The Miracle: The Epic Story of Asias
Quest for Wealth by Michael
Schuman
Must-Read Economics And Development Material!
In little more than a generation, Asia has emerged from centuries of
stagnation to become the rising force of the global economy. This
transformation has been so spectacular that some have called it a miracle.
How did it happen? Taking the reader from the docksides of Korea to the
halls of Indias finance ministry, The Miracle details the courageous
decisions and heroic self-sacrifice that made Asias ascent possible.
Spanning nine countries and probing major historical currents, this account
illuminates not only Asias extraordinary economic rise but also how its
causes might emancipate the developing world from poverty and guide the
developed world to further prosperity.
Using more than a decade of reporting and analysis, Time magazine and
former Wall Street Journal reporter Michael Schuman uncovers how

outsourcing to Asia began; how Asias most famous companies, such as
Sony and Honda, became global corporations; and how technological
changes and global economic shifts made Asias boom possible. He
reveals the compelling human side to this economic story, introducing
readers to the political strongmen, entrepreneurs, and policymakers who
made the Miracle a reality. This engaging historical narrative brings to life
the ideas and actions of a diverse group of Asians—dictators and
democrats, generals and technocrats, economists and engineers.
Some of the characters in the book have captured the global imagination
for years, such as Chinas reformer Deng Xiaoping and Sony founder Akio
Morita. Others are less well known, including Park Chung Hee, Koreas
tightfisted nation builder; Liu Chuanzhi, the risk-taking founder of PC
maker Lenovo; and Azim Premji, the mastermind behind Wipro, one of
Indias technology giants. All of them shared a dream—to elevate Asia to
its proper place of influence in the world and eradicate the poverty around
them.
The Miracle not only offers profound insight into Asia and its increasing
wealth and power; it also reveals how these seismic shifts continue to
reverberate through the global economy. The implications of Asias
economic ascent for the rest of the world are surprising, promising, and
inspiring. Readers of The Miracle will gain a deep understanding of Asias
place in the global economy—and of their own.
Personal Review: The Miracle: The Epic Story of Asias Quest for
Wealth by Michael Schuman
sia has emerged from centuries of stagnation to produce the most
sustained economic boom in modern history - all in little more than a
generation. Shuman's expertise and openness combine to produce one of
the most important books on economic development - "The Miracle." South
Korea leads the group, with a 15,046% growth in GNP/capita from 1965 -
2007; Japan's was "merely" 4,133%, China's 2,260%, and India's 764%.
East Asia's 1981 poverty rate (surviving on $1.25/day, or less) led the
world at nearly 80%; this fell to 18% by 2005. (During the same period sub-
Saharan Africa remained at 50%.) Goldman-Sachs predicted in 2003 that
by 2050 the Indian and Chinese economies together would double that of
the U.S.
Shuman's focus is on both reporting how each economy blossomed, and
then synthesizing underlying potentially explanatory factors. Five theories
are most prominent:
1)"There is something special about Asians" - eg. Confucianism's stress on
societal order and devotion to a strong work ethic (early Hyundai
shipbuilders working 17-hour-days; Chinese factory workers working 12-
hour-days for 28 or so days/month), savings (up to 50%) and education.

