Edge of chaos Why democracy is failing to deliver economic growth--and how to fix it

BEMOANING the worrisome state of liberal democracy has become a cottage industry. With each erosion of individual liberties, with every election gone awry, the commentariat disgorges a fresh flotilla of analyses of the world's ailments and favored prescriptions for fixing them. Some fret about the slide toward absolutism in central European countries ranging from Poland to Türkey. Others cast a wary eye on the wave of populist tremors that fringe parties in mature nations like France and Germany have tried to ride. Brexit was a Code Red alert. And of course, the most energetic handwringing is reserved for what has befallen the United States - not just the election of a president with little visible respect for democratic norms but the seeming ease with which Russia cyberburrowed into email systems and social media networks. Such is the state of fear - Freedom House declares democracy to be facing "its most serious crisis in decades" - that even economists are leaping across customary academic boundaries into political science in order to opine. To this discussion, Dambisa Moyo brings strong economic credentials. She is a regular contributor to The Wall Street Journal and The Financial Times. In 2009 she was named one of the "100 most influential people in the world" by Time magazine. Her familiarity with the dismal science radiates through her provocative new work, "Edge of Chaos," as she argues compellingly that the global failure to achieve sustained, inclusive growth underpins the rampant political turmoil. Liberal democracies could probably endure either slow growth or rising inequality, she says. But when the two collide, as they have in many mature economies, the chemical reaction can be fierce. To take a vivid example, the United States has seen its rate of expansion slide from 4 percent in the late 1990s to a bit more than 2 percent at present. At the same time, the gap between rich and poor has exploded, leaving many of those near the bottom enduring lower standards of living than they faced decades ago. As Moyo notes, left to its own devices, capitalism produces income inequality. This, however, is within the power of governments to redress. While inequality has risen in Europe as well, progressive taxation and robust social safety nets have kept the gap there manageable. Moyo ticks off seven headwinds - from aging societies to limited natural resources - as impediments to growth. In the United States, for example, educational attainment is a major cause for concern; on a 2015 math test administered globally to 15-year-olds, the United States came in 30th out of 35 major countries. While many of these are, indeed, scary prospects, her most vexing fear - with much justification - is the rising tide of protectionism. Partial blame goes to the financial crisis and ensuing recession, but globalization advocates must also be held responsible for the drift (perhaps now, a scramble) toward more protectionist policies. They failed to recognize that for all the winners (think of how many products we buy that are better and cheaper because they are made elsewhere), there are also losers (think of the shuttered factories throughout the industrial heartland). However, rather than ques- Dambisa tion capitalism and globalization, Moyo mounts a vigorous and welcome defense of both. She argues that they are the most likely avenues to high economic growth, which she pronounces to be the holy grail. She is surely correct that capitalism and globalization have done more to improve living standards than any other economic arrangement. But is democracy a necessary ingredient? China's mixed system of state-directed capitalism has produced stunning results: In just one generation, China has moved 300 million people out of poverty. Moyo is appropriately respectful of China's accomplishments and appropriately concerned that if proponents of liberal democracy don't figure out how to fix what's broken, systems like China's could become more prevalent, with severe implications for individual liberties. Moyo is not all darkness. She recognizes the vast improvements that have been made around the globe in public health and even in economic well-being, particularly in emerging nations. Indeed, she doesn't always seem sure whether the glass is half empty or half full. At one point, she mourns incomes that have remained flat in the United States since 1970, after adjusting for inflation. At another, she extols the success of democratic capitalism in generating a 30-fold rise in earnings throughout the 20 th century. And then there's the matter of productivity. Amid the near hysteria over the future of work, even thoughtful commentators often get twisted up in its complications. Uncharacteristically for an economist, Moyo is among them. She rightly pronounces improved worker efficiency to be the key to economic growth and laments its current sluggish rate of improvement across the developed world. But then she goes on to climb a familiar wall by expressing worry about robots and automation when, in fact, significantly greater productivity can occur only by supplementing workers with machines - yes, with robots and automation. THERE ARE OTHER PROBLEMS as Well. She muddles the concept of change versus rate of change, declaring global productivity to be on the decline, though what she means is that the rate of growth of global productivity has been waning. In any book so crammed with facts and figures, small errors are bound to creep in. The United States and Europe together have many more than 10 cities with populations above one million. India, with its sparkling 7 percent growth rate, can hardly be considered a laggard nation (as Moyo declares three times). Lastly, there's the occasional infelicitous phrase, like "the leaders of leading nations." Turning to politics, Moyo documents how trust in government has fallen as polarization and gridlock have risen. For this, she blames "shorttermism." Eager to win elections, politicians make decisions to maximize voter support rather than those that would do the most for longterm growth. Meanwhile, in Washington, gridlock has slowed action to a crawl. It was not always thus and Moyo takes a valiant stab at explaining why. She cites the move in recent years toward more laissez-faire capitalism, the rise of the 24-hour news cycle, the emergence of social media and a shift in power toward corporations and wealthy philanthropists. Gerrymandering and an avalanche of political money, for both electoral campaigns and lobbying, are additional (and related) flaws. These and other villains dance across her stage before Moyo unveils her proposed fixes, all designed to reform the American political system so that capitalism can flourish. They number 10, from the incontrovertible (getting money out of politics) to the incredible (imposing what amounts to literacy tests on would-be voters and weighting voting toward "the bestinformed segment of the electorate"). Her other ideas include longer terms for elected officials coupled with term limits, less gerrymandering and mandatory voting. There are oddities as well, like restricting the ability of successor governments to modify long-term agreements entered into by their predecessors and setting minimum qualifications for officeholders. Helpfully, Moyo includes as an appendix a chart showing how 14 leading countries rank in terms of her goals for reforming democracy. By her tally, unsteady Mexico ranks at the top (having achieved five of Moyo's milestones) while Europe's economic engine, Germany, ranks at the bottom, with a goose egg. That may leave readers scratching their heads. ? Liberal democracies can endure slow growth or rising inequality, but probably not both. STEVEN rattner was counselor to the secretary of the Treasury in the Obama administration. He is the author of "Overhaul: An Insider's Account of the Obama Administration's Emergency Rescue of the Auto Industry."

