Monday, May 26, 2008

The Battle for the 21st Century

Robert J. Shapiro, Futurecast: How superpowers, populations and globalization will change the way you live and work. St. Matrin's Press, 2008.

Lester Thurow's best-selling book -- Head to Head: the coming economic battle among Japan, Europe and America -- hit the bookstores with a splash 15 years ago. Everyone wanted to know what would happen in the emerging post-Soviet world and the economist and MIT dean was ready to tell them.

Thurow forecast a world where a triad of nations would battle to write "the rules for the 21st Century." The winner would be Europe, Thurow concluded after ticking off all the usual suspects (Russia? No. China? No. America? No. Japan? Not a chance.)

Was Thurow correct? Well he was right about Japan, I guess, but was he right about the U.S. and China? Too soon to tell, I think, given that the 21st Century is still in its first decade and a lot has changed since the early 1990s. Perhaps it is time to revisit the question.

Robert J. Shapiro takes up this challenge in Futurecast. He builds his analysis around three strong forces that will shape domestic and international relations: demography (aging populations), globalization (rising competition, shifting production and consumption patterns, increasing interdependence) and the collapse of the old Soviet empire and the rise of a new geopolitical order. What countries can best adapt to this new environment, Shapiro asks? China and the U.S., he answers, but for different reasons. The critical relationship of the future is therefore the Sino-American one.

Europe and Japan will be increasingly marginalized from a geopolitical perspective in part because they will have trouble dealing with the dual challenges of demography and globalization. Other big potential players are also considered (India? Russia?) but they have problems of their own. Ireland and Korea present models of how countries can successfully develop as niche players in the global markets.

I liked Thurow's book in the 1990s because it raised a lot of interesting questions and taught me and my students a good deal about economic problems and social change around the world. I like this book for the same reason. I like it even more, in fact, because of the detailed analysis that I find here -- he goes well beyond the usual stylized facts.

That's not to say that Shapiro is necessarily right. Economic consultants are often cautioned not to make predictions that can be proven wrong before you can get to the airport. Shapiro has violated this rule by making big time forecasts in indelible ink. He might wish that he could revise what he writes here about inflation, growth and interest rates in light of the current oil crisis, food crisis and mortgage financial crisis.

Close reading, however, shows that he hedged his optimism about globalization pretty carefully and doesn't need to grab the next cab to the airport just yet. It will be interesting to see how a thoughtful and optimistic book like this is received in this presidential election year. (Note: Shapiro has been an economic advisor to Bill Clinton, Al Gore and John Kerry.)

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