Newsweek - Interview with Michael Spence E-mail
Saturday, 04 June 2011 20:08

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.

 

How sustainable is the economic growth were 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.

Who will lead the charge on energy efficiency?

Asia, I would guess, because it is in their direct self-interest.

Whats the biggest problem facing the U.S.?

Getting our fiscal house in order and restoring some civility to that process. Then a pattern of underinvestment, especially in the public sector.

Is our tax structure getting in the way?

It’s a major problem. We have a tax system that is like Swiss cheese: there are loopholes of all kinds. And it could create stronger incentives for domestic investment.

Are we too focused on economic growth, rather than, say, happiness?

I think there’s been an overemphasis on growth. We tend to think that employment is employment, and we don’t ask the question: is this rewarding employment? Research establishes pretty clearly that typical notions of happiness—that more is better—really don’t correspond to the way people think and feel.

Any advice on how to win a Nobel Prize?

There’s no way to win it in the active sense; you sort of end up receiving it if you’re lucky. It’s not a reasonable goal in life.

 

 
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