CNN - Q&A with Michael Spence & Amar C. Bakshi (Part 2) E-mail
By Amar C. Bakshi

This is part II of my interview with Michael Spence (part I focused on China), the economist who won the 2001 Nobel Prize in economics with Joseph Stiglitz and George Akerlof for work on market development. Spence just published The Next Convergence: The Future of Economic Growth where he examines how emerging economies are reshaping the international order.

AMAR C. BAKSHI: Let’s focus on the United States. How do you make America more competitive? How do you address the issue of middle class jobs?

MICHAEL SPENCE: We have to have a working knowledge of the global economic forces affecting our economy. That’s one of the reasons I wrote the book. I want people to really understand that emerging markets - as they go through this process of moving up the value-added chain and becoming more like us - create competitive pressures on our economy.

Let me be specific about what we should do:

  1. Fix the tax system and remove disincentives for domestic investment in technology and/or fixed assets.
  2. Invest heavily in infrastructure because it creates employment in the short-run and creates greater competitiveness and higher returns for domestic investments over time.
  3. Remember that global economic growth is an opportunity for much of the U.S. economy. We need to exploit that to the maximum extent.
  4. Fix the ineffectiveness of parts of our education system because the more you can create human capital with good education and technical training, the better chance you will have of solving some of the unemployment, competitiveness and income distributions problems.
  5. We should have a sensible energy policy. If we keep going the way we are going, the global economy is going to raise the relative prices of energy, producing recurring negative shocks to our system.

If we did all those things successfully, over a five to ten-year period we might have taken a big chunk out of the problem. We can probably solve the unemployment problem. But I believe the global economy’s evolution probably does have distributional implications regardless of whether you’re doing all the right things in policy terms.

Over the last ten years, the Germans have gone through a major effort to restore the productivity and competitiveness in the economy by removing rigidities in the labor market, and investing in technology in parts of the advanced manufacturing sector. It’s worked. If you look at their industrial sector, it’s larger and employs more people in percentage terms.  Growth is returning an unemployment is falling.

But, in fairness, the rate of increase of wages and income has been pretty measly. The Germans seem to have looked at the situation and said, “We’ve got a choice here between rapid increases in income and increases in employment; we are going to choose employment.” They have an institutional setup that allows business, labor and government to reach that conclusion together. Then they do the appropriate thing.

Is there an economic fact that you want every American to know?

It would be nice if every American had a working knowledge of the components of the U.S. federal budget. Surveys say there’s a subset of Americans who think that if we cut foreign aid we can balance the budget. There are a lot of funny stories like that. But the point is that in democracy if you’re going to make major social and economic choices to right the ship, you need a reasonably decent, factual base that’s shared by most of the people that are making the choices. You need well-informed fellow citizens.

Also, emerging markets are complex and highly dynamic. There is tremendous diversity across continents and countries. I want people to have a framework for being able to understand the forces that are at work and a sense of what’s likely to happen in the developing world in the future.

If you wanted me to be specific, I think if more people spent some time on Wikipedia and knew: roughly where the people in the world lived; knew that almost 60% of the world’s population lives in Asia; knew where countries are in terms of growth and development; understood a little bit about why countries grow or get stuck and what can and can’t be done about it.

That’s the kind of working knowledge I tried to provide in my book.

My long-term belief is that we are going to need more elaborate global governance structures than we have now. In order to do that we have to have some shared understanding of what’s going on in the world. That understanding must run across borders. I thought maybe I could make a contribution to that journey with The Next Convergence: The Future of Economic Growth.



 
 

 



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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