Thought Leader: Dambisa Moyo

July 19, 2012

As part of the Carnegie Council Centennial Thought Leaders Forum, Carnegie Council's Devin Stewart spoke with Dambisa Moyo, an international economist who writes on the macroeconomy and global affairs.

DEVIN STEWART: Dr. Moyo, how would you describe the time we live in today as it relates to other previous times in history?

DAMBISA MOYO: I think we are living in one of the most exciting and interesting periods in history in pretty much every aspect of life. Whether it's politics, economics, demographic change, there are significant transformations occurring.

We're living at a very unique time when the population of the world has skyrocketed, and continues to skyrocket, and most demographers would say that this is very unique and will not occur again after it plateaus out around 2100. But also, if you look back in history and prehistory, it has never occurred in the past. So a very unique time in terms of the demographic landscape.

But also, in terms of politics and economics, and certainly the interplay between politics and economics, we are also living in very interesting times. We have a situation where the number one and number two largest economies in the world, the United States and China, have very, very different models of political infrastructure—the United States, a well-established democracy; China, a country that has tended not to adopt a democratic approach but rather focused on a much more centralist one-party system. By many forecasts, China will be the leading economy in the world by as soon as 2020.

So in terms of what is important, what are the prerequisites for economic growth and economic development, these are the questions we ought to be asking. A very fascinating time. I don't think we really have a lot of the answers, but it is certainly an interesting time to be posing these questions.

DEVIN STEWART: Of demographics, economics, and politics, which one do you think most about and what would be the moral implications?

DAMBISA MOYO: With regards to demographics, economics, and politics, I think that there has been a tendency, certainly in academe, to focus on one area. Going back to the original question of why are we living in a very interesting time, there is much more of an interplay, much more of an interaction, between these three aspects that is actually jostling for an answer to pop out in terms of the sort of world we will live in in decades to come.

Obviously, my predilection as an economist, someone who was trained as an economist (my doctorate is in economics), my tendency is to lean toward economic solutions or economic models as the first port of call in addressing some of the big questions that the world is facing today. However, the complexity of demographics—not just the numbers, but also the makeup of human existence, the differences in culture and origin, the fact that over 90 percent of the world's population lives in the emerging world, and how that might play out in terms of what we value and how we define morality as a society, is obviously something that's not far away from economics and politics.

DEVIN STEWART: Which issue concerns you the most?

DAMBISA MOYO: My greatest concern right now is our ability, particularly people who are in the international arena, to continue to deliver economic growth in a sustainable way. I think it's not just about economic growth, but it's also about continuing to put a meaningful dent in poverty. So issues around income inequality, concerns about resource constraints and scarcity, and how these things may play out in terms of our ability to continue to deliver economic performance and improvement in people's livelihoods is absolutely the thing that I spend a lot of time on and am interested in.

DEVIN STEWART: Do you think things are getting worse or better today?

DAMBISA MOYO: My greatest fear now is that there is emerging a schism, I would say, between the way more developed economies (the United States, Europe) are interacting with the, shall we call them, economic upstarts (the countries such as China and India, across Africa and South America) that are trying to improve economic standards but perhaps are not immediately adopting the Western standards of rule of law and democracy and political infrastructure.

My greatest fear is that, rather than have an open-ended discussion around these issues, where the differences can be brought to the fore but there is a much more mutual understanding of why these challenges exist, I fear that we are actually moving away from a global approach into a world where people are much more keen to highlight the weaknesses and inadequacies of certain countries and certain regions. This is actually creating much more of a split in the world agenda than it is a more cohesive approach to what I would deem are some of the biggest and most seemingly intractable problems that the world faces. By "the world," I mean we all face together, and yet we are not approaching it in a multilateral way to solve these questions.

DEVIN STEWART: One of our projects is to look at the idea of a global ethic with philosophers and other thinkers. Does a global ethic mean anything to you; and, if so, how would you define it?

DAMBISA MOYO: I think it's one of these things that—ethics and the idea of global ethics, it sounds appealing on paper, but I can see how it would be very difficult to get people around the table.

Just again pointing to many different aspects of life today, issues around economic approaches and political approaches tend to be very different. The need for political infrastructure, for example, to be a prerequisite for economic growth, is something that is debated and not agreed upon, even with all the data and information that we have.

But perhaps a better example of the challenges around ethics and having a global ethics agenda would be to look back in history to 1948 and the United Nations Universal Declaration of Human Rights, where, in reading the material from that period, a lot of the discourse shows that there was a split even in the understanding of what exactly human rights are. More developed Western countries tend to ascribe things like freedom of speech, freedom of choice, to be definitions of human rights; whereas people and countries, particularly those in the emerging world, tend to err onto sort of a Maslow's hierarchy of needs and focus on things like food and health care as being the inalienable fundamental rights.

