How the West was lost: fifty years of economic folly – and the stark choices ahead, Dambisa Moyo, Farrar, Strauss & Giroux (2011).

The basic point of this book is undeniable: the West (in general, and the US in particular) is on a descending track vis-à-vis the so-called Rest (China, India, et al.). If present trends continue, China will become the world's biggest economy by approximately 2027.

Dr. Moyo also provides some cogent reasons for Western decline, expressed in a somewhat pedantic but informative style. Excessive use of debt, subsidization of housing-related (nonproductive) investment, reckless granting of unfunded pension benefits resulting in underestimates of labor costs, overpayment of star athletes, CEOs and hedge fund managers, reckless squandering of technological edge, decline of the US educational system.

And then there is a gripping foreword, in which a senior business executive summarizes a conference at which two of the speakers were the heads of a Western and a Chinese telephone company, respectively. The Western executive spoke at length of the technological plans of his company, drawing a lot of applause. The Chinese executive responded that "We can do everything he can . . . for 40 percent less," and then promptly sat down. Ouch!

I find it a little suspicious, however, that all of these insights seem to come back to blaming the 2008 financial crisis on Wall Street greed, etc. Equity owners will inevitably seek more risk, which magnifies their potential gains without increasing their downside loss of investment. Debt owners were hypnotized into forgetting about downside risks because they expected (and to a large extent enjoyed) government guarantees. Homebuyers were lulled into buying things they could not afford. Etc.

Reminds me of how many intellectuals were pointing to Communism and Fascism as the "wave of the future" back in the 1930s, while ignoring America's far more impressive economic track record.

And given the deep involvement of the US government in creating our present set of economic problems, it is unclear why the answers should be thought to reside in further government initiatives.

Never mind that the 2009 stimulus package represented a doubling down on the overuse of debt, which in hindsight seems less than inspired, Dr. Moyo deplores the necessity of selling the plan to the public. "What sense does it make in the depths of a financial crisis - a state of economic emergency by most accounts, which brought this country to its knees - for the president of the United States to have to build consensus around a desperately needed fiscal stimulus package before he and his advisers can act?" Page 172.

As for the longer-term solutions that are outlined, such as high speed rail, government-mandated renewable energy and "even nuclear energy" to reduce presumably harmful carbon emissions, a government takeover of the healthcare sector (might help, might hurt, why not try it, p. 150), economic protectionism and sovereign debt default, I would surmise that the writer does not like free market economics - even though she has a cushy investment banker job at Goldman Sachs specializing in emerging markets.

I respectfully disagree with Dr. Moyo's reading of economic history and her conclusions. This country should proceed as she suggests, in my view, only if it wants China to prevail.