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How the West Was Lost: Fifty Years of Economic Folly- and the Stark Choices Ahead
In How the West Was Lost, the New York Times bestselling author Dambisa Moyo offers a bold account of the decline of the West€™s economic supremacy. She examines how the West€™s flawed financial decisions have resulted in an economic and geopolitical seesaw that is now poised to tip in favor of the emerging world, especially China. Amid the hype of China€™s rise, however, the most important story of our generation is being pushed America is not just in economic decline, but on course to become the biggest welfare state in the history of the West. The real danger is a thome, Moyo claims. While some countries €“ such as Germany and Sweden €“ have deliberately engineered and financed welfare states, the United States risks turning itself into a bloated welfare state not because of ideology or a larger vision of economic justice, but out of economic desperation and short-sighted policymaking. How the West Was Lost reveals
240 pages, Hardcover
First published August 17, 2010
84 people are currently reading
907 people want to read
About the author
Dambisa Moyo
11 books362 followersDr. Dambisa Moyo is an international economist who writes on the macroeconomy and global affairs.
She is the author of the New York Times Bestsellers "Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa", "How The West Was Lost: Fifty Years of Economic Folly And the Stark Choices Ahead" and "Winner Take All: China s Race for Resources and What It Means for the World".
Ms. Moyo was named by Time Magazine as one of the “100 Most Influential People in the World”, and was named to the World Economic Forum’s Young Global Leaders Forum. Her work regularly appears in economic and finance-related publications such as the Financial Times, the Economist Magazine and the Wall Street Journal.
She completed a doctorate in Economics at Oxford University and holds a Masters degree from Harvard University. She completed an undergraduate degree in Chemistry and an MBA in Finance at the American University in Washington D.C..
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Displaying 1 - 30 of 87 reviews
January 31, 2013
Reading this book was a little like having a dinner party and listening to a know-it-all who can tell you a million reasons why the world is going to shit in a hand basket and, worse, a million different remedies. Many of those remedies are so drastic that a few of the guests choke on their steak when they are mentioned. Others sound so outlandish (America defaulting on its debt to "press reset") that a hitherto quiet and unnoticed English gentleman in the corner says, "this has all gotten a bit silly" and excuses himself from the gathering.
Sure, the West is on a general slight decline in relation to "the rest", but do we all need to pretend like we saw it coming, and that if only we'd played our cards different it could have been avoided?
Basically if you don't want to read the book - this is why the West was "lost". What's wrong:
Unemployment, debt, housing bubble, bubbles in general, credit cards, free trade, oil resources, global warming, population expansion, currency manipulation, welfare system, democracy, etc, etc...
Sure, the West is on a general slight decline in relation to "the rest", but do we all need to pretend like we saw it coming, and that if only we'd played our cards different it could have been avoided?
Basically if you don't want to read the book - this is why the West was "lost". What's wrong:
Unemployment, debt, housing bubble, bubbles in general, credit cards, free trade, oil resources, global warming, population expansion, currency manipulation, welfare system, democracy, etc, etc...
October 16, 2019
What a great summary of the prevailing issues that America’s economy is facing and how it got there. This is more than a academic book, it touches on real life facts and problems with education, war, debt, and housing to name a few.
You will learn a lot from this book and it is all supported by referenced material. It helped me to understand a century worth of US economic policy along with a good amount of focus on key events.
Some of the negative reviews of this book I have seen I believe are unfounded; this book, with an open mind, will inform you on areas you probably never knew.
5/5 from me.
You will learn a lot from this book and it is all supported by referenced material. It helped me to understand a century worth of US economic policy along with a good amount of focus on key events.
Some of the negative reviews of this book I have seen I believe are unfounded; this book, with an open mind, will inform you on areas you probably never knew.
5/5 from me.
February 13, 2013
My old economics professor's favorite phrase: "There is no free lunch." It has been quite a while since I have read a book on economics, so I was particularly drawn to this one. It would be interesting to see an update as it has been a few years since its research and publication. I probably liked the book, because the author shares my own view, that one of the reasons BRIC(Brazil, Russia, India and China) is able to accomplish many economic feats is because their capitalistic activities are often state controlled, sponsored or directed. Our form of government and view of private enterprise is working against us from many perspectives including making decisive, and clear policies that benefit the country as a whole. What can be accomplished to make us competitive in a global marketplace when the leaders spend more time campaigning than governing? The increasing use of referendums nationwide will only make our condition worse. Our culture, our historic geographic isolation, our roots, all create scary challenges when it comes to competing with these huge countries. We are who we are....how do we harness our unique advantages as a people to hold our own, economically? What does all this look like if you overlay the equally challenging environmental and socio-political challenges in our world?
January 17, 2025
This was book number 1 for me of a Book-A-Week Summary challenge I'm setting for myself this year (started a week late here in Jan).
It's all about training myself to draw out the thesis of a work and the most salient points/data. It'll be a learning experience for me, undoubtedly.
With this one, I greatly appreciated Moyo's detailed use of economic principles and formulas, most of which went over my head and was, unfortunately, not something I could focus on much given the time constraint in reading it.
I learned from her that the housing crisis of 2008 was certainly a problem of government policy as well as cultural emphasis. Also, the trade protectionism that Trump seems to be embracing now at the onset of his second term seems to line up pretty well with some of her prescriptions for how the US can remain competitive on the world stage against big up and coming players like China and India.
In the same vein, a kind of intellectual protectionism might be in order when it comes to who and how we train in STEM. She points out the really bad setup we have with visas/residency/immigration as it relates to this; we easily import international academic talent, but don't allow it to stay here. On top of this, many of these post-grad students plan to return and work in their home countries or other countries anyway after being educated here.
We also, apparently, have a real problem with our STEM patents, when it comes to 1) IP theft (from China primarily), and 2) pharmaceutical drugs, where there is a ton of social and political pressure on drug companies to sell well below market prices and as close to cost as possible. Both of these factors contribute to a really losing situation for us.
Capital, labor, and total productivity, are, I believe the three big indicators of a nation's absolute status, more so than GDP. If I remember her verbiage, these three make up the stock of capital for a nation. Stock, rather than flow, should be paid attention to.
It's all about training myself to draw out the thesis of a work and the most salient points/data. It'll be a learning experience for me, undoubtedly.
With this one, I greatly appreciated Moyo's detailed use of economic principles and formulas, most of which went over my head and was, unfortunately, not something I could focus on much given the time constraint in reading it.
I learned from her that the housing crisis of 2008 was certainly a problem of government policy as well as cultural emphasis. Also, the trade protectionism that Trump seems to be embracing now at the onset of his second term seems to line up pretty well with some of her prescriptions for how the US can remain competitive on the world stage against big up and coming players like China and India.
In the same vein, a kind of intellectual protectionism might be in order when it comes to who and how we train in STEM. She points out the really bad setup we have with visas/residency/immigration as it relates to this; we easily import international academic talent, but don't allow it to stay here. On top of this, many of these post-grad students plan to return and work in their home countries or other countries anyway after being educated here.
