February 2011

Arts & Letters

‘How the West was Lost’ by Dambisa Moyo

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

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.

From the front page

Image of Lisa McCune, Zahra Newman and Peter Carroll appearing on stage in Girl from the North Country. Image © Daniel Boud.

‘Girl from the North Country’

Weaving Bob Dylan songs into a story of Depression-era hardship, Conor McPherson’s musical speaks to the broken America of today

Image of fans taking a selfie with a photo of tennis star Novak Djokovic ahead of first round matches at the Australian Open in Melbourne. Image © Hamish Blair / AP Photo

‘Health and good order’

If Novak Djokovic is “a talisman of anti-vaccination sentiment”, what does that make George Christensen?

Image of coal for export, Newcastle, NSW

The fossil-fuel industry’s grip on Australian hearts and minds

Is there hope that public misconceptions of the importance of coal and gas can be overcome?

Illustration by Jeff Fisher

Echidna poo has changed our understanding of human evolution

Citizen science is not only helping echidna conservation, but changing how we think about evolution

In This Issue

Illustration by Jeff Fisher.

Renewable energy

Mark Twain at home in New Hampshire, 1906. The writer penned the annotation as part of a series of narrative portraits. © Bettmann / Corbis

Parallel lives

Mark Twain and his Autobiography: Volume 1

Brisbane, 1974 © Bruce Postle

The Queensland floods

Carlos the Jackal, France, c. 1970. © AFP / Getty Images

Paths of glory

Olivier Assayas’ ‘Carlos’ and terrorists in film


More in Arts & Letters

Image of Gerald Murnane

Final sentence: Gerald Murnane’s ‘Last Letter to a Reader’

The essay anthology that will be the final book from one of Australia’s most idiosyncratic authors

Image of The Kid Laroi

New kid on the block: The Kid Laroi

How Australia has overlooked its biggest global music star, an Indigenous hip-hop prodigy

Still from ‘No Time To Die’

The Bond market: ‘Dune’ and ‘No Time To Die’

Blockbuster season begins with a middling 007 and a must-see sci-fi epic

Abbotsford I

New poetry, after lockdowns


More in Books

Image of Gerald Murnane

Final sentence: Gerald Murnane’s ‘Last Letter to a Reader’

The essay anthology that will be the final book from one of Australia’s most idiosyncratic authors

Image of Olga Tokarczuk

Speaking in tongues: ‘The Books of Jacob’

Nobel Prize winner Olga Tokarczuk’s latest novel in translation turns on the nature of language itself

Image of police at The Shrine of Remembrance, Melbourne, September 22, 2021

A tightening knot: ‘On Freedom’

Maggie Nelson’s essay collection argues against the false binary of freedom and obligation

Detail from cover of Sally Rooney’s ‘Beautiful World, Where Are You’

The meanings of production: ‘Beautiful World, Where Are You’

Novelist Sally Rooney returns to the dystopia of contemporary life while reflecting on her own fame


Online exclusives

Image of Lisa McCune, Zahra Newman and Peter Carroll appearing on stage in Girl from the North Country. Image © Daniel Boud.

‘Girl from the North Country’

Weaving Bob Dylan songs into a story of Depression-era hardship, Conor McPherson’s musical speaks to the broken America of today

Still from ‘The Worst Person in the World’, showing Anders Danielsen Lie as Aksel and Renate Reinsve as Julie. Image courtesy Everett Collection.

‘The Worst Person in the World’

Renate Reinsve is exceptional in Joachim Trier’s satisfying Nordic rom-com

Image of WA Premier Mark McGowan earlier this week announcing the state will reopen its border to the rest of the country on February 5, after almost two years of border closures. Image © Richard Wainwright / AAP Images

Family’s grief compounded by WA’s hard border

The awful predicament of a Melbourne family unable to bring home their son’s body shows the callousness of WA’s border policy

Image of Liliane Amuat and Henriette Confurius in Ramon and Sylvan Zürcher’s film The Girl and the Spider. Image supplied

The best of 2021 on screen

This year may have been difficult to live through, but it produced an extraordinary crop of films