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The Betrayal of American Prosperity: Free Market Delusions, America's Decline, and How We Must Compete in the Post-Dollar Era MP3 CD – Audiobook, MP3 Audio, Unabridged
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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.
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved. --This text refers to an out of print or unavailable edition of this title.
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 --This text refers to an out of print or unavailable edition of this title.
Top customer reviews
While painting a candid but somewhat bleak picture of the present day economic posture of the United States, Prestowitz does not leave the reader without hope. While clearly an opponent to orthodox free trade as espoused by the Chicago school, Prestowitz helps the reader to understand the fundamental assumptions that result in the flaws associated with this philosophy and argues for a more practical approach to fair trade that is grounded in the realities encountered in real world transactions. He concludes the book with four chapters that provide a prescription for business leaders, politicians, policy makers and all citizens to follow in an attempt to help America regain its positioning as the leader in the global marketplace.
While this book is written by an accomplished international economist, Prestowitz's style is engaging and thoughtful. Prestowitz presents his arguments with just enough relevant statistics and a splattering of case studies and vignettes to keep the reader wanting to continue to move through each chapter. Rather than gloss over some of the more difficult and important technical aspects of the global economy, Prestowitz presents them in clear and simple terms that are easily understood by those with a basic understanding of global economics. His analysis of currency valuations and the impact on trade deficits is just one example of where he excels in explaining the nuances of global economics to the uninitiated.
I would strongly recommend this book for anyone interested in gaining an apolitical perspective on the challenges America faces today in the global economy. Business leaders, policy makers, students of economics or interested citizens will all benefit from Clyde Prestowitz's deep insights and vast practical wisdom. He has done a great service to his country by presenting this forthright and candid analysis in a non-partisan prescriptive approach.
The argument is that because of currency manipulation, and other practices, American firms can't compete with Chinese and other Asian firms. Andy Grove, former CEO of Intel, has a striking example in his July, 2010 Bloomberg Business Week article entitled "How America Can Create Jobs." Apple is surely one of the most creative and successful firms in American history with the "i-phone", "i-pad" etc. Apple's great success has provided jobs for about 25,000 in America. But 250,000 Chinese manufacture these products in Foxconn plants in mainland China. For every job Apple creates here, ten are created in China. Amazon's Kindle is another American success story. Rather than the usual LCD screen which is unreadable in bright sunlight, the Kindle uses E-ink, a technology invented here. But Kindles are not produced here, indeed, as Prestowitz writes (p.253); they could not be produced here now even if the manufacturing cost here was as low as in China. The special glass needed for the display, the semiconductor chips, the battery and other key components are not manufactured here, but only in China, Taiwan, Korea and Japan. Is it surprising that U.S. job stimulus programs create many more jobs in Asia than in the U.S.A.?
Currency manipulation is illegal under our laws and violates World Trade Organization rules. However, our government has for many years chosen to ignore it and even now is doing little more than grumbling about it. Prestowitz thinks one reason is a belief that trade, even unbalanced trade, benefits the US. Better to accept a trade agreement that gives foreigners generous access to our markets but gives our firms little access to their markets than no agreement at all. In the past I would have, and did, argue that accepting a trade agreement without much reciprocity was sensible U.S. policy. So what if the Chinese or anyone else wants to sell their goods too cheaply to us - isn't that good for us? Certainly we as consumers have benefited greatly. What of job loss? Maybe we would lose some, but other jobs as good or better would replace those lost. I still think this is a pretty good argument in a world with a well functioning international monetary system, that is, a system that sets in motion forces to reduce excessive trade surpluses or deficits. The classical gold standard from 1870 to 1914 is probably the best example. No country could run large trade surpluses for year after year because the inflow of gold would cause domestic prices to rise, leading to a fall in exports and a rise in imports. Under the gold standard, could all manufacturing jobs migrate to a mercantilist bent on keeping its exports prices low? No. Since trade will have to more or less balance, any loss of jobs due to new imports will tend to be offset by jobs generated by the new export goods required to pay for the imports. Similarly, when Milton Friedman first argued the case for flexible exchange rates in 1950 , the U.S. government stood ready to buy and sell gold at $32 per oz., but only to foreign central banks - the "gold exchange standard" [1946 - 1971]. This system also provided some discipline to ensure balance and so I think the conventional argument applied pretty well during this period as well. In any case, Friedman's case for flexible exchange rates assumed that governments would be prevented from intervening in currency markets, so arguably under Friedman's version of flexible exchange rates countries could not run deficits year after year. On August 15, 1971, President Nixon cut the last link to gold and the old system died. Since then, as Milton Friedman, put it "...a world monetary system has emerged that has no historical precedent: a system in which every major currency in the world is, directly or indirectly, on an irredeemable paper currency standard..." , p.249] It is now clear that under the current "system" countries can run trade deficits or surpluses for extended periods of time. Under current conditions, keeping one's exchange rate low relative to the dollar can destroy jobs; indeed it's hard to see why any job that could be performed off-shore would not move.
So what should we do? Prestowitz recommends that a G-20 meeting be called to coordinate a 40% to 50% revaluation of the major managed currencies. "The revaluation would have to entail an agreement to halt strategic currency management activities." [pp 291-293] If Prestowitz means that governments should commit to not intervening in their currency markets, then he's recommending the flexible exchange system proposed by Friedman 60 years ago. Perhaps Prestowitz isn't as far from the Chicago school as he thinks. Unfortunately it is hard to see how the G-20 countries would agree to all this. Prestowitz's diagnosis may be Dr. House-like, but neither the patient nor the guardians whose signature is required is likely to agree to the treatment recommended.
There's much more in this book: a fascinating argument that we must have an industrial policy based in part on the underappreciated book by Baumol and Gomory , that labor unions are more likely to reflect American interests than large multinational firms whose profits depend more on pleasing foreign governments than our own, and that the idea that corporate leaders only responsibility is to maximize value for their shareholders is wrong and corporate charters need to be revised to reflect all stakeholders. Economists: read this book; I guarantee it will make your blood flow faster.