This is my review of Losing Control: The Emerging Threats to Western Prosperity by Stephen D. King.
The global economist Stephen King has produced an analysis of "the emerging threats to western prosperity" that is clear, readable yet ultimately more chilling than a thriller from his namesake.
King may be doing no more than bring together the information which can be deduced from regular reading of daily broadsheets, but it is thought-provoking to have the evidence for our inevitable terminal decline set out in one place. Writing from the viewpoint of a "westerner", we are in a Catch-22 position: we need the rising economies of the east, most recently China and India, as areas for new productive investment, sources of capital for us to borrow in turn, sources of labour as our own working populations decline. Yet, at the same time, the swamping effect of the Chinese surpluses invested in US bond markets destabilises our financial system. Increasing earnings and rising expectations create intense competition for scarce resources of energy etc. In the bargaining process, what is to prevent, say Russia, from making gas deals with the east rather than the west? Just as old eastern empires declined and the west "succeeded" because it was flexible and entrepreneurial, the tables may now be turned back again. Retreat into a protectionist bunker, such as the formation of "The Independent EU", is a sterile solution, as we should know from the US attempts at protectionism which exacerbated the World Depression of the 1920s-30s. Our complacent assumption of being in a permanently superior position cannot last.
There is already evidence of the truth of King's predictions of increasing internal unrest, as say, "the Tea Party" in the US provides an example of economic nationalism in what is likely to be a futile effort to stem the changing balance of world power.
In reading this book , one is frustrated again by the short-termist attitude of our political leaders, who persist in the fallacy that continual growth is possible and "fiddle while Rome burns" by encouraging us to focus on immediate relatively minor issues and "scandals" rather than face up to the "bigger picture" long-term.
Although King is good at painting this picture, and certainly covers a wide range of interconnected political and social aspects as well as the economic, there is the odd occasion when he forgets to explain the basics for a lay reader (e.g. the operation of the US bond market – very important since developing countries invest so much of their surplus wealth in currently "safe" US bonds). The small number of diagrams included do not shed much light (e.g. p. 69 of hardback) and the book becomes rather repetitive, even rambling, after a while, as though a very busy man has thrown it together in a hurry.
His solutions also appear a little thin. Suggestions for e.g. a small number of major financial power blocs rather than reliance on the US dollar is interesting, but the suggested common currency for China and Japan sounds a bit Utopian! He fudges the issue of increased migration into areas like Britain to offset the "demographic deficit", saying that "it is not time to close borders", without addressing the counterarguments adequately. I was left with the depressed conclusion that King has no real answer for "coping with the West's diminished status" apart from accepting it with an air of defeatism. It may be indefensible for the West to have obtained its unfair advantage in the first place but, having identified the problem of our inevitable decline, one could wish that "experts" could come up with better strategies for how the decline might be managed.
At least this book enables us to understand more coherently what is in store for us in terms of a permanently reduced standard of living, with increased inequality within countries, not least for the growing numbers of pensioners reliant on declining savings…..