The Global Economy: An American Perspective
It is a great pleasure to have the opportunity to address this distinguished group of journalists and analysts from around the world. I have prepared an analysis which I hope you will find useful as you process all of the information that you are gathering at this unprecedented international meeting.
To break the suspense, I would like to give you my conclusion at the outset. It is in the form of a quotation from my favorite economist and philosopher. I am referring to the late Oklahoma cowboy-humorist Will Rogers, who stated, "Things will get better, despite our efforts to improve them." This is a time, however, when negative reports dominate the economic news.
That is precisely why I believe that Will Rogers' cynical but upbeat attitude is a useful approach to follow. Unfortunately, forecasts of doom and gloom always sell well. After all, it was not that long ago that we all believed that Japan would dominate the world economy. Americans were all supposed to be serving hamburgers in a low-tech service society. All of us were also scheduled to suffer global cooling--yes, that was the rage in many intellectual circles in the 1970s.
This phenomenon reminds me of a standard proposition in economics, Gresham's Law: bad money drives out good money. There seems to be a form of Gresham's Law that operates in so many economic discussions: bad news and downbeat forecasts drive out good news and upbeat forecasts.
The Global Economy
The news is good as I examine the global economy. Last year, the economies of the world grew at an average of 1.7 percent. This year they are growing a bit more rapidly, 2.5 percent. Next year, the outlook is for world growth of three percent or more. That is not a justification for wild optimism, but three percent or even two percent is not exactly the basis for another doom-and-gloom scenario.
The puppet-parading protesters so visible in Seattle and Genoa are wrong. Globalization is working. When we penetrate the noise, it turns out that those terrible multinational corporations are creating widespread wealth. The poorer countries are growing more rapidly than the more advanced and developed nations--about 50 percent faster this year. More people have moved out of poverty in the last two decades than ever before in world history.
Surely, the task of economic development is far from complete. Many societies are not yet actively participating in the world economy. This is especially true in Africa.
The challenge now is to help them get into the global marketplace. The poor nations need to get the opportunity to reap the benefits that have been achieved by other hitherto poor and undeveloped economies such as South Korea.
Let me offer a personal but representative example of the power and effectiveness of the international economy. I can go 10,000 miles to the other end of the globe without any cash in my pocket. I can count on people who never saw me before and probably never will meet me again to provide me with the goods and services that I need.
Moreover, they can confidently expect that somebody else that they never have met will pay them.
All I have to do is to wave my magic wand--or rather a credit card such as MasterCard[R]. When I stop to think of it, the degree of trust implicit in these relationships is awesome. Of course, all human institutions are imperfect. However, in over 40 years of international travel, the system has worked well for me and for so many other travelers.
Nevertheless, there is no need to ignore the challenges and difficulties that do arise in the global economy. The development of China as an industrial power and the rise of India as a major service center are fundamental developments. Their growing position in the global marketplace is generating problems as well as opportunities for business firms and their employees around the globe. It will probably take many years or even decades before the full effects are realized. …