The Financial Times published its longlist for the FT/Goldman Sachs Book of the Year today and I am honoured that How Asia Works is on it. Below is the full list of 14 titles.
After the Music Stopped: The Financial Crisis, the Response, and the Work Ahead, Alan Blinder, The Penguin Press
The Alchemists: Inside the Secret World of Central Bankers (UK subtitle); Three Central Bankers and a World on Fire (US subtitle), Neil Irwin, Headline Business Plus; The Penguin Press
Big Data: A Revolution That Will Transform How We Live, Work, and Think, Viktor Mayer-Schönberger and Kenneth Cukier, John Murray; Eamon Dolan Books/Houghton Mifflin Harcourt
The Billionaire’s Apprentice: The Rise of The Indian-American Elite and The Fall of The Galleon Hedge Fund, Anita Raghavan, Hachette Book Group/Business Plus
The End of Competitive Advantage: How to keep your strategy moving as fast as your business, Rita Gunther McGrath, Harvard Business Review Press
The End of Power: From Boardrooms to Battlefields and Churches to States, Why Being In Charge Isn’t What It Used to Be, Moisés Naím, Basic Books
The Everything Store: Jeff Bezos and the Age of Amazon, Brad Stone,Transworld/ Bantam Press; Little, Brown
Give and Take: A Revolutionary Approach to Success, Adam Grant, Weidenfeld & Nicolson; Viking (Penguin)
The Great Escape: Health, Wealth, and the Origins of Inequality, Angus Deaton, Princeton University Press
How Asia Works: Success and Failure in the World’s Most Dynamic Region, Joe Studwell, Profile Books; Grove Press
Lean In: Women, Work, and the Will to Lead, Sheryl Sandberg, WH Allen/Random House Group; Knopf
Making it Happen: Fred Goodwin, RBS and the Men Who Blew Up the British Economy, Iain Martin, Simon and Schuster
The Org: The Underlying Logic of the Office, Tim Sullivan and Ray Fisman, Twelve
Scarcity: Why Having Too Little Means So Much, Sendhil Mullainathan and Eldar Shafir, Allen Lane; Times Books/Henry Holt
I was just sent a link to a first review of my new book, carried in the FT. If you want to see other reviews (assuming there are any), check www.howasiaworks.com. This one I will paste in here since it gives a pretty good synopsis of what the books is about (and, let’s be honest, isn’t entirely negative either).
Reap what you sow
©GettyA woman plants rice seedlings in a flooded paddy field, Taiwan
Why are the northeast Asian states of Japan, South Korea and Taiwan rich, while the southeast Asian ones of Thailand, the Philippines and Indonesia are relatively poor? Is the failure of the latter because of their geography or climate, or is it because their leaders chose wrong-headed policies?
One of the many virtues of the pithy, well-written and intellectually vigorous How Asia Works is that Joe Studwell does not equivocate. South-east Asian nations have ended up on what he calls the “rubbish heap of industrialisation” because they failed to learn the lessons of history. Instead of taking what he presents as relatively simple steps to technological advancement, leaders were captured by their ruling elites or took bad advice from international institutions such as the World Bank. The latter pushed neo-liberal policies – including no protection for fledgling industries – that Studwell considers wholly inappropriate for countries trying to get on the first rung of the developmental ladder. His recommendation to poor nations is to emulate Park Chung-hee, the South Korean strongman who oversaw what became known as the miracle on the Han river: “make public pronouncements about the importance of free markets, and then go quietly about your dirigiste business.”
The measures taken by Japan, then South Korea, Taiwan and, after 30 years of Maoist missteps, communist China were, argues Studwell, threefold. They involved land redistribution, the development of an export-oriented manufacturing policy, and the formation of a closely controlled finance system. The three important development insights, he argues, are that “a country’s agricultural potential is most quickly released when its farming is transformed into large-scale gardening supported by agricultural extension services; that the technological upgrading of manufacturing is the natural vehicle for swift economic transformation … and that finance must be harnessed to both these ends”. Only the small city-states of Hong Kong and Singapore have successfully taken a different path.
Maximising yields serves several broader development goals: farmers earn money to spend on local manufactures; higher food production means the state doesn’t have to waste precious foreign exchange on imports; and farmers’ savings can be recycled through the banking system into industry. Both the indulgent leaders of the Philippines, who left vast haciendas in the hands of absentee landlords, and Maoist ideologues, who collectivised land into unproductive large-scale co-operatives, ignored the basic insight on what he calls “the triumph of gardening”.
