A FirstLook Review by Loyd Eskildson

Shuman's expertise and openness combine in one of the most important books on economic development - The Miracle. He begins by reminding us of the obvious, but too easily forgotten - that Asia has produced the most sustained economic boom in modern history, bringing unprecedented gains in wealth and economic opportunity to billions. This was accomplished despite, for some, centuries of colonial domination or the devastation of war. Economic discipline and sacrifice were key.

South Korea leads the group, with a 15,046% growth in GNP/capita from 1965 - 2007; Japan's was "merely" 4,133%, China's 2,260%, and India's 764%. East Asia's 1981 poverty (surviving on $1.25/day, or less) rate led the world at nearly 805; this fell to 18% by 2005. (During the same period sub-Saharan Africa remained at 50%.)

As Asia's financial and political power have grown, it is inevitable that the West's has declined - especially given Goldman Sach's well-known 2003 prediction that by 2050 the Indian and Chinese economies together would double that of the U.S.

Shuman's focus is on first reporting how each economy blossomed, and from that, providing material to help explain this. Three are most prominent: 1)"There is something special about Asians" - eg. Confucianism's stress on societal order, and devotion to a strong work ethic and education. (Akin to earlier studies crediting Protestantism's "The Lord helps him who helps himself" for the rise of capitalism in the West.") (Shuman also could have credited the number of politically-incorrect yet credible studies concluding that Asians, in general, benefit from about a ten IQ-point lead over Caucasians.) Regardless, Shuman suggests this explanation does not address the question of "Why not earlier?"

A second explanation is that Asians did a superior job of planning that was contrary to pure U.S. laissez-faire ideology. Asian governments have picked specific industries to nurture, and then created policies to nurture (eg. protectionism) and accelerate them.

A third common theory is that Asians simply took advantage of American-supported free-trade while also boosting the education of their peoples and infrastructure (eg. transportation, power networks). Again, however, Shuman challenges such thinking with "eg.Why not Africa?"

Shuman sees nationalism as a key contributor - leaders seeking strong growth to lift their people's standard of living, as well as a defense against the Communist threat (eg. South Korea, Taiwan). (Ironically, part of Deng's motivation in China was to favorably impress citizens in Taiwan and Hong Kong - in hopes of later re-uniting with them.) The author also notes that, with one exception, Singh, in India) the leaders were not economists, but were quick to borrow from nations demonstrating early success (Japan was first). Shuman also is quite impressed by the creativity of early Asian business leaders - eg. Morito (Sony), and those involved in developing the Toyota Production System (TPS) that turned "Fordism" on its head. (Actually, Shuman talked about Honda, not Toyota - however, Toyota's TPS has had much greater impact.) China's recent battery and solar power entrepreneurs, also not mentioned, are nonetheless supportive of Shuman's thinking. Finally, The Miracle also quotes Asian leaders crediting the U.S. for providing security and stability to the region.

The bulk of the book is taken up with an accounting of individual Asian nation transformations, starting with Japan. While covering South Korea's transformation he also posits that strong-man rule, certainly replicated in China and Indonesia also) has been another positive component. Deng Xiaoping's "turn-on-a-dime" leadership away from ideology to pragmatism after Mao's death, covered in the book, is in itself an incredible story of leadership courage.

My only criticism of The Miracle is that Shuman's thinking about long-term consequences for the U.S. are superficial. He believes, correctly, that continuation improves relations between the U.S. and Asia - but only up to a point. China's increasing concerns over holding U.S. assets is evidence that things may get tougher. More importantly, however, Shuman fails to realize that what's good for Asia (more free trade) may not be good for the U.S. One also wonders what Russia's fate would have been if it had followed the Asian model.

5 Stars

The Miracle: The Epic Story of Asia's Quest for Wealth (HarperCollins/ Jun 2009) by Michael Schuman

A Failure of Capitalism by The Honorable Richard A. Posner

An Economic Naturalist's Field Guide by Robert H. Frank

Agenda for a New Economy by David C. Korten

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