www.ebook3000.com THE COMING PROSPERITY www.ebook3000.com This page intentionally left blank www.ebook3000.com THE COMING PROSPERITY How Entrepreneurs Are Transforming the Global Economy Philip Auerswald www.ebook3000.com Oxford University Press, Inc., publishes works that further Oxford University’s objective of excellence in research, scholarship, and education Oxford New York Auckland Cape Town Dar es Salaam Hong Kong Karachi Kuala Lumpur Madrid Melbourne Mexico City Nairobi New Delhi Shanghai Taipei Toronto With offices in Argentina Austria Brazil Chile Czech Republic France Greece Guatemala Hungary Italy Japan Poland Portugal Singapore South Korea Switzerland Thailand Turkey Ukraine Vietnam Copyright © 2012 by Philip Auerswald Published by Oxford University Press, Inc 198 Madison Avenue, New York, NY 10016 www.oup.com Oxford is a registered trademark of Oxford University Press All rights reserved No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior permission of Oxford University Press Library of Congress Cataloging-in-Publication Data Auerswald, Philip E The coming prosperity : how entrepreneurs are transforming the global economy / Philip E Auerswald p cm ISBN 978-0-19-979517-8 (hbk : alk paper) Globalization—Economic aspects Globalization—Developing countries Economic development—Developing countries Economic development—United States Developing countries—Population—Economic aspects I.Title HF1359.A927 2012 337—dc23 2011029789 Printed in the United States of America on acid-free paper www.ebook3000.com For Cecelia, Helena, and Isabel www.ebook3000.com This page intentionally left blank www.ebook3000.com CONTENTS Introduction PART ONE: Strength in Numbers Car Trouble Demographic Dividends I’m So Bored with the PRC Positive Insurgencies 13 24 43 57 PART TWO: The Animating Element Mobilizing the Masses You Are What You Venture The Way of the Empty Hand Before Adam Smith What’s Good for GM  .  75 89 98 114 129 PART THREE: Participatory Prosperity 10 Time to Be What Matters 11 Collaborative Advantage 12 From Passion to Purpose www.ebook3000.com 147 162 177 viii • Contents PART FOUR: The Next America 13 Fear Itself 14 Left, Right  .  Forward 15 You Ain’t Seen Nothin’ Yet 191 207 220 Acknowledgments Notes Index 233 237 267 www.ebook3000.com THE COMING PROSPERITY 258 • Notes the rest of the country: http://www.thelaunchpad.org/ For an understanding of how Launch Pad fits into the broader story of the future of collegiate education, see panel of the Presidents’ Symposium on the Future of Collegiate Education, a workshop held at the Association of Public and Land-Grant Universities on May 28, 2010, http://www.aplu.org/page.aspx?pid=1643 pg 186, “among the relatively advantaged”—A January 2011 New York Times profile of Mohamed Bouazizi—the Tunisian street vendor whose suicide sparked that country’s revolution—offers a vivid description of this phenomenon Bouazizi himself was not a college graduate, but the circumstances of his peers in his hometown of Sidi Bouzid reflect Schumpeter’s predictions: “There are jobs at a toy factory, one of the two biggest plants in town, but they pay only about $50 a month People with college degrees head for the more affluent coastal cities or settle for less Wassim Lassoued, who has a master’s degree in physics, works part time in an Internet cafe ‘Five years ago, lots of money was sent here to establish new businesses,’ he said ‘That money disappeared.’” Karim Faheem, “Slap to a Man’s Pride Set Off Tumult in Tunisia,” New York Times, January 22, 2011, http:// www.nytimes.com/2011/01/22/world/africa/22sidi.html?pagewanted=1&_r=1 pg 188, “at least one attempt at an answer”—At the time I was finishing this book, Christopher Washington had picked up on his original vision and was working to launch a venture in Ghana informed by his experience with large-scale urban agriculture in the Washington, DC metro area c h a p t er pg 193, “call forth moral allegiance”—Schumpeter, Capitalism, Socialism, and Democracy, 142 pg 194, “on the cable news feed”—The Federal Bureau of Investigation, Terrorism 2002–2005 (Washington, DC: Federal Bureau of Investigation), p 1: “In keeping with a longstanding trend, domestic extremists carried out the majority of terrorist incidents during this period.” http://www.fbi.gov/stats-services/publications/terrorism-2002-2005/ pg 195, “fighting against Islamic fascism”—Kari Huus and Tom Curry, “The Day the Enemy Became ‘Islamic Fascists,’” MSNBC.com, August 11, 2006 Accessible at http://www.msnbc.msn.com/id/14304397/ns/politics/ pg 196, “impacts through exaggerated responses”—Philip Auerswald, “The