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BOOK REVIEWS 195 The Endangered American Dream. By Edward N. Luttwak, New York, Simon &. Schuster, 1993, 365 pp, $24/ Hard Cover. Reviewed by Mr. Marijan Cvjeticanin, LLB. University of Zagreb, Croatia (1988), MA. The Johns Hopkins University SAIS (1991). With The Endangered American Dream, Mr. Edward Luttwak, Director of GeoEconomics at the Center for Strategic and International Studies, has undertaken rhe heroic task of addressing all the major American contemporary problems from the perspective of new international realities. He has divided die book into eleven chapters, each of which deals widi one or several modem American challenges and their relation to the international strength or weakness of U.S. businesses, people, or government Readers ofthe book will recognize chapter topics by rheirtides (like "Our Japan Problem" or "Capitalism without Capital") as some of the most controversial and debated issues ofthe modern American political science. The author's approach ofanalyzingthese issues in the context ofthe presentworld military realities sheds new light on these issues and makes the book an indispensable read for scholars interested in diese matters. Indeed, the non-conventional, non-economic approach to some crucial American foreign policy issues presented in the book provides both Washington policy-makers and researchers with new concepts and ideas necessary in rhe search for the American purpose in the post- Cold War environment The most valuable contribution of the book is the introduction of die new concept — geoeconomics. In the author's words, geo-economics is the new, modem version of the ancient rivalry of states. In Luttwak's view, war between Americans, Europeans and Japanese has become almost unthinkable, while other external dangers of attack are either remote or localized to some unimportant areas. Hence, both military power and classic diplomacy have lost rheir traditional importance in world politics. Luttwak emphasizes, however, that even devoid of military confrontation, the very nature of states is still relendessly adversarial. Since he obsen'es the creation ofthree major world trading blocks — North America, Europe, and Japan — he concludes that the adversarial attitudes are now mainly expressed by economic or commercial means. Widi the threat of war ebbing, economic priorities previously suppressed are consequendy emerging and dominating the worid political scene. The precondition for the emergence ofthese new rivalries in the form ofgeoeconomic issues is rhat these countries have already mied out war among diemselves and are engaging in a more peaceful struggle. Furthermore, Luttwak believes that these diree major trading blocks will try to develop their economies and maximize high-grade employmenr in advanced industries at die expense ofeach other. Thus, rhis new international rivalry is an economic zero-sum game. Within diis basic framework, Luttwak introduces two new concepts as analytical tools. The first is rhe idea of producer-efficiency, contrasted with the classical 196 SAIS Review SUMMER-FALL 1994 consumer-efficiency model from economic textbooks. The second notion is die new international industrial policy. By dividing U.S. citizens between consumers and producers, die audior shows rhat while foreign government (primarily European and Japanese) export subsidies and other similar measures may benefit Americans as consumers, rhey are at the same time adversely affecting rhe U.S. producers. This is especially true in some key hightech industries diat are crucial for rhe productivity ofdie overall U.S. economy and for rhe country's long-term national security. To supporthis claim, Luttwak sights Airbus, the plane manufacturer heavily subsidized by European taxpayers. Certainly, American consumers benefited from die below-cost sales ofadvanced aircraft's to large U.S. carriers. They smile at the generosity of the French, German, British and Spanish governments for subsidizing die Airbus consortium. Luttwak points out however, that from 1971 to 1991, Airbus increased its share of rhe global airline market from near zero to 26%, while the American airiine industry lost that much in production and sales, mosdy on die overseas markets. American producers, therefore, lost jobs, particulariy high-quality ones, while Europeans were creating them dirough government subsidies. The same analytical concept of distinguishing producerefficiency and consumer-efficiency is used throughout the book in several other key areas ofnational interest like foreign investments, domestic savings, employment and education. In each ofthese cases, Luttwak disagrees wirh neoclassical economists and emphasizes...

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