Interview with Michael Spence

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Byline: R. M. Schneiderman

The Stanford economist talks about American inequality, the Chinese economy, and how to score a Nobel.

How sustainable is the economic growth we're seeing in China and India? We don't have any examples of advanced countries growing at 7 percent for an extended period of time. So China will slow down, but it can probably keep this up for at least another decade. India is about 13 years behind China.

What are some of the global challenges posed by this rapid growth? China and India represent almost 40 percent of the world's population. When they finish this process, they will be economic giants. The world will have a global GDP of three to four times of the one we have now. This will put an awful lot of pressure on natural resources and the environment.

Is this battle for resources a zero-sum game? No, unless you assume that technology is stagnant. The high prices are part of the solution as well as part of the problem. To have a future that works, we're going to have to live with considerably higher energy efficiencies. High prices create pretty big incentives, especially if they stay relatively high. There are a lot of alternative energies that become economic with $60 to $70 barrels of oil. …