Irrelevance of the Middle East,” American Interest 2, no (May/June 2007): 19–37 pg 196, “category of ‘the greatest risk’”—Falkenrath stated: “Of all the various remaining civilian vulnerabilities in America today, one stands alone as uniquely deadly, pervasive, and susceptible to terrorist attack: toxic-inhalation hazard (TIH) of industrial chemicals, such as chlorine, ammonia, phosgene, methylbromide, hydrochloric and various other acids.” Statement before the United States Notes • 259 Committee on Homeland Security and Governmental Affairs, Washington, DC, April 27, 2005 pg 198, “creative spirit that drive entrepreneurs”—Philip Auerswald et al., Seeds of Disaster, Roots of Response: How Private Action Can Reduce Public Vulnerability (Cambridge: Cambridge University Press, 2006) pg 199, “continued poverty for much of the world”—Michael Atiyah and Frank Press, “Population Growth, Resource Consumption and a Sustainable World,” Interdisciplinary Science Reviews 17, no (June 2002): 100–102 pg 200, “to deal with this important question”—John Tanton, “International Migration as an Obstacle to Achieving World Stability,” Ecologist 6:6 (July 1976): 222 Accessible at http://www.johntanton.org/articles/mitchell_essay_immigration html pg 201, “if they are to bloom at all”—John Tanton, “End of the Migration Epoch? Time for a New Paradigm,” The Social Contract, 4, no (Spring 1994) pg 201, “detain illegal immigrants”—NumbersUSA was founded in 2002 by Roy Beck, a former journalist and public policy analyst, while he was working for Tanton as the Washington, DC, editor of The Social Contract pg 202, “rental price of their housing”—Gianmarco Ottaviano and Giovanni Peri, “The Economic Value of Cultural Diversity: Evidence from U.S Cities,” NBER Working Paper 10904, November 2004 See also “Rethinking the Gains from Immigration: Theory and Evidence from the U.S.,” NBER Working Paper 11672 (2004) pg 202, “and employed 450,000 workers”—Vivek Wadhwa, “Our Best Imports: Keeping Immigrant Innovators Here,” Democracy: A Journal of Ideas, no 21 (Summer 2011), http://www.democracyjournal.org/21/our-best-imports-keepingimmigrant-innovators-here.php See also re-search published by the Kauffman Foundation’s program “Immigration and the American Economy,” http://www kauffman.org/research-and-policy/immigration-and-the-american-economy.aspx pg 203, “family abandonment rate”—Michael A Clemens, “Economics and Emigration: Trillion-Dollar Bills on the Sidewalk?” Journal of Economic Perspectives 25, no (Summer 2011): 89 For a comprehensive survey of the mechanisms by which the actions of diaspora populations affect, and benefit, home countries, see Kingsley Aikins and Nicola White, Global Diaspora Strategies Toolkit: Harnessing the Power of Global Diasporas (Dublin: Diaspora Matters, 2011), http://www diasporamatters.com/download-the-diaspora-toolkit/2011/ pg 203, “capital movement in the world”—Lawrence MacDonald, “Migration and the Trillion Dollar Bills on the Sidewalk: Michael Clemens,” Center for Global Development blog, September 7, 2011 See http://blogs.cgdev.org/global_prosperity_wonkcast/2011/09/07/migration-and-the-trillion-dollar-bills-on-the-sidewalk-michael-clemens/ pg 204, “regardless of ethnicity, religion or background”—Amy Chua, Day of Empire: How Hyperpowers Rise to Global Dominance—and Why They Fall (New York: Doubleday, 2007), xxxiii 260 • Notes pg 204, “diverse interests for collaborative success”—An interesting affirmation of this principle is found in a letter Tanton himself sent to the New York Times in response to the profile of him that the paper ran on its front page in June 2011: “Regarding my penchant for working with all sides of the political, ethnic, philosophic, economic, racial, religious and other spectra, that is how one forms a coalition that has political meaning and power Forming a coalition from people who agree on all issues simply does not work.” See http://www.johntanton.org/answering_my_critics/letter_2011apr18_jt_new_york_times.html pg 204, “serving to keep opportunity out”—For policy proposals to reverse that trend, see Carl Shramm, “Rolling Out the Welcome Mat for Entrepreneurs,” McKinsey & Company: What Matters, July 18, 2011, http://whatmatters.mckinseydigital.com/job_creation/rolling-out-the-welcome-mat-for-entrepreneurs pg 204, “to be in the US illegally?”