BOOKMARK

Decline of the West and rise of the Rest

By Dr R Balashankar

How the West Was Lost: Fifty Years of Economic Folly – and the Stark Choices Ahead, Dambisa Moyo, Allen Lane (Penguin Books),  Pp 226 (PB), £ 14.99.

Homer’s Odyssey describes two grotesque monsters, Scylla and Charybdis, dwelling on either side of the Straits of Messina. Odysseus, the hero, has to decide which monster to confront, a choice between a partial loss of sailors or total annihilation and he choose the first option.

Dambisa Moyo, the celebrated author of the best seller How the West Was Lost describes the state of the western economies particularly that of the US as the dilemma before Homer’s hero. Like Odysseus, the West must choose which monster to confront; if it does nothing, it faces swift economic oblivion, if it continues to pursue wrong-headed policies, although its survival may be prolonged its economic demise will be inevitable. Many Americans believe, says the author, their country’s best days are in the past. Fifty years of economic folly brought about this pass. And the choices before the West are dire and painful. The pet theory that the developed countries of the West lived beyond their means, created a consumerist greed, saving was discouraged and high spending with easily promoted loan availability and crazy financial instruments have generated a debt economy have all been discussed in great detail.

The most interesting aspect of the book is its erudite analysis of the exorbitant advantage the US enjoyed after the World War II and how the prosperity of the past five decade was the outcome of the exploitation of the enormous war booty the US cornered. Acknowledgement of this aspect makes the understanding of our economic thinking more focused and real. And that capitalism as a system is not the synonym for growth and prosperity. Rather the author envisages a socialist prospect for the capitalist world. “The odds are, however, the United States will be a bona fide socialist welfare state by the latter part of this century. Indeed, if nothing else changes it from its current path, it is almost certain that America will move from a full-fledged capitalist society of entrepreneurs to a socialist nation in just a few decades.”What is the blueprint for West’s survival, asks the author and suggests, before any practical solutions can be implemented, the West has to change its mindset. But the author, mercilessly paints a rather no win situation when she says, “It can no longer afford to regard the up-and-comers as simply menacing gatecrashers. As we have shown, forging closer ties with the emerging economies and dismantling (rather than re-imposing) trade barriers will not work.” A suggestion for protectionism and greater restrictions on immigration?

The West interestingly is not too happy with the growing and spreading prosperity of the larger non-West part of the earth. In theory the West should be happy about the possibility that the incomes and livelihoods of hundreds of millions of people will be meaningfully improved—and converge with those of the industrialised West. The problem, the author underlines, is of course we cannot all be winners. “Natural resource limits and constraints remind us that this is so.”

Moyo, who was chosen as one of Time magazine’s 100 most influential people in the world in 2009, has worked with World Bank and says, “The uncomfortable truth is that the West is desperately strapped for cash.“ It goes without stressing it all boils down to cash, who has it and who doesn’t. In the global bidding war, for property, for companies, for commodities, for anything of value, the “West will rarely be seen: it’s fast running out of money.” Intriguing?

The recurring theme of this book is how Western governments and private institutions, all borrowing away feverishly to design the best economic policies yielded and failed. In a scathing attack on governments, policymakers, corporate heads and think-tanks Moyo explains –perhaps it was folly, perhaps willful blindness or perhaps capricious political myopia regardless of the motivations, in the last fifty years, Western policy making has placed an unbearable burden of unsustainable mounting cost on future generations. The full extent of which, these countries have just begun to experience.

If cash is king in the economic roll call, which is fast depleting in the West and accumulating in the Asian countries, Moyo makes an important observation about Indian black money. Quoting Asymmetric Threat Contingency Alliance (ATCA) she writes, India –still regarded in many Western eyes as a poor country—has an estimated US$ 1.5 tn residing in Swiss banks (more unaccounted for monies than the rest of the world put together), and an amount ten times larger than its foreign debt. It is also home to fifty Indian billionaires. Every year around 80,000 Indians travel to Switzerland, of whom 25,000 are frequent visitors.”

How the West was Lost is a highly readable, easy to grasp concise narrative of the state of the world economy today. The West is declining also because others are rising. The balance of economic power is shifting to the Rest from the West. This is also because there are not many colonies left for the West to exploit for markets and raw materials, there are no war booty to sustain the high spending super class life style. The message of the book is clear and loud. Mend your ways to delay the decline, but it is inevitable in the long run. An angry damnation of western profligacy.

(Allen lane (Penguin Books), Penguin Group (UK) 80, Strand, London WC2R)