Book review: The Elephant and the Dragon

Facing the rise of China and India.

For a book that argues the West need not fear the rapid growth of China and India, The Elephant and the Dragon: The Rise of India and China and What It Means for All of Us (W. W. Norton, $32.50) spends a lot of time ruminating on gloomy scenarios. Robyn Meredith’s account of the countries’ booming economies touches on how China’s hunger for oil could lead to Iran’s nuclear empowerment, how the U.S. is facing untold white-collar job losses due to offshoring to India, and how China is in a position to cause a financial meltdown in the U.S. should relations between the two countries sour.

Despite the potential outcomes, the opening of the Chinese and Indian economies has largely been a positive development for the world. Huge gains in the standard of living for millions of Chinese and Indians have occurred as a result — though poverty is still shockingly widespread — and western companies have benefited enormously through access to cheap labour, all of which Meredith, a correspondent with Forbes, dutifully recounts. This growth will only continue as China shakes off its manufacturing roots and starts to build an educated white-collar workforce, and if India can improve its infrastructure to foster a robust manufacturing sector.

The more growth that occurs, however, the more jobs will be shifted to China and India from the West. The result will be widespread unemployment, lower wages, and a reduction in the standard of living for westerners. The U.S. has allowed itself to become complacent in the face of such massive change, and though Canada warrants scant attention in the book, many of Meredith’s criticisms apply north of the border, as well. The author makes the case that neither protectionism nor free-market solutions are the proper response to the threat posed by China and India. Instead, she issues a call to arms of sorts, emphasizing the need for the U.S. to create new jobs rather than protect existing ones. She recommends strengthening the education system, boosting funding for basic research and improving the country’s infrastructure.

If Americans really don’t want to see their standard of living decline dramatically, however, they may be forced to curb their rampant consumerism, as most are currently spending more than they earn.