Interview with Dambisa Moyo

Zachary Karabell (0:08)

On today's installment of What Could Go Right, I am speaking with Dambisa Moyo, who I've been friendly with for many years. She is an extraordinary woman who has had a extraordinary career as a global economist and an author. She's written a number of books, including Dead Aid, about the challenges and perils of Western aid programs in Africa. She's also written a book called Winner Take All about the success of the Chinese model, at least through the early 2000 and teens. She is finishing up her next book called The Edge of Chaos, which will be out early in 2018 She was educated in the UK. She also has a degree from Harvard. She has worked at Goldman Sachs, at McKinsey, and she is currently on the board of Barclays, Barrick Gold, Chevron Energy, and Seagate Technology. So she is a unique voice, a writer, someone who has been involved intimately with the ups and many times downs of global corporations. And she has also spoken widely, including a much followed Ted Talk, and commented often in various publications on what's going on in our global economic system. And while Dambisa definitely has a more cautious, if not pessimistic view of what's going on in the global economy, she is ever provocative and ever illuminating. So it's my pleasure to have her conversation.

So Dambisa, you have been looking at inequality, you've been looking at rising levels of debt, you've been looking at issues around the world that affect global corporations. Can you rank them? Are there a series of issues you think are the most pressing versus a series of issues that are pressing but maybe not as immediately?

Dambisa Moyo (2:04)

Well, first of all, thank you for hosting me, I'm delighted to participate. I think the way I would frame the answer to your question is to start off with what I would consider to be the fundamental, sort of foundational changes in the global economy. And the way I would couch that is in two ways. First of all, there is, and we're undergoing, but there has already been a significant shift in the role of non-state actors. And by that, I don't just mean ISIS or Al Qaeda, I'm talking about philanthropists and non-governmental agencies in terms of their influence from the perspective of public policy and the delivery of public goods. But the second point, which I think is a very fundamental shift, is the impotence around particularly economic tools, but also political tools that we used in the 20th century to solve some of the economic challenges that we're dealing with today that have essentially, as I mentioned a moment ago, become impotent and are no longer working to solve both the economic and the political environment in which we find ourselves. In terms of the economics, I'm talking about things like the interest rate regime to monetary policy as well as fiscal policy. Clearly, we're in an era now of incredibly and historically low interest rates and a world of QE. This is incredibly artificial in terms of trying to resolve some of the challenges post the 2008 financial crisis. Then in terms of diplomacy, and I've alluded to this already, a lot of the sort of framing, the political framing, the rise of the importance of democracy, the global infrastructure and engagement has also come under challenge in recent time. So the way I would characterize the fundamental shifts that we're encountering right now is really through the lens of these two massive shifts. Then we can talk some more about the array of consequences, whether it's debt, technological automation, and what that might mean for jobless underclass, demographic shifts, natural resource scarcity, etc.

But that's how I would initially frame the question.

Zachary Karabell (4:22)

So it's funny, one thing I've been asking lots of people, and I may have asked you at another time, is at a purely macro structural level, if things are so bad, why aren't they worse? And the question is, again, that macro stability level, as opposed to maybe there are 60 million Americans, a not inconsiderable large chunk, who are manifestly being screwed by the contemporary economy or not doing well. I'm just saying at a macro stability level, you haven't found there are not governments crumbling, at least they're not governments crumbling because of economics. Syria's civil war is not really an economic thing. Venezuela was mismanaged. North Korea has been North Korea through various economic cycles.

So, in spite of all that, why are things feeling so bad structurally and yet relatively benign when you look at it?

Dambisa Moyo (5:23)

So, it's a great question and I think this is a classic thing that frustrates economists because we're very good at predicting doom and gloom and then it doesn't turn up as quickly as we expect. I'm reminded of a quote or clip from Rudiger Dornbusch who was a very eminent professor of economics at MIT when I was at Harvard and he always used to say the thing about about crises is that they always emerge much later than you expect but they also are much more catastrophic than you than anyone anticipates and I think just to be more succinct with you know in answering your question I would say that we are in a world where there we see a lot of the problems but we are in a band-aid world by that I mean a lot of the QE a lot of the the low interest rate environments have have basically put a band-aid on what I think is a lot of festering problems which are emerging but perhaps much more slowly than we would expect so if you look around the world today freedom numbers from Freedom House for example there is a disintegration in political freedom in both developed and developing countries if you look at the economic environment it is absolutely the case that participation rates even in the United States have declined and not never recovered post the financial crisis you know we tend to focus on the unemployment rate but as you know the underemployment rate continues to be one that's quite disturbing concerns I think that the issues around income inequality and the debt levels in the United States are things that are bubbling under the sun. And so I certainly don't see... I mean, I should say for myself, I'm pretty queasy about where we are, not just in the United States, but globally, across a whole range of metrics and lenses. And so, yes, should we feel a bit comforted that it hasn't blown up completely? You know, I think there are people who gain that comfort. But from my perspective, I do worry that this is not sustainable longer term. What the trigger might be for this sort of catastrophic scenario, I can't tell you. But what I can tell you is if you just look at the debt, both not just at an aggregate level, but government debt, household debt, credit card debt, student loans, auto loans, all of these factors are above a trillion dollars in the United States. And clearly there is something very fundamental that has occurred in the political as well as in the economic realm that I think will only get worse without some drastic response.