We also, apparently, have a real problem with our STEM patents, when it comes to 1) IP theft (from China primarily), and 2) pharmaceutical drugs, where there is a ton of social and political pressure on drug companies to sell well below market prices and as close to cost as possible. Both of these factors contribute to a really losing situation for us.
Capital, labor, and total productivity, are, I believe the three big indicators of a nation's absolute status, more so than GDP. If I remember her verbiage, these three make up the stock of capital for a nation. Stock, rather than flow, should be paid attention to.
March 17, 2011
A must read for any socially aware citizen...
Moyo presents a clear picture of how the west, USA specifically, lost their economic superiority to the emerging "rest" through systematically implementing myopic economic policies over the last three decades.
From the tech boom in Asia of the early 80's to the 21st century housing bubble bursting in the 2008 economic crash, Moyo gives a succinct, if bleak, account of American missteps that virtually handed the reigns freely to the developing world.
Although we've created a workforce comprised of undereducated, unskilled, expensive citizens that are uncompetitive in the global marketplace, Moyo's conclusion offers a sliver of hope to the west in the form of 4 possible scenarios of the rest of the century, not all of which end with the west at the bottom.
She reminds us of our savvy and resilience, which is needed now more than ever to pull us out of this nose dive... and the responsibility we have to invest in our own people in the form of education and innovation.
Moyo presents a clear picture of how the west, USA specifically, lost their economic superiority to the emerging "rest" through systematically implementing myopic economic policies over the last three decades.
From the tech boom in Asia of the early 80's to the 21st century housing bubble bursting in the 2008 economic crash, Moyo gives a succinct, if bleak, account of American missteps that virtually handed the reigns freely to the developing world.
Although we've created a workforce comprised of undereducated, unskilled, expensive citizens that are uncompetitive in the global marketplace, Moyo's conclusion offers a sliver of hope to the west in the form of 4 possible scenarios of the rest of the century, not all of which end with the west at the bottom.
She reminds us of our savvy and resilience, which is needed now more than ever to pull us out of this nose dive... and the responsibility we have to invest in our own people in the form of education and innovation.
May 10, 2011
This book started strong. Moyo's description of the West's mis-allocation of labor and capital were awesome and eye-opening.
But at times the book seemed to descend into doomsday predictions (hence, the title), calls for a stronger centralized state, and lists upon lists of stats that I could pull off the Internet myself. That said, her concerns about America's economic position were intimidating and not without basis.
My largest concern with the book's thesis is that it seems to assume a world in which cultures rise and fall based primarily on economic policy. I don't buy this.
As a final little critique, the book's scope seemed to occasionally lack clear focus. At times, it seemed all about America v. China, but paragraphs later it would go super broad in discussions about all the West v. all the Rest. This is probably a stupid critique.
Overall, I'm glad I read it and am torn between 2 and 3 stars.
But at times the book seemed to descend into doomsday predictions (hence, the title), calls for a stronger centralized state, and lists upon lists of stats that I could pull off the Internet myself. That said, her concerns about America's economic position were intimidating and not without basis.
My largest concern with the book's thesis is that it seems to assume a world in which cultures rise and fall based primarily on economic policy. I don't buy this.
As a final little critique, the book's scope seemed to occasionally lack clear focus. At times, it seemed all about America v. China, but paragraphs later it would go super broad in discussions about all the West v. all the Rest. This is probably a stupid critique.
Overall, I'm glad I read it and am torn between 2 and 3 stars.
October 10, 2014
Great explanations about the financial crisis and the US-construction policies. Explains how allocation of capital is either beneficial on the long-term or not. In addtion, it explains the general differences between the econo-political systems in China, USA, Russia, Europe and the rest of the world. A bit black-white with China and the general evaluations of the future.
August 15, 2021
Some of her arguments are weak and she leans heavily on them. Otherwise fairly interesting but take it with a grain of salt.
March 4, 2020
It was a bit of jarring ride reading this book, it flipped a lot of the half formed notions I had about the world and helped me understand a bit more about the global economy.
Firstly when she pointed out the weaknesses of the Western Bloc and how they've shifted significantly from their far more economically sound actions in the sixties, I failed to fault her reasoning. Among the ills in the Western Blocs's policies, she lists; their willingness to freely share data and innovations, their failure to recoup investments they make in research (especially the pharmaceutical industry), unfair trade deals by China, America's heavy investments in Defense and adventurism on the seas and abroad, Badly designed or implemented Welfare polices, China's artificial devaluation of its currency, a failure by people in the west to adequately train up a productive labour force among other factors.
However it can be argued that one of the biggest contributing factorDambisa feels that American consumers had failed to understand the difference between leverage and ownership which led to far too many Americans investing in real estate and living a life centred on consumption which significantly contributed to the 2008 global financial crisis.
This led to a downward spiral where America grew heavily indebted to China and is now in a precarious situation where it owes trillions to China, a situation that would have been unthinkable in forty years ago.
While on on the other end of the Spectrum Chinese nationals were saving their money and were far less willing to spend their money on investments which had little impact socially on their nation but instead made far more sound investments. As well as had more actual usable cash in their Banks.
The Book is an incredibly sobering look at the world of Banking and Finance and makes the average reader (me) question just what the Banks do with the money we give them and if we are safe from a second crisis. I personally feel it is important to see the world through her lens, because as the saying goes. People who don't know their History often times repeat it and reading Dambisa explain just how myopic investment into the Housing Market and the failure of financial regulatory bodies like Central Banks and the IMF to fulfil their fiduciary duties beyond monitoring and adjusting inflation; makes me wonder if the world has learnt much from the 2008 crisis or of the world is even willing to change to avoid another similar event.
Once again Dambisa makes a great argument and supports her well researched arguements with fine writing and research...I feel this book was better written than Dead Aid, due to the more elegant flow of the prose in this one as opposed to Dead Aid which even though it was brilliantly written, felt a bit more essay like.
I didn't have many issues with it, except for the fact that the book was written from a purely economic perspective and she herself admits in her book that other factors like Democracy and free speech also have a significant impact on the Economic success of a nation, and I feel that these factors were not adequately explained, of course that's no fault of hers she's an economist first and foremost.
Further I'm not sure if her world view fully tallies with reality, she seems to see things in an us versus them scenario (East versus West) with little to no chance of mutual benefit a zero sum game so to speak. I must argue that there might be other less warlike scenarios out there that might play out, provided we are willing or are forced to consider them.
All in all I loved the book (plain to see from my long rant) and I can't wait to read her other works.
Firstly when she pointed out the weaknesses of the Western Bloc and how they've shifted significantly from their far more economically sound actions in the sixties, I failed to fault her reasoning. Among the ills in the Western Blocs's policies, she lists; their willingness to freely share data and innovations, their failure to recoup investments they make in research (especially the pharmaceutical industry), unfair trade deals by China, America's heavy investments in Defense and adventurism on the seas and abroad, Badly designed or implemented Welfare polices, China's artificial devaluation of its currency, a failure by people in the west to adequately train up a productive labour force among other factors.
However it can be argued that one of the biggest contributing factorDambisa feels that American consumers had failed to understand the difference between leverage and ownership which led to far too many Americans investing in real estate and living a life centred on consumption which significantly contributed to the 2008 global financial crisis.