—I am referring to Arizona’s Senate Bill 1070; see http://www.azleg.gov/legtext/49leg/2r/bills/sb1070s.pdf pg 205, “nation is roused to action”—James Fallows, “How America Can Rise Again,” Atlantic (January/February 2010) pg 206, “planting any perennial border”—Jane Garmey, “The Natural Look, with Much Effort,” New York Times, September 10, 2008, F1 Accessible at http://www nytimes.com/2008/09/11/garden/11meadow.html pg 206, “suppress invasive weeds”—Ibid c h a p t er pg 207, “human relations in his business”—Charles P McCormick, The Power of People (Baltimore, MD: McCormick & Company, [1949] 1952), xvi pg 208, “manager of a multimillion-dollar business”—Ibid., 12 pg 209, “to give advice about it”—Ibid., 28–29 pg 209, “clear to everyone in the system”—W Edwards Deming, The New Economics for Industry, Government, Education (Cambridge, MA: MIT Press, [1994] 2000), 50 pg 209, “unknown or unknowable”—W Edwards Deming, Out of the Crisis (Cambridge, MA: MIT Press, [1982] 2000), 121 pg 209, “The Builder learns from them.”—Umair Haque, “The Builders Manifesto,” Harvard Business School blog, December, 18, 2009 Accessible at http://blogs.hbr org/haque/2009/12/the_builders_manifesto.html See also Umair Haque, Betterness: Economics for Humans (Cambridge, MA: Harvard Business School Press, 2011) pg 210, “as a curb to economic power”—John Kenneth Galbraith, American Capitalism: The Concept of Countervailing Power (New Brunswick, NJ: Transaction Publishers, [1952] 2008), 113 This subsection parallels Auerswald and Acs, “Defining Prosperity.” pg 210, “defined the American political system”—See, for example, Baumol et al., Good Capitalism, Bad Capitalism, 194 Galbraith observed a transient form of Notes • 261 economic organization linked directly to the technological and organizational realities of the mid-twentieth century and took it to be the end point of a nation’s development American capitalism is nothing if not dynamic, but Galbraith’s framework is fundamentally static It is hard, for instance, to imagine writing a book today on the topic of American capitalism that contains, as Galbraith’s does, only two uses of the word “entrepreneur.” While Galbraith alludes to the important role in economic life of technology and innovation, he states that both of these emanate from large corporations and thus only serve to reinforce the economic status quo pg 210, “which they were supposedly arrayed”—Auerswald and Acs, “Defining Prosperity.” pg 211, “the viability of automakers”—See http://www.npr.org/templates/story/story php?storyId=104527823&ft=1&f=1001 pg 211, “Left? Right?”—Alluding to the same apocryphal quote, columnist William Kristol wrote at the time the auto bailout packages were being debated: “Whichever party can liberate itself from its well-worn rut to propose policies that help both American businesses and workers has a great opportunity That party’s leaders could begin by offering management and labor at the Big Three a little more sympathy and heaping upon them a little less calumny Where’s Charles Wilson when we need him?” “Left and Right, Piling On,” New York Times, December 15, 2008, A31 pg 211, “helps you change a culture”—Bill Vlasic, “Culture Shock: G.M Struggles to Shed a Legendary Bureaucracy,” New York Times, November 13, 2009, B1 pg 211, “For decades.”—Floyd Norris, “U.S Teaches Carmakers Capitalism,” New York Times, November 20, 2009, B1 Available at http://www.nytimes com/2009/11/20/business/20norris.html pg 212, “have spelled trouble?”—Dane Stangler, “The Insurgent Spirit and Messy Capitalism,” RealClearMarkets.com, November 25, 2008, http://www.realclearmarkets.com/articles/2008/11/the_insurgent_spirit_and_messy.html pg 214, “better or worse than the original one”—Ronald H Coase, “The Problem of Social Cost,” Journal of Law and Economics (October 1960), 34 pg 215, “recurrent themes in this book”—See also Peter Orzag, “As Kaldor’s Facts Fall, Occupy Wall Street Rises,” Bloomberg.com, October 19, 2011 pg 215, “notably health and education”—Michael Spence, “The Impact of Globalization on Income and Employment: The Downside of Integrating Markets,” Foreign Affairs (July/August 2011): 28–41 pg 215, “current standard but at far lower cost”—W B Arthur, “The Second Economy.” pg 216, “occasionally suggested is the case”—In March 2009, Nobel laureate Paul Krugman posted to his blog a chart of US industrial production from 1929 to 1930 (the first thirteen months of the Great Depression), comparing it to the interval from 2007 to 2009 (the first thirteenmonths of what Krugman referred to as the 262 • Notes “Great Recession”) Noting that the drop in industrial production at the start of the Great Depression was about double that experienced in 2007–2009, Krugman concluded: “At this point we’re sort of experiencing half a Great Depression That’s pretty bad.” “The Conscience of a Liberal: The Great Recession versus the Great