So you can see there already there's not an agreement on what the definition of human rights is. So the notion of ethics, against the backdrop of religion and cultural differences, is something that would be an incredibly interesting project, but it would be very interesting to hear how it would be defined in totality.

DEVIN STEWART: You are talking about different perspectives on ethics, needs versus freedoms. Is there a way to bridge this gap?

DAMBISA MOYO: I think the promise of globalization was essentially the idea that through a global community, greater interaction, greater movement of labor, of capital, goods, and services, would actually bring the world into a sort of view of commonality and an idea of unity and unison. However, because economic problems have emerged, particularly and most recently the financial crisis of 2007-2008, and certainly working through in the aftermath of that financial crisis, this has left a lot of challenges in terms of making sure that we can at least keep people's living standards at a particular level.

I think that the challenge of having a global purview around utility for all is something that is becoming more challenging. Policymakers, particularly those who are subject to myopia and driven by short-term electioneering, are under a lot of pressure to deliver in the short term at the cost of a more global agenda.

DEVIN STEWART: Is there an explicit ethical issue that is facing the planet that you think is the most pressing today?

DAMBISA MOYO: It's an interesting question, because the definition of ethics lends itself to localized interpretation of what is ethical.

Going back to the Universal Declaration of Human Rights argument, you can see why, if you come from the emerging world, the question of ethics tends to lean against people's needs, people's ability to survive as human beings. Is it ethical? Is there a moral imperative for us as human beings to do something about a situation where there are people who are struggling to eke out a living but at the same time there are people who are living with a vast amount of wealth?

The question of income inequality comes closest to this question of ethics, if you will. Perhaps people who are more philosophical about the question of ethics may not view an economics question as an ethical one, but I think that's the one that I would pick.

DEVIN STEWART: Given your focus on income inequality, how should businesses, organizations, and governments respond?

DAMBISA MOYO: Gosh, that's a big question. I would argue that there have been clearly defined and delineated roles of government, of businesses, and of society as a whole.

Government has basically been charged with three things: focusing on the delivery of public goods, things like education, health care, infrastructure, and so on; but in addition to that, they have also been charged with the responsibility of regulating the environment, making sure that they manage and stamp out illegal behavior; but, thirdly, that they also create an environment to incentivize people to innovate and to do things that are beneficial for society as a whole.

Businesses have a responsibility, but I think their approach and their mandate has tended to vary depending on where they are located. If you live in a capitalist society, the pure definition of capitalism—perhaps that might not exist—but to the extent that something similar exists somewhere, like in the United States, we know that businesses have tended to be quite focused on returns on investment and improvement in performance so they can grow and increase their wealth.

Obviously, it depends on where you are. If you live in a place like China, the mandate for government is broader than the one I just outlined, and it tends to encompass both the delivery of private sector products and the use and the transformation of capital and labor as inputs. But also the government has a strong role in terms of provision of public goods and some of the traditional aspects that I talked about.

There clearly is a role for government and for business and for society going forward. But the question is, what does that role look like in a time when we are coming from a world where they have been very clearly delineated?

The good news is that it is already happening. We know that businesses are now involved in more charitable activities, activities that are probably to some extent outside of their purview. Governments are also involved in aspects of the economy, even in Western countries, that are not really part of their original mandate. A good example of this is the United States government being involved in the provision of housing, for example, through Fannie Mae and Freddie Mac and through providing subsidies and tax breaks so that people can have access to housing.

So there is a question here about what their role might look like. But I think there is a clear tendency, a move away from the traditional roles that we are accustomed to towards something that is new and different. I think over time there will be greater pressure on all these agents to actually deliver more in this space.

DEVIN STEWART: When you think about poverty and income inequality, if organizations don't respond, what's at stake, what's the risk, what should we expect?

DAMBISA MOYO: Well, I don't think that there is much of an option not to respond. Both businesses and governments seek or have their imperative to exist directly linked to the living standards of the people whom they serve. Whether it's the Arab Spring that will lead that transformation or the capital markets that will force a business out of operations because of lack of response, I think, whatever the case, there will always be, and it is increasing, pressure for some active participation by government, by the private sector, to be involved in this space. So I actually believe that we will see more rather than less of this.