This led to a downward spiral where America grew heavily indebted to China and is now in a precarious situation where it owes trillions to China, a situation that would have been unthinkable in forty years ago.
While on on the other end of the Spectrum Chinese nationals were saving their money and were far less willing to spend their money on investments which had little impact socially on their nation but instead made far more sound investments. As well as had more actual usable cash in their Banks.
The Book is an incredibly sobering look at the world of Banking and Finance and makes the average reader (me) question just what the Banks do with the money we give them and if we are safe from a second crisis. I personally feel it is important to see the world through her lens, because as the saying goes. People who don't know their History often times repeat it and reading Dambisa explain just how myopic investment into the Housing Market and the failure of financial regulatory bodies like Central Banks and the IMF to fulfil their fiduciary duties beyond monitoring and adjusting inflation; makes me wonder if the world has learnt much from the 2008 crisis or of the world is even willing to change to avoid another similar event.
Once again Dambisa makes a great argument and supports her well researched arguements with fine writing and research...I feel this book was better written than Dead Aid, due to the more elegant flow of the prose in this one as opposed to Dead Aid which even though it was brilliantly written, felt a bit more essay like.
I didn't have many issues with it, except for the fact that the book was written from a purely economic perspective and she herself admits in her book that other factors like Democracy and free speech also have a significant impact on the Economic success of a nation, and I feel that these factors were not adequately explained, of course that's no fault of hers she's an economist first and foremost.
Further I'm not sure if her world view fully tallies with reality, she seems to see things in an us versus them scenario (East versus West) with little to no chance of mutual benefit a zero sum game so to speak. I must argue that there might be other less warlike scenarios out there that might play out, provided we are willing or are forced to consider them.
All in all I loved the book (plain to see from my long rant) and I can't wait to read her other works.
This entire review has been hidden because of spoilers.
May 30, 2021
Dambisa Moyo lays out a wide-ranging critique of Western governments' policies and offers a Cassandran look at the 21st century. Her major criticisms are around the American obsession with debt accumulation and the housing-for-all policies that have been staples of the US government since the New Deal. I certainly don't agree with all of her critiques or proposed solutions, but it was an interesting and challenging book. I do think she suffers from her reliance on a couple of well-worn tropes. The first is her mixing of Asian countries, Asian people and Asians in America or Asian-Americans. These are four different entities, and the fact that Chinese-born US nationals or Chinese-descended Americans are earning an increasing share of US patents doesn't indicate the rise of China over the United States; in fact, one could argue it supports the opposite proposition. I also think she mixes and matches percentage growth and absolute growth to suit her argument, which feels cheap.
Personally, I'm not sure that the relative decline of the West is a bad thing - for example, the fact that China's economy will overtake America's in terms of total GDP may simply be an indication that China's growth from small-scale agriculture is taking effect, and not cause for hand-wringing in the US. However, reading this ten years after Moyo wrote it, I do think she underestimated the political dangers in the United States. I wonder what sort of populist nationalism may rise in response to the rise of China (and, potentially, other developing economies).
Ultimately, this is an interesting book that offers a serious structural framework for thinking about the relative decline of the West, and one I'd recommend for those interested in global economics.
Personally, I'm not sure that the relative decline of the West is a bad thing - for example, the fact that China's economy will overtake America's in terms of total GDP may simply be an indication that China's growth from small-scale agriculture is taking effect, and not cause for hand-wringing in the US. However, reading this ten years after Moyo wrote it, I do think she underestimated the political dangers in the United States. I wonder what sort of populist nationalism may rise in response to the rise of China (and, potentially, other developing economies).
Ultimately, this is an interesting book that offers a serious structural framework for thinking about the relative decline of the West, and one I'd recommend for those interested in global economics.
July 17, 2020
Too big to fail? I am totally with Moyo that the Debt to GDP ratio is an important one that everyone should know about and understand. Not long after the book was published this ratio hit 100% for the US. That the US culture is a dangerous model - consumption based on debt accumulation is also not in dispute. For laying out some of these concepts reasonably well I would give the book 3 stars.
However, I have to add that this book almost ended up as my first DNF since joining goodreads - if I hadn't been on the train while reading the offending passage, I might have thrown the book against the wall! I am referring to the Chapter Keys to the Kingdom where among other issues, Energy Efficiency is (too) briefly discussed. Who advocates nuclear power anymore? The risks of cleaning up a potential disaster are just too great for governments to bear! Who writes about energy and limits the discussion to two types: fossil fuels and nuclear power? In 2001 when we moved house in Germany, solar water heating was heavily pushed - I can't imagine that 10 years later when the book was published, that solar and wind power were advanced only in Germany as alternative sources of energy! As far as France being the model for nuclear power usage, only 3 years after the book was published, the country made a policy decision to reduce their reliance on nuclear power. Apparently in 2014 the decision was made to cut the usage from 75% to 50% within a 20 year time frame. Boy did this section of the book make me angry. For that section of the book, an unclear point of view -are we discussing the west or just the US, and finally due to a weak conclusion my rating has been cut by one star.
However, I have to add that this book almost ended up as my first DNF since joining goodreads - if I hadn't been on the train while reading the offending passage, I might have thrown the book against the wall! I am referring to the Chapter Keys to the Kingdom where among other issues, Energy Efficiency is (too) briefly discussed. Who advocates nuclear power anymore? The risks of cleaning up a potential disaster are just too great for governments to bear! Who writes about energy and limits the discussion to two types: fossil fuels and nuclear power? In 2001 when we moved house in Germany, solar water heating was heavily pushed - I can't imagine that 10 years later when the book was published, that solar and wind power were advanced only in Germany as alternative sources of energy! As far as France being the model for nuclear power usage, only 3 years after the book was published, the country made a policy decision to reduce their reliance on nuclear power. Apparently in 2014 the decision was made to cut the usage from 75% to 50% within a 20 year time frame. Boy did this section of the book make me angry. For that section of the book, an unclear point of view -are we discussing the west or just the US, and finally due to a weak conclusion my rating has been cut by one star.
March 18, 2021
It reads like a college essay where you run out of insights and you have a minimum length requirement. Extensive fluff. I was hoping for something like Dead Aid which was fascinating (note I usually read two books on the same subject from different points of view at the same time). This is just stale and relies on chalkboard exercises. To her, everything in a sector of the economy falls into a single bucket. Let's take housing in general before looking at the 2008 bubble. She claims that there is no economic value in having someone own a house and they would be better served to rent housing owned by investors. There are definitely situations where it better to rent than own and there all sorts of online calculators to help figure that point out, but there are many instances where it is cheaper for the consumer to own rather than rent. The difference between the costs to own to the costs to rent is surplus value that can be re-invested elsewhere. Even if housing costs were flat there are instances where this is true before even accounting for capital retention in the value of the home. Relying on a house's increase in value is dangerous, however. Let's do a chalkboard exercise say for instance your rent is $1400/mo and you are able to buy an inexpensive home that will cost you $1200 in mortgage and upkeep, for the sake of simplicity we are assuming no money down even though that is rare. The economic benefit to you of owning that home compared to renting is $200/mo that you can then reinvest elsewhere. This cough cough "book" is full of oversimplification like this and is frankly a disappointment.