Depression,” New York Times blog, March 20, 2009 Accessible at http://krugman blogs.nytimes.com/2009/03/20/the-great-recession-versus-the-great-depression/ Of course Krugman was hardly alone in trumpeting the severity of economic fallout from the global financial crisis Analogies between the recession and the Great Depression proliferated in the winter of 2009 Yet that wasn’t the first time Krugman rang alarm bells about another Great Depression In 1998, during the Asian financial crisis, he expressed an equally dire outlook in a cover story for Fortune magazine: “Never in the course of economic events—not even in the early years of the Depression—has so large a part of the world economy experienced so devastating a fall from grace.” Without a drastic intervention, “we could be looking at a true Depression scenario—the kind of slump that 60 years ago devastated societies, destabilized governments, and eventually led to war.” “Saving Asia: It’s Time To Get Radical,” Fortune, September 7, 1998, accessible at http://money.cnn com/magazines/fortune/fortune_archive/1998/09/07/247884/index.htm; cited in Fareed Zakaria, “Capitalist Manifesto: Greed Is Good (To a Point),” Newsweek, June 13, 2009 Accessible at http://www.newsweek.com/2009/06/12/the-capitalist-manifesto-greed-is-good.html What actually happened? The interventions Krugman advocated were not, in fact, enacted Calamity did not ensue pg 217, “that most of the world still envies”—Fallows, “How America Can Rise Again.” A reasonable counter to the argument I make here is that—even if we all agree that levels of human well-being matter in the way I am suggesting that they do—people nonetheless are well known to make assessments of their well-being based on the their relative standing in society, rather than in absolute terms Furthermore, people tend to compare themselves to their most immediate peer group As a consequence, improvements in human well-being are far more elusive than the foregoing argument would suggest The evidence supporting such context-based assessments of well-being is strong I would simply say that, compared with watching your child die in your arms of an easily preventable disease, the anxiety of “keeping up with the Joneses” is, itself, a rather significant luxury As a consequence, it is not my primary concern pg 218, “will be forced on them”—Ram S Tarneja, “My Friend Naval,” Tata group website, 2004 Accessible at http://www.tata.com/aboutus/articles/inside aspx?artid=SufsIy078IY= pg 218, “asserts itself and there is a change”—McCormick, Power of People, pg 218, “The people liberate themselves.”—Statement in Mexico, 1958 pg 218, “by management and government”—McCormick, Power of People, pg 218, “being of service to others”—Ibid., 2–3 pg 219, “leaders today, tomorrow, and forever”—Ibid., Notes • 263 c h a p t er pg 220, “Asa Bowen Smith”—Clifford Merril Drury, The First White Women over the Rockies: Diaries, Letters, and Biographical Sketches of the Six Women of the Oregon Mission Who Made the Overland Journey in 1836 and 1838 (Glendale, CA: Arthur H Clark Company, 1963), 157 pg 221, “the embracing of true religion”—Thomas Harriot, A Brief and True Report of the New Found Land of Virginia (London, 1588), 25 pg 221, “We are a separate people!”—Colonel Tatham, The Annual Biography and Obituary for the Year 1820, vol (London: Longman, Hurst, Rees, Orme & Brown, 1820), 163–64 Original source located via Corntassel.net pg 222, “limits to our onward march?”—“Annexation,” United States Magazine and Democratic Review 17, no (July–August, 1845): 5–10 O’Sullivan used the term in reference to alleged European efforts to impede the westward expansion of the United States, which he claimed were “in a spirit of hostile interference against us, for the avowed object of thwarting our policy and hampering our power, limiting our greatness and checking the fulfillment of our manifest destiny to overspread the continent allotted by Providence for the free development of our yearly multiplying millions.” In an earlier essay he had introduced the idea of manifest destiny, but did not employ that precise term; see John O’Sullivan, “The Great Nation of Futurity,” United States Democratic Review 6, no 23 (November 1839): 426–30 Accessible at http://digital.library.cornell.edu/cgi/t/text/text-idx?c =usde;cc=;view=toc;subview=short;idno=usde0006-4 pg 222, “competition with the Soviets”—Alexis de Tocqueville’s reference to the United States as “exceptional” in Democracy in America (New York: Vintage, 1990) illustrates one way in which that term might be interpreted in this context: The position of the