Mini-Book Review — Easterbrook — Sonic Boom

Easterbrook, Gregg, Sonic Boom: Globalization at Mach Speed, Random House: 2009, 243pp.

Sonic Boom falls within the genre of the quick-reading airport business book. Using a series of places as exemplars (Shenzhen, Waltham MA, Yakutsk, Erie PA, etc.), the author shows how a globalized economy can create prosperity from swampland, and restore prosperity to Rust-Belt and 19th century industrial hubs. The writing is crisp and smooth. The manner is often witty, and occasionally wise-ass. It’s anything but turgid … which is a great relief from many of the “big think” books which come and go on the bestseller lists.

Easterbrook’s central theme is that globalization is a net plus for the world, but it also creates accelerating levels of change and uncertainty for all participants. And he feels that both trends will continue. He makes the effort (in distinction to the MSM) to uncover the positive changes to mortality, health, and prosperity for the world’s people in the past century and even more in the past two decades since the collapse of the Soviet Union. The case for “uncertainty,” on the other hand, could hardly have been made more emphatically than by the economic and political events of the last 18 months. And in line with his earlier book, The Progress Paradox: How Life Gets Better While People Feel Worse, increased quality of life doesn’t necessarily translate to more personal happiness.

For readers of this blog, this may all seem old hat. Free markets, free trade, “Creative destruction,” etc. etc. Readers more interested in the nuts and bolts explanation of globalization’s success might better refer to Martin Wolf’s Why Globalization Works but Easterbrook’s book might be a fine option as a gift for teenagers or for friends whose “to hell in a handbasket” experience of modern life is leaving them at loose ends.

The optimistic (if cautionary) tone of the book is compromised a bit, to my mind, by Mr. Easterbrook’s concluding chapters. His enthusiasm for better health care and education as a foundation for further American prosperity is admirable. Betraying his Brookings Institution background, however, his solutions for more equitable distribution of the benefits of these two industries harken to an earlier era and betray none of the optimism and “silver lining” perspective of earlier chapters.

Education and heath-care costs are increasing at a rate that out-paces inflation. While Easterbrook is methodical in his earlier explanation of how people leave the farms for factories, and then for service industry and white-collar work … he doesn’t seem to spot the same pattern in the allocation of individual or family budgets over the last century.

We are no longer an agricultural society. Nor one based around industrial factories. For a brief shining moment, Western prosperity was so dominant, and medicine’s successes and failures were so starkly drawn (in favour of increased life expectancy at modest cost), that the majority of people could aspire for suburban comfort and prosperity while paying diminishing attention to the costs of all else: Not to food, not to heat, not to clothing, not to tuition or doctor’s bills. They fulfilled their aspirations by dedicating the majority of middle-class family budgets to vehicles, real estate, and vacations. Such priorities may no longer be sustainable. Making an adjustment in 21st century dreams may be far more wrenching than for the generation that moved off the farms or saw the de-industrialization of America.

Health care is becoming increasingly elaborate and increasingly engages the most highly-skilled members of our society. Demand is unlimited (for better, more comprehensive, more insightful care) and supply is necessarily limited. The pressure for cost increases (absolute and relative to other household expenses) is therefore relentless. Similarly with education, elite universities have switched to being prestige engines … effectively a zero-sum game. Frank and Cook’s The Winner-Take-All Society: Why the Few at the Top Get So Much More Than the Rest of Us is a great review of this process in the educational system. As a result, education at the undergraduate level isn’t delivering a knowledge product so much as a social milieu. And that, again, is costed based on highest bidder for service. Even at state schools, the elaborating demands for professional certification necessitate larger budgets and larger fees … not to mention pressure for successful football teams.

Fewer kids, diminished housing and vacation dreams, bigger education and health care bills. I’m not sure how that cycle gets broken at any point in our lifetimes. We no longer dream of forty acres and a mule. Nor of a lush pension after 35 years on the shop floor. We dream nonetheless, and markets respond accordingly. McMansions and tropical beaches are currently a necessity of the good life but “nice-to-haves” and “must-haves” tend to shift over time.

Barring Mr. Easterbrook’s Big Rock Candy Mountain digressions (for which he can’t really be held accountable since they are my hobbyhorses), Sonic Boom is an upbeat, well-written book that explains the impact and trends associated with globalization in plain language. Recommended for readers seeking a quick introduction to the subject.

