Alan Greenspan on Globalization
Has Alan Greenspan been able to maintain his ‘magic touch’ on the U.S. economy?
December 11, 2001
Alan Greenspan has outlasted four U.S. Presidents, five Federal Reserve vice chairmen and six secretaries of the Treasury. For almost 14 years, he has been the chairman of the powerful U.S. central bank — serving longer than any other of his predecessors except William McChesney Martin who lasted from 1951 to 1970 — 19 years. Since 1987, some say, Alan Greenspan has literally been running the biggest economy on earth. Ultimately, the job as Fed chief comes with responsibilities for the global economy as well. Our new Read My Lips Feature presents Alan Greenspan’s views on the process of globalization.
How would you broadly define the term “globalization”?
“Globalization as generally understood involves the increasing interaction of the world’s peoples through their national economic systems.”
What, in your view, is the special responsibility of the United States in the global economy?
“The United States has been in the forefront of the postwar opening up of international markets. It would be a great tragedy were that process reversed.”
What makes globalization such a contentious topic?
“Our exceptionally complex system for the international distribution of goods, services and finance is not universally recognized as successfully enhancing standards of living — and promoting civil values worldwide.”
Where do you see the essential weakness in the anti-globalization movement?
“Though presumably driven by a desire to foster a better global society, most protesters hold misperceptions about how markets work — and how to interpret market outcomes.”
Where do you think these misunderstandings have their roots?
“Globalization admittedly is an exceptionally abstract concept to convey to the general public.”
Could that have negative effects?
“Globalization needs to be seen as offering opportunities. If we fail to make that case, renewed barriers to commerce could fill the void. Should that occur, a few might be better off. Surely, the world will not.”
How could developed countries make sure that such an opportunity arises for developing countries?
“Probably the best single action that the industrial countries could actually take to alleviate the terrible problem of poverty in many developing countries would be to open, unilaterally, markets to imports from these countries.”
Having said that, do you see the United States heading in the right direction?
“Our trade laws and negotiating practices are essentially adversarial. They presume that a trade concession extracted from us by our trading partners is to their advantage at our expense — and must be countered.”
How would you justify a U.S. economy first approach?
“We would never put ourselves in a position where we envision actions we would take to be of assistance to the rest of the world but to the detriment of the United States.”
Do business leaders have a better grasp of economic issues than the average folk?
“It may be argued that all workers should have the foresight to recognize long-term job opportunity shifts and move in advance of obsolence. Such forecasting abilities are not in general abundance among workers. But neither are they evident among business managers.”
What has been your guiding principle in monitoring the U.S. economy?
“When we can be pre-emptive we should be, because modest pre-emptive actions can obviate the need of more drastic actions at a later date that could destabilize the economy.”
And finally, what keeps you going after all these years?
“It’s like eating peanuts. You keep doing it, keep doing it, and you never get tired because the future is always, ultimately, unknowable.”
December 11, 2001