Americans is therefore quite exceptional, and it may be believed that no democratic people will ever be placed in a similar one Their strictly Puritanical origin, their exclusively commercial habits, even the country they inhabit, which seems to divert their minds from the pursuit of science, literature, and the arts, the proximity of Europe, which allows them to neglect these pursuits without relapsing into barbarism, a thousand special causes, of which I have only been able to point out the most important, have singularly concurred to fix the mind of the American upon purely practical objects His passions, his wants, his education, and everything about him seem to unite in drawing the native of the United States earthward; his religion alone bids him turn, from time to time, a transient and distracted glance to heaven Let us cease, then, to view all democratic nations under the example of the American people (36–37) pg 222, “affairs of the contemporary world”—William Pfaff, “Manifest Destiny: A New Direction for America,” New York Review of Books, February 15, 2007 pg 224, “new and growing businesses?”—Tim Kane, “The Importance of Startups in Job Creation and Job Destruction,” Kauffman Foundation Research Series: 264 • Notes Firm Formation and Economic Growth (Kansas City, MO: Kauffman Foundation, July 2010) pg 225, “twenty-first competitive advantage”—For insightful further analysis of the just-cited job-creation statistic, see Dane Stangler and Paul Kedrosky, “Neutralism and Entrepreneurship: The Structural Dynamics of Startups, Young Firms, and Job Creation,” Kauffman Foundation Research Series: Firm Formation and Economic Growth (Kansas City, MO: Kauffman Foundation, September 2010) pg 225, “all corners of the global brain”—Anne-Marie Slaughter, “America’s Edge: Power in the Networked Century,” Foreign Affairs (September/October 2009): 103–4 pg 225, “quickly test these new combinations”—I thank Sandy Maxey for suggesting the use of the term “civic infrastructure” in this context pg 226, “radical innovators must redraw”—Umair Haque, “Google Buzz and the Five Principles of Designing For Meaning,” Harvard Business Blog, February 12, 2010 Accessible at http://blogs.hbr.org/haque/2010/02/google_buzz_revolution_evoluti.html pg 227, “there is my country”—O’Sullivan, “Great Nation of Futurity,” 429 pg 228, “to create platforms for innovation”—Tim O’Reilly, “Government as a Platform,” in Open Government: Collaboration, Transparency, and Participation in Practice, eds Daniel Lathrop and Laurel Ruma (Sebastopol: O’Reilly Media, 2010): 12–39 pg 228, “This is a model for the future.”—I thank President Clinton for sharing this observation with me One application, which I have discussed with my Kauffman Foundation colleague Bob Litan, is the creation of a globally accessible platform for the registration of property rights This innovation would bring into the digital age the rights-inclusiveness strategy that has long been championed by Peruvian economist Hernando de Soto pg 228, “any of them lie fallow”—Richard Florida, The Great Reset: How New Ways of Living and Working Drive Post-Crash Prosperity (New York: Harper: 2010); Edward Glaeser, How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier (New York: Penguin Press, 2010); The Brookings Institution Metropolitan Policy Program, Restoring Prosperity: The State Role in Revitalizing America’s Older Industrial Cities (Washington, DC: Brookings Institution, 2007) pg 229, “We have to make sure that happens.”—Anya Kamenetz, DIY U: Edupunks, Edupreneurs, and the Coming Transformation of Higher Education (White River Jct., VT: Chelsea Green, 2010); Philip Auerswald, “First Newspapers, Now Universities: It’s Transformation Time,” WashingtonPost.com, June 8, 2010, http:// views.washingtonpost.com/leadership/guestinsights/2010/06/first-newspapersnow-universities-its-transformation-time.html pg 229, “strategies of diaspora engagement”—Aikins and White, Global Diaspora Strategies Toolkit The US State Department deserves credit for not only having recognized the important role of diaspora communities resident in Notes • 265 the US but also for having taken significant initial steps to mobilize America’s collaborative advantage (see http://www.diasporaalliance.org/) However, realizing the full potential of a strategy of diaspora engagement in the US will require not only a far more broad-based effort within the federal government but also the implementation of creative new approaches by states, cities, and educational institutions across the country pg 229, “everyone a changemaker world”—William Drayton, “Everyone