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A leading international business expert, former trade negotiator, and lifelong student of Japanese culture shows how America is abdicating its future to Japan and offers some practical solutions for reversing this trend. Selected by Business Week as one of the ten best business books of the year.

User Reviews about Trading Places: How We Are Giving Our Future to Japan and How to Reclaim It

I read this book in 1989, in preparation for a job interview with the author himself. For four years prior to that interview, I had been steeped in the literature on the "competitiveness question" - first as a graduate student at Harvard, and then in Washington, DC, as a Senate staffer. I can say, without hesitation, that this is one of the best books that came out of the debate on what to do about the apparent economic weakness: it is a pure statement on "strategic trade policy," in which political negotiation was called for in addition to economic competence.

Now, nearly 20 years after that time, I can assess this book in a new way. Japan is no longer the juggernaut we imagined it to be: it is now in our eyes, a beleaguered backwater, and many of the advantages we imagined it had are now seen as liabilities, perhaps even fatal ones, i.e. government-business collusion, mutually supporting conglomerate arrangements (Keiretsu), career advancement by seniority, etc.

In a nutshell, Prestowitz argued that Japan has an unstoppable system based on the power of protected cartels. With an inaccessible yet dynamic internal market in which to test new products, it could export the things it developed at a huge discount to it competitors, in effect eroding or destoying their industrial capabilities; Japanese consumers did suffer in the short term, but the cost was compensated for in the growth of industrial power over the long term. As such, the liberal economic system that the US had could not - and would never - be able to compete. The only course, Prestowitz argued, was political negotiation of trade quotas. I still believe that there is much useful in this persepctive and some truth, as evinced in the growth today of India and China.

However, with regard to Japan, subsequent events have proven this wrong on two counts. First, technology evolved that offered the US distinctive advantages: the Japanese could only copy products in relatively static markets, in particular in analogue electronic devices. They lost the digital revolution, decisively, even though they still make great cars. Second, as the system grew very large and rich, its actors became corrupted and began to strive to preserve wealth rather than create it in new markets. So the Japanese economy lost much of its dynamism as priviledge was preserved for the big few at the expense of smaller, hungrier firms that might create jobs and opportunities.

I am glad to say that I did not get the job in Prestowitz's new group, the Economic Strategy Institute. Instead, I went to Japan to learn how it did things and in the process I became a writer and journalist. As events show, Prestowitz's approach was quickly surpassed by new and unforeseeable developments. I learned far more by leaving DC and going to Japan - even if what I found was disppointing, I made my living debunking myths about Japan for several years, and this book is one of the things I tried to debunk, not for its political economy arguments, but for other assumptions it made.

That being said, Prestowitz is a smart guy and latched onto new things to talk about, and has done very well for himself. He is a great DC careerist and typical of the place. This book made him famous and so is an interesting study in DC careerism.

Recommended as a bit of history. Take the ideas with a grain of salt, until the next juggernaut emerges, that is. Then perhaps we can dust it off and employ its ideas once again. -- a snapshot in time on the trade debate

Written from first hand experience from a man on the inside of the Reagan Administation. The events of 1980's unfold as whole US Indusrties are wiped from existence by Japan from consumer products, memory chips,etc. Not only is Clyde a brilliant Economist he is an expert on Japan and expains the misunderstanding that occur between the US and Japan. More important he points out how many of those industries could have been saved for example Harley Davidson would not be around today if not for Paul who lobbied for tariffs on Japanese Motorcycles. This Book made me want to become an Economist, which I am at UC Berkeley. -- The Most Insightful Book Ever Written on InternationalTrade