THE GREAT BETRAYAL

If you think the Great Recession was a bummer, there’s more bad news in store for the U.S. economy.

Prestowitz, Asia trade negotiator in the Reagan administration and economic advisor to the Obama campaign, takes an evenhanded view of economic events in this survey of the current fiscal landscape, a survey that is less histrionic than its title suggests and more wide-ranging than the subtitle indicates. He locates the causes of the recent “financial Armageddon” in many areas, including “greed, fraud, regulatory failure, and flawed mathematics,” but also notes that the meltdown was long overdue and represents the manifestation of policies that have been weakening the U.S. economy for years. One of the author’s bugaboos, mentioned more than once, is the false notion that somehow it’s acceptable for the United States to abandon manufacturing. He argues, coherently, that America needs to make more of the things we use and export what we don’t. Of course, that puts the United States in direct competition with China, which has the advantage of a command economy that can turn on a dime and which further counts among its assets about $2 trillion. Given that Wal-Mart alone accounts for a massive amount of the trade in cheap goods between China and America, there are many shareholders who would not want to see any change in the state of affairs—including one by which China consumes more of its own production. In the end, Prestowitz urges, U.S. leaders must take greater measures to put our economy into a state of healthfulness, including declaring energy independence, reducing the deficit—for the federal government’s financial health “is poor at all levels and likely to get worse”—and making the corporate tax environment more attractive for multinationals.

As with any work of economics, there are dozens of arguments both for and against every plank on Prestowitz’s platform. Still, he provides a vigorous, provocative look at some of the possibilities—few pretty—that lie ahead.