Adam Posen Takes the Stage: Just Back from His Three-Year Stint on the Monetary Policy Committee of the Bank of England, the New President of the Peterson Institute for International Economics Sat Down with TIE Founder and Editor David Smick

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Smick: Congratulations on becoming president of the Peterson Institute for International Economics. This appointment will go down in history as proof that nice guys actually do finish first. What changes do you have in store for the Institute at this point?

Posen: In the search to replace the retiring Fred Bergsten, I was in a sense the Board's continuity candidate. I promised them there would be no New Coke change for change's sake. We would stay the same size and be committed to the same values--pro-globalization, and intellectual honesty about globalization. Still, since Fred Bergsten and Pete Peterson founded the place over thirty years ago, we do need to adapt to a changing world. Let me list three ways I plan for us to do that. First, we have to reorient more globally. The Institute was always focused on Washington decisions, the actions of the U.S. government, and the United States talking to other governments. The action now is not just in Washington and not just happening in government. Markets matter. Non-governmental organizations matter. Part of my mission is to make the Peterson Institute more engaged both with stakeholders and with issues beyond just those that interest Washington.

The second adaptation is generational change. We have some wonderful scholars who make Peterson among the very top research institutions, but for a variety of reasons a number of them are retiring soon. This gives us an opportunity to refresh and restock. We've already hired a couple of exciting new people and promoted others. I'm hoping over the next three years to continue refreshing the senior staff.

The third way we need to adapt is to face the growing competition. Fred and Pete had the vision to create a specialized think tank back when nobody else was in this space. We're now one of many, including organizations that work directly on our issues. Our unique brand is intellectual quality while being relevant, but quality doesn't always come across in a blog or an op-ed. A big challenge will be to figure out what modes of publication and communication we should be using in the years ahead to get our research out. We can't just write a book and hope people read it the way perhaps we once could.

Smick: The Institute enjoys a well-deserved reputation for its fine analysis, but if there's one criticism--and it may be unfair--it is the relative lack of market experience on the part of the Institute's scholars.

Posen: It is fair to say it would be useful for us to have more market input. But I think the number of people who were both working in markets and being economically literate was much smaller when the place was started than it is now. So it's a little unfair to say that Fred and Pete missed the boat on that. I am hiring a couple of people who have direct market experience. Perhaps as importantly, I'm increasing the number of smaller meetings, forums, and interactions with market people--not just in pursuit of support, but also in pursuit of ideas and insights.

Smick: Did the Institute as a whole ring the alarm bell that the Great Financial Crisis was coming? I don't recall that being the case, but I could be wrong.

Posen: Our people, ranging in views on banks from Simon Johnson to Bill Cline, got some things fight and some things wrong. I think Jacob Kirkegaard in particular deserves credit for correctly calling a lot of what happened in Europe. Joe Gagnon and I deserve credit for getting a lot of the monetary policy analysis correct in real time during the crisis. The broad optimism of our trade people--notably Gary Hufbauer and Jeff Schott--that significant protectionism wasn't going to result from the crisis, was borne out. And Fred, Anders Aslund, Nick Lardy, and Arvind Subramanian all called the at least temporary decoupling of Eastern Europe and Greater China from North American developments.

But that said, like almost everybody else, we were certainly too confident that something as bad as the global financial crisis wouldn't happen to the Western powers including the United States. …