(Akin to earlier studies crediting Protestantism's "The Lord helps him who
helps himself" for the success of capitalism in the West.") Shuman also
could have referenced politically-incorrect yet credible studies concluding
that Asians benefit from about a ten IQ-point lead over average
Caucasians. Regardless, Shuman challenges this theory, asking "Why not
earlier?"
2)A second theory is that Asian leaders did a superior job of planning -
despite contradicting seemingly superior U.S.-backed laissez-faire
ideology. Examples include selecting particular industries to promote (eg.
steel, shipbuilding, chemicals, electronics, metals, machinery - Japan,
South Korea), assisting them with government funds, protection from
foreign competition on their home turf, discounts on energy, lowered local
taxes on their products, and wresting foreign assistance with new
technology and patents. Other aspects include sometimes picking leaders
of the new industries, forcing them to succeed vs. international competition
in other lands, and forcing out corporate leaders who failed to succeed.
Finally, it was also particularly interesting to note that some aspects
correlated with strategic thinking by U.S. leaders. South Korea, for
example, seemingly deliberately planned that every new plant had to be
one of the largest in the world, and most efficient - very similar to Jack
Welch's dictate that G.E. must be #1 or #2 in every area it competed in -
guaranteeing it would not suffer scale dis-economies.
3)A third theory is that Asians simply took advantage of American-
supported free-trade and military support for stability, while also boosting
the education of their peoples and infrastructure (eg. transportation, power
networks). Again, however, Shuman challenges such thinking with "Why
not eg. Africa as well?"
4)Shuman sees nationalism as a fourth explanatory theory. The
transformational Asian leaders sought strong growth to lift their people's
standard of living, as well as a defense against the Communist or U.S.
threat (eg. South Korea, Taiwan; China). Ironically, part of Deng's
motivation in China was also to favorably impress citizens in Taiwan and
Hong Kong in hopes of later peacefully re-uniting with them. These leaders
also often set demanding goals for themselves - Ikeda, Japan's PM
beginning in 1960, set a goal of doubling national income by 1970 - not
only did Japan succeed, but confidence in his goal led many Japanese to
boost the economy by spending on basic appliances (B&W TVs,
refrigerators, washers), and later upgrading to color TVs and buying cars.
Similarly, China's Deng supported a 1982 goal of boosting output in 2000
to levels 4X those then current.
Deng, like Obama's assistant, Rahm Emmanuel, was of the "let no crisis
go to waste" school. He and his supporters took advantage of failing
harvests to encourage and support radical thinking - eg. "privatizing" the
collective farms. (Six months after Deng's approval, this spread to 75% of
its farms.) Shuman also points out that China's approach differed from its

Asian neighbors, with considerable government withdrawal from business
areas formerly dominated - eg. government-owned enterprises. However,
readers mush not make too much of that distinction - China still kept core
actions of selecting and assisting new industries.
The author also notes that, with one exception, (Singh, in India) the
leaders were not economists, but were quick to borrow from nations
demonstrating early success (Japan was first). (Similarly, many leading
American business leaders had no economic/management training - eg.
Gates, Welch, Jobs, etc.)
Shuman also is quite impressed by the creativity of innovative and driving
early Asian business leaders - eg. Morito (Sony), those involved in
developing the Toyota Production System (TPS) that turned "Fordism" on
its head, China's head of Leveno, Hyundai's founder, etc. China's recent
battery and solar power entrepreneurs, not mentioned, are nonetheless
also supportive of Shuman's thinking. Finally, "The Miracle" also quotes
Asian leaders with crediting the U.S. for providing security and stability to
the region.
5)A fifth potential explanatory theory is that strongman or single-party rule
throughout much of Asia, did away with divisive arguments and
interminable decision-making delays (think U.S. politics). Interestingly,
South Korea's strongman Park, most credited with its economic
transformation, was also posthumously selected in 1996 as the "dictator
they' most like to clone." (Economic benefit trumps political freedom.)
Clearly China's Deng, Suharto, and Japan functioned similarly - especially
at the onset of their transformation.
Which theory is correct? My opinion is that each has truth; reality is
probably a combination of them all.
My only criticism of "The Miracle" is that Shuman's thinking about long-
term consequences for the U.S. are superficial. He believes, correctly, that
continuation improves relations between the U.S. and Asia - but this is
likely only up to a point. China's increasing concerns over holding U.S.
financial assets is evidence that things may get tougher.
More importantly, however, Shuman fails to realize that what's good for
Asia (more free trade) may not be good for the U.S. Further, he misses the
significance of Sony's Morito refusing a major manufacturing contract to
build transistor radios with Bulova's name on them - Morita's point was to
give Sony greater control of its destiny, and gain access to the bulk of
profits accruing to non-manufacturing activities (eg. China receives only
25-35% of the consumer price for items it manufactures). Similar
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