a Changemaker: Social Entrepreneurship’s Ultimate Goal,” Innovations: Technology, Governance, Globalization 1, no (Winter 2006): 80–96; Thomas Kalil, “Innovation, Education, and the Maker Movement,” Remarks at the New York Hall of Science, September 29, 2010, published in O’Reilly Radar, October 4, 2010, http://radar oreilly.com/2010/10/innovation-education-and-the-m.html; Anya Kamenetz, “Why Education Without Creativity Isn’t Enough,” FastCompany.com, September 14, 2011, http://www.fastcompany.com/magazine/159/indian-engineers-education pg 230, “America’s best days lie ahead”—Warren E Buffett, Letter to the Shareholders of Berkshire Hathaway Inc., February 26, 2011, http://www.berkshirehathaway.com/letters/2010ltr.pdf pg 231, “It is an idea.”—For an eloquent elaboration on this theme, see Anne-Marie Slaughter, The Idea That Is America: Keeping Faith with our Values in a Dangerous World (New York: Basic Books, 2007) This page intentionally left blank INDEX Abouleish, Ibrahim 9, 162–164, 166, 168–176, 186, 203 Adams, John Quincy 25, 53 Adams, Henry 25 Afghanistan 4, 9, 57–61, 63, 69, 71, 83, 124, 125, 141 Aga Khan Development Network 59 Alaska 48, 49, 189 ants, as example of decentralized social coordination 45, 104, 105 Aravind Eye Care System 148, 153, 198 Ashoka, Innovators for the Public 229 automaton 114, 115, 128 automobile bailout (2008) 210, 211 industry 15–17, 21, 23, 37, 66, 108, 129–131, 133, 135, 137, 139, 141–143, 211, 218 Aziz, Seema 68, 69, 72 banking medieval 121–124, 165, 166 mobile 83–85, 177 Blanco, Kathleen Babineaux 98 Bareeze 68, 69 Barhydt, Bill 84 Ben & Jerry’s 57, 153, 157 bills of exchange 121–124, 165, 166 Black Death, and 14th century labor supply 116, 118 Bonaparte, Napoleon 55 Bonus March 13 Brilliant, Girija and Larry 148 Buffett, Warren 230–231 capitalism and democracy 102, 108, 109, 117, 128, 131, 183–185, 193, 195 and entrepreneurship 54, 55, 109, 117, 121, 128, 131, 132, 136, 137, 167, 184, 193 early history of 121, 128, 184 carbon tax 39 Care Foundation (Pakistan) 69 Cervantes, Miguel de 119 chaebols (see also South Korea) 142 collaboration 41, 77, 106, 135, 197, 225 collaborative advantage 161, 169, 218, 225, 228, 229 college enrollment trends 185 financing of 13, 185 CellBazaar 85 Cheol-Soo, Ahn 142 China, People’s Republic economic growth 28, 30, 39, 43, 46, 52–55, 70, 165 economic reforms 43, 48 invention of the first mechanical clock 115 Forbidden City (Beijing) 114, 117, 128 Dongguan 49–53 Hong Kong 33, 51, 70 268 • Index China, People’s Republic (continued) Sichuan earthquake 55 Shenzhen 43, 51, 52, 161 Tibet 45, 87, 161 Chua, Amy 204 Clemens, Michael 166, 203 climate change 3, 7, 8, 11, 34, 35, 37–39, 51, 59, 231 clocks and clockmaking, early history of 114–117, 121, 125, 128 Club of Rome 34, 35, 199 Coast Guard, US 110, 111, 214 Cohen, Ben 57 Council on Foreign Relations 69 Cowen, Tyler 131–134 Cusack, Jake 71 communism 16, 20, 45, 142, 154, 195 complexity edge of chaos 107, 112 of social challenges 5, 6, 8, 16, 17, 24, 36, 72, 81, 82, 105, 106, 121, 136, 152, 165, 169, 170, 215 organizational and technological 134, 135 theory 106 Council of Reims 122 countervailing power (see also John Kenneth Galbraith) 209, 210 cybernetics 14, 16, 34, 114 cyberspace 14, 21, 40 Daly, Herman 152 democracy and capitalism 102, 108, 109, 117, 128, 131, 183–185, 193, 195 and entrepreneurship 118, 128, 131, 193, 212 Deng Xiaoping 43, 48, 50, 52 Detroit 4, 15, 23, 66, 187, 210, 211 Diaspora 69, 161, 168, 169, 171, 174, 175, 229 Drayton, Bill 229 economics capital and labor, accumulation and substitution 95, 102, 137 capital deepening 54 consumer and producer surplus 153, 156 ecological economics 152, 201 externalities 151, 152, 203 economies of scale and scope 16, 18, 38, 78, 109, 131, 132, 135, 210 financial models 100 free market 8, 212–214 incumbent political and economic interests 4, 66, 101, 121, 126, 129–131, 137–139, 141, 160, 183, 193, 215 invisible hand 119–121, 124 market failure 213, 214 microeconomic theory of production 35, 94, 95 order and adaptability tradeoff 8, 73, 100, 101, 103, 106, 107, 112, 117, 121, 142, 183 prices as means of allocating scarce resources 34–36 recipes model of production 92, 95 specialization 81, 103, 122, 127, 134, 135, 225 standard-setting 21, 117 technological unemployment 4, 14, 19, 39, 108, 136 Value at Risk (VAR) models 100 ecology 5, 32, 96, 152, 198, 201, 204 Egypt 79, 86, 162–164, 168–171, 174–176, 184, 185 Eisenhower, Dwight D 82, 90, 101, 129 Enlightenment, Age of the 119, 121, 124 entrepreneurship and democracy 118, 128, 131, 193, 212 and capitalism 54, 55, 109, 117, 121, 