Here is the book: Losing Control: The Emerging Threats to Western Prosperity by Stephen D King
The Sunday Times review by John Arlidge
Stephen King writes scary stories; Stephen D King writes scarier ones. Never heard of him? The chances are you have a piece of his work in your wallet. He’s global chief economist at HSBC, and Losing Control is his first book. His message is as memorable as the bank’s advertising slogan, “The world’s local bank.” But this time it’s less uplifting. Put simply: “We’re doomed.”
We in the West, he says, have prospered since global trade began: colonialism, the development of liberal democracy, technological innovation, good education and legal systems — and the collectivism that has choked growth in China and Russia — have all seen to that. But the game is changing. Markets are more open than ever, and labour is more mobile. Technological innovation is spreading around the world. Western economies are over-reliant on financial services and burdened by ageing populations.
The result? China, Russia, India and Brazil are the new global economic powers and it is they who will, in future, grab the largest share of the world’s scarce resources and generate most of the profits from growing businesses. Globalisation, which the western world thought would help make it rich, may well end up doing the opposite.
Losing Control has many of the advantages of being written by an economist. It is thoroughly researched, detailed and, thanks to King’s historical sweep, places our current economic woes firmly in context. It also has some of the disadvantages of being written by an economist. There are clunky “as we will see in chapter 10” signposts, and a scarcity of quotations or anecdotes to leaven the tightly argued prose. King presumes a lot of knowledge on the part of the reader, too. You don’t have to understand the carry trade or know what a Gini coefficient is to read this book, but it helps.
Nevertheless, this is an important volume, bringing together serious analysis and data to make its case. Looking into his economic crystal ball, King points out that many Asian and Gulf states, such as China, Abu Dhabi and Qatar, are already cutting exclusive deals with African countries to take over vast tracts of land for mining or grow crops to guarantee food security for their own populations. Russia is building oil and gas pipelines to supply China and ¬Brazil at the expense of western Europe. When Shell and BP tried to exploit Russian oil and gas, the Russians seized their assets.
The rise of state capitalism and vast ¬sovereign wealth funds in Abu Dhabi, China, ¬Singapore and Dubai, he argues, will tip the terms of trade in favour of these newly powerful nations and city states. It is they who have all the money in the world and are buying up western assets at a clip. The emerging economies’ populations will grow and become better educated, which means much more competition for jobs around the world, even at the highest levels. Citigroup and Pepsi are already run by Indian-born executives.
And if that weren’t enough, America, the engine of the West, is vulnerable, thanks to its over--reliance on the willingness of other countries to hold dollars. The US is the world’s biggest borrower but there are signs that China’s renminbi might be starting to replace the greenback as the world’s reserve currency.
King sums up his argument neatly by invoking — and then turning on its head — the ancient trading route that the West established to trade with the East: “We’re beginning to see the creation of a new, global Silk Road linking emerging nations in Asia, the Middle East, eastern Europe, Africa and Latin America via land, sea and the electronic ether.”
But is he right? Critics are sure to point out that we in the West have proved pretty nifty over the years at adapting to challenges to make sure we come out on top. The US is particularly flexible and has no shortage of work ethic. Competition for resources may become less important than King suggests because genetically modified crops will ¬produce better yields and new sources of green energy will be developed. State capitalism may also turn out to be less ¬powerful than he fears (look at Dubai, mired in debt). And political obstacles may limit the growth of new economic superpowers. With its dysfunctional political and regulatory ¬systems and heavy dependence on the energy sector, for instance, Russia’s membership of BRIC’s club of emerging ¬economic superpowers (Brazil, Russia, India, China) has been called into question by many economists.
For all his gloom about the future impact of globalisation, King does also offer us a few possible ways out of the bind. The issues he raises are being discussed in the election campaign, but the politicians are reaching the wrong conclusions, he argues. Instead of limiting immigration, he insists, Britain should dismiss border controls and protectionism and welcome immigrants. We need their labour and their youth. We should also resist all attempts to close our markets and, painful though it may be in the short term, open ourselves up to the full force of global competition. Labour, for instance, should ditch its “Cad¬bury clause”, designed to make it harder for foreign firms, such as America’s Kraft, to take over British firms such as Cadbury.
Whoever takes control on May 6, this book should be on his bedside table.
Losing Control by Stephen D King
Yale £20 pp302 |
