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

by Lester Carl Thurow

Book Overview

Bestselling author and renowned economist Lester Thurow argues forcefully that globalization is not a done deal and we must seize the moment now if we are to create a new global economy in which all can prosper.

In this new book, Thurow examines the newly-forming global economy, with a special focus on the role of the US and the dangers to our own national well-being. He examines such questions as: What's at stake for us in the global economy?...

• Format: Paperback
• Language: English
• ISBN: 0060750693
• ISBN13: 9780060750695
• Release Date: March 2005
• Publisher: Harper Business
• Length: 340 Pages
• Weight: 0.59 lbs.
• Dimensions: 0.8" x 5.4" x 8.2"

Customer Reviews

Pragmatic and well thought

Lester Thurow has a penetrating mind. His ideas and arguments are intellectually pure and for that reason invaluable. He is a true CKO - Chief Knowledge Officer.

Tower of Babel - 21 st Century model

Globalization is here to stay. You have three options - accept it, reject it or shape it. The author suggests the third option.With the demise of communism in the last decade of the twentieth century, capitalism is the only remaining vehicle of economic development that appears to have succeeded in creating prosperity in the developed world. Globalization in the context of the third industrial revolution led by knowledge based industries is the spread of capitalism across boundaries. Capitalism has three basic traits as outlined by the author - greed, optimism and herd mentality. It is this combination that drives capitalists to establish global supply chains - produce where it is cheap and sell where it is attractive; and everyone has something to sell. Globalization is driven by businesses and not by national governments. While governments can play a catalytic role in attracting businesses, it is business that fuels the engine of growth.The distribution income and wealth has never been so skewed in the history of mankind. While just a couple of hundred years ago the per capita incomes across nations was almost uniform, and perhaps uniformly low, today the top 20 percent of the nations control 80 percent of the planet's wealth, and this disparity is increasing. While America with over 32 percent of global GDP in dollar terms is the locomotive of global growth, the author emphasizes the urgent need to kick start two other big locomotives- Europe and Japan, that can pull the global economy faster into prosperity. The American locomotive is now struggling with a huge trade deficit and a overvalued dollar. It can stop. Europe and Japan are shut. It is this scenario of no locomotive in action that threatens to bring global economies to a halt, and into a recession. The third world countries will be hit hard should this happen.There are conflicting interests between the developed world and developing countries when it comes to some vital issues on global prosperity. Capitalism aims at rewarding intellectual properties, and there is no limit to such rewards. Capitalism ignores human aspects. On the other hand there are billions of poor people in developing countries for whom a square meal a day is a luxury. They just cannot afford health care and drugs at international prices. Governments in these countries need to find a way for providing health care though it may not satisfy the prices demanded by global pharmaceutical companies. Intellectual property is important but human life is priceless. Similarly when it comes to agriculture, developed nations protect and subsidize their farmers, which denies a huge opportunity for developing countries to export their production and earn higher incomes.Singapore and Taiwan receive accolades as models of globalization and growth in Asia. The picture on china is mixed. Growth statistics projected by China are shown as suspect in accuracy and bordering on intentional exaggeration. Despite attracting huge FDIs, C

For Whom Did the Author Intend This Book?

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.

Creating a Better Global Economy

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 a