When economist Dambisa Moyo was born in Zambia in 1969, Blacks weren’t issued birth certificates — a fact her parents didn’t tell her until she needed one to attend college. Instead, they built her childhood around “a narrative that was very constructive and was incredibly helpful. My parents never clouded my vision with the forces that could have worked against me.”
Moyo didn’t just go to college; she attained an MBA in finance, a masters in public education at Harvard and a doctorate in macroeconomics from Oxford. She’s also written a bestselling book called “Edge of Chaos,” which argues that we need to overhaul democracy to jump-start economic growth.
Today, she’s one of the most influential voices on the world stage of global policy, from co-authoring a controversial recent report on racial disparity in the United Kingdom to speaking at the World Economic Forum in Davos in 2020. That was a busy year for Moyo, capped by marriage to Qualtrics co-founder Jared Smith in December.
She tweets avidly, sharing ideas like her three rules for success: No does not mean never, it just means not now. Get feedback. Never stop learning.
She is a patient teacher, a careful listener and — no surprise, considering those early lessons from her parents — an optimist.
The conversation has been edited for length and clarity.
Deseret News: You write and speak frequently of America’s role in the global economy. A recurring theme is the failure of democracy. Why does democracy fail?
Dambisa Moyo: Democracy is failing because the political structure of democracy is to have elections very regularly. In Europe, heads of state elections tend to be every four to five years. In the United States, you have elections every two years. The presidential election is every four years. The problem is that it creates a mismatch with the economic problems, which are all long term, structural and intergenerational.
What that means, because there’s this schism between short-termism in politics and long-term challenges, is you’re always in that situation where policymakers and politicians are proposing and implementing policies that are short term, very attractive, but over the long term, when politicians are long gone, have left a much bigger problem for other generations to deal with.
DN: Is that an endless cycle: Kick it down the road for the next guy?
DM: There’s a wonderful book by two economists, Carmen Reinhart and Ken Rogoff, called “This Time Is Different.” They looked at what happens when governments become heavily indebted. When that happens, not only does it slow economic growth in a very, very dangerous way, but a lot of governments end up having to default.
The fact that China is the largest foreign lender to the U.S. government means that in the United States this debt problem has become less of just an economic problem. It’s now more of a geopolitical challenge at a time when China is, in terms of economic growth, on sturdier footing than the United States.
DN: What can we do about this?
DM: It’s worth stressing that every single class of debt in the United States — government debt, household debt, credit card debt, auto loans and student loans — now is over $1 trillion. This shows just how problematic a situation the U.S. economy is in. There’s a high risk of inflation. A lot of people are worried that there’s so much demand — we’re seeing it already for property — for goods and services as we come back out of being in lockdown for a year, that prices will go up. In response to rapid increases in prices, the government — in particular, the Federal Reserve — will have to raise interest rates. If interest rates go up, it becomes much more expensive to service the debt we’re already sitting on.
There’s a whole slew of things we can do to solve an issue of high indebtedness. Ideally, you want to create economic growth. If you take debt and you invest in productive assets, there’s a strong argument that’s a good thing for an economy; you want a government to be investing for future generations. The problem is, are governments, households, corporations actually getting the returns that we need? We’re coming back out of the pandemic and there will be good growth this year. But further out, the growth trend is declining. A lot of big economic headwinds are creating a drag on economic growth, beyond just debt — things like income inequality and climate change making it harder to create economic growth to help pay off debt.
DN: What should we do on an individual, family or otherwise smaller-than-a-government scale? Pay off debt?
DM: One, limit your borrowing. Two, to the extent that you are borrowing or even if you’re not, you should be thinking about productive assets like real estate, which hold value over time, particularly in an inflationary environment. If you have a physical asset like a home, you’ll always have a home. Or infrastructure. The U.S. infrastructure is graded D+ by the American Society of Civil Engineers. That’s unacceptable. Countries like the United States cannot compete globally without infrastructure. By that, I mean roads, railways, airports, ports, digital infrastructure. That’s what I would consider a productive investment that will help not only GDP increase, but further enhances our ability to pay down debt we have.
DN: Is education a productive investment?
