These days, most of our troubles can be explained away by the phrase, "It's the economy, stupid." We await the latest numbers on unemployment, inflation, imports, exports and government deficits. We go up and down with the stock market. Nonetheless, according to author Daniel Altman, we don't pay nearly enough attention to the deep structural factors that underpin the world's economies.
In his new book, Outrageous Fortunes, Altman analyzes these factors — including natural resources, demography, geography, climate, culture and politics — in an effort to "refocus economic prediction" on the longer term, decades away. Informative and accessible, penetrating and provocative, his book is a first-rate guide to global trends.
Altman, founder of the consulting firm North Yard Economics and an instructor at New York University's Stern School of Business, is nothing if not bold. Despite its phenomenal recent growth, China, he predicts, is not likely to overtake the United States as the world's leading economic power. Still a hierarchical culture, rife with corruption and lacking a first-rate technology infrastructure, China is not at all receptive to start-up businesses. Even more importantly, thanks to the "one-child policy" instituted in 1979, China's population is increasing by less than 0.7 per year, making it the fastest aging country in the world. By 2050, as China feeds hundreds of millions of senior citizens, average incomes will grow at lower rates than in the U.S. Its moment in economic history, Altman asserts, "will be impressive, but brief."
China's moment in economic history, Altman asserts, "will be impressive, but brief."
The writer also addresses risks to global prosperity. Economic regulation in wealthy nations, he suggests, will lead to off-shore black markets. ("If you thought the Cayman Islands was notorious as a tax haven," he notes, imagine it as a financial haven with "huge skyscrapers filled with currency and derivative traders," doing business on the Internet.) Global warming will hit tropical regions especially hard. And, alas, even if it reduces overall emissions, a "cap and trade system," which provides financial incentives to businesses to reduce emissions of pollutants, may make poor and dirty countries poorer and dirtier.
Altman isn't always persuasive. An ability "to transcend cultural differences by isolating the lowest common denominator," best exemplified in the entertainment industry, may not, as Altman suggests, make Americans the premier sales force in the world. Nor does it seem all that certain that as the global economy integrates, the go-between in international trade "will survive and thrive" as a recruiter of outsourcers and, "lamentably, [a] people smuggler."
Altman doesn't claim to be a Nostradamus. After all, economics is by no means an exact science. But readers of Outrageous Fortunes are likely to conclude that they have learned some important things about a global economy that will have an ever-more profound impact on their lives.
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