Since the 2008 financial crisis, most of the world hasn't exactly been living large. Economist Moyo (Dead Aid; Winner Take All) has some ideas on how to change that, arguing that in the past, liberal democracies of the kind found in the West were the best situated to deliver economic growth. However, in the new scheme of things, other political systems-notably authoritarian China-are delivering that growth. Economic development is a prerequisite to political stability, so the imperative for the United States and the West to reclaim their economic leadership is not simply to beef up the bottom line. Moyo drafts a blueprint for spurring growth by focusing on long-term goals instead of short-term, politically expedient fixes. She presents a spot-on analysis of the forces stagnating economic growth-and her proposals for political solutions, such as extended terms and performance incentives for elected officials, are compelling up to a point. However, some of her ideas (e.g., mandatory voting and weighted voting) will not likely sit well with the American public's interpretation of agency and egalitarianism in the political realm. VERDICT An intriguing partnership of economic policy and political reforms for solving stagnating economic growth in the West.-Carol Elsen, Univ. of Wisconsin, Whitewater Libs. © Copyright 2018. Library Journals LLC, a wholly owned subsidiary of Media Source, Inc. No redistribution permitted.

Zambian-born economist Moyo (Winner Take All: China's Race for Resources and What It Means for the World, 2012, etc.) takes on thorny questions of economic and political stagnation.Is democracy an essential component of market freedom? No, writes the author. As the command economy of China demonstrates, "many aspects of how the Chinese political class manages its economy are antithetical to the Western values of democracy and free markets." That does not keep Western investors away, for China has demonstrated a commitment to things that Western democracies, by Moyo's account, have abandoned: the idea of constant economic growth and, with it, investment in infrastructure, health care, education, and other public goods that enhance political stability. By contrast, the West is ground down in stagnation, endemic poverty and inequality, and political unrest, all of which "suggest that democracy is not a prerequisite of economic growth." For Moyo, that economic growth is a sine qua non: without it, the developing world cannot attain developed status, and the developed world cannot flourish. Democratic capitalism may be preferred to other systems, but it has shortcomings that play out in the economic and political spheres. If democracies are to endure, she writes, then inequality must be combatted and elections need to be truly competitive and involve more than mere duopolies. The fundamental enemy of growth and democracy alike is "short-termism," behavior that ignores the long view in favor of immediate returns and gratification. For example, "a less politicized and more long-term-focused education policy would help circumvent the problem in which the United States ranks among the highest in terms of education spending per capita but in some respects is among the worst in education outcomes when compared against its advanced country peers." Although the writing is sometimes clunky and the argument repetitive, the author's program of remedy is provocative and of much interest to advocates of growth.Moyo clearly identifies systemic problems that the democraciesor what's left of themwould do well to address. Copyright Kirkus Reviews, used with permission.