CNN - Q&A with Michael Spence & Amar C. Bakshi (Part 1) E-mail
Tuesday, 31 May 2011 07:18
By Amar C. Bakshi

Michael Spence won the 2001 Nobel Prize in economics with Joseph Stiglitz and George Akerlof for their work on information flows and market development. Spence just published The Next Convergence: The Future of Economic Growth where he examines how emerging economies are reshaping the international order.  I sat down with Spence to get his take on China's economic rise and the future of the global economy.

AMAR C. BAKSHI: What are the key points you want people to take away from your new book, The Next Convergence: The Future of Economic Growth?

MICHAEL SPENCE: Emerging economies are very impactful.  Their systemic effects are large and that is going to require adjustment on everybody’s part - from international institutions to the domestic policies of advanced countries.

We are on a dynamic journey this century.  This book is meant to help people better understand where we’re going.

What are some challenges you see on the horizon?

We have a serious employment and distribution problem in most of the advanced economies.  The middle class is getting squeezed while highly educated people in competitive sectors experience lots of growth and opportunity.

Asia is going to make up a very large fraction of global growth in the second half of this century. In a 20-year period, global GDP is going to increase by a factor of three or four.

The next question is: Can you actually run a global economy on that side (Asia) the same way we run the global economy on this side (the West) in terms of energy intensity? What would the environmental impact be over time? The old model of global growth just doesn’t scale.

Increasingly, Asia shares this view.  They recognize this is an issue for them because if it doesn’t scale, they can't complete their journey to advanced-country status

America needs to adjust too.  Now is a good time to have a real energy policy in the United States that prepares us to become a less energy-intensive economy. It’ll take a long time. We can't rebuild all the cities and the transportation systems overnight.

In some ways, the emerging economies have an advantage over us because they don’t have to tear old systems down before building next generation systems.

Do you think that China can successfully transition from middle income to developed country status?

Yes, I do.

But if you wanted to argue against that proposition, you’d say China has complex structural transitions they need to engineer first.  Most notably, they need growth driven by the private sector. They have to let the market decide more and the government and the state decide less. They also need to become an innovation-led, entrepreneurial economy.  That doesn’t necessarily correspond with the way they think about the world.

Only five economies have sustained their growth rates going from middle income to advanced economy status: Japan, Korean, Taiwan, Singapore and Hong Kong. It’s never been done at China’s scale before. So there are lots of reasons to argue that China’s movement to advanced economy status is not a done deal.

I’m rather fairly optimistic that it will occur, however.  I have been involved in trying to be helpful in providing international experience and input for China’s policy choices, including its five-year plan. I think they’ve got the moving parts in focus and if they implement well –and that’s not a trivial challenge - they actually can pull this off.

On the global economy, are we at risk of another 2008-type of crisis in the in the near- or medium-term future?

Things are getting better.  There’s an awareness that there has to be some homogeneity in basic financial regulatory principles around the world in order to avoid arbitrage - or sinking to the lowest level - on basic things like dangerous levels of leverage and debt.

On the other hand, I don’t think we’re progressing on all the needed fronts. The international monetary and exchange rate system has to be fundamentally changed. That will take an international process and an agreement.

The current system is left over from a period in which the emerging economies basically didn't follow the rules that were set out in the post-Bretton Woods era.  It didn't really matter because they were pursuing their domestic growth and development agenda and the systemic impacts weren't big enough to destabilize the system.

Now these emerging economies are systemically significant - individually in the case of China and collectively.

READ PART 2 OF THE INTERVIEW


 
 

 



