Spelling out end to U.S. world domination
M. Taufiqurrahman, The Jakarta Post, Jakarta
Three Billion New Capitalists: The Great Shift of Wealth and Power to the East
Clyde Prestowitz
Basic Books, May 2005
321 pp
In an interview with The Jakarta Post, economist and author Clyde Prestowitz said the United States was hopeless against the growing power of newly emerging countries, India and China in particular.
The world's sole superpower had no strategy whatsoever to deal with the two Asian giants, so the only strategy was just to let a thousand flowers -- a free market -- bloom.
Such a statement could be dismissed easily as pure sensationalism if it was made by Bush-bashers or those on the Left who had grown restless with the U.S. imperial hubris.
But it is worth heeding if such a prognosis is made by a person like Prestowitz.
A former commerce official under the Reagan administration who has traveled extensively and consulted with leading figures in the countries he visited, Prestowitz is more than an expert who is well-acquainted with his subject.
In Three Billion New Capitalists: The Great Shift of Wealth and Power to the East, published by Basic Books, Prestowitz tries to make sense of what has encroached on the U.S.' economic and, in turn, political supremacy, which will subsequently bring the superpower down to its knees.
An accessible book that will draw in even those who are not very familiar with economics, Three Billion New Capitalists is a comprehensive study on America's road to ruin.
Ironically, the decline of the U.S.' economic might has been facilitated by globalization, a massive social, economic and political engineering the superpower helped unleash during the post-war period.
The massive proliferation of the dollar as the world's main currency helped turn the U.S. from the biggest producer into the world's number one consumer -- at the expense of their financial stability, which is bleeding heavily from a ballooning trade deficit.
Prestowitz places the greatest blame for the downward slide on the declining competitiveness of big U.S. firms, which once stood as the hallmark of American capitalism.
If most Americans are convinced that the miracle in information technology was borne out of an innate pioneering spirit and a uniquely entrepreneurial spirit among its best brains, Prestowitz begs to differ.
From an insider's point of view, Prestowitz offers an explanation that people like Bill Gates, Michael Dell and Andy Grove thrived only with the support of the government's hands.
"Gates and most of the U.S. technology industries owe their leadership as much as to U.S. victory in the World War, U.S. defense policy and overall U.S. industrial primacy as to entrepreneurial virtuosity," Prestowitz claims toward the middle of his book.
He gives an example that IBM, the pioneer of personal computers, kick-started its business by filling government contracts for B-52 bombers' guidance system and the North American Aerospace Defense Command (NORAD).
This statement seems to confirm the industrial-military complex, a proposition that has long been regarded as a faux conspiracy theory.
Over the years, U.S. technology industries lost in competition with more efficient overseas manufacturers such as those in Japan, which continuously swarmed the American market with their products.
American firms, on the other hand, failed to penetrate foreign markets while their share of the domestic market shrunk.
"As a result, between 1984 and 1986 the U.S. industry lost $4 billion and laid off 50,000 workers," Prestowitz recalled from his days in the Reagan administration.
And now replacing Japan as a test to American domination are China and India.
With the advent of Internet technology and a more efficient express delivery service, manufacturing from the First World can now easily be outsourced to developing countries, which commands large pools of cheap labor.
In the initial stage, however, it was cheap labor, but soon Third World manufacturers absorbed the know-how and later developed their own competitive advantage.
Take Chinese electronics manufacturer Haier, for example. From a cash-strapped, state-owned refrigerator company in 1984, Haier is now China's leading maker of refrigerators, air conditioners, washing machines and other household appliances with sales over US$10 billion, surpassing General Electric as the world's fourth largest electronic company.
India, on the other hand, is now a world leader in software technology, an industry pioneered by several former staffers from local IBM branches and aided by a liberalization of the IT market by then prime minister Rajiv Gandhi.
Satyam, an Indian IT services company, now has a network spanning 45 countries on six continents, and its 15,000 employees serve 325 global companies, including over one hundred Fortune 500 firms.
Prestowitz believes that this great shift is irreversible, and the only thing that America can do is to control the damage.
"Maintaining a uni-polar, hegemonic leadership is out of the question. It is no longer possible nor desirable for the long- term welfare of Americans," he said.