Book Review: The Betrayal of American Prosperity by Clyde Prestowitz

This post will be a review of the book The Betrayal of American Prosperity by Clyde Prestowitz.

Not Made in the USA

We hear incessant reports about the demise of manufacturing in America. Moreover, we constantly see jobs outsourced, trade deficits rise, and the national debt increase. All this while we continue to have the largest economy of any country by far and we are still the world’s premier manufacturer. What is happening and why? In his book, Mr. Prestowitz endeavors to explain our past and how it differs from our current predicament.

About the Author

Mr. Prestowitz is a former counselor to the Commerce Department and negotiator with Asia for the Reagan administration. Currently, he advises companies on foreign relations. Using his past and current experience, Mr. Prestowitz explains the conditions that led to American economic primacy. He also outlines the factors driving the economic surge of emerging market nations. Finally, Mr. Prestowitz offers some guidance for American business and government leaders to chart a course for continued American prosperity rather than decline.

Book Summary

Mr. Prestowitz covers a broad range of topics in his book. He gives a synopsis of world history from the 18th Century to the present. He comments on natural resources and their impact on the economic landscape. He analyzes some important U.S. public policies and their ramifications. He also analyzes the national strategies of some of our international trading partners. Mr. Prestowitz concludes his text with some suggestions for American success in the future.

In the first part of the book, Mr. Prestowitz provides an overview of the economic dynamics in American history. Starting with the Colonial Era, Mr. Prestowitz argues that England’s colonial holding and focus on mercantilism gave it a dominant economic position. Later policy changes permitted America and other nations to erode England’s position. Then, World War II cemented America’s place atop the economic hill during the 20th Century. Policy and practice decisions before and after World War II have led to America’s uncertain present and future.

Initially, America was subordinate to England and other European economic powers. Vast natural resources, free markets, and some public policy decisions drove the American economy to rival the declining European powers. Mr. Prestowitz assigns especial importance to some of the public-private partnerships that developed our rail systems, highways, and telecommunications. Also, we generally fostered manufacturing and promoted innovation while protecting our intellectual and human capital. At the end of World War II, the rest of the world lay in ruins and America’s industrial base and innovative climate placed us atop the world’s economic heap.

According to Mr. Prestowitz, since then, and even due to some policies prior to World War II, we have lost sight of important factors that led us to outperform as a nation. Among the failings is an over-reliance on and over-use of our natural resources, especially our oil reserves. Also, America practiced a sort of hubris by not respecting other nations’ abilities to catch up and even surpass our abilities. Moreover, in international relations, our leaders sacrificed many of our intellectual property advantages in order to maintain military bases in foreign countries or promote other defense-related issues. Finally, many of our primary policy makers have operated using the Efficient Market Hypothesis without confronting or even recognizing its shortcomings. All of these factors have led to a context where firms are more excited about conducting business in emerging markets than they are about business prospects in America.


Initially, I was skeptical about Mr. Prestowitz and his book. While he glosses over some historic factors and contextual realities, no single book can capture the complete picture of commerce, policy ramification, human interaction, and the reasons for the unfolding of history. Nonetheless, Mr. Prestowitz provides some solid generalities as well as some sobering particularities. He performs especially well when he argues against a slavish adherence to the Efficient Market Hypothesis if we do not recognize and confront its shortcomings. Also, he describes the national economic strategies of our international trading partners and contends that America should rethink its priorities and positions going forward. Overall, Mr. Prestowitz offers a thoughtful consideration of the factors that made America an economic powerhouse and guidelines to chart a future wherein America retains and improves its position in the world economy. I recommend this book to everyone.


Prestowitz, C. (2010) The Betrayal of American Prosperity. Free Press: New York.

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2 Responses to Book Review: The Betrayal of American Prosperity by Clyde Prestowitz

  1. Ellie Graham says:

    I enjoyed the review and I found the content very interesting. I would like to know more about the public-private partnerships that built so much in America.

    • admin says:

      Consider most of the major industries that need land grants, tax breaks, or other special treatment: railroads, interstates, telecommunications, basic scientific research. For example, the airlines save tons of money because NASA conducts most aerospace safety testing. Essentially, the argument that all government is bad ignores the realities of our historic development.

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