How the reader was lost

How the West Was Lost: Fifty Years of Economic Folly—and the Stark Choices Ahead. By Dambisa Moyo. Farrar, Straus and Giroux; 226 pages; $25. Allen Lane; £14.99. Buy from Amazon.com, Amazon.co.uk

HERE are two predictions about the world economy. First, the West's malaise and the rise of emerging economies will yield a mountain of books. Second, few of these are likely to be as bad as “How the West Was Lost”.

Dambisa Moyo, a Zambian-born economist whose provocative first book attacked foreign aid in Africa, accuses the West of squandering the sources of its economic growth. Borrowed money has been poured into unproductive uses, notably housing. Its workers are ageing or, if young, dream of being footballers or fund managers rather than engineers. Technology has been handed to, or stolen by, the Chinese. Government policies over half a century have encouraged or abetted all this. Unless the West changes its ways, it is heading for “a savage economic decline”.

Much of this is both plausible and familiar. The trouble starts when Ms Moyo ventures into economic analysis. In comparing America's economy with China's, for instance, whether you convert yuan into dollars at market exchange rates or after adjusting for purchasing power matters a lot. Measuring at purchasing-power parity makes the gap in GDP and living standards look narrower. This explains a great deal of the difference between two sets of figures that Ms Moyo cites. Yet she does not mention it.

This is basic stuff. Much else in elementary economics also gets mangled here. Governments usually manipulate exchange rates to make their currencies artificially weak, not strong. In the Keynesian national-income identity, G represents government spending, not the budget surplus. The idea of a special tax on sports stars' incomes to discourage youngsters from unrealistic aspirations is intriguing, if contentious; suggesting that the two groups might bargain away such effects is absurd.

There are some puzzling omissions. Ms Moyo rightly complains at the exclusion of big emerging economies (except Russia) from the G8. She celebrates the strengthening of their diplomatic muscles. Amazingly, she seems not to have noticed the prime manifestation of this: the rise of the G20, which since 2008 has eclipsed the smaller, rich-country club.

Worse, Ms Moyo commits some jaw-dropping factual errors. General Motors, she writes, was bought by Fiat, “an event unimaginable just a couple [of] years earlier”. Yes, and it still is: the Italian carmaker did not purchase GM, but a 20% stake in Chrysler, recently increased to 25%. France gets “almost 20% of its electricity from nuclear sources”. The OECD says the figure is close to 80%.

Ms Moyo's editors are as bad as her fact-checkers. If they couldn't spot the analytical flaws, they might have done something about the stylistic ones that range from curious analogies to long phrases in parentheses. Endnotes are used almost at random.

The book ends with some provocative claims. America's indebtedness and crippling health-care and pension burdens, Ms Moyo believes, may lead it to create a “socialist welfare state” by the latter part of the century, or to default on its public debt. Should the world descend into autarky, America would be better equipped than China for survival on reduced means. But these arguments need much better supporting material than the book provides. By that stage the reader's trust in the author will already, so to speak, have gone south.