The sections on industrial policy and finance are more familiar, though the ideas remain controversial among free-market economists who argue that governments can’t “pick winners”. Such economists, says Studwell, misunderstand what Japan, and later South Korea, actually did. The key was to force manufacturers, whether of steel or cars, to export and thus compete on international markets. Those that couldn’t hack it were killed off. Korea, for example, had three putative car champions in 1973 at a time when local auto sales were only 30,000 cars a year. In the early years, the market leader was the now-forgotten Shinjin. Only later did Hyundai emerge as the last car company standing. “The economics of development requires nurture, protection and competition,” he writes. The alternative to such hard-headed, nationally driven policies, he says contemptuously of the Philippines, is “an authentic, technology-less Third World state with poverty rates to match”.
| Studwell’s thesis is bold, his arguments persuasive, and his style pugnacious. It adds up to a highly readable and important book that should make people rethink the glib equation of free-market policies with economic success. He also writes with disdain for those who would peddle the “fairy tale” that poor countries can become rich by skipping industrialisation. Of India’s attempt to build wealth through IT services, which employ only a few million people, he says: “Punditry that likens India’s economic development to that of the more northerly countries is fatuous.” |
The implication of Studwell’s analysis is that talk of globally converging living standards is overdone. Those countries that do not begin with comprehensive land reform or bully their entrepreneurs into nation-building – as opposed to rent-seeking – are bound to fail. Even the relatively successful ones won’t get further than Malaysia, he says, a country whose botched efforts at industrialisation he likens to attending school but not paying much attention.
That leaves China, which in many ways has emulated the successful northeastern model, through post-1978 land reform and the creation of state champions financed through policy banks. China’s biggest companies, he argues, are closing in on international standards in heavy industry. But consumer businesses are not. As demographics worsen and as vested interests worry more about personal gain than national development goals, he wonders whether China will get stuck.
Studwell’s book is a warning to those who believe that developing countries in Asia, Latin America and now Africa have cracked the secret of growth and will inevitably catch up with rich ones. Only those nations with good policies will make it, he argues. And good policies are out of fashion.
David Pilling is the FT’s Asia editor
Leaving Cambridge, I pop into Blackwells and purchase two books about the Greek legends. What better way, I am thinking, to entertain and educate one’s young children than to introduce them to the original mythology of western civilisation? Moreover, this is a nice little saver, since I get about 800 pages of stories for a two-book total of 18 quid, compared with about a quid a page in the larcenous children’s department.
There is just one problem. Like most people who think it a good idea to educate their young in the Greek mythos, (and in our case even name the eldest child after the Greek goddess of the earth), I have never actually read the material. On so doing I quickly discover that the legends are not the child-sanitised morality tale I had in mind.
It is an initial relief to discover that Gaia is indeed the earth, can be construed as its goddess, and was the first thing to come into the Greek world after darkness — a poetic reference, I decide, to our first-born after all those years of waiting. Reading on, however, things quickly become rather less poetic. Gaia had a jealous husband: Uranus, the sky. He was a) addicted to sex and b) unwilling to have any child enter the world to compete with him for attention. So Uranus kept his dick permanently inside Gaia in order to prevent any of the children he sired from being born. Gaia, naturally, didn’t much like this. So she persuaded the youngest child in her belly, Cronus, to castrate Uranus while he was shagging. You can imagine that this came as a hell of a shock to Uranus, who jumped off Gaia and up into the sky. His dick fell into the ocean, where it floated about in a foaming mass of sperm and gave rise to Aphrodite, [sic] the goddess of love (ho, ho, ho). Meanwhile blood from Uranus’s wound splattered on the earth and produced the Erinyes – the furies, or avenger gods (this at least sounds plausible). Cronus and the other ‘titan’ kids escaped from Gaia’s womb, but Cronus grew up to be a ‘wrong ‘un’, imprisoned most of his siblings in the underworld, and ate his own children.
In the end, Zeus came on the scene and sorted out the big issues. But then Zeus himself got hacked off with (mortal) man, and sent down woman in the form of Pandora as a form of punishment. Pandora was good looking, but also sexually rapacious, gluttonous and pathologically deceitful, so that man’s life became miserable. ‘This is the dilemma now,’ observes French Greek-legend guru Jean-Pierre Vernant: ‘If a man marries, his life will pretty certainly be hell, unless he happens on a very good wife, which is extremely rare. Conjugal life is thus an inferno – misery after misery….If he marries it is a catastrophe, and if he doesn’t, it’s another kind of catastrophe.’ (pp61)
The children, all teed up before I read the text, are greatly excited at the prospect of hearing daddy tell them the story of Gaia and the Greek gods. They snuggle up on the sofa in baited anticipation. Daddy must now scale a new peak of judicious paraphrasing. He does his best: ‘Once upon a time, Gaia had a very naughty son called Cronus, who even stabbed his daddy with something a bit like a knife – which is something you must never, ever do… then there was Aphrodite, the beautiful goddess of love who, would you believe it, was discovered one day floating about on something a bit like an upturned canoe on the sea, but without a paddle… while cheeky Cronus became naughtier and naughtier and even swallowed his children – but without chewing, mind – until Zeus made him sick them up; not that one should ever try to make anyone sick anything up… and then Zeus created the first woman, who was very beautiful and had lovely clothes and jewels, but was, frankly, well, a bit of a handful… not at all like mummy, so just think about how lucky you are…ooh, is that the time, well lights out, good night… yes, of course I will…
Next day, the eldest child is heard to tell her brother, who happens to share his name with one of Christ’s disciples: ‘You are a friend of Jesus. That’s very good. But I am a God.’ Once again, liberal parenting has broadened the horizons that other parenting cannot reach.