Biggs on Finance, Economics, and the Stock Market: Barton's Market Chronicles from the Morgan Stanley Years

Section 1E: Geopolitics

Popcorn and the Decline of the West

June 30, 1980

Walter Levy is an eminent, elderly guru, and Foreign Affairs is the heavyweight American intellectual magazine. Mere publication of an article in its gray, ponderous cover means many will take very seriously the messages delivered. Thus, it is not surprising that the press and others are reacting with handwringing and deep sighs to Levy's lead article in the new issue of Foreign Affairs with the dire title of “Oil and the Decline of the West.”

Actually, the title tells it all, and there really isn't anything new in the 16 pages of gloomy text. It's just another in a long line of “Decline of the West” essays, with oil, weakness, and self-indulgence the culprits this time. Levy outlines the inevitability of the world's inability to find enough oil to replace what is being used up in what is a fairly classic extrapolation analysis that makes very little allowance for the impact of price or technology on either supply or demand. He is very pessimistic about the political stability of the Middle East and seems to make the assumption that social and political change inevitably means monstrous supply stoppages. My view is that there will be social change in the Gulf nations, but the supply interruptions will be short and not necessarily synchronized because governments in the area need massive oil revenues to meet ...