(06/26/05) Clyde Prestowitz in Economic Times (India)
Economic Times (India)
Copyright 2005 The Economic Times of India, Coleman & Co Ltd. Source : Financial Times Information Limited
June 26, 2005
"Dad, they cant move snow to India"
Clyde Prestowitz says he had a revelation in 2003 when his oldest son,
a software developer living on Lake Tahoe in California, asked him to
co-invest in a snow-removal company.
Why, wondered Prestowitz, would his high-tech offspring go into a business "as mundane as snow removal?"
Explained the son: "Dad, they can't move the snow to India."
It's an example of the angst spreading among America's technology
professionals as they watch India snare big chunks of the U.S. services
sector while China runs off with America's manufacturing patrimony.
His son's fears, Prestowitz asserts in Three Billion New Capitalists:
The Great Shift of Wealth and Power to the East, are all too rational.
Actually, Prestowitz didn't need the heads-up from his son. He has been
mulling over America's competitiveness problems for 30 years, most
recently as head of his own think tank - the Economic Strategy
Institute in Washington.
Before that he was an international executive for U.S. multinationals,
a trade negotiator in the Reagan Administration, and author of a
ground-breaking, although ultimately alarmist, 1988 book about
U.S.-Japan relations, Trading Places.
Prestowitz writes with clarity, historical perspective, and an uncommon
ability to extricate himself from the intellectual straitjackets that
hobble so many Washington economic policymakers.
Free trader or protectionist? Democrat or Republican? Keynesian or supply-sider? He doesn't fit in any of those boxes.
Governments have long been creating comparative advantages for their
own economies, Prestowitz notes, but U.S. policymakers have apparently
Despite today's fashionable disdain for industrial policy, Washington
was once an active participant in boosting the gross domestic product.
The federal government created Radio Corporation of America and
established U.S. dominance in radio technology, launched Boeing (BA )
and nurtured it with government contracts, and created AT&T (T )
and its genius pool at Bell Laboratories (B ), cradle of
Then there's the Internet. "The apparently effortless technological
supremacy Americans assume as a birthright...had nothing to do with
market forces and everything to do with targeted policy decisions,"
Prestowitz also challenges one of the most popular and soothing myths
in Washington - that U.S. workers can compete with any in the world if
given "a level playing field."
The truth: Western workers won't be able to compete without accepting
wage cuts, since, in the area of labor costs, China enjoys a "fifteen
to thirtyfold advantage" over the developed world.