March 31, 2025
I came across this book recently and decided to give it a try. I wasn’t disappointed. The book deals with uncomfortable topics that one wishes they would go away. It was written 15 years ago, shortly after the financial crisis of 2008. It deals mainly with economic issues that Ms Moyes explains in relatively simple ways. Fast forward to today and many issues have barely changed. The three factors that she identifies as ingredients for healthy growth, namely capital, labor and technology have not been fully addressed in the last few years. In today’s (2025) environment they remain a problem and the subject of heated debate but investment in productive matters, education and improvement of labor or R&D are pushed aside by political discourse. Recently, protectionism has become a hot topic and although she made some points about it, it seems to be driven by politics, not by a strategic approach. Whether you are on one camp or another, it is very good to read this book. You can filter events, update some but debt and education, to name a couple of points remain unaddressed in what is shadowed by ideological differences and short term, political issues. The truth is that economic domination has changed over time and there is no reason to believe it can not happen again if long term policies are neglected.
November 23, 2012
How the West Was Lost, Fifty Years of Economic Folly – And the Stark Choices Ahead; Dambisa Moyo
“once an idea is out it can be used and improved upon by anyone, anywhere, an idea has a marginal cost of zero”
This quote is referring to the spinoffs from the magnificent technology that enabled the Apollo moon landing in July 1969. I was a vagabond watching it on a storefront TV in Athens, Greece, along with a small crowd who didn’t own their own sets, or had to be in downtown Athens on that day, away from the comfort of their own home. We were all looking for free.
Technology, labour and capital all combined to make America the winner of the Space Race and the Cold War, and the Superpower of the planet. Then came the Financial Crisis of 2008. Dambisa Moyo contends that it is not just the quantity of capital, of labour and of technology that matters, but also the quality. By ‘quality’ she means the manner in which capital is allocated, the aptitude of the workforce and the nature of the technology.
Beginning with capital, Moyo points out how the cash-strapped West is losing out in the international bidding war for commodities. The 50 year-long policy to enable the chase for the American Dream by extending credit against an ever-weakening collateral has left America at the cliff-edge of collapse. Too much capital was drawn into the housing market (by risk-loving banks backed by government guarantees) where it becomes ‘non-productive’ capital, ‘non-cash-generating’, and ‘low-yielding’. The combination of easy debt (like mortgages) and the mistaken belief that home equity would always rise led to the housing bubble and collapse of 2008. Moyo says “in a sentence, debt claiments failed in their fiduciary duty to police the equity holders because they were hedged by public policy”.
The second misallocation is Labour. Expensive future-debt in the form of pension (I enjoy mine) is one problem. Bad labour-pricing that rewards the wrong groups (sportsmen, CEO’s, and financial services managers) whose societal benefits are low, versus those whose work benefits society more broadly (doctors, nurses, teachers) is another. The global migration of labour is also an issue where quantity and quality are considered from their economic impact.
The key demographic factor in the West is the looming retirement of the baby-boomers. The UN forcasts that by 2050 one in three persons in the rich countries of the West will be a pensioner. The median age for all countries in 2050 will rise from today’s 29 years to 38 years. Contrast this with the expectation that the emerging economies (BRIC, for example) will add 2 billion people to the middle class. The quantity question is in the numbers.
The quality question is illustrated by Moyo through a discussion about engineering degrees. “According to a 2009 Forbes article, the US prefers lawyers over engineers by 41:1”. The economic trajectory of agriculture to manufacturing, to service sector predominance in maturing economies may explain some of this preference, but the service sector economy is also in jeopardy (witness the call-centre outsourcing described by Tom Friedman in his Flat Earth book). But its not just this aspect of technology that has shifted labour, its also R&D. The education systems in India and China favour a ‘meritocratic’ style where streaming students is practiced, in contrast to the egalitarian practice of broadening access is favoured in the West.
I have some disagreement about this latter point and the validity of the evidence. Firstly, the top place in the TIMMS and PISA testing regimes has consistently gone to Finland, a Western country, with Canada close to the top as well. Secondly, the recent high rankings of ‘city states’ like Shanghai and Singapore, are not the same as saying all of China or Malaysia is excelling in the same way or that the system is better. Thirdly, the US scores can be disaggregated to show that some schools and districts are indeed failing but others are excelling, depending on socio-economic status and racial makeup (which is a problem of another kind).
Besides capital and labour inputs, a third factor contributes to the growth of economies. This is the ‘total factor productivity’ (TFP). Think of this as all possible contributing factors combined such as geographical factors (terrain and weather), rule of law, property rights, human rights, freedom of expression and technological growth and efficiency. The West’s superior ‘know-how’ has been eroding in a number of ways in this input area. One example of this is the R&D in the pharmacological industry. Drugs developed in the US and Europe privately, soon show up abroad as generics. Another example is the auto industry, where the big three (GM, Ford and Chrysler) failed to keep up to the technological innovations of such manufacturers as Nissan, Toyota, Honda and Hundai.
Big global problems become economic challenges as well. Healthcare and education, energy and food security, all require marshalling innovation in new ways. The new world order must now acknowledge other players at the table such as Brazil, Russia, India, China (BRIC) Turkey and South Africa. These players come with a different view of how to organize their economies. Instead of allowing the market to decide how to behave unfettered by regulation and government direction, these countries accept governments with larger roles in directing the economy. 75% of global oil reserves, for example, are controlled by state-owned companies from emerging markets.
Moyo, the economist, explains how a country’s wealth comes about:
Y = C + I + G + (X – M)
Y is a country’s GDP (its income); C is individual consumption; I is total investment in the country (private and public); G is the net position of government (revenues less expenses); (X – M) is exports less imports.
“once an idea is out it can be used and improved upon by anyone, anywhere, an idea has a marginal cost of zero”
This quote is referring to the spinoffs from the magnificent technology that enabled the Apollo moon landing in July 1969. I was a vagabond watching it on a storefront TV in Athens, Greece, along with a small crowd who didn’t own their own sets, or had to be in downtown Athens on that day, away from the comfort of their own home. We were all looking for free.
Technology, labour and capital all combined to make America the winner of the Space Race and the Cold War, and the Superpower of the planet. Then came the Financial Crisis of 2008. Dambisa Moyo contends that it is not just the quantity of capital, of labour and of technology that matters, but also the quality. By ‘quality’ she means the manner in which capital is allocated, the aptitude of the workforce and the nature of the technology.
Beginning with capital, Moyo points out how the cash-strapped West is losing out in the international bidding war for commodities. The 50 year-long policy to enable the chase for the American Dream by extending credit against an ever-weakening collateral has left America at the cliff-edge of collapse. Too much capital was drawn into the housing market (by risk-loving banks backed by government guarantees) where it becomes ‘non-productive’ capital, ‘non-cash-generating’, and ‘low-yielding’. The combination of easy debt (like mortgages) and the mistaken belief that home equity would always rise led to the housing bubble and collapse of 2008. Moyo says “in a sentence, debt claiments failed in their fiduciary duty to police the equity holders because they were hedged by public policy”.