T
AKE AWAY - Michael Spence thinks there is a 50/50 percent chance of the global economy slipping into another recession.
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BLOOMBERG BUSINESSWEEK
- 'Europe may require a $2 Trillion Fund to fight it's debt crises' says Michael Spence.
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 WNYC - Leonard Lopate in conversation with Michael Spence and Matthew Bishop (NY Bureau Chief, The Economist) discuss the future of economic growth.
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FINANCIAL TIMES - Future of America Conference debate features Michael Spence.
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CNBC SQUAWKBOX - Insight on the negative aspects of globalization with Michael Spence and Glenn Hutchins. They discuss why globalization has not been good for the U.S. economy.
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YAHOO! – 'U.S. Destined for Slow Growth But Not Recession.' Interview with Michael Spence and Aaron Trask.
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YAHOO! - 'Important policy issues are being held hostage to other things.' Interview with Michael Spence and Aaron Trask.
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THE ECONOMIST
- Matt Bishop explains 'The Great Mismatch'; Spence's employment findings.
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MARKETPLACE
- Kai Ryssdal sits down with Michael Spence and two other economists to talk about their ideas on jobs.
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BLOOMBERG
- Tom Keene and Michael Spence on 'Surveillance Midday'
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THE NEW YORK TIMES
- Romney's plan 'a stretch' says Michael Spence.
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BLOOMBERG
- Fed could focus more on housing sector
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BLOOMBERG
- There is a significant risk of a downturn in Europe or America.
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THE FINANCIAL TIMES
- 'A Coherent Voice for Asia?'
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THE NEW YORK TIMES
- 'Economic Research Institute Created in Hong Kong'
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Michael Spence and Christopher Alessi
COUNCIL ON FOREIGN RELATIONS - 'Reviving U.S. Economic Leadership' An interview with Michael Spence by Christopher Alessi.
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Michael Spence and Ezra Klein
WASHINGTON POST - Ezra Klein Q&A with Michael Spence, 'I don't think there's a solution to the employment problem in the short run'
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BLOOMBERG - Michael Spence talks about the outlook for a political resolution to Italy's debt woes. Spence also discusses the U.S. debt-ceiling debate and the country's credit rating with Maryam Nemazee on "The Pulse."
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REUTERS - Nobel prize-winning economist Michael Spence comments on the ongoing negotiations to raise the U.S. debt ceiling.
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THE ECONOMIST - "America the Sclerotic"
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HUFFINGTON POST / JEFF MADRICK - "Impact of Job Numbers Goes Far Beyond the Jobless"
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ON POINT WITH TOM ASHBROOK - Are we in danger of slipping back into another global financial crisis, one even more dangerous than the one that scared us so in two thousand eight?
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CNBC WITH MARIA BARTIROMO "US not a giant in the future global economy" Michael Spence describes the changing fortune of the United States' economy in the 21st century.
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FOX BULLS & BEARS
"How can the debt be reined in while boosting the economy?"
2001 Nobel Prize Winner in Economics Michael Spence on why Republicans and Democrats need to find a compromise on the debt for the benefit of the economy.
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CNBC SQUAWK BOX
"Greece Cannot Avoid Default"
There is no way Greece can avoid a default, says Michael Spence, Nobel laureate, with Mark Olson, former Federal Reserve governor.
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CNBC SQUAWK BOX
"Economy Jobs Disconnect"
Michael Spence talks about current and future job creation.
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FOX BUSINESS/LOU DOBBS
"Resolving Greece's Debt Crises". Nobel Prize-winning Economist Michael Spence on why Greece can’t solve its debt crisis on its own without a default or restructuring.
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WABC RADIO -
John Batchelor and Michael Spence, Nobel laureate and author of "The Next Convergence" discuss globalization and the permanent changes it has on the global marketplace.

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CNBC SQUAWK BOX -
"Market Risk and the Economy" 

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PROJECT SYNDICATE -
Nobel laureate and Project Syndicate contributor, Michael Spence discusses global economic growth in a "multispeed" world and the challenges ahead for countries like the U.S. and China.

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TIME - What U.S. Recovery? Michael Spence weighs in on Myth #3.

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Conversations host Harry Kreisler welcomes Nobel Laureate Michael Spence for a discussion of his new book, "The Next Convergence.

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REUTERS - "Why do we want our economy to grow?" -  In "The Next Convergence" Michael Spence asks this simple yet evocative question.

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NEWSWEEK - The Stanford economist and author of "The Next Convergence" talks to Newsweek’s R. M. Schneiderman about American inequality, the Chinese economy, and how to score a Nobel.

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INSTITUTIONAL INVESTER - Nobel Prize–winning economist Michael Spence warns that the era of discount money is coming to a jarring conclusion.

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CNN - China's economic rise and the future of the global economy.

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CNN - Michael Spence examines how emerging economies are reshaping the international order.

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Google Authors - Nobel Prize-winning economist Michael Spence spoke to Googlers in Mountain View about his book "The Next Convergence."

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MSNBC - Dylan Ratigan Show: Getting America Back to Work - Michael Spence and panel discuss the sluggish job recovery and how the government can help change it.

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The New York Times - "French Minister to Seek Top I.M.F. Job"

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KUOW.ORG - "While the Economy May Recover, the Job Market Will Not"

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Bloomberg TV - Michael Spence on IMF Leadership, Greece's Default Risk.

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Author, Michael Spence at "Politics and Prose" discussing his new book,"The Next Convergence", as well as the rapid growth rates in China and India.

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Yahoo! Finance - "U.S. May Have to Live with Slow Employment Growth"

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Yahoo! Finance - "Why Globalization is Good for America"

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Yahoo! Finance - "Europe's Downward Spiral: Portugal Gets Bailout But Greek Default Unavaoidable"

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Carnegie Council - Public Affairs Program: Michael Spence addresses critical economic questions.

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Council on Foreign Relations's Michael Spence discusses his new book, "The Next Convergence: The Future of Economic Growth in a Multispeed World," as well as the rapid growth rates in India and China.

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CNBC Squawk Box - Michael Spence discusses what the Strauss-Kahn arrest means for the European debt crisis;
weighs in on Europe and America's two different yet similar fiscal problems.

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Michael Spence

WNYC - Michael Spence and Leonard Lopate discuss his new book "The Next Convergence."

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Michael Spence talks about his new book with Ron Insana

Michael Spence joins Ron Insana to discuss his new book "The Next Convergence."

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