9 thoughts on “Mini-Book Review — Easterbrook — Sonic Boom”

  1. Okay, between this post – and, well, the many more like it around here – remind me how much I love this blog. Truly a mind-expanding experience for the likes of me.

    From my perspective as a physician, I think the medical community in the States is like an ostrich. The technological changes coming our way – coupled with globalization – is gonna knock us for a loop. Now, where did I read that? That the white collars are going through the dislocations blue collars did some years ago due to disruptions in manufacturing? Hmmm, Joel Kotkin.

    Anyway, what frustrates me is the way the medical profession isn’t preparing for this intellectually within its halls of academe – the private sector sort of gets it, outside of the big crony capitalist types. The private sector is just stymied by rules and regulations.

    Take my profession, for instance: looking at glass slides under a microscope. So far, the digitization is a bust for a bunch of reasons, but it won’t be forever. So, the images can go anywhere: France, Japan, India, Australia. Instead of recognizing this and being at the forefront so that the digitized images come here to take advantage of our expertise, our lumbering medical community seems interested only in re-imbursement rates. Okay, I understand why – it’s the most immediate threat. But you know, we better get it into our heads that our best asset as Americans is our knowledge and technological base, our savvy and creativity. Our roiling, open culture.

    Okay, done rambling now, dear CB friends!

  2. There are big changes coming in a number of areas, and they will break in unexpected and probably unpredictable directions. Two of the big cost drivers — education and medicine — may see the curves top out and collapse. Genetic medicine, spurred by rapidly-falling costs of DNA analysis, and then molecular medicine may make entire major classes of diseases easily and cheaply curable. Just as nobody worries about the rising cost of iron lungs these days, the spectacle of large numbers of people in chronic care due to Alzheimers, etc. may become a thing of the past. University education is a bubble driven by government-guaranteed student loans, and may soon collapse just as the housing bubble did.

    Hopefully, the next American administration can start to take some steps to restore flexibility to the American economy so we can adjust to such changes. That would be a good subject for a next round of Contract with America.

  3. University education is a bubble driven by government-guaranteed student loans, and may soon collapse just as the housing bubble did.

    There is also increasing competition from online educational institutions that are profitable under current conditions.

  4. For my sake, I hope that altzheimer’s deal works out petty soon. No signs yet, but…

    For my grandson’s sake, the change from the factory school model to something more individualized and rigorous can’t come soon enough.

    Flexibility, yes, that is truly a key factor. It is psychically painful for me to watch as the increasing power and control of the state over large sectors of economic and social activity bring about the inevitable ossification of those areas into rigid and non-responsive fossils.

    How anyone can look at an inter-connected world and not realize that nimbleness and adaptability are absolutely essential qualities for us to have in all of our cultural constructs is beyond my understanding.

    I do understand that there is a certain type of mindset that fears and distrusts an unstructured environment, but that is not the mindset whose main concern is the well being of ordinary working men and women.

    Adults require freedom to find their own path. Infants require constant supervision.

    It is easy to see which our rulers wish us to be.

  5. “From my perspective as a physician, I think the medical community in the States is like an ostrich. The technological changes coming our way ”

    I am also a physician although retired for some years. After I retired due to a back injury and had a 14 hour surgery, I decided that I wanted to learn how to measure quality. I was interested in how medicine might improve outputs while reducing inputs. I knew about Jack Wennberg and spent a year at Dartmouth learning the technology and theory of CQI in medicine. I then returned to California expecting that someone would be interested in the contributions of a surgeon with 30 years experience and the additional qualification. Nobody was. I found that insurance companies and HMOs were afraid that higher quality meant more cost. I never succeeded in convincing them otherwise. The Obama led reformers have the same misapprehension. Good quality costs more. We can point to Toyota all we want but they cannot see that a better way to do things would be cheaper.

