The Siren of the Financial Meltdown

By Sieghart, Mary Ann | Newsweek, February 21, 2011 | Go to article overview

The Siren of the Financial Meltdown


Sieghart, Mary Ann, Newsweek


Byline: Mary Ann Sieghart

Brainy, beautiful economist Dambisa Moyo castigates the West for its economic profligacy in a provocative new book. She talks with NEWSWEEK about rising from Zambian roots to the heights of Davos.

When Dambisa Moyo wrote a book claiming that aid was bad for Africa, many in the West were ecstatic. This was no right-wing, isolationist, middle-aged, white, male author, but a glamorous, young, black, female, African economist. Dead Aid won itself a load of publicity when it came out in 2009, not because its argument was particularly new, but because it came from such an unexpected source.

Moyo's new book, How the West Was Lost: Fifty Years of Economic Folly--and the Stark Choices Ahead, may be rather less welcome to Western audiences. The 42-year-old Zambian argues that we have become feckless, overborrowed, and obsessed with consumer goods. Our governments have fed our foolishness with policies that meant well but ended badly. Meanwhile China and the other emerging economies, which she dubs "the Rest," have been catching up fast and have so far made few of the same mistakes. At the end of the book, she controversially floats the possibility of the U.S. defaulting on its debt.

Having grown up and gone to college in Zambia, but having studied for a master's at Harvard and a doctorate at Oxford, where does Moyo herself fit in to this story? "It's the most fortuitous position I could ever have asked for because I'm neither a Westerner nor a 'Resterner.' I come from the laggard in the whole game: Africa." That said, Moyo looks every inch the glossy international jet-setter, with her designer dress, crimson nail varnish, and vertiginous heels, perched in the tearoom of a breathtakingly expensive Knightsbridge hotel. She has apartments in both London and New York, travels to Asia four times a year, and goes back to Zambia every couple of months. She is ubiquitous on the global conference circuit of Davos, Bilderberg, and Aspen. Where does she consider home these days? Full-throated laughter: "A British Airways flight!"

There is no hint of schadenfreude in Moyo. She isn't gloating at the decline of the West. Far from it. "Having grown up in Africa and watched all the most amazing American and British TV--Dallas, Dynasty, Fawlty Towers--and having lived in a time when going to America was a big aspiration, it makes it even more of an issue to say, 'You've got to get it right! How can you disappoint my childhood dreams?' At the same time, seeing what China's done in moving 300 million people out of poverty gives me so much hope for what's possible for my home continent of Africa."

Moyo's argument is that Western governments unwisely encouraged their citizens to borrow too much and sink the money into the unproductive investment of a home, with all the subprime consequences that we have seen since. They set up unaffordable Ponzi state-pension schemes. And they failed to incentivize young people to study mathematics and science at college. How can such societies then compete against the highly educated, prudent Chinese, who don't have the economic burden of a welfare state?

Moyo condemns the short-term outlook of Western politics and half admires China's ability to make quick, tough decisions unencumbered by democratic constraints. She cites the moment when China killed 2 million birds in a matter of days to avert avian flu, while America failed to kill any. Given that bird flu killed no humans in America, perhaps the democratic process has something to be said for it. (The chickens are doubtless grateful too.)

But she claims not to be a closet authoritarian. "I'm not saying democracy is a bad thing.

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