February 2011

Arts & Letters

‘How the West was Lost’ by Dambisa Moyo

By John Edwards

Dambisa Moyo’s 2009 bestselling attack on development assistance to poor countries, Dead Aid: Why Aid is Not Working and How There is a Better Way for Africa, was sufficiently successful to win her a spot among TIME magazine’s “100 most influential people in the world”. The Zambian-born, Oxford-educated economist now takes on an even bigger theme: how “the most advanced and advantaged countries have squandered their once impregnable position through a sustained catalogue of fundamentally flawed economic policies”.

With a mix of indignation, mumbo-jumbo and bewildering confusions, Moyo argues that, since its post-World War II peak, the United States has wasted capital by encouraging investment in home ownership, undermined its workforce by allowing inferior education, and squandered its technological lead by permitting other countries to steal its secrets. The result is the continuing decline of the US and other western economies, and the swift ascent of China, India and the developing world.

If the US is indeed in decline, it’s tough to argue – as Moyo does – that home-building explains it. Like Australia, the US puts about one-sixteenth of GDP into home-building, far less than either spends on business investment – and markedly less than the share of output China puts into home-building. The termination of the American house price boom certainly contributed, but it was the vast leverage of investment banks that transformed a messy American economic downturn into the global financial crisis of 2009.

A basic problem with Moyo’s decline thesis is that, while China and India are rapidly growing, the US is doing pretty well, too. She argues that “America peaked economically” in the 1950s, yet American output is six times greater today than it was in 1950. China has done better in the last quarter-century, but so what? In the same quarter-century, American real GDP doubled. If a billion people are coming out of poverty in China is that so bad?

More troubling are Moyo’s elementary confusions. GDP is a flow, so you cannot speak of a “low GDP stock”. If you deposit US$100 into your bank, it cannot “then make US$100,000 in loans”. Holidays are not capital expenditure. In what sense is the West “fast running out of money” or the US “short on cash”? And, where are these “GDP estimates” that show a “precarious path of forecast decline” for western countries?

Moyo promises a way out of the West’s supposed decline, which is where the book becomes very strange indeed. She wants “closer consideration of the possible benefits of adopting protectionist policies”, evidently seeing new American trade barriers as a good response to China’s export success. The American government, she writes, should also consider defaulting on its debt as a “necessary and temporary reset of the economy”. These are solutions? If Moyo is one of the 100 most influential people in the world, the West does indeed have a problem.

'How the West was Lost: Fifty Years of Economic Folly - And the Stark Choices Ahead' By Dambisa Moyo, Allen Lane, 224pp; $32.95
Cover: February 2011

February 2011

From the front page

Image of Tony Burke

Above politics

The JobKeeper package proves the Opposition is being constructive

Image of Sarah Aiken

Wage fright

COVID-19 isolation rules have seen artists’ livelihoods disappear

Photo of Barnaby Joyce

Inside the Nationals

As the National Party celebrates its centenary, its future is in the hands of bitter rivals Michael McCormack and Barnaby Joyce

Photograph of Australian Securities Exchange

Super heroes or super villains?

How the secretive trillionaire superannuation funds are using your money to reshape capitalism


In This Issue

Words: Shane Maloney | Illustration: Chris Grosz

John Peter Russell & Vincent van Gogh

Illustration by Jeff Fisher.

Life juices

Fasting at a ‘Fat Farm’

Illustration by Jeff Fisher.

A tale of two cities

Mahmoud Saikal and Kabul’s ‘New City’ Proposal

'Franklin and Eleanor: An Extraordinary Marriage' By Hazel Rowley, Melbourne University Press, 352pp; $36.99

‘Franklin & Eleanor’ by Hazel Rowley


More in Arts & Letters

Image of Stormzy

Grime boss: Stormzy

The rapper and MC’s second album ‘Heavy Is the Head’ is another triumphant step bringing black British culture forward

Photo of Tennant Creek Brio artists

Desert bloom: The Tennant Creek Brio

The brazen art movement born out of the troubled legacies of substance abuse and dispossession

Cover of jenny Offill's ‘Weather’

Twilight knowing: Jenny Offill’s ‘Weather’

The American novelist brings literary fiction’s focus on the interior life to climate-change cataclysm

Image from ‘The Personal History of David Copperfield’

Properly British: Armando Iannucci’s ‘The Personal History of David Copperfield’

A multicultural vision underscores the acclaimed British satirist’s endearing Dickensian romp


More in Books

Cover of jenny Offill's ‘Weather’

Twilight knowing: Jenny Offill’s ‘Weather’

The American novelist brings literary fiction’s focus on the interior life to climate-change cataclysm

Image of Cecilia Klein, 1974

The fabulist of Auschwitz

Heather Morris’s bestselling novels ‘The Tattooist of Auschwitz’ and ‘Cilka’s Journey’, and the problem of truth in historical fiction

Image [detail] of Agency, by William Gibson

Days of future passed: William Gibson’s ‘Agency’

The cyberpunk pioneer’s latest novel continues his examination of the present from the perspective of a post-apocalyptic future

Conversion on the way to Damascus by Caravaggio

Damascene subversion: Christos Tsiolkas’s ‘Damascus’

The literary storyteller’s latest novel wrestles with the mythology of Christianity’s founder, Paul the Apostle


Read on

Image of Sarah Aiken

Wage fright

COVID-19 isolation rules have seen artists’ livelihoods disappear

Opposing forces

Even during a time of crisis, history shows that partisan politics has a role to play

Image of ‘Hamnet’

What dreams may come: ‘Hamnet’

Shakespeare’s son succumbs to plague as Maggie O’Farrell conjures Elizabethan England

AFL names of the decade

Games may be cancelled, but the names play on


×
×