Dambisa Moyo is worried that short-term approaches taken in politics and business around the world are hindering the solving of global challenges.
Speaking exclusively to Pensions & Investments ahead of her keynote appearance later this month at the WorldPensionSummit 2018 in The Hague, Netherlands, the New York-based global economist and author said political and business "myopia" are her biggest concerns right now.
"The reason it is particularly problematic is that the people responsible and charged with designing public policy, and the people who are making big, long-term investment decisions — the business leaders — are short-term in their thinking," she said. "And yet almost all the biggest challenges the global economy faces are long-term, deeply structural problems that require a level of pragmatism and long-term thinking."
It's an issue that has come up repeatedly among money managers and institutional investors, with representatives of some of the largest managers, including the $6.3 trillion BlackRock Inc., and pension funds such as the ¥158.6 trillion ($1.4 trillion) Government Pension Investment Fund, Tokyo, highlighting their concerns over short-term focuses in investment and business.
In an effort to alleviate these concerns, Ms. Moyo alluded to 10 proposals targeted at government, made in her most recent book, "Edge of Chaos: Why Democracy Is Failing to Deliver Economic Growth — and How to Fix It."
"Things like extending political terms — instead of elections every two years in the U.S., a model more similar to what you see in Mexico and Brazil where senator terms are up to nine years, closer matching the business cycle," Ms. Moyo said.
She also suggested installing a link between political remuneration and policymakers' performance, citing Singapore and other countries that have this model. There, politicians may be given, for example, a 30% to 40% bonus payment based on output such as better living standards.
"If they don't see those improvements in the economy, in Singapore not only have they not increased the pay, but they claw back compensation. That's one way of forcing politicians to think long term," she said.
For the investment industry, besides worrying about short-termism, Ms. Moyo thinks the biggest issue is regulation.
"In large part the investment industry has been relatively unscathed from regulatory creep, (while banks and other institutions) have been very aggressively managed regarding issues around capital but also compensation. To the extent that asset managers, pension funds and insurers are managing significant assets for society, government reach could become much more aggressive, so it would be required that a proportion of investments would be invested in sectors that will benefit society as a whole," such as infrastructure and education. "Regulation is where I think there could be more change, even in the environment we are in, which tends to be a bit more regulatory-light," Ms. Moyo said.