Does Third World Growth Hurt First World Prosperity?

Only a short while ago, our most influential business writers were warning that the biggest threat to U.S. prosperity was competition from other developed countries. One need only look at the subtitle of Lester Thurow’s 1992 best-seller, Head to Head: The Coming Economic Battle Among Japan, Europe, and America. But in the last year or so, our supposed economic adversaries have begun to appear a lot less invincible: both the Japanese and the German economies are stuck in intractable recessions, their exports hammered by overvalued currencies and their vaunted labor-market institutions fraying under the impact of economic adversity. In comparison, the U.S. economy, while hardly a picture of glowing prosperity, looks healthy.