Related Issues

World Trade and Western Supremacy

• Developing-country and nongovernmental- organization activism may have sparked the beginning of an end to Western supremacy over world trade negotiations

The Changing Geography of Cheap Labor

• Westerners long enjoying global economic superiority rationally accept the advantages of outsourcing jobs. But now the trend appears to have made life more worrisome for white-collar workers at home

Rogoff on the US and poor management

"If we’re talking about debt crises, I do think the United States is one of the big problems in the world today. It’s not so much that the United States is an Argentina-style debt crisis. The fallout from the United States’s voracious borrowing can lead to huge changes in the exchange rates that much of the world may not be very able to take.... The United States is borrowing five percent of income annually, which is a huge amount. That’s more than $500 billion.

I still see the dollar going down another 10 or 15 percent.... With China, I think my view is that the Asian countries do ultimately need to bear some of the weight of the dollar’s depreciation. It can’t all fall on the euro.... I was very glad that Kerry is a free trader as far as NAFTA. That was a real concern. Because of the US current account deficit, one of the worst things that could happen would be the result of closing off to trade.

"I have a concern that US budget policy is rudderless. It isn’t so much debt. The level of the debt is out of control...and the deficit is very large, but the United States ran big surpluses in the 1990s, especially under Clinton, and has the scope to do that. The concern is that we have Social Security and Medicare, which are clearly underfunded, and politically it’s very understandable. The Medicaid legislation adds another $500 billion or so to the projected deficit on Medicaid.

"About the budget situation, the problem, I think, is that the Bush Administration answers that we can take care of it later, but I’ve heard that song around the world. Although the cap cuts and the loose Federal Reserve monetary policy were helpful getting out of the downturn, I think at this point it’s not what the doctor called for anymore."

Excerpts from remarks by Kenneth Rogoff, Director, Center for International Development, Harvard University