What third world economies can teach the US

>>> welcome back to " morning joe " at 46 past the hour. here with us now, the dean of new york university 's stern school of business , peter blair henry, the author of the new book "turnaround," third world lessons for first world growth. this sounds like a great concept. but first i must point out he's escaped the responsibilities this morning. we're glad we could help you out.

>> delighted to be here. i'll make it up to my wife later on today.

>> four boys to get out the door at once. good luck to that. tell us about the book. what are the lessons we can learn from third world countries?

>> well, it's an important time in the global economy . first world countries like the united states , western europe are looking a lot like third world countries. we used to call third world countries 30 years ago. slow growth and lack of direction. and --

>> and crumbling infrastructure. if there isn't.

>> and a need to invest in infrastructure.

>> yeah.

>> and the question is, how do we get back on track? and third world countries have a lot to teach us. third world countries, there's a lot of talk right now about the fiscal issues. and one of my favorite examples from the third world is the story of chile. compare chile and the united states . in 2001 , we had a record $236 billion surplus, which we decided to give back in the form of tax cuts . in chile in 2008 had a huge surplus, came under incredible pressure to spend that surplus during flush times, but the finance minister held his ground and said, no, we're going to save this. and when the global recession hit in 2009 , chile was able to enact a $4 billion tax cut and subsidy program. the key lesson there was discipline. we need more discipline to get back on track.

>> that's one thing we could start with.

>> we're also talking about here, political paralysis that prevents us, i would think from doing many of the things that occur in other countries. it's embarrassing, somewhat embarrassing now as an american, greatest country in the world . greatest country in the world . land of opportunity to come back to the united states having been to say any number of places, singapore, hong kong where everything is new, where you're wired, you know, more instantly than you are in many areas of this country and wondering why is it that we can't get up to speed in so many areas that we need desperately to get up to speed to?

>> you know, i think the key thing is, and this is what's really ironic. three decades ago, we went around the world and taught third world countries about the three things that are needed to get the economies back on track. discipline, clarity and trust. and now there's an opportunity for us to learn from what they've been doing the last three decades and turning things around. so for instance, you talk about the paralysis in this country. there are lots of democratic societies that have found a way to get through difficult times. what my favorite example comes from the very tiny country of barbados . people say what can you learn from barbados . it's a place you go for vacation. no. in 1992 , barbados faced a real economic crisis, went into recession, the imf said you need to de-value the currency. they said, no, we've got an alternative plan. they got the private sector together with labor unions and the government and found a way to agree to wage cuts instead of devaluing the currency to restore competitiveness to the economy. this was not an easy thing to do.

>> you think it's easy thing to do

>> you think it will ever happen here?

>> this is where i think the key lesson is, right? in a small country, when you decide to cut wages, you are cutting your brother's wages, your cousin's wages if a small country can find the courage and reach a compromise in difficult things, we can certainly find our way forward .

>> peter, a lot of what you talk about is growing moderately, exercising prudence and self-control. we have never been a country that likes moderation. what we need now is growth, we need to be -- a lot of companies, their strategy is to chase this growth in precisely the markets you talk about china, brazil. is that the wrong strategy, we need to be just a little bit more thoughtful? what's your key on that?

>> the word discipline, you have heard to moderation, really is about finding the right balance.

>> discipline and moderation. yes.

>> so a lot of people think this one means austerity. us a ter sit like crash dieting, right?

>> correct.

>> just spending willy-nilly is like binge eating. we need to find that middle road which is, again, use the example of chile. the key thing is you don't need a balanced budget all moments in time. you need to save during good times so that when you hit a rainy day , you have got money to spend. and that is, of course, the lesson of the ant and the grasshopper.

>> a hard times sometimes defining good times and then they don't save. the book "turn around, third world lessonnesses for first world growth." read an expert on our blog, mojo.msnbc.com. peter blair henry, thank you, come back. good tough on our show.

>> good to be here.

>>> on " morning joe " tomorrow, mayor michael bloomberg will be here on set. you're watching " morning joe ," brewed by starbucks. come on, nowadays lots of people go by themselves. no they don't. hey son. have fun tonight. back against the wall ain't nothin to me ain't