Free Market Delusions, America's Decline, and How We Must Compete in the Post-Dollar Era
May 10, 2010
High profile Washington economist Prestowitz (Three Billion New Capitalists) finds hope in the present economic collapse, which he believes will spur abandonment (however reluctantly) of "Laissez Faire Gobalization." As a campaign advisor to President Obama and a principal trade negotiator for Reagan, Prestowitz has repeatedly warned against disregarding foreign competition ("thinking of the United States as number one") as the U.S. suffers "a rapid erosion of its productive base." Overreliance upon capital markets that were actually "a corrupt, over-leveraged, house of cards" has shifted the global balance of power to Japan, China and Europe, regions with protectionist policies that the U.S. has failed to counter. The genesis of this downhill slide can be found in Cold War principles-low taxes, deregulation, privatization-necessitated by the times, but which have become enshrined at the expense of the New Deal "private sector-government partnership" that led to America's 20th century prosperity. An important contribution to the political debate, Prestowitz's volume suggests a number of solutions-abolishing the dividend tax, imposing a value-added tax, incentivizing foreign investment in the U.S., and doubling federal support of innovative technologies-all likely to prove controversial on both sides of the political divide.