Robert Rubin says Americans will have to do a lot of adjusting.
By: Amy Sennett
Former Secretary of the Treasury Robert Rubin warned Friday that Americans face an unfamiliar economic landscape in the coming decades.
"The difficulties will be greater and the uncertainties more pervasive than Americans have known for a long time," Mr. Rubin said in a speech at Princeton University’s McCosh 50 lecture hall.
"The underlying assumption in economics and economic markets is that the future will show positive growth, but the politics are as important as the policy," he said.
Mr. Rubin said economic success is determined by the presence of political leaders engaged intellectually and willing to make politically risky and difficult decisions.
Citing World Bank statistics that estimate 50 percent of the world’s population lives in poverty, Mr. Rubin emphasized the growing importance of globalization.
Nevertheless, Mr. Rubin cited a "powerful, growing backlash against globalization and market economics" because "even those doing well often feel threatened by change.
"Only if the great preponderance of people believe that these measures are in their best interest will globalization and free-market economies succeed," said Mr. Rubin.
He called for "robust public measures" to deal with issues such as public education, health care and environment that free markets, by their nature, will not address.
Mr. Rubin also is concerned by poverty in developing countries that he believes increases hopelessness, fosters terrorism and encourages the spread of disease and pollution.
"Our futures depend on the ability for us to help developing nations and combat poverty," he said. "We have a massive self-interest in increasing foreign assistance."
Recognizing the need to change the political culture that opposes such aid, Mr. Rubin called for an "extensive, long-term public-advocacy program like drugs or smoking" to change Americans’ views on international financial assistance.
Mr. Rubin added that financial assistance must be "joined with good public policy in recipient nations."
Mr. Rubin cited the differences in economic development between Asia and Latin America as critical to understanding the best approaches for implementation. Mr. Rubin attributes low growth rates in Latin America to political ineffectiveness as well as a failure to equip the poor in Latin America with the skills to make them socially mobile.
Focusing on partnerships and productivity, Mr. Rubin foresaw different challenges for industrialized nations.
The importance of imports is under-recognized and little understood by their beneficiaries, he said, again urging public education and a robust public agenda.
Mr. Rubin also is concerned by the absence in Japan and Europe of the productivity surge seen in the 1990s in the United States. He attributes this lack of growth to a political unwillingness or inability to make reforms in the social safety net.
Worried that "the U.S., as a major engine of growth, will not reach its full potential without equal partners," Mr. Rubin said the nation must "go out of our way to look for partnerships."
Mr. Rubin, who wished for a speedy and successful conclusion to the conflict in Iraq, said the nation