Top positive review
3 of 3 people found this helpful
Stimulating, insightful, but uneven
on 28 December 2012
This is a fascinating book: short enough to read in half a day or so, full of refreshingly unconventional views, but clearly aiming for balance. In spite of the provocative, "Buy Me!" title (presumably based on the famous Western movie "How the West was won"), the author does not adopt anything that could be called an "anti-American" attitude. Her thesis is that the West - the USA, UK, Western Europe, etc. - has been steadily losing ground economically to "the Rest" - led by China, and also including China, Russia, Brazil, India, and many other nations. Dr Moyo then takes a deeper dive, divided into the three critical factors of Capital, Labour, and Total Factor Productivity (TFP). In each of those, she claims, the West has been falling behind for well-defined reasons.
Starting with capital, Dr Moyo asserts that the West has seriously mismanaged its capital in several ways. One of the main reasons for this - an idea that crops up again later in the book - is that Western nations lack the political ability to make rapid decisions for the good of the nation as a whole. They are hamstrung by participative democracy and frequent elections. In a passage that, for me, is the most important in the whole book, Dr Moyo explains why "debt is cheaper than equity". All corporations are funded by equity and debt; but those who own the equity are much less risk-averse than those who own the debt. Thus the creditors should exert a restraining influence, forcing management to avoid excessive risk. When government underwrites banks and other enterprises, it removes this restraining influence - leading directly to catastrophes like the financial crisis of 2008. Another dreadful mistake was for governments to encourage home ownership, which merely raised the cost of housing while tying up capital unproductively.
The situation is equally grim when it comes to labour, as demographics mean that the West has an aging population that will become steadily less productive, just as the unfunded promises of future pensions come due. Dr Moyo seems to approve much more of the Chinese way, where individuals mostly have to fend for themselves by saving while they can. The West has also failed on the educational front, both in terms of quality and quantity: standards have fallen in the pursuit of equality and anti-meritocratic policies, while China and India produce far more scientists, technicians, and engineers than the USA or the UK. Moreover, the West is misusing its talent, as the best and brightest make a beeline for Wall Street or the City of London instead of doing something useful with their brains.
Dr Moyo's undoubted expertise seems to have sharply delimited borders. Her only substantial mention of population growth leads to the judgment that the West is at a severe disadvantage due to its slow rate of increase, whereas China is sitting pretty with a much younger demographic profile. Later, she states in passing that the world's total population is "around 6 billion today". In fact, it passed 7 billion the very year (2011) this book was published. To underestimate such a critical number by 16% would be unforgivable, were it not that Dr Moyo is clearly an economist with little knowledge of, or interest in, ecology. Nevertheless, one may question the value of a book that carries economic analysis to a considerable depth while utterly ignoring the wider context which may render pure economic analysis worthless. In another example, she declares that Africa contains 80 percent of the world's "untilled arable land", suggesting that it could be cleared of trees and used to grow crops. But experience has shown that, in tropical forest, this often leads to laterization, after which the land won't grow crops, trees, or anything else.
When it comes to politics, Dr Moyo appears to be almost as naive. She writes, for example: "The US needs to make sure the benefits of its consumption accrue to the broadest number of its citizens". But this assumes that there is such a single entity as "the US", and that it is interested in the welfare of all its citizens. Even given that the USA is a functioning democracy (a big assumption to make) why would the rulers behave altruistically, rather than favouring their sponsors?
The book has been poorly (or at least unevenly) edited, as several schoolgirl clangers have got through. For instance, it is claimed that the UK's 62.8 million credit cards and total credit card debt of £63.6 billion represent "over one card and one pound for every Briton in the country". It doesn't build confidence when a professional economist confuses millions with billions! On page 77 of my edition, Danish researchers are quoted as saying that every second baby born today in "developed, industrialized nations" will live to 100. Well and good - but then on page 122 we are told that "across the industrialized West many medical practitioners agree that this generation of six-years olds will be the first to live less long than the generation that preceded them". On page 123 I was surprised to read that, "...one nuclear molecule provides many hundreds of times of kilojoules of energy than its closest competitors". I quote those mistakes only to demonstrate that the author, the editor, or both were inattentive at times.
Despite its imperfections, I encourage you to read this book. I don't think it has any answers, but it asks some very pointed and interesting questions.