The Forces Of Culture Behind Economies' 'Fortunes'

Containerized cargo is stacked high on a China Shipping Line freighter in 2006 in Miami Beach, Florida. Despite China's growing economy, author Daniel Altman believes cultural and demographic factors will prevent it from overtaking the United States as an economic power.

hide captionContainerized cargo is stacked high on a China Shipping Line freighter in 2006 in Miami Beach, Florida. Despite China's growing economy, author Daniel Altman believes cultural and demographic factors will prevent it from overtaking the United States as an economic power.

Paul J. Richards/AFP/Getty Images

These days, most of our troubles can be explained away by the phrase, "It's the economy, stupid." We await the latest numbers on unemployment, inflation, imports, exports and government deficits. We go up and down with the stock market. Nonetheless, according to author Daniel Altman, we don't pay nearly enough attention to the deep structural factors that underpin the world's economies.

Outrageous Fortunes by Daniel Altman

In his new book, Outrageous Fortunes, Altman analyzes these factors — including natural resources, demography, geography, climate, culture and politics — in an effort to "refocus economic prediction" on the longer term, decades away. Informative and accessible, penetrating and provocative, his book is a first-rate guide to global trends.

Outrageous Fortunes
By Daniel Altman
Hardcover, 272 pages
Times Books
List Price: $25
Read An Excerpt

Altman, founder of the consulting firm North Yard Economics and an instructor at New York University's Stern School of Business, is nothing if not bold. Despite its phenomenal recent growth, China, he predicts, is not likely to overtake the United States as the world's leading economic power. Still a hierarchical culture, rife with corruption and lacking a first-rate technology infrastructure, China is not at all receptive to start-up businesses. Even more importantly, thanks to the "one-child policy" instituted in 1979, China's population is increasing by less than 0.7 per year, making it the fastest aging country in the world. By 2050, as China feeds hundreds of millions of senior citizens, average incomes will grow at lower rates than in the U.S. Its moment in economic history, Altman asserts, "will be impressive, but brief."

The writer also addresses risks to global prosperity. Economic regulation in wealthy nations, he suggests, will lead to off-shore black markets. ("If you thought the Cayman Islands was notorious as a tax haven," he notes, imagine it as a financial haven with "huge skyscrapers filled with currency and derivative traders," doing business on the Internet.) Global warming will hit tropical regions especially hard. And, alas, even if it reduces overall emissions, a "cap and trade system," which provides financial incentives to businesses to reduce emissions of pollutants, may make poor and dirty countries poorer and dirtier.

Altman isn't always persuasive. An ability "to transcend cultural differences by isolating the lowest common denominator," best exemplified in the entertainment industry, may not, as Altman suggests, make Americans the premier sales force in the world. Nor does it seem all that certain that as the global economy integrates, the go-between in international trade "will survive and thrive" as a recruiter of outsourcers and, "lamentably, [a] people smuggler."

Altman doesn't claim to be a Nostradamus. After all, economics is by no means an exact science. But readers of Outrageous Fortunes are likely to conclude that they have learned some important things about a global economy that will have an ever-more profound impact on their lives.

Excerpt: 'Outrageous Fortunes'

Outrageous Fortunes by Daniel Altman
Outrageous Fortunes
By Daniel Altman
Hardcover, 272 pages
Times Books
List Price: $25


The global economy is changing more quickly than ever before in its history. The technologies that have made it more integrated—primarily those that have improved transportation and the exchange of information—continue to develop, and the number of interactions among people from all parts of the world is growing exponentially. These changes are having a profound effect on our lives. In the past two decades, we have seen hundreds of millions of people escape poverty, but we have also seen a severe deterioration in our natural environment and the bursting of huge financial bubbles.

Despite the refinement of economic policies designed to manage the business cycle, the volatility of commodity prices, trade flows, government budgets, and many other important indicators of the global economy continues to increase. As a result, it is easy to get caught up in the stream of numbers that spew out every second and to lose sight of the long term. That's a problem for our future. Personal fortunes may be gained and lost in a day, but national fortunes are gained and lost because of deeply ingrained economic factors that take years to develop and, if necessary, to change. Certainly, idiosyncratic events can push countries to one side or the other of their long-term economic paths. But over the course of decades, those paths tend to be determined by economic factors with very deep roots indeed.

