The Zambian Economist at the Crossroads of Global Business

For policymakers and business leaders seeking simple answers to complex problems, Dambisa Moyo is a valuable sounding board. With a Ph.D. in economics from Oxford, a master of public administration from Harvard and experience serving on the boards of companies like Chevron, 3M and Barclays, Ms. Moyo has the kind of broad exposure and macroeconomic knowledge that is often lacking in the upper reaches of siloed organizations.

But Ms. Moyo recognizes the complexity of thorny issues like climate change, inequality and the erosion of democracy, and resists the temptation to offer pat solutions. She is adamant that climate change is an existential crisis, but wary about rushing to limit fossil fuel use given the energy needs of the developing world. She is a champion of diversity, but worries that focusing on racial equity distracts from the threat of automation. She understands that unchecked capitalism can create inequality, but is careful not to dismiss the importance of economic growth.

“I am at the crossroads of many different perspectives,” she said. “I’m on the board of a large global energy company. I serve on the board of the Oxford University endowment. I also was born and raised in Africa, and there’s still 1.5 billion people on the planet who have no access to cost-effective energy, including my parents, who still live in Zambia.”

Ms. Moyo currently serves on the Chevron and 3M boards, and this year published her fifth book, “How Boards Work.”

This interview was condensed and edited for clarity.

When you look at the pace of the global economy’s transition away from fossil fuels, do you believe it’s happening fast enough?

It’s urgent. Climate action is necessary. What I worry about is that there are so many different fragmented conversations going on. There’s no doubt in my mind that to actually drive reductions and get to net-zero targets, and at the same time create sustainable investment, we will need solar, wind, geothermal, battery, nuclear, that whole list. But that is going to require policy. It’s going to require technology. It’s going to require changes in customer preferences.

And I worry that when we start to go down the policy angle with haste, it can actually encourage misallocation of capital in particular, and resources more generally. There is a risk of ignoring second-order knock-on effects. This idea of defunding the energy companies might be appealing in the here and now, but it doesn’t adequately reflect the fact that over a billion people have no access to energy. The implications of that is disorderly migration, geopolitical risk.

Where is the haste inside the boardroom of a company like Chevron?

I do not know any energy company that is not taking this seriously and understanding that this is about survival. This an existential crisis. The good news is companies like Chevron have been around over 100 years. They’ve gone through their own transition. The bad news is that a lot of the science that’s required, the innovation that’s required, the innovation of business models, is a challenge.

I do worry that there is this sort of sense that perhaps the energy companies haven’t been investing in these alternative areas. But if anyone knew how to generate energy in a sustainable, cost-effective, scalable way, we would have that answer. The fact that we haven’t done that tells me, and should tell everybody else, that this is a hard problem to crack.

When you look at the disruption being caused by climate change, do you believe the effects are unevenly distributed?

Yes. And this gets at one of my bugbears, which, for better or worse, is economic growth. There’s been massive pushback against growth, against globalization. And I feel more and more like a lone voice on the issue of growth, the importance of growth and not losing sight of the importance of growth. When I say, “Hey, guys, we really do need growth — if we’re not going to expand, this leads to considerable problems,” I get comments like “OK, boomer” on social media.

OK, boomer. Why is growth so important?

At least three reasons. One, living standards. If governments cannot have enough money in their coffers from taxation to fund education, health care, infrastructure and national security, you end up with political unrest. So to my mind, first and foremost, how do you improve people’s living standards? You’ve got to have growth.

The second point is around politics. There’s a lot of research in what we used to call the political science area. One of my favorite papers is on what’s the minimum per capita income in a country to make sure democracy survives. At low levels of per capita incomes, you’re always going to have factions. You’re going to have government bad behavior at certain levels. You need a minimum in order for there to be a middle class to hold the government accountable. We see that even in a place like the U.S. The voter participation rates of people who are earning $30,000 and less are very low.

The third point is just innovation. Look at the problems we’re dealing with. It’s not a surprise that innovation around Covid and the vaccines came from developed economies. We can’t expect poor economies to be thinking about that when they are talking about essentially survivability in the here and now. It’s not going to happen. Innovation and technology in education and health care and life sciences require growth.

Is there a way to still have growth in a way that is equitable and not environmentally and socially destructive?

Absolutely. I was born and raised in one of the poorest countries in the world and one that unfortunately remains so today. So I’m genuinely trying to find out the solution. Rather than say, “Growth is inherently the problem,” I actually think the manner in which we have created growth has been the problem. The reality is public policymakers have been using shortcuts to fuel growth, such as debt, such as a society that rewards capital more than it does labor, such as a lack of appreciation of the global picture. It’s sort of every nation for itself, and that results in a situation where you end up with public policymakers focusing on short-term solutions, and a decoupling between long-term economic imperatives and policies that will help win short-term elections. We are too focused on the short term — not just policymakers, businesses, too.

When you think about long-term growth, how important is it for worker wages to rise?

It’s easy for me to say, “On a state-by-state basis we should pay a certain minimum wage.” But that doesn’t address a more fundamental trend that we all recognize, which is automation and robotics. That is a bigger boogeyman than talking about whether or not we should increase the minimum wage.

And diversity is in the same camp. Everybody is sort of hot and bothered about diversity, especially retailers. They love to show that they’ve got lots of diversity. The truth of the matter is if you lift the lid, the diversity is skewed to unskilled workers at the bottom of the stack. They’re exactly the workers that are going to be affected when digitization really bites.

We can’t have enormous inequality in society and expect things to be stable. I grew up in Africa. I understand that you cannot be in the 1 percent and think that everybody else living in poverty doesn’t affect you. It does.

There’s a body of research that correlates high C.E.O. compensation and shareholder capitalism with inequality. If we want an innovative society with the breakout success stories, is that also one that ultimately leads to inequality?

The debate on whether inequality is an artifact of capitalism will reign way past our lifetimes. It’s always been an issue. If you’re more Republican, you believe there are more people who are able-bodied who can work and should work. Democrats think that there are more people who need help. This is an age-old problem.

Do I think that short-termism helped create inequality? Yes, I absolutely do. If we had spent that money investing in infrastructure, spent that money educating people instead of fighting wars, for example, I think we would have had a different outcome. But is capitalism inherently bad? No. I think we probably need some more regulation. We probably needed more efficient government. We didn’t have those things. But I think it’s a bit too easy to say, “Oh, capitalism equals more inequality.” I don’t buy that.

What’s the one thing you think the pandemic has revealed about the economy that we didn’t understand 20 months ago?

Our policymakers and business leaders, and society in general, are less prepared on issues of economics, issues of military, issues of logistics than I thought then. Many of us thought that there was a blueprint, a plan somewhere that could be easily executed based on the 1918 Spanish flu. That has, to me, proven not to be the case. And I think what has happened is that companies and governments have basically been running around with less of a compass than I think we thought existed.

When you look at the stock market, do you think valuations are based on fundamentals or do you think we’re in a bubble?

I worry about a bubble. But let’s suppose that’s right. Where else would you go? Should you invest in something else? Family offices over time invest in three areas: a third in equities, a third in property and a third in art. Property doesn’t look very attractive. Art seems way overvalued. So that leaves equities, and the U.S., given everything, is still the best in a bad neighborhood.

What do you think is the biggest risk factor facing the U.S. economy over the next 10 years?

Misallocation of capital, both in terms of climate change, but also more generally around not investing in the future, i.e. dividends and share and stock buybacks instead of thinking about growth opportunities in innovation.

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