The second misallocation is Labour. Expensive future-debt in the form of pension (I enjoy mine) is one problem. Bad labour-pricing that rewards the wrong groups (sportsmen, CEO’s, and financial services managers) whose societal benefits are low, versus those whose work benefits society more broadly (doctors, nurses, teachers) is another. The global migration of labour is also an issue where quantity and quality are considered from their economic impact.
The key demographic factor in the West is the looming retirement of the baby-boomers. The UN forcasts that by 2050 one in three persons in the rich countries of the West will be a pensioner. The median age for all countries in 2050 will rise from today’s 29 years to 38 years. Contrast this with the expectation that the emerging economies (BRIC, for example) will add 2 billion people to the middle class. The quantity question is in the numbers.
The quality question is illustrated by Moyo through a discussion about engineering degrees. “According to a 2009 Forbes article, the US prefers lawyers over engineers by 41:1”. The economic trajectory of agriculture to manufacturing, to service sector predominance in maturing economies may explain some of this preference, but the service sector economy is also in jeopardy (witness the call-centre outsourcing described by Tom Friedman in his Flat Earth book). But its not just this aspect of technology that has shifted labour, its also R&D. The education systems in India and China favour a ‘meritocratic’ style where streaming students is practiced, in contrast to the egalitarian practice of broadening access is favoured in the West.
I have some disagreement about this latter point and the validity of the evidence. Firstly, the top place in the TIMMS and PISA testing regimes has consistently gone to Finland, a Western country, with Canada close to the top as well. Secondly, the recent high rankings of ‘city states’ like Shanghai and Singapore, are not the same as saying all of China or Malaysia is excelling in the same way or that the system is better. Thirdly, the US scores can be disaggregated to show that some schools and districts are indeed failing but others are excelling, depending on socio-economic status and racial makeup (which is a problem of another kind).
Besides capital and labour inputs, a third factor contributes to the growth of economies. This is the ‘total factor productivity’ (TFP). Think of this as all possible contributing factors combined such as geographical factors (terrain and weather), rule of law, property rights, human rights, freedom of expression and technological growth and efficiency. The West’s superior ‘know-how’ has been eroding in a number of ways in this input area. One example of this is the R&D in the pharmacological industry. Drugs developed in the US and Europe privately, soon show up abroad as generics. Another example is the auto industry, where the big three (GM, Ford and Chrysler) failed to keep up to the technological innovations of such manufacturers as Nissan, Toyota, Honda and Hundai.
Big global problems become economic challenges as well. Healthcare and education, energy and food security, all require marshalling innovation in new ways. The new world order must now acknowledge other players at the table such as Brazil, Russia, India, China (BRIC) Turkey and South Africa. These players come with a different view of how to organize their economies. Instead of allowing the market to decide how to behave unfettered by regulation and government direction, these countries accept governments with larger roles in directing the economy. 75% of global oil reserves, for example, are controlled by state-owned companies from emerging markets.
Moyo, the economist, explains how a country’s wealth comes about:
Y = C + I + G + (X – M)
Y is a country’s GDP (its income); C is individual consumption; I is total investment in the country (private and public); G is the net position of government (revenues less expenses); (X – M) is exports less imports.
June 1, 2018
When I picked up this book, I did not check when it was written. I feel like the book was largely influenced by the 2008 economic collapse. There is also the fact that the West is essentially the US of A while the Rest is China. Maybe the author intentionally used the two as examples to illustrate her point, but she does not explicitly say so. I am no economist, so I was really enlightened by the numbers showing the economic state and history of the two nations. And I think that maybe in 100 years, China will be the super power and the US will be somewhere lower. All in all, a very informative read.
Also, I can draw parallels to some of the things my country is currently doing. I surely hope that Dambisa Moyo is wrong, for our sake.
Also, I can draw parallels to some of the things my country is currently doing. I surely hope that Dambisa Moyo is wrong, for our sake.
February 4, 2021
Το βιβλίο αυτό το διάβασα πριν αρκετά χρόνια. Όταν εμφανίστηκε ο Τραμπ ως υποψήφιος του Ρεπουμπλικανικού κόμματος με βοήθησε να καταλάβω τους λόγους της επιτυχίας του. Γιατί κέρδισε τους συνυποψήφιους του και κατόπιν την προεδρία των Ηνωμένων Πολιτειών. Το ξαναδιάβασα πρόσφατα, μετά τις τελευταίες αμερικανικές εκλογές για να επιβεβαιώσω τους λόγους για τους οποίους με κυβέρνηση Biden οι ΗΠΑ θα οδηγηθούν συντομότερα στην παρακμή.
Η συγγραφέας έχει γεννηθεί και μεγαλώσει στη Ζάμπια και έχει εργασθεί στην Παγκό��μια Τράπεζα και στην Goldman Sachs.Έχει γράψει τέσσερα βιβλία, μεταξύ των οποίων και το συγκεκριμένο, τα οποία έχουν μπει στην λίστα των μπεστ σέλερ στην Αμερική, εάν αυτό λέει κάτι.
Η συγγραφέας έχει γεννηθεί και μεγαλώσει στη Ζάμπια και έχει εργασθεί στην Παγκό��μια Τράπεζα και στην Goldman Sachs.Έχει γράψει τέσσερα βιβλία, μεταξύ των οποίων και το συγκεκριμένο, τα οποία έχουν μπει στην λίστα των μπεστ σέλερ στην Αμερική, εάν αυτό λέει κάτι.
October 8, 2024
Wanted to give it 3.5 stars but sadly couldn’t.
Overall thought it was a good book that detailed the economic rise of the BRIC countries (but most specifically China) and potential economic downfall of some of the West countries (mostly the US with some UK). It is interesting to read this now as it is 14 years old and that even with the utter confidence that the author had with her opinions, she has not necessarily ended up being correct. If I had read this in 2010, it’d probably be 4 stars.
Overall though some good concepts and thoughts that you don’t traditionally see in economic analysis on TV/newspaper.
Overall thought it was a good book that detailed the economic rise of the BRIC countries (but most specifically China) and potential economic downfall of some of the West countries (mostly the US with some UK). It is interesting to read this now as it is 14 years old and that even with the utter confidence that the author had with her opinions, she has not necessarily ended up being correct. If I had read this in 2010, it’d probably be 4 stars.
Overall though some good concepts and thoughts that you don’t traditionally see in economic analysis on TV/newspaper.
February 18, 2022
Dambisa Moyo is sharing her views on what she thought were bad policy decisions made by western country leaders that enabled the rise of China and the rest of the world. Despite the title suggesting an overall analysis of western countries, the book mainly focuses on examining the policies of the United States and the UK through an economic lens. In doing so, the author makes a broad generalization of the “West” based on these two countries. Certain parts of the book might not be easy to read for math-averse people or those who do not have economics or finance background.
September 4, 2017
Starts out pretty good, with some interesting insight into economic history. Then goes completely off the rails, displaying absurd misunderstandings of basic concepts like comparative advantage and the effects of protectionism, concluding with 'solutions' that a clearheaded look into the history from the first part of the book show to be the exact opposite of correct. The last 50 or so pages truly infuriated me.