DM: Absolutely. There’s a lot of evidence the United States has underinvested in education. On a per capita or individual student basis, the United States is among the highest in terms of paying out money, but if you look at surveys, such as the Organization of Economic Cooperation and Development, the wealthiest countries in the world, the United States lags in mathematics, science and reading. For the first time in the history of the country, this generation will be less educated than the preceding generation.
McKinsey, the global consulting firm, has argued that underinvestment in education of Blacks and Latinos in this country is so acute it will essentially put the United States in a permanent economic recession by 2050, especially as those groups become the majority. And we can then get into the question of what sorts of education are high-value-added investments. Obviously, we’re moving more into the digitized and technological world. So the STEM subjects will basically earn a higher premium in future settings. That’s not a big mystery, everybody can see that that’s what’s happening. But we really do need to think about education as an investment.
DN: You’ve said lack of economic growth means a country can’t dent poverty and that “at stake are our livelihood and living standards.” How do we grow that economy?
DM: In economics, three things create growth. Capital — essentially, how much money do you have? And how are you spending it so it’s investment capital? No. 2 is labor — both the quality and the quantity of the population. Having a declining population — think about places like Japan or parts of Europe — that’s not a good thing for future generations. We know we’re going to be more digital-focused. We need more skills in STEM, science, technology, engineering, mathematics. Third is productivity; 60% of growth is explained by productivity — things that actually speed up the ability to convert capital and labor into growth. We know moving from handwriting an essay to typing an essay to now all of us having individual computers, those gains in technological expertise are a great contributor to economic growth, rule of law, more capitalistic society where people are able to become entrepreneurial. They help speed up the ability for capital investments and for labor to contribute to growth.
The problem is that even with the best of circumstances, the world is not stagnant and a number of economic headwinds start to drag down economic growth. Debt is a great example. Ineffective governments. Inequality, which creates friction and divisiveness in society also hurts growth. Technology could be a very good thing. But if it creates more unemployment and a jobless underclass, that will further create a drag on economic growth.
DN: This is sobering. Should we be depressed?
DM: Quite the contrary. I really do believe in problem identification being a good chunk of how you get to a proper solution. The United States has a 300-year history of being able to reset, to identify problems and to continue to move forward in a very meaningful and important way. That is not to say it’s easy and it’s always happened. Clearly, we’re in a pretty divisive period.
The world is counting on the United States to get these things right. I can’t emphasize that enough. A lot of countries, millions and millions of people across the globe, are counting on the United States to really get back down to basics, including having a strong, effectual government. If you look back in history, it is absolutely the case that government was heavily involved in setting up the sorts of constituent parts to make investment attractive. The government was involved in the building of Silicon Valley, DARPA (Defense Advanced Research Projects Agency), the Manhattan Project. The U.S. government historically has been a great visionary that created infrastructure and an environment in which the private sector could thrive.
I’m reminded of what someone told me some time ago: The most effective governments are ones that are data-driven, forward-leaning, have measured outcomes and are not corrupt. If we can have government that is focused on basically firing on those four cylinders, I think we can create the environment where the pie is expanding and we’re not just focused on redistributing a pie that is stagnant.
DN: Any last words?
What keeps me up at night is that we’ve been trained to think everything comes for free. And we haven’t really thought enough about trade-offs. You cannot be all things to all people. You cannot have public policy that only moves in one direction.
Take data privacy. We all wanted the COVID vaccine last year, we want the cancer cure yesterday. But part of being able to do science and analytics to find those solutions, you need big datasets. At the same time, we don’t want to give up our privacy, which is fine on the surface. But if the companies like Merck or J&J decide that they’re going to have operations in places like China where the data privacy issues are not as stringent as the United States, we often object.
You’ve got a trade-off. Do you want the vaccine yesterday? Yes. Do you understand that I can reduce the time by which I get that information if I’m able to have bigger datasets, which you’re not willing to give me because of data privacy?
Business leaders, politicians, public policymakers are dealing with those types of complex problems all the time. Data privacy, environment, pay equity, gender and racial parity, all these issues — if they were easy, trust me, somebody would have solved them.