Unlike almost every other well known economist, Dambisa Moyo has not won the economics Nobel prize. Moreover, the economics Nobel Prize is an accolade for which Dambisa Moyo seems entirely unqualified since she has published neither block-busting economics textbooks, nor clever mathematical models in obscure economics journals. Indeed, she has published almost nothing at all, other than a book on development aid, and her latest work, "How the West Was Lost."
Despite her seemingly slight credentials, Dambisa Moyo has pointed out what none of America's many economics Nobel laureates seem to have noticed; namely, that America, and more broadly the West, is (a) going broke, and (b) facing imminent eclipse by Asia's economic giants. More importantly, she explains why.
The story is best told in her book or in abbreviated form in this lecture to the Commonwealth Institute of California:
Briefly, her account is simple and irrefutable. We are living beyond our means, massively over-investing in housing and other forms of consumption, imposing massive and unbearable financial burdens on our children through Ponzi healthcare and pension schemes, and ignoring a catastrophic decline in educational standards.
Housing bubbles she attributes largely to misconceived government programs that subsidize home ownership, proceeding on the assumption that housing, a basic necessity of life, should be expensive not cheap: an insane idea to anyone concerned with the welfare of the people, but one highly profitable to the construction industry and property developers.
The Ponzi schemes are, well, just that. Ways in which governments bribed voters with the voters' children's money, a symptom of a terminal decline in public intelligence and the morality of Western governments.
On education, she makes the obvious point that if English kids can't do math their contribution to the nation's declining industrial economy is likely to be small. Moyo does not enter directly into a discussion of the causes of the decline in educational standards throughout most of the West, although she touches on what is the most important factor: employment opportunity.
Western state have for a generation pursued a policy of unconstrained free trade, which has meant off-shoring and outsourcing of manufacturing and many service sector jobs including design work, computer programming and financial-services-industry back-office functions, mainly to Asian sweatshops where labor rates average less than 5% of those in the West. Under those circumstances, what is the reward for the hard work necessary to obtain a good education? LOL. They have plenty of good brains in India and China, so who's gonna rush to employ a math wiz. or programming geek who expects to earn a decent salary and who, in any case, is not permitted by law to work for less than than a minimum wage that a fresh graduate in India would die for.
But what Moyo does show is that under the conditions of World trade that currently prevail, the claim by the likes of Canadian economist, Jeff Rubin, that free trade benefits everyone -- the argument for comparative advantage, is a lie, thereby indicating the remedy that the West must employ if it is not to be driven into absolute poverty. We must allow Canadians, and Britons and Americans and Australians to make shoes and shirts and cars and cameras for one another. The time of exchanging bits of worthless paper for Asian made goods will soon be over, and if by then we have entirely destroyed our manufacturing, scientific and technological skills, we will never recover.