July 9, 2018
Highly recommended for those who have little to no background in economics but are interested in the reasons for thr economic underperformance of the West especially those leading to the 2008 financial crisis.
January 25, 2023
Adorei outro livro desta escritora mas detestei este! Parte de várias premissas assumidas como dogmas mas que são na verdade opiniões muito debativeis e chega a conclusões nada óbvias.
Não gostei do tom fatídico e tendencioso.
Não gostei do tom fatídico e tendencioso.
February 19, 2018
It is impossible to read this book and not learn anything. The world is changing and Dambisa Moyo expertly shows how we got to where we are and where we are going as a global community.
November 30, 2021
Feels dated and much of what the author ginned up hasn't really materialized.
July 5, 2023
buen análisis
Buen análisis del declive del oeste, no me parecen acertadas sus conclusiones sobre rol del estado. Una vez más concluye fracaso del estado benefactor
Buen análisis del declive del oeste, no me parecen acertadas sus conclusiones sobre rol del estado. Una vez más concluye fracaso del estado benefactor
December 1, 2025
Rather unfocused and incoherent. It is not clear what the core message is.
August 3, 2013
Opening quote is a great one: "A senior business executive tells the story of a conference where the head of an established and leading Western telephone company boasted about all the things the company could do, and innovations it had in the pipeline. He went on for quite a long time, as he demonstrated the company's range, depth, and brilliance. His speech was met with enthusiastic applause. Then came the turn of the head of a similar Chinese company; undaunted, pointing to the western executive, he said: 'We can do everything be can.... For 40 per cent less.' He promptly sat down."
First chapter is pretty dry - very analytical in breaking down how the financial crisis in the west was perpetuated by a system that rewarded risk over jurisprudence. Taking very basic microeconomic principles of debt and equity combined with behavioral economics of decision making, when the consequence of a loss is that of leverage to the creditor and not the one holding the debt, it's easy to see how housing/business/ finance bubbles can perpetuate and burst.
2nd chapter delves more into behavioral analysis of debt vs equity and how companies and nations since WWII have historically been encouraging over expenditure, living beyond means, and housing ownership for all which led to the sub prime crisis. Mentally we all have in mind that we own our houses - and not the bank that owns it, as part of the always striving for more and living beyond means to keep up with the joneses.
3rd chapter talks about demographics of the west as our aging populations deal with paying for pensions of previous generations when we have fewer workers coming up since so few students are now studying stem fields. Interesting to see the actual numbers that only 31% of those with stem backgrounds actually work in a stem field today in the US. "Graduates used to be doers (as engineers and diplomats in the 1950's and 1960's State Department and oil companies) [...] then they became talkers, as investment bankers and management consultants, and finally as speculators as hedge find and private-equity managers in the 1990s and 2000s to today."
This is the fundamental point of the book - one of culture in which a series of seemingly "good idea at the time" actions taken by policy makers, corporations, and individual consumers led to this perfect storm of disaster in which America is on the road to becoming a welfare state of the worst kind - where we do not have the coffers nor will to support the public destitution. Moyo continues with an astute breakdown of the challenges facing the US in the future: "herein lies the essential difference between the mindset if the Rest an the mindset of the West. In places like China, the state is the paramount and its government acts in the interest of and for the greater good of China as a hole, even if at the expense of the individual. Western governments, in contrast, have embedded in their very foundations that the rights of the individual supersede all."
Since WWII, we have seen an erosion in the power of western governments to take control and act on behalf of its citizens - as corporations have become the power brokers. "But, unlike governments, companies do not act on behalf of the population a large; they act on behalf of their shareholders." Naturally we will always be at a disadvantage vs governments who can negotiate directly on behalf of their people. This is a fundamental truth that Moyo recognizes, not to say that she supports moving to a central realm of authority with all of the downsides (individual freedom, abuses, etc).
Interesting breakdown of the 5 types of political supporters in the US: labor democrats who see china negatively as stealing their unionized jobs; high technology democrats who are highly educated, urbane, and see china as intriguing and challenging; religious republicans who see china negatively due to human rights violations; defense republicans who see china as a future opponent a la Cold War ussr; big business republicans who see china as a great way to lower production costs for TSR - all 5 factions ally and fight intermittently and alternatingly for various causes.
The end message is not a positive one and spells a bleak future under pretty much all circumstances. Among Moyo's 4 possible outcomes, surprisingly the only one in which there is a light at the end of the tunnel (for the US - impact will be drastic for the globe) is an American default on debt in order to hit the reset button. Global catastrophe, drop of greenback value overnight, and loss of nearly all savings by foreign investors (especially china), so the US can go into isolation mode for a while and eventually break out of this funk with a dramatic overhaul of bad policies to shift culture to one of more savings, frugality, and long term strategy vs short term rewards. Not a likely one to play out.m
First chapter is pretty dry - very analytical in breaking down how the financial crisis in the west was perpetuated by a system that rewarded risk over jurisprudence. Taking very basic microeconomic principles of debt and equity combined with behavioral economics of decision making, when the consequence of a loss is that of leverage to the creditor and not the one holding the debt, it's easy to see how housing/business/ finance bubbles can perpetuate and burst.
2nd chapter delves more into behavioral analysis of debt vs equity and how companies and nations since WWII have historically been encouraging over expenditure, living beyond means, and housing ownership for all which led to the sub prime crisis. Mentally we all have in mind that we own our houses - and not the bank that owns it, as part of the always striving for more and living beyond means to keep up with the joneses.
3rd chapter talks about demographics of the west as our aging populations deal with paying for pensions of previous generations when we have fewer workers coming up since so few students are now studying stem fields. Interesting to see the actual numbers that only 31% of those with stem backgrounds actually work in a stem field today in the US. "Graduates used to be doers (as engineers and diplomats in the 1950's and 1960's State Department and oil companies) [...] then they became talkers, as investment bankers and management consultants, and finally as speculators as hedge find and private-equity managers in the 1990s and 2000s to today."
This is the fundamental point of the book - one of culture in which a series of seemingly "good idea at the time" actions taken by policy makers, corporations, and individual consumers led to this perfect storm of disaster in which America is on the road to becoming a welfare state of the worst kind - where we do not have the coffers nor will to support the public destitution. Moyo continues with an astute breakdown of the challenges facing the US in the future: "herein lies the essential difference between the mindset if the Rest an the mindset of the West. In places like China, the state is the paramount and its government acts in the interest of and for the greater good of China as a hole, even if at the expense of the individual. Western governments, in contrast, have embedded in their very foundations that the rights of the individual supersede all."
Since WWII, we have seen an erosion in the power of western governments to take control and act on behalf of its citizens - as corporations have become the power brokers. "But, unlike governments, companies do not act on behalf of the population a large; they act on behalf of their shareholders." Naturally we will always be at a disadvantage vs governments who can negotiate directly on behalf of their people. This is a fundamental truth that Moyo recognizes, not to say that she supports moving to a central realm of authority with all of the downsides (individual freedom, abuses, etc).
