How The West Was Lost: Fifty Years Of Economic Folly--and The Stark Choices Ahead (2011) - Plot & Excerpts
The author, an economist educated at Oxford, details in facts and figures the past events, bad government policies, and trends that spell the bankruptcy of the West and the "rise of the rest." The fundamental cause is the introduction of the welfare state to Europe and America. She makes the point that the northern European states are functioning as better managed than the badly managed welfare states of the U.S. and southern Europe.The U.S. and the southern European states are in fact bankrupt now. There is no way they can ever repay the debts they have incurred to support the welfare economies and for the U.S. the recent wars. In the West today we have the "makers and the takers." Fully half of Americans pay no income tax at all. The U.S. debt is only increasing and the Federal government will either default on the debt or print huge sums of money to create major inflation. The big unknown is what happens when the default occurs or the inflation starts. In this book, Dr. Moyo analyzes the reasons of why the West is losing the lead to the rest of the world (mostly Asia, but also Russia and South America).Instead of providing a broad review of this book, the focus will be on the first few chapters which concern the housing market in the U.S. The author starts by providing a short background of the housing crisis. Basically, the author repeats the same old (and true) claim that was written in every other newspaper in the world: "However, US policy has, in particular through guarantees to bondholders, banks and other lenders, eroded the checks and balances, leading to the misallocation and the erosion." (p.43) Nothing new under the sun here.However, the main flaw in this part is the author's conclusion regarding the way the housing problem should be solved. The author's solution is to "the government should now encourage people to assume less debt and put more equity down upfront in the form of down payments which could be matched... Ultimately, policy should be focused around weaning the financial system off guarantees for mortgage loans and removing tax benefits on mortgage debt, instead providing a subsidy for equity (cash) down payments." (p.46). In other words, the author acknowledges that the government has caused the problem in the first place by misallocation of capital toward the housing market. So now, instead of letting the market clear this misallocation of capital by letting the price drop, and thereby stimulating demand, the author wants to re-inflate this bubble by providing equity subsidies. Isn't this misallocation of capital all over again?The rest of the book discusses the areas, mostly education, R&D and energy, in which the U.S. is falling behind and needs to concentrate its efforts and resources in order to resume the lead once more. (Nothing new under the sun here either.)To sum up, the author was blessed with a great writing style and was able to take a dry topic such as economic policy and make it more "alive", however, the content of the book doesn't provide much new information or insights that wasn't discussed many times before. This book is not recommended for persons who are already well acquainted with such topics.
What do You think about How The West Was Lost: Fifty Years Of Economic Folly--and The Stark Choices Ahead (2011)?
hard exam ination on western policies, good read it helps you understand the bigger picture
—moe
Excellent insight into the current state of world economic affairs and political systems.
—BabeRuthless
This book has a lot of problems, especially in the second half. I don't recommend it.
—june
Interesting ideas as the U.S. ponders its place in world economics.
—Sayedqd