    I don’t know if the central planners will ever get it but medicine is changing. Doctors are dropping out of the Medicare/insurance system and setting up cash practices. The only fellowship trained geriatrician in central Iowa dropped out of Medicare after she was harassed by the CMS police and threatened with prosecution for seeing her frail elderly patients too frequently. I attended the home care physicians meeting last year at the geriatrics meeting in Chicago and saw how disintermediation (Glenn Reynold’s term) is affecting these folks. They can do laboratory work and x-rays at the patient’s bedside of home visits. Most geriatrics is done in teaching hospital programs because reimbursement is so poor. Some of these cash practice geriatrics specialists are making a living by avoiding Medicare and going to a cash free market model.

    The movement is still small but a large on-line medical association surveyed members last fall. They had about 2,000 responses and 80%_ said they were changing to cash model or seriously considering it. The next step is for the “solution shop” physicians (read the Innovators Prescription if you haven’t) will start connecting with the primary care people who are out of the network. The AMA is brain dead but almost everybody knows that.

  6. Michael Kennedy: I think I miss a lot because of my place within the academic medical community. To be honest, I find the “head space” of the academic community to be frustrating. The private sector docs do stuff a lot faster, but that is because, guess what? They are not part of large bureaucratic practices where change happens at a glacial pace. Teaching hospitals should be OUT FRONT of this stuff and leading the way. Won’t happen because of the culture and because of stake-holders in the systems, I suppose.

  7. The assumption among too many people seems to be that health care costs for any given level of quality for any given number of people is fixed, and the only way to save money is either reduce quality or to provide care for fewer people.

    This hasn’t been true in any other area of life. Someone in 1800 might have thought that the world output of textiles would be forever fixed by the number of good waterpower sites available to run the looms and spinning equipment…and that, hence, more clothing for the poor could be made available only at the expense of less clothing for the middle classes and the rich..but the steam engine and the electric motor changed the equation.

    There’s been a lot of talk about the need to limit MRI scans because of their cost…but what if we went the other way and found a way to vastly *increase* the number of MRI scanners while making them smaller and cheaper.

    Maybe, for example, this project at GE could help point in that direction (although I fail to comprehend why NIH should be contributing financially to GE’s product development costs)

  8. Forgive me if I’ve related this story before but a friend of mine, a radiologist, was involved in a project about 15 years ago to put mammography clinics in shopping malls. The clinic would be run by an x-ray tech and a secretary. The films, now all digital, would be read by the radiologist at a central office. The patient would get the results the next day. The price they were planning to charge was about $100. Then, insurance began to pay for routine mammograms and they couldn’t compete with that. Free drives out cheap every time.

    Technology is now driving home care and it is growing but still has a major problem with getting paid by insurance or Medicare.

  9. University education is a bubble driven by government-guaranteed student loans, and may soon collapse just as the housing bubble did.

    Not unless HRs stop looking for educational milestones in their selection of candidates. Every single job ad in my field stresses that “only those that satisfy minimum Bachelor Degree requirement should apply” – regardless of years of working experience. This bureaucratic bean-counting now crept even into junior positions’ job descriptions: a typical ad now reads “Junior designer; 1-3 years working experience required, Bachelor or Master in Architecture is necessary, Project Management experience, expertise in latest industry software, client/contractor coordination, building site supervision and verifiable record of construction documents assembly is essential”. As if a 3-year-after-college kid can demonstrate all that, in addition to his/her shiny diploma.

    I hear you, Madhu – the same thing, if in considerably smaller degree, happens in architectural practice; this insulation (sometimes deliberate) is why the crisis hit the industry so badly: nobody, it seems, was prepared to sudden lack of projects and clients. And to abundance of foreign competition, which now, thanks to modern communication tools, is everywhere and hurts unprepared businesses badly. At freelancers’ commissioned site Elance, for example, where international providers of services can bid online openly for a job posted, foreigners often outbid domestics – no wonder, when a guy in Mexico or Bangalore charges $10/hr for a job that cost min $30/hr “wholesale” in NY (and “retail” rate that big architectural companies used to charge their commercial clients only a year ago was over $70hr for the same service). I was talking to a young architect recently who is supplementing his now shortened work week with second job @ a valet service: his rate per hour there a little less than in the architectural practice he works 3 days a week. “What was the point of acquiring debt for $150,000 education, memorizing ever-increasing and complicated codes, regulations and keep in touch with technological innovations – when huge chunks of my job duties could be outsourced now to a half-trained mindless CAD-drafter abroad, while I can make 70% of my paycheck parking cars?”

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