Those that do not, if I may use the colloquialism, step up to the plate, I think will be punished either by the electoral process, as we've seen in recent times with the political uprisings, or will be punished by the markets, as investors will not be willing to support those types of businesses.

DEVIN STEWART: What would you like to see in the next 100 years? I'm not asking for a forecast, but if you could imagine something, use your imagination, be aspirational, what would you like to see happen?

DAMBISA MOYO: As an African, I would love to be here on the day that Africa and Africans can be equal parts of the discussion and discourse around global changes, global questions. I fear that, not just for Africa, but for the emerging markets, there has been a sense that they have not really been active participants in the global discourse. It's to the detriment of the world as a whole.

Almost 90 percent of the population is living in the emerging markets, and not only living there, but in terms of some of the most dramatic changes that have occurred economically for sure, they have come from the emerging markets. It took Britain 154 years to double its per capita income, the United States over 50 years to double its per capita income, and it has taken China 12 years to double its per capita income. China has done the unfathomable. It has moved hundreds of millions of people out of poverty in a few decades.

Around the world, particularly in the emerging markets, politicians, but also average citizens, are looking at China, at Brazil, and saying, "What is it that they have done? How can we implement the right policies to change our path of economic performance?"

If I look out to 100 years, I would hope that there would be much more respect and integration in terms of the discussion and discourse at the global level so that we don't see the negative consequences of what I fear right now, which is this emerging split between the emerging markets and developed economies.

We see it in multilateral institutions when the debates are going on about who should lead these institutions. There should be less politics in this whole discourse and much more of a unified approach.

Thus, in that sense, I am much more a proponent of globalization in the sense of a global community than perhaps where we are today.

DEVIN STEWART: How about moral leadership? Does that mean anything to you; and, if so, what is it?

DAMBISA MOYO: Moral leadership, that's interesting.

I think I have probably broadly become more of a skeptic of political process. The whole skepticism might be an artifact of the political process. By political process I don't just mean in politics specifically; I mean the political process in business, the political process in religion, in cultural areas. I fear that the political process in many different institutions has been corrupted with different agendas, personalized agendas, being prioritized over the important things that should be a priority for humanity.

So moral leadership to me is about selflessness. But in a world of personal aggrandizement and short-term-ism, I do fear that we'll see less moral leadership and perhaps more of what we don't want.

DEVIN STEWART: Is world peace possible?

DAMBISA MOYO: Well, I hope so. I would hope that my 100-year plan encompasses a world peace agenda.

The better way for me to address the question is to say: What are the issues that have caused war and moved us away from peace, if you look back at history? They are broadly twofold. One is commodities, scarcity of resources. Number two is differences in ideological perspective.

Now, I say these things not in as simplistic a way as perhaps it may come across on the camera. I say this as very fundamental sources of conflict, but also the reason we have not yet achieved world peace.

But I also say them as an optimist, because I do think that, in identifying these two pillars or sources of conflict, you could argue that we can therefore find a solution that's very permanent and where everyone participates that could actually move us away from conflict and towards an ideal of world peace.

There is lots of evidence that even today there are numerous clashes going on around the world, at least 20, that have their origins in commodity scarcity. If you look ahead into 2050, there will be more of those, not less, as there is more demand coming from greater population, but also increasing wealth, particularly from the emerging markets. But if you contrast that with supply constraints of land and water and energy and minerals, you can see where the conflicts are coming from.

Similarly, the rise of Islam as a much more powerful religion across many other regions of the world, and how that plays out with other religions, is obviously a big question. So ideologically, whether it's religious issues, cultural differences, aspects of approach to political versus economic policy, those types of ideological differences are a lot of source of consternation. But at the same time, given that we know that a priori, we should be able to come up with a more cohesive approach, a much more clear dialogue, in figuring out how to address these issues.

DEVIN STEWART: A final question. All these things that we've talked about today, who is ultimately accountable for these things?

DAMBISA MOYO: I think we probably put too much hope in government. I've talked a lot already about how and why governments have been corrupted. I think it's ultimately to the detriment of society.

Not to be philosophical about these things, but ultimately I think the responsibility or the onus falls on the individual, because the institutions that have been corrupted are ultimately a collaboration or compilation of individuals.

I think that ultimately societies and institutions and the political frameworks within which we live are simply a reflection of our own priorities and our own preferences around the societies in which we live. So it's very easy to point at the government and say, "I don't like my government because of X." But ultimately we do very little more, aside from criticize, to actually try and change or transform the way governments operate. So ultimately it is about the individual and not just sitting back, but actually doing something about making the change happen.

DEVIN STEWART: Perfect. Thank you.