These deep factors do not necessarily explain why stock markets rise and fall in the course of a single day, hour, or minute, but they do set limits on the material standards of living that an economy can achieve. If the pursuit of economic growth is a race, then these factors determine the location of the finish line. Because the finish line can often seem very far away, however, they do not receive very much attention in the daily pronouncements of pundits, politicians, and even people who know a little bit of economics.

This book aims to change that. It begins by explaining how, over long periods of time, countries with similar deep factors tend to reach similar limits of growth and prosperity. Those limits will start to bind, perhaps sooner rather than later, for the current darling of the global economy, China. China's rapid growth—and the notion that this growth will continue for decades to come—has attracted investment from around the world. Yet its long-term prospects are not as rosy as investors might hope. The European Union has also been a popular target for investors because of its political stability, its huge internal market, and the potential of its newer Eastern members. Its euro currency has given central banks, sovereign wealth funds, and other major investors a long-awaited alternative to the dollar. But all is not well in the Union, nor in the euro area, both of which are beginning to fall apart because the member countries are facing different limits to growth.

As countries strive to reach their limits and offer their citizens the highest possible living standards, they will come upon a series of obstacles. Their economies need resources—both natural and human—as well as a certain measure of stability. In the coming decades, many countries will face shortages of all three of these items, and those shortages will slow their headlong dash toward the finish line. Some countries will colonize others in a bid to secure the natural resources their economies need to grow: raw materials for manufacturing, crops to feed workers, fuel, and water. This time, the colonial conquests will be achieved through monetary rather than military means, but the results will likely be counterproductive for both the colonizers and the colonized. Rich countries, with their aging populations and low fertility rates, will change their immigration policies to draw in more workers from around the world. Even as poor countries develop, it will be harder for them to hold on to their most productive citizens. Meanwhile, many countries that have embraced left-leaning populist governments in recent years will first shift to the right, then continue to swing back and forth like political pendulums. The resulting regime changes will slow their economic growth—an unfortunate reality, since growing may be the only way to settle the pendulums down.

In the midst of these limits and obstacles, there will also be new opportunities. As the booms fueled by technology and cheap credit in the 1990s and 2000s fade into the background, Americans will be looking for new sources of jobs and income. They will find some of them in an unexpected place, drawing on a little-recognized but fundamental pillar of their nation's economic success: selling power. The restructuring of the global economy—ever more intertwined, ever more digital—will also allow workers to seize new opportunities by straddling two or more markets at a time and acting as gatekeepers of profit. Changes in how people work will lead them to change where they work as well; in the future, a growing class of mobile professionals will populate a new set of economic hubs founded on lifestyle choices rather than business imperatives. And the slow collapse of the World Trade Organization will actually allow countries to pursue freer trade, opening up new gains from doing business abroad.

Despite the opportunities it presents, the road to growth is not always smooth. Even if a country manages to avoid the obstacles along its particular path, there are still risks that affect everyone in the race. The recent financial crisis showed that negligence, malfeasance, and herd behavior in a couple of financial centers can stunt growth around the world, setting some countries back years in their pursuit of higher living standards. One result of the new regulatory framework facing the world of finance will be the blossoming of an enormous black market whose presence will bring new risks to the global economy. At the same time, climate change—often touted as an opportunity for new industries in rich and poor countries alike—will actually separate these countries even further, creating a threat of instability that could hamper growth in both. To solve these problems, countries will have to work together. Yet the political institutions that provide the framework for global problem-solving may not be up to the task.

Even generalists have their areas of strength and weakness, so this book does not take on every pressing economic issue. Other writers are better equipped to predict which fuel will power the transport of the future (indeed, some already have), which super- and semi-conductors will carry the global economy's data, and whether that mode of transport and those data will help humankind to develop the resources of the moon, other planets, or faraway galaxies. The task of prediction is difficult enough without venturing so far afield in so many different directions.

Books Featured In This Story

Outrageous Fortunes
Outrageous Fortunes

The Twelve Surprising Trends That Will Reshape the Global Economy

by Daniel Altman

Hardcover, 257 pages | purchase


Purchase Featured Books

  • Outrageous Fortunes
  • The Twelve Surprising Trends That Will Reshape the Global Economy
  • Daniel Altman



Please keep your community civil. All comments must follow the Community rules and Terms of Use. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.

Support comes from: