A Glass Half Full? Thurow Dissects the Third Industrial Revolution

Thurow's ideas about education warrant attention, too, particularly those on rethinking professional training as traditional careers give way to pressures and choices unimaginable just a few years ago. He is dead right in saying, "There is no system for organizing skill acquisition after the age of 25."

THE PESSIMISTS VS. THE OPTIMISTS

As with his other books, it is easy to get swept away by the coherence and grandeur of Thurow's ideas. He has captured the big issues of the day: how to get the most out of 21st-century capitalism and make it work for more than a few. But Thurow's downbeat view of the future is sure to provoke controversy. For example, is the United States really as weak as he asserts? Even leaving aside quibbles about how Thurow presents statistics on productivity and income distribution, he could have given more than a nod to the possibility that the U.S. model of capitalism is finally on the cusp of delivering higher productivity, thanks to technology and the competitive pressures of globalization. He could have acknowledged, too, that wages are currently rising for almost all levels of workers. A more nuanced discussion of savings rates is also in order; true, Americans are chronic spenders and lousy savers, but many economists question whether statistics properly account for the wealth stored in homeownership or personal assets locked up in the stock market. When Thurow declares that America must reinvent itself, surely he vastly underestimates what has been going on here this decade.

When it comes to Europe, everyone knows that the continent seems stuck with high unemployment, unaffordable social-safety nets, and arthritic labor rules. But new entrepreneurial capitalism is emerging as companies leap over borders to engage in takeovers and governments scurry to keep their most dynamic companies from relocating. Japan is a mess, no doubt, but the seeds of major change have been planted by, for instance, the move by many leading firms toward shareholder capitalism. Thurow also might have identified the decline of lifetime employment and the disintegration of the keiretsu system as harbingers of Japanese economic reinvention.

On an international scale, although a new global financial architecture may not soon materialize, Thurow underestimates how much is happening to create a stronger global economy. Since global government will never be accepted, he writes, the world's economy will sport no enforceable, agreed-upon set of rules and regulations, no sheriff to compel acceptable behavior, and no judges and juries to whom to appeal. But between a global czar and anarchy lies an expansive middle ground. Thurow could have acknowledged the massive international efforts underway to strengthen banking standards, improve the reliability and transparency of information, create global accounting conventions, build a consensus on better IPR protection, emphasize meaningful corporate governance, reduce corruption, expand membership in the World Trade Organization, and launch a new round of global trade talks to deal with, among other things, electronic commerce and biogenetic engineering.

In short, much of the infrastructure for wealth creation that Thurow wants to see is being established. It may be a slow and spotty process, but it is happening. To be sure, Thurow is trying to create a national debate, and what is most important about Building Wealth is that it may well provoke one. Thurow forces you to agree passionately or take him on passionately; there is no middle ground. As he says, the big divide in the upcoming years will not be between the political left and right but between the forces of chaos and order, between individualism and community, and between cooperation and competition. In this third industrial revolution, moreover, the big debate will occur between optimists and pessimists, between those who feel that every such fundamental transition has made more and more people better off and those who believe the opposite. I am in the first camp; judging by this book, Thurow is in the other.