The renowned economist Dambisa Moyo has made a name for herself by tackling difficult problems head on and coming up with unconventional solutions. She has looked at the troubled history of development aid, the economic rise of China, and the global struggle over resource control. In this incisive interview, she diagnoses the financial and monetary issues plaguing the world today and outlines the threat they pose to our most cherished political institutions.
Moyo: It's funny. A great deal of my interest now is around the inadequacy and challenges that the democratic system is dealing with. I would say that a lot of the economic challenges that we're facing today are a manifestation of flaws and weaknesses in the political system.
I'm not saying we should jettison democracy at all. I think it is the best system, but I think it's also due for an upgrade. And in that respect in particular, one of the greatest problems that we need to address in politics and ultimately also in business and in economics is short-termism.
I think the fact that public policymakers and politicians come up with policies that are designed to cater to and court voters in the short term but may have longer-term consequences that are dangerous or deleterious for an economy is very much at the root of the problem.
All the problems that I mentioned to you earlier — demographics, income inequality, productivity, debt, technology — are long-term, intergenerational problems. And yet we have elections in the United States every two years. There's clearly a mismatch between the political system being very short-term and these intergenerational, longer-term challenges.
So if I had to pick one thing, I would really do a reboot of how public policy and politics are done in a democratic state.
OR: Do you buy the argument that, with respect to these issues, there is something to be said in favor of the Chinese model? What's your take on China's rise under Xi Jinping?
Moyo: I think in many respects it's too soon to tell, even for China. They've clearly done some amazing things — things that economists and historians will tell you have never been accomplished in any country anywhere in the world. They've been able to move hundreds of millions of people out of poverty in just a few decades. That deserves respect already.
But I think it's too soon to say, "Oh, this is the model of the future." They continue to have significant issues in terms of environment, in terms of poverty; their political system is still evolving. I think that one of the challenges that these types of discussion have is that they view economics and politics as being static. And what I was saying earlier about democracy applies to any type of system, because I think you have to assume that these systems are very dynamic and constantly changing.
Do I believe that China will continue to grow under Xi Jinping and be successful? Yes, I do. Do I think it's going to be linear? No, I do not. I think there will be lots of volatility. We have concerns in the marketplace around leverage in the system, and we talked already about some of the demographic issues that they're dealing with. I think that these are all really well-known and accepted challenges, and that tells me that it requires a lot of savvy and nous to move in the right direction. But I'm also very optimistic. They're very focused. I've spent time in China, and I think that they are not swayed by a lot of the political machinations and political interests that democratic societies are.
OR: You've outlined a number of big challenges and big steps meant to address these issues. Do you see national and international institutions as still having enough legitimacy to undertake these big strategic projects?
Moyo: I'm very much for innovation. So I think that the institutions that will have relevance and legitimacy are the ones that are innovating. Because the world is changing, and as I said, the dynamics around who we engage with politically and how we solve economic challenges is changing. A lot of that is due to exogenous factors — things that public policy may not have a priori a lot of influence on.
Do I think they have legitimacy? I think they can have legitimacy if they recognize that a lot of the models and the assumptions that we've made in the past may no longer hold. And I think they themselves as institutions need to evolve. They need to shift their focus or their agenda — and certainly the manner in which they execute.
So I am optimistic, fundamentally. But think about business. Some companies will survive and others will not, and I think it's really about you constantly evolving and forcing yourself, as an institution, to evolve and change as systems change.
OR: Do you think that the current U.S. administration has the capacity to at least embark on this process?
Moyo: I think it's a bit too soon to call it one way or another. There are some good people who are in the administration. Of course, it's quite disconcerting to hear some of the remarks and commentary that comes out. And to be honest, I try to separate what is just a style difference and to really focus on the content. In that respect, we've had a tax debate. I want to see what's going to happen in infrastructure. We've had the healthcare agenda. I'm much more interested in public policy than I am in superficial language. I think the jury's still out.
Let's see what happens. The economy is growing, and we are seeing employment numbers that are solid. Obviously, we haven't addressed participation rates, and I do think that some of the language coming out of the administration is very disturbing as it undermines the U.S.’s global agenda. But overall, I'm pretty optimistic that America and Americans will make sure that the country is set on the right course.
Dambisa Moyo is a leading economist and the bestselling author of, most recently, Edge of Chaos.