Fred Bergsten: The US Economy: Beyond a Quick Fix

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Partner:: Chautauqua Institution
Location:: Chautauqua Amphitheater
Chautauqua, New York
Event Date:: 08.12.11
Speaker:: Fred Bergsten
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Summary: Nick Glunt | Staff Writer

While Thursday’s morning lecturer John Stropki spoke on globalization in regard to manufacturing, Friday’s speaker Fred Bergsten commented that manufacturing only makes up 10 percent of the U.S. economy. The real topic to Bergsten — and the one he spoke on — is the service industry, which makes up 80 percent.

Bergsten, a longtime Chautauquan and well-known economist, was the fifth and final speaker in Week Seven; the speeches covered “The U.S. Economy: Beyond a Quick Fix.”

During his speech, Bergsten said globalization is important to the economy because it boosts average household income, creates jobs and fuels economic growth — but the U.S. can do more.

Bergsten is the director of the Peterson Institute for International Economics, a nonprofit think tank based in Washington, D.C., that focuses on international economics.

The U.S. has become more and more involved in the global economy over the past 50 years, Bergsten said. International trade has more than tripled, and it makes up more than one-third of our total output.

Other countries supply more than half of American oil, and almost half of Fortune 500 revenue comes from international business. Furthermore, half of American government debt is owed to foreigners.

“The United States has now joined the world in two senses,” Bergsten said. “We are highly dependent on global developments for our own prosperity and stability, and we are now more like other countries.”

He pointed out that while such international interaction was always a requirement for other countries, but not for the U.S. Fifty years ago, the U.S. was “pretty much self-contained.” Anymore, he said, the U.S. is highly involved in foreign markets.

Because of globalization over the past several decades, the U.S. is more than $1 trillion richer per year, more than 10 percent of national income. That number, he said, “equates to more than $10,000 per household” on average.

If the U.S. further integrated into the global economy, Bergsten said it could produce an additional $500 billion per year.

He said international “emerging markets” were not affected by the financial crisis. These markets are important to the global economy because they remained untouched.

“There’s a huge swing in international economic capability,” Bergsten said, “and therefore power relationships.”

Some of these countries — China, India, Russia, Brazil, South Korea and Mexico — have been developing so fast in the past decades that they’ve joined what Bergsten calls “The Trillion Dollar Club.” Turkey and Indonesia, he added, are soon to join as well.

China alone accounts for 10 percent of global output, and its global domestic product is growing at 10 percent every year. Like Stropki, Bergsten spent a portion of his lecture on Chinese trade.

Though the U.S. has become heavily involved in global markets, Bergsten said it fails to recognize how involved it is. It continues to wrack up debt with other countries — becoming, as Bergsten said, the biggest debtor country in the world.

This worries him because it could one day drive the U.S. into even deeper economic turmoil. It is risky, he said, to stay on this path. These other countries, after all, “don’t always have our best interest at heart.”

For reasons like this, he said Standard & Poor’s had a right to downgrade the U.S. credit rating.

“The United States needs to become much more of an exporting country,” Bergsten said, “and, indeed, to look to foreign markets as a critical element of dealing with our own economic problems — creating jobs, reducing our unemployment problem.”

Fred Bergsten

C. Fred Bergsten has been director of the Peterson Institute for International Economics since its creation in 1981. The institute is the only major research institution in the United States devoted to international economic issues. It has been called “the most influential think tank on the planet,” has a staff of about 50, averages two or three publications per month and holds at least one conference or policy meeting every week. Bergsten testifies frequently before Congress and appears often on television.

The assistant secretary for international affairs of the United States Treasury from 1977 to 1981, Bergsten also functioned as undersecretary for monetary affairs from 1980 to 1981. From 1969 to 1971, Bergsten coordinated U.S. foreign economic policy in the White House as assistant for international economic affairs to Henry Kissinger at the National Security Council. He has been a senior fellow at the Brookings Institution, Carnegie Endowment for International Peace and the Council on Foreign Relations, and is co-chairman of the Private Sector Advisory Group to the United States–India Trade Policy Forum.

Bergsten was a member of the two leading commissions on reform of the international monetary system: the Independent Task Force on the Future International Financial Architecture, sponsored by the Council on Foreign Relations, and the International Financial Institutions Advisory Commission, created by Congress. He has authored, co-authored, or edited 40 books on international economic issues, including The Long-Term International Economic Position of the United States and The United States and the World Economy: Foreign Economic Policy for the Next Decade, and has had 17 articles published in Foreign Affairs.

Bergsten has received the Meritorious Honor Award of the Department of State, the Exceptional Service Award of the Treasury Department, and the Legion d’Honneur from the Government of France. He has been named an honorary fellow of the Chinese Academy of Social Sciences. Bergsten earned two master’s degrees and a doctorate from the Fletcher School of Law and Diplomacy at Tufts University and a bachelor’s degree from Central Methodist University.

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01 hr 14 min 25 sec

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01.: Introduction

03 min 35 sec

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02.: Lecture

52 min 25 sec

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03.: Question and Answer

18 min 25 sec

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Fred Bergsten: The US Economy: Beyond a Quick Fix

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Fred Bergsten

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