Capital Wars

The Complacent, Delusional West

The balance of economic power is shifting from west to east and perhaps a bit south. The United States and Great Britain, once hotbeds of entrepreneurialism, have lost their edge. Today, China, India and Brazil show the way. These new powers embrace risk taking, entrepreneur-friendly corporate governance and personal thrift in a way the developed world should emulate. Instead, the West’s leaders, citizens and executives continue to live in delusion. Workers believe that a comfortable pension is their birthright, even though companies and governments cannot sustain such safety nets. Business leaders delude themselves into thinking they can keep operating as they always have, even as the ground fractures beneath their business models.

Consider the steel industry. Entrepreneur Lakshmi Mittal roiled the steel market in a way that caught his slower, softer competitors flat-footed. Starting with one steel plant in Indonesia, Mittal maneuvered – over the course of three decades – to the top of the industry. In 2006, when Mittal proposed closing two outdated blast furnaces in France, politicians responded with an outcry, threatening to nationalize...