here Comes the Tsunami --- run !! , May 29, 2005

By	Graham M. Flower (San Jose, CA USA) - See all my reviews (REAL NAME)

Mr Prestowitz raises alot of the issues regarding the rise of China and its consequences. He writes from the perspective of a former international marketing manager for a US corporation and a former Commerce department official. I take most of the things Mr Prestowitz is commenting on seriously and
I think the tone, while pessimistic, is not over the top.

I am a silicon valley scientist and I find Mr Prestowitz's
perspective valuable and complimentary to my in the trenches view of this. I grew up in the rust belt and watched at close quarters the disappearance of the steel industry and started my career at a DRAM company, which was also vaporized in the early to mid 80s. In the late 90s I had my product line moved to the
far east and the most recent business I am associated with is
seeing counterfeiting and price competition from China.

The parts of Mr Prestowitz's analysis of which I have personal and independent knowledge is almost all correct in my opinion. He correctly lays out the dilemma from the businessman's perspective and he is aware of the key reasons why tech businesses feel compelled to move manufacturing and other things to China and other locations in the far east. He gives you a good feel for the strategies of the Chinese and Indian Governments so that you get a good feeling for the dynamics of this.

However, he goes much further by adding his analysis of the European hand of cards and how they are likely to play it. There is also the issue of the fate of the dollar and the trade deficit which is discussed at some length in several chapters. Much of this discussion does place some numbers out there some of which are new to me.

Mr Prestowitz also discusses the effect of the steep rise of China on the attitudes of other countries and shows that China is already having a substantial effect in people's anticipation of the Chinese rise to the top of world economies.
The effects of the rise on allies such as Australia were surprising to me and I was not aware of some of this. In addition the effects of China on American relations to South America were also a surprise to this reader.

While I dont agree with all of his assessments, I feel he
overestimates European capabilities, for example, his statements are well reasoned and certainly within reasonable
bounds. The book is a very good place to start on these issues.
Based upon my experience with these issues over the last 30 years and with the obvious personal knowlege of the situation that Mr Prestowitz has there is no question that this gentleman has a very solid background to write on these issues.

11 of 11 people found the following review helpful:

5.0 out of 5 stars America and the Global Economy: Excellent Book, November 29, 2005

By	J. E. Robinson - See all my reviews (TOP 1000 REVIEWER)    (REAL NAME)

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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