Much as we tout China as the next big thing of the World economy today, so did people in the 80's, only then it was Japan. America was a huge economy, but not with the impetus of a world leader. Japan, on the other hand was growing rapidly, driven by manufacturing; TVs, cameras, textiles, and anything you could name. (Made in Somewhere?) The difference was the Vendor Lock that that China has today, Japan never did.
Japan was accelerating and catching up to the USA. Blasphemous talks of ascension to the head of the world economy were doing rounds in important circles. In the face of competition from the upstart, America acted with a great deal of urgency. President Reagan called upon a new industrial revolution. They thought that the computer and communications industries had great market potential. These would become world leaders in the future (Google, Apple, anyone?). There were no short term fixes (bailing out failing businesses) but a more concentrated effort to bolster technology, generate patents at a rate the world began to lose interest. A decade later, they got together to form what today is the underwater Internet highway.
While the US was adopting technology of today, Japan stuck to its guns, and lead the traditional manufacturing units. By the time they paid heed to technology, Godzilla lay seige. So many Japanese live in so little area, the housing prices would increase indefinitely (Housing Bubble?). The real estate bubble burst. Japan’s market was small and profits were low, because of the type of goods it was manufacturing. There were the Toyotas and Sonys of the world, but they were the creme de la creme. The Japanese economy had plunged into an abyss for close to a decade. America's insistence on computer and communications began to pay off. This is not an all encompassing analysis, there were the "Plaza Accord" and the "Louvre Accord". But the move to the desktop was decisive.
Now, China is not much different from Japan in the 80's. It has gone past the UK and Germany. Check Japan. The downfall of Japan was its failure to seize the high ground in science and technology.
Professor History teaches like no other. Why will we not be sitting around in 2030 discussing how Brazil should avoid the mistakes China made? This time around, it looks like China is the one landing a killer blow. America has had its King Kong attack with the real estate crisis, and China has a new edge developing, its newfound appreciation of the need of a huge populace that not only builds well, but also creates the designs that the building is made of. Heralding a change at the top of the pyramid would bring in great new changes, maybe not as soon as everyone thinks, but it should be a great time for the world economy if America can regroup as in the 80's and China keeps up its surge. The crumbs will be great sustenance for those not fighting for the bread. If another Tiger joins the party, a lot of our potential will begin to come true.