Interesting breakdown of the 5 types of political supporters in the US: labor democrats who see china negatively as stealing their unionized jobs; high technology democrats who are highly educated, urbane, and see china as intriguing and challenging; religious republicans who see china negatively due to human rights violations; defense republicans who see china as a future opponent a la Cold War ussr; big business republicans who see china as a great way to lower production costs for TSR - all 5 factions ally and fight intermittently and alternatingly for various causes.
The end message is not a positive one and spells a bleak future under pretty much all circumstances. Among Moyo's 4 possible outcomes, surprisingly the only one in which there is a light at the end of the tunnel (for the US - impact will be drastic for the globe) is an American default on debt in order to hit the reset button. Global catastrophe, drop of greenback value overnight, and loss of nearly all savings by foreign investors (especially china), so the US can go into isolation mode for a while and eventually break out of this funk with a dramatic overhaul of bad policies to shift culture to one of more savings, frugality, and long term strategy vs short term rewards. Not a likely one to play out.m
April 27, 2025
This feels like one of those artifacts of that moment just after the financial crisis where people took seriously the idea that the West/Capitalist world (she uses the term West, but the latter seems more precise) was on a precipice.
The argument is meandery, landing one or two fair points, and then banging on about problems that seem fairly inconsequential and which she presents in a manner that is poorly argued.
Her points about how government subsidies caused misallocations in the US housing markets is fairly well argued, but, even there, I think she could have had more data. She is an economist after all, and she uses very little in terms of real numerical data as evidence in her most successful of arguments.
And in her less successful arguments, she uses almost no data at all. Here is an example of one of the more fallacious parts of her argument:
“If you picked up a boy’s annual published any time between the 1930s and the mid-1960s, you would most likely find in it articles about engineering feats, suspension bridges, railways and planes, even descriptions of how an atomic bomb works, but not so today. Open the equivalent today and it’s football teams and boy bands that grace the pages. James Dyson the British inventor put it this way: ‘As a child, I pored over Eagle magazine cut-aways that delved into the workings of everything from Bloodhound missiles to offshore oil rigs ... it was the innards that intrigued and inspired … what happens between childhood and adulthood? We stamp it out of them. Engineering gets stigmatized and we encourage our kids to become ‘professionals’ – lawyers, accountants, doctors … Engineering is almost a dirty word. We’re told it’s “old industry” and that we are a “post-industrial nation”.’ Never mind that China produces fourteen times as many engineers as Britain. This lackadaisical attitude towards science and engineering permeates the political structure of the industrialized West. One has to go almost as far back as Thomas Jefferson,the third US president (1801–9), who was an inventor, horticulturist, archaeologist and palaeontologist, to find a president with an engineering or science background. Apart from the Science Minister, Lord Drayson, appointed in 2009, no engineers are represented at the highest levels of the British government. In contrast, Hu Jintao, the current Chinese president, graduated in hydraulic engineering from Beijing’s Tsinghua University, and Wen Jiabao, the Chinese prime minister, is a postgraduate engineer.”
There is so much in this passage that is fallacious that it is surprising it was published. First, she says that unlike before, kids spend too much time focused on football and boybands, whereas, back in the day, kids typically read engineering magazines. Her example of this typical boy is one of Britain’s most famous engineers, James Dyson. Of course, Dyson’s boyhood reading was probably not typical, but rather, as someone who is clearly a good engineer, he was probably drawn to reading about engineering.
She then goes on to suggest that Britain and the US are unlikely to be productive because no US president has been engineering-oriented since President Jefferson. This is in contrast to China, whose leadership is chock full of engineers. Of course, this is fallacious. Why would one think that politicians with engineering training make for engineering superpowers. First, the US was an engineering superpower in the 20th century, a period when, as she points out, the US had no engineers in the presidency. Would she seriously claim that the lack of an engineer in chief has hampered the US development in the two centuries since Jefferson left office?
In fact, there is no reason to think that putting an engineer in power is particularly beneficial for a nation’s engineering. Yes, China did build some great works of engineering with engineers in charge, but the politics surrounding them are dicey. The Three Gorges dam is an engineering marvel, but it is also geologically precarious in an earthquake-prone country and, if the country goes to war, it will be an easy target. Not to mention the millions of people forced to migrate to build these. This book is really poorly argued, though there were some interesting spots.
The argument is meandery, landing one or two fair points, and then banging on about problems that seem fairly inconsequential and which she presents in a manner that is poorly argued.
Her points about how government subsidies caused misallocations in the US housing markets is fairly well argued, but, even there, I think she could have had more data. She is an economist after all, and she uses very little in terms of real numerical data as evidence in her most successful of arguments.
And in her less successful arguments, she uses almost no data at all. Here is an example of one of the more fallacious parts of her argument:
“If you picked up a boy’s annual published any time between the 1930s and the mid-1960s, you would most likely find in it articles about engineering feats, suspension bridges, railways and planes, even descriptions of how an atomic bomb works, but not so today. Open the equivalent today and it’s football teams and boy bands that grace the pages. James Dyson the British inventor put it this way: ‘As a child, I pored over Eagle magazine cut-aways that delved into the workings of everything from Bloodhound missiles to offshore oil rigs ... it was the innards that intrigued and inspired … what happens between childhood and adulthood? We stamp it out of them. Engineering gets stigmatized and we encourage our kids to become ‘professionals’ – lawyers, accountants, doctors … Engineering is almost a dirty word. We’re told it’s “old industry” and that we are a “post-industrial nation”.’ Never mind that China produces fourteen times as many engineers as Britain. This lackadaisical attitude towards science and engineering permeates the political structure of the industrialized West. One has to go almost as far back as Thomas Jefferson,the third US president (1801–9), who was an inventor, horticulturist, archaeologist and palaeontologist, to find a president with an engineering or science background. Apart from the Science Minister, Lord Drayson, appointed in 2009, no engineers are represented at the highest levels of the British government. In contrast, Hu Jintao, the current Chinese president, graduated in hydraulic engineering from Beijing’s Tsinghua University, and Wen Jiabao, the Chinese prime minister, is a postgraduate engineer.”
There is so much in this passage that is fallacious that it is surprising it was published. First, she says that unlike before, kids spend too much time focused on football and boybands, whereas, back in the day, kids typically read engineering magazines. Her example of this typical boy is one of Britain’s most famous engineers, James Dyson. Of course, Dyson’s boyhood reading was probably not typical, but rather, as someone who is clearly a good engineer, he was probably drawn to reading about engineering.
She then goes on to suggest that Britain and the US are unlikely to be productive because no US president has been engineering-oriented since President Jefferson. This is in contrast to China, whose leadership is chock full of engineers. Of course, this is fallacious. Why would one think that politicians with engineering training make for engineering superpowers. First, the US was an engineering superpower in the 20th century, a period when, as she points out, the US had no engineers in the presidency. Would she seriously claim that the lack of an engineer in chief has hampered the US development in the two centuries since Jefferson left office?
In fact, there is no reason to think that putting an engineer in power is particularly beneficial for a nation’s engineering. Yes, China did build some great works of engineering with engineers in charge, but the politics surrounding them are dicey. The Three Gorges dam is an engineering marvel, but it is also geologically precarious in an earthquake-prone country and, if the country goes to war, it will be an easy target. Not to mention the millions of people forced to migrate to build these. This book is really poorly argued, though there were some interesting spots.
