Fortune Favors the Bold

author: Lester Thurow, Sloan School of Management, Massachusetts Institute of Technology, MIT
published: July 18, 2011,   recorded: October 2003,   views: 2909

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Economists and geologists have something in common. Geologists can trace the San Andreas Fault in chalk and tell you there’s going to be a major earthquake somewhere along that line—but they can’t say when. Economists, Lester Thurow included, know that the massive trade deficit the U.S. is building ($550 billion as of this year) can’t balloon indefinitely, but when the dollar will collapse -- tomorrow or a thousand years from now -- is anybody’s guess. And, he warns, don’t expect a soft landing. Thurow’s talk, which draws both title and subject matter from his new book, describes the promise and hazards emerging from the latest technology-based industrial revolution. While new technologies pay off with enhanced productivity, businesses cut thousands of jobs a month. Globalization may mean foreign markets for American goods, but it also means that Walmart purchases 10% of all of mainland China’s exports. And he warns, watch out as more high-paying professional jobs get outsourced to nations like India. Thurow sees a future of vast inequities, within our borders and among countries of the world, unless governments and institutions like the World Bank pursue such innovative policies as embracing biotechnology and educating women.

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Reviews and comments:

Comment1 Lacha12, August 28, 2013 at 4:10 a.m.:

I realize that the above lecture was given in 2003, but most of his points are still quite valid today. I think there was one issue which was not addressed and that is the issue of individual consumption. At the time this lecture was given, all these laid off people or underpaid poeple were living off easy credit. That is now dried up. So, if relatively poor people (I include the middle class in this category) are continually laid off or end up unemployed due to productivity gains, where will the consumption come from to drive our national economy?

It will not come so much from the wealthy, that I do know. Contrary to popular belief, the wealthy are not great consumers...their needs can be covered with a fraction of their money and they tend to invest/save the rest of it.

My understanding is that now (2013) we are suffering about a 1 trillion dollar a year consumption deficit in America. Government is also slowing down it's consumption (spending). And it is a pipe dream that foreigners will import our products...though I am sure there are more American exports now that the dollar has fallen....but not a huge amount because a good deal of the world is hurting too. I would love to hear Thurow give an update on this lecture.

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