Reviewing Leading Economist Lester Thurow who was wrong as a Europe Optimist and a China Pessimist

For three decades, Lester C. Thurow has been one of the most widely read economists in the United States.

Lester Carl Thurow is an American political economist, former dean of the MIT Sloan School of Management, and author of books on economic topics. Thurow is on the board of directors of Analog Devices, Grupo Casa Autrey, E-Trade, and Taiwan Semiconductor Manufacturing Corp.. Thurow was also one of the original founders of the Economic Policy Institute in 1986. Thurow is currently an economics columnist for, among others, the Boston Globe and USA Today. He was previously an economics columnist for and on the editorial board of the New York Times, and was a contributing editor to Newsweek.

Thurow is a longtime advocate of a political and economic system of the Japanese and European type, in which governmental involvement in the direction of the economy is far more extensive than is presently the case in the United States – a model that has come to be known as “Third Way” philosophy.

His ideas are often very broad and sometimes lack analytical substantiation, and he is consistently too pessimistic, especially about the United States. His predictions can be wrong, too. A good example is his 1992 conclusion in Head to Head: The Coming Economic Battle among Japan, Europe, and America that Europe would be the most competitive entity in the world.

Not only did he pick Europe as the winner, Thurow did not even include China his list of three competing forces.

Europe’s per capita income fell from 85 percent of that of the United States in 1990 to 66 percent in 2007, according to International Monetary Fund statistics.

The Economist magazine has a recent article about how the Euro and Eurozone economies are again in big trouble.

What started more than four years ago as a banking and sovereign-debt crisis has decayed into a growth crisis that is now enveloping the three biggest economies. Germany is teetering on the edge of recession. France is mired in stagnation. Italy’s GDP is barely above its level when the single currency came in 15 years ago. Since these three countries account for two-thirds of euro-zone GDP, growth in places like Spain and the Netherlands cannot make up for their torpor.

The underlying causes of Europe’s new ills are three very familiar and interrelated problems. First, there is a shortage of political leaders with the courage and conviction to push through structural reforms to improve competitiveness and, eventually, reignite growth: the big countries have wasted the two years bought by Mr Draghi’s “whatever it takes” commitment. Second, public opinion is not convinced of the urgent need for deep and radical changes. And third, despite Mr Draghi’s efforts, the monetary and fiscal framework is too tight, throttling growth—which makes structural reforms harder.

In 2007, Thurow wrote how China’s GDP would not pass the US in absolute or relative terms anytime soon.

The World Bank has adjusted its purchasing power parity statistics in 2011. China is passing the United States in GDP on a purchasing power parity basis in 2014. This is using World Bank and IMF statistics.

Thurow calculated how China could not pass the US on a nominal exchange rate basis before 2100. However, he did not consider currency appreciation of the yuan versus the US dollar or problems for the US economy.

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