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A Less Than Perfect Vision Of 2020




Power, Culture and Prosperity

By Hamish McRae

Harvard Business School 302pp $24.95

With the approach of the millennium, forecasting the start of the 21st century has become a growth industry for pundits, economists, journalists, and politicians. Not surprisingly, views diverge widely. Newt Gingrich hails Future Shock author Alvin Toffler and his Third Wave theory of a global information society. Paul R. Krugman, an iconoclastic Stanford University economist, argues that Asia's success is overrated and scorns predictions of a "Pacific Century." This magazine, in a special issue last November, suggested a 21st century economy so networked and borderless that skilled, highly trained professionals from many nations will create a new international class.

Hamish McRae, a British journalist, now serves up a stolid, middlebrow view. McRae doesn't envision the end of the nation-state or the triumph of techno-individualism. But he does see a huge dilution of national power as economic and technological changes sweep goods and people across borders and subsume the political class into loose regional government confederations with limited authority to direct or correct change.

In McRae's vision, there will still be three major spheres of influence: North America, Europe, and Japan with Asia. But by 2020, China will be emerging as a superpower, challenging America for economic dominance. North America and Europe, moreover, will be suffering from stagnating living standards and social deterioration great enough to threaten the fabric of civil society.

Families will bear the brunt of this change. Marriage will give way to "consensual union" in the more liberal European states; in other countries, it will serve mainly as a temporary contract for child rearing. Anger about crime, security, and education will be even greater than it is now. The U.S. will have completed the transition to a truly multicultural nation heavily influenced by Latin and Asian cultures.

McRae is best in connecting social progress with economic gains. Enduring prosperity, he argues, requires not just healthy growth but "societies which are stable, ordered and honest." For developed and developing countries, meshing these goals will be difficult.

Nowhere is this connection more important than in East Asia and China, where today per capita income, gross national product, the balance of payments, and the exchange rate are revered measures of achievement, while individual rights, ending corruption, and free speech are ignored in the quest for growth. Critics such as Stanford's Krugman say even Asia's spectacular growth is suspect because it was achieved simply by using more people to make things rather than by making production more efficient.

McRae doesn't go that far, but he does predict that East Asia, China, and Japan face traumatic adjustments. First, Asia's vaunted manufacturing prowess will become less valuable as productivity gains make labor less of a factor, so Asia will have to become better at exporting services. Second, Asia's ability to innovate rather than copy will be sorely tested. Finally, Asian governments will have to replace command systems for economic change with market solutions and institute legal reforms to protect property and diminish corruption. To make such changes, McRae says, Asia's high flyers will incur stiff social and economic costs.

On the other hand, if China can incorporate Hong Kong and Taiwan into a federation of semi-independent states, and if Japan can pay for its aging society, both will be strong rivals to North America--politically as well as economically. While the U.S. will remain the world's undisputed technological and creative leader, it will be struggling to balance its cherished individualism against the fraying social order. "Put bluntly...people will have to behave better," McRae asserts, or a populist backlash in which voters impose social values is likely.

What's wrong with this picture? First, McRae doesn't reach ahead far enough. Backlash against social decay and the welfare state is today's issue, not the next century's. Moreover, his analysis is so historical that it may be of little use in predicting how the information revolution and a global market revolution will reorder work and life.

Second, McRae all but ignores what many consider the future's two most powerful scientific forces--information technology and gene management. Free information offers the possibility of uniting the worlds of work, leisure, and culture in ways no one has clearly envisioned. Gene tracing may allow us to preempt many diseases and dramatically manage population growth, fundamentally altering social trends.

Finally, McRae's reporting is stunningly thin. Most of this book draws from officialdom--studies by the World Bank and Organization for Economic Cooperation & Development, along with a few bigwig interviews--when a stroll through a science lab at Shanghai University might have yielded far richer insights. As the past two decades have shown, the official consensus, whether overestimating Russia or vilifying Japan, is usually wrong.

In fairness, McRae never suggests that with 2020 he is out to replace Future Shock. So if you're ready for a low-voltage guide to what lies ahead, consider this book safe to bring home.BY ROBERT J. DOWLING

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