July 19, 2021
The book was okay.
The main ideas in the book weren't convincing. Maybe I'm not the intended audience. But I was constantly wondering about conflicting evidence and counter arguments. I would have needed to look up a lot of ideas and topics to fully engage with the book. So with that said, I wasn't convinced with her arguments and evidence. I am curious to look further into these topics.
The main ideas in the book weren't convincing. Maybe I'm not the intended audience. But I was constantly wondering about conflicting evidence and counter arguments. I would have needed to look up a lot of ideas and topics to fully engage with the book. So with that said, I wasn't convinced with her arguments and evidence. I am curious to look further into these topics.
April 24, 2011
This is an important book, but not a good book. Dr. Moyo answers the questions that is on everyone's lips in America these days, is something wrong with our economy? If so what?
Dr. Moyo states that the United States has misallocated: capital, labor and intellectual property over the past 50 years. The country and it's people have made poor choices with regard to these area.
Capital - Dr. Moyo lays blame on the equity culture in America, specifically the high amounts of leverage used by equity holders. She describes the asymetric risk that allows equity holders to gain a lot if the company is heavily indebted and things go well while losses are borne by banks and ultimately the public when things go poorly. This is doubly so with stock options. This type of thinking was also introduced to main street during the housing bubble where for 1% down a "homeowner" has leverage to 100% of the move in the housing price. If the house increases in value by 5%, the "homeowner" earns 5x the money they put down, if things go badly they send the keys back to the bank. The end result is that Americans have invested too much capital in housing which is an unproductive asset and most companies and banks employ too much leverage.
Labor - Dr. Moyo points out how engineers built the great American companies of today, but today few American youth seek engineering degrees. Today's youth aspire to be sports stars, celebrities, lawyers, consultants and investment bankers. These occupations have the highest pay, but do not create the businesses to sustain or grow employment in America. Such misallocation of talent and intelligence has hurt America, particularly in the case of sports stars where many millions of youth forgo education and fail to become pros.
Intellectual Property / Trade - America has assumed the rest of the world will play fair as pertains to free trade and intellectual property. This has not been the case and many jobs and trade secrets have been stolen. Dr. Moyo suggests that the USA adjust it's approach to trade to better protect their intellectual property and to acknowledge the fact that some countries are cheating. She correctly points out that all the benefits of free trade accrue to shareholders and large companies, while the workers are ill positioned to benefit and have suffered as a result.
I say this is not a good book, because Dr. Moyo's tone comes across as demeaning and anti-American at times. While an important and thought provoking economic book, her tone makes it difficult to read.
Dr. Moyo states that the United States has misallocated: capital, labor and intellectual property over the past 50 years. The country and it's people have made poor choices with regard to these area.
Capital - Dr. Moyo lays blame on the equity culture in America, specifically the high amounts of leverage used by equity holders. She describes the asymetric risk that allows equity holders to gain a lot if the company is heavily indebted and things go well while losses are borne by banks and ultimately the public when things go poorly. This is doubly so with stock options. This type of thinking was also introduced to main street during the housing bubble where for 1% down a "homeowner" has leverage to 100% of the move in the housing price. If the house increases in value by 5%, the "homeowner" earns 5x the money they put down, if things go badly they send the keys back to the bank. The end result is that Americans have invested too much capital in housing which is an unproductive asset and most companies and banks employ too much leverage.
Labor - Dr. Moyo points out how engineers built the great American companies of today, but today few American youth seek engineering degrees. Today's youth aspire to be sports stars, celebrities, lawyers, consultants and investment bankers. These occupations have the highest pay, but do not create the businesses to sustain or grow employment in America. Such misallocation of talent and intelligence has hurt America, particularly in the case of sports stars where many millions of youth forgo education and fail to become pros.
Intellectual Property / Trade - America has assumed the rest of the world will play fair as pertains to free trade and intellectual property. This has not been the case and many jobs and trade secrets have been stolen. Dr. Moyo suggests that the USA adjust it's approach to trade to better protect their intellectual property and to acknowledge the fact that some countries are cheating. She correctly points out that all the benefits of free trade accrue to shareholders and large companies, while the workers are ill positioned to benefit and have suffered as a result.
I say this is not a good book, because Dr. Moyo's tone comes across as demeaning and anti-American at times. While an important and thought provoking economic book, her tone makes it difficult to read.
April 2, 2013
I am not a tough grader of books because producing a sensible piece of work is very very difficult but found that the author here could have done better with her categories. The title of the book is so far removed from its content because it concentrates on some of the real economic policies blunders of successive US administrations but to add examples from Uk once in a while does not constitute what is known as "The West". I have no doubt about the author's credentials at all but would be cautious when the solutions proposed involved protectionism and closing up into a north American alliance.
Also startling for me is the neo-Malthusian argument that the world is running out of energy, land and food on account of growing populations. Now, this is an argument that is not only set against the grain of history but also requires far more sophistication to pull off than merely stating that it requires 9 kilogrammes of grain to produce an equivalent weight of beef and therefore that the world is doomed. On the same path is the argument made without evidence that conflict around resources such as water will shortly be normal without evidence for it.
In conclusion, I agree that david Ricardo's theory of comparative advantage has been questioned several times but just because China is a "Volume Maximizer" is not evidence that comparative advantage is obsolete. As it is, the simple mathematics of comparative advantage show that no country could hold an absolute advantage in every product imaginable. More recently China's labour costs have been rising and this alone means that Ms Moyo may need to update her arguments. Similarly, the fact that the US is close to being self sufficient in energy undercuts the argument that reliance upon energy imports harms its economy.
Finally, I find that the book is a very good polemical work but ignores countries that have managed economies very well. In the entire publication, i am surprised that Canada was hardly mentioned except towards the end in the suggestion that the US should go into a North American alliance with its neighbor. In the end, the book puts up a lot of information on the misallocation of resources in the US but does not provide evidence to me that the US, leave alone the West, is really lost.
Also startling for me is the neo-Malthusian argument that the world is running out of energy, land and food on account of growing populations. Now, this is an argument that is not only set against the grain of history but also requires far more sophistication to pull off than merely stating that it requires 9 kilogrammes of grain to produce an equivalent weight of beef and therefore that the world is doomed. On the same path is the argument made without evidence that conflict around resources such as water will shortly be normal without evidence for it.
In conclusion, I agree that david Ricardo's theory of comparative advantage has been questioned several times but just because China is a "Volume Maximizer" is not evidence that comparative advantage is obsolete. As it is, the simple mathematics of comparative advantage show that no country could hold an absolute advantage in every product imaginable. More recently China's labour costs have been rising and this alone means that Ms Moyo may need to update her arguments. Similarly, the fact that the US is close to being self sufficient in energy undercuts the argument that reliance upon energy imports harms its economy.
Finally, I find that the book is a very good polemical work but ignores countries that have managed economies very well. In the entire publication, i am surprised that Canada was hardly mentioned except towards the end in the suggestion that the US should go into a North American alliance with its neighbor. In the end, the book puts up a lot of information on the misallocation of resources in the US but does not provide evidence to me that the US, leave alone the West, is really lost.
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