UNBALANCED by Stephen Roach


The Codependency of America and China
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Eye-opening look at a condition that wanders from the boardroom to the psychiatrist’s couch: financial codependency, which enables the worst qualities of two powerful economies.

It’s no secret that much of America’s consumer culture is predicated on the availability of cheap goods from China. Neither is it a secret that China has grown wealthy in large measure because Americans are willing to go into debt to buy such cheap things. The news that Roach, former chairman and chief economist of Morgan Stanley Asia, brings in this book is how deep that relationship extends and how quickly it has enriched one nation and impoverished another. Meanwhile, the United States keeps spending, and China keeps saving, both in ways that endanger the health of their domestic economies. The solution is obvious: Roach proposes a “rebalancing prescription…grounded in the economic imperatives facing both nations—pro-consumption in the case of China, and pro-savings in the case of the United States.” Obvious, yes—but possible? Perhaps not, given how deeply ingrained the habit of saving is in Chinese households and given that “personal consumption is the essence of the American Dream,” one that Americans don’t like to be told is detrimental in excess. Roach’s arguments are complex and data-packed, and it helps to have some grounding in economics in order to appreciate such matters as how Ben Bernanke, in his role as chairman of the Federal Reserve, helped keep the U.S. economy afloat during the crisis of 2007–2009 (“Bernanke…laid out a menu of unconventional choices that a zero-bound-constrained central bank might also consider as part of a quantitative stimulus package”). Even without such background, readers will not mistake the urgency with which Roach approaches his subject—which promises economic meltdown if our bad habits are not lessened.

Full of implication, well-written and of much interest, especially to fiscal policy wonks.

Pub Date: Jan. 28th, 2014
ISBN: 978-0-300-18717-5
Page count: 344pp
Publisher: Yale Univ.
Review Posted Online:
Kirkus Reviews Issue: Dec. 15th, 2013


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