128, 131, 132, 136, 137, 167, 184, 193 and governance 72, 117 and societal adaptability 20, 54, 55, 73, 89, 100, 112 Index as positive insurgency 7, 26, 137, 167, 212 culture of 55, 137, 206 destructive 21, 61, 62, 206 immigrant 167, 186, 225 motivation for 102, 152, 153, 157, 158, 160 Ehrlich, Ann and Paul 27, 36, 37, 199, 201 Esoko 85 eugenics 30, 33 extractive industries 140, 141 Facebook 86, 132, 175, 178 Falkenrath, Richard 196 Fallows, James 44, 205, 217 Fannie Mae 99 fascism 16, 154, 195 Federation for American Immigration Reform (FAIR) 200, 201 financial crisis 7, 51, 75, 100 FIRST Robotics 229 Forbidden City (Beijing) 114, 117, 128 Ford Motor Company 15–17, 108, 131, 211, 218 Friedman, Thomas 44, 93, 183 Galbraith, John Kenneth 209, 210 Gapminder 7, 31 gasoline 36, 46 General Motors Corporation 23, 129– 131, 133, 135, 137, 139, 141–143, 211 George Mason University 8, 131, 177 Gibson, William 14 Ghandour, Fadi 183 Ghonim, Wael 175, 176 GI Bill 13, 25 Gingrich, Newt 110 “God, glory, and gold” 148, 160 Goldman Sachs 75 governance 72, 86, 117, 123, 140, 141 Graber, David 22 Great Depression 4, 13, 19, 133, 149, 207, 208, 216, 217 • 269 Green, David 148 Green Revolution 93 Greenspan, Alan 100 Gross Domestic Product alternatives to 151, 152, 156 critiques of 150, 151 Gross National Product (see also Gross Domestic Product) 150, 151 Hale, Victoria 6, 158–160 Hamilton, Alexander 120 Haque, Nadeem 63, 65, 71 Haque, Umair 209, 226 Hardin, Garrett 201 Hirschman, Albert O 117–119, 124, 193 Hobbes, Thomas 40, 119 Holdren, John 5, Human Development Index (HDI) 152, 156 Hume, David 118 Hurricane Katrina 93, 98, 99, 110, 112, 197, 214 India 3, 20, 27, 30, 52, 63, 70, 130, 136, 148, 156, 160, 164, 167, 217 innovation organizational and technological 3, 5, 6, 16, 34, 37, 41, 79, 101–103, 107, 108, 134, 135, 195, 202, 204, 226 routinization of 109, 131 slowing of 135 Innovations journal 6, 9, 111, 218 Institute for OneWorld Health (IOWH) 159 International Development Enterprises (IDE) 61, 62 International Standards Organization 21 Iraq 4, 8, 60, 164, 196 Janah, Leila 9, 182, 183 Jones, Ben 134 Joy, Bill 204 J P Morgan 100 270 • Index Kai-yah-teh-hee (a.k.a Corn Tassel) 221 kala-azar (Black Fever) 159 Kauffman Foundation 41, 134 Kauffman, Stuart 5, 92, 106–7, 218 Kennedy School of Government 5, Kennedy, Robert 150 Kenya 3, 84, 104 Keynes, John Maynard and economic bliss point 19, 108 and technological unemployment 108 “Economic Possibilities of Our Grandchildren” 3, 18, 19, 21, 149 The General Theory of Employment, Interest, and Money 19 Khoja, Karim 9, 57–59 Khosla, Vinod 167, 169 Kissinger Report 30, 32, 199 Kissinger, Henry 30, 32, 199 Korea, North 142 Korea, South 20, 41, 51, 136–140, 142 Kremer, Michael 27–30 labor and capital, accumulation and substitution 54, 95, 102, 137, 226 organized (see also United Auto Workers) 14, 21, 101, 116, 209–212 surplus 102, 137 Landes, David 116, 126, 127 Lee, Greg 47 Lemelson-MIT InvenTeams 229 Leonhardt, David 133, 134 Leppert, Marty 62 Limits to Growth report (see also Club of Rome) 34, 93, 136, 199 Lin Zexu 53 Litan, Bob 41 Lopez, Robert 122, 123 Luc de Clapiers, marquis de Vauvenargues 120 M-PESA, mobile banking in Kenya 84 Ma, Jack 20 Macready, Bill 106 Maker Faire 229 Malmstrom, Erik 71 Malthus, Thomas Robert 26, 27, 33, 34, 41, 117 Mandeville, Bernard 117, 120 Mangano, Sal and Mabel 98 Manpower Inc 180, 181 manufacturing 21, 39, 87, 116, 126, 169, 211, 215, 226 Mao Zedong 16, 43, 45, 46, 48, 50, 128 MacArthur Fellows 106, 112, 148 McCormick and Co 207–209, 217, 218 McCormick, Charles P 207–209, 217, 218 McLuhan, Marshall 14 Middle Ages 122–124, 149, 150, 184 Middle East (see also Egypt, Tunisia) 122, 175, 184 migration 30, 164, 166, 198–200, 202, 203, 221 Millar, John 87, 117 Millonas, Mark 105–107 Minitel 81 mobile banking 83–85, 177 mobile phones 3, 5, 9, 41, 57, 61–63, 76–79, 82–88, 132, 168, 225 Montesquieu, Baron de (Charles Louis de Secondat) 118, 119, 121, 123, 124 mortgage market 7, 13, 99, 100 Multiple Management (see also McCormick and Co.) 209 Nardelli, Robert 210 National Guard, US 61, 62 New Orleans 4, 98, 99, 110, 187 Nilekani, Nandan 20 Nizard, Maurice 112 NumbersUSA 201 Obama, Barack 5, 18, 227, 229, 230 Occupy Wall Street 22, 215 oil 17, 35, 37–39, 45, 46, 61, 140, 158, 212 O’Sullivan, John 221 Index Oklahoma City bombing (April 19, 1995) 194 Olson, Marcur 40, 138, 139, 142, 165, 193, 212 Opium Wars 53 Ortega y Gasset, José 169 Ottaviano, Gianmarco 202 outsourcing 22, 126 official development assistance (ODA) 63, 140 Pakistan 58, 60, 63–72, 187 paradoxes of prosperity 9, 23–25, 37, 39, 184 particle swarm optimization (PSO) 105 passions 87, 114, 117–121, 124, 148, 149 party politics 127, 223 Peri, Giovanni 1, 202 Polak, Paul 61, 62 population concerns over growth of global 18, 25, 27, 32, 34, 36, 37, 199 demographic transition 32–34, 70 The Population Bomb (see also Ann and Paul Erlich) 25, 27, 34, 36, 37, 199 productive power of 30, 77, 135 Quadir, Iqbal 5, 6, 9, 141, 168, 169, 183 Rahman, Monis 67, 72 Great Recession 4, 18, 131, 216, 217 recipes 89–97, 116, 147, 211, 224 remittances, international 83, 84, 161, 203 Renaissance 115, 118–120, 124, 134, 222 repurposing 119, 121, 131, 142, 158, 168, 183, 186, 188, 228, 229 River Rouge plant (see also, Ford Motor Company) 16–18, 98, 218, 220 robotic manufacturing 14–16, 21, 23, 114, 229 Rodrik, Dani 139–141 Roshan 57–59, 76 Rosling, Hans Rwanda 86, 125 Saint Augustine 118, 119 Samasource 85, 182 • 271 Santa Fe Institute 5, 105, 106 Santorum, Rick 194 Schumpeter, Joseph and unemployment 108, 184 early life 107 entrepreneurship as creating new combinations 109, 131 Capitalism, Socialism, and Democracy 102, 108, 131 creative destruction 108, 109, 121, 130, 131, 137 “The Instability of Capitalism” 109 routinization of innovation 109, 131 The Theory of Economic Development 95 trustified capitalism 184 Sen, Amartya 152, 155, 156, 167 September 11 attacks 19, 60, 69, 81, 194, 196 Seva Foundation 148 Silicon Valley origins of 130 role of immigrant entrepreneurs 167, 202 Shell, Karl 5, 92, 193, 218 Slaughter, Anne-Marie 225 Slim, Carlos 20 Smith, Adam 81, 87, 113, 117, 119, 120, 123, 124, 127, 149, 222 Solow, Robert 101, 102, 193 Somalia 63 Sputnik 101 Sri Lanka 70 Steuart, Sir James 117, 165 Su Sung 115 Sultan, Shamoon 66, 72, 187 Switzerland Geneva 126, 164 Neuchâtel 126, 127 origins of watchmaking industry 125, 126, 204 Taiwan 20, 51, 136 Taliban (see also Afghanistan) 59, 61, 71, 141 Tanton, John 198–202, 204 272 • Index Tata Group 156, 157, 161, 217 Tata, Jamsetji 130, 156, 217 Tata, Naval 217 Taylor, Alex 23 terrorism 7, 8, 51, 60, 65, 69, 70, 194–198 The Clash 43, 44, 231 The Sex Pistols 231 Thiel, Peter 132, 134 3-D printing 225, 226 Tsui, Daniel Chee 167 Tunisia 79, 86, 112, 168, 184, 185, 201 Turner, Stansfield unemployment among college graduates 186 as skill mismatch 180, 185 technological unemployment 4, 19, 39, 108 Union of Soviet Socialist Republics (USSR) and economies of scale 19, 54, 55, 101, 102, 165 Cold War 196 collapse of 54, 101, 103, 112 implicit taxation of labor 165 United Auto Workers 14, 15, 21, 210, 211 United Nations Development Programme (UNDP) 152, 156 United States civil liberties 196 Constitution 120, 127, 227 decline, US economic 3, 18, 37 Department of Defense 82, 101, 197 Department of State 44, 65, 225 economy 3, 18, 39, 40, 50, 52, 82, 101, 102, 131, 133, 142, 183, 185, 193, 202, 215 exceptionalism 222, 223, 231 immigration and immigration policy 167, 168, 187, 202, 203, 225 manifest destiny 221 manufacturing 21, 39 oil demand 39 political dichotomies 8, 101, 211, 212, 215, 218, 219 unemployment 3, 19, 21, 44, 186 usury, medieval prohibitions against 52, 122, 123 Venkataswamy, Govindappa 6, 147, 148, 153, 198 veterans 4, 13 Vico, Giambattista 117, 119 Wadhwa, Vivek 167 Waiwenju (Foreign Languages Press, Beijing) 47 Walmart 93, 110, 111 Washington, Christopher 177, 181, 183, 228 watchmaking (see also Switzerland) 22, 125–127, 204, 207 water scarcity 3, 8, 25, 34, 39 Weaner, Larry 206 Weitzman, Martin on innovation as the creation of new combinations 92 on technological limits to growth 136 prediction about collapse of the Soviet Union 54, 101, 103, 112 “What’s good for GM is good for America” (see also Charles Erwin Wilson) 129, 131, 133, 135, 137, 139, 141–143 Wiener, Norbert correspondence with Walter Reuther 14, 15 development of cybernetics 14, 16, 34, 114 Deming, William 208, 209 Wilson, Charles Erwin 129, 130, 212 Wilson, E.O 104 World War I 13 World War II 8, 13, 25, 28, 45, 101, 150, 166, 167, 194–196, 222 Zero Population Growth 33, 199, 200 Zhang Runbo 49, 50 Zheng He, Admiral 118 .. .THE COMING PROSPERITY www.ebook3000.com This page intentionally left blank www.ebook3000.com THE COMING PROSPERITY How Entrepreneurs Are Transforming the Global Economy Philip... or otherwise, without the prior permission of Oxford University Press Library of Congress Cataloging-in-Publication Data Auerswald, Philip E The coming prosperity : how entrepreneurs are transforming. .. Wiener and Reuther—is the preamble to the coming prosperity And so it is with that story that I begin At the start of the twentieth century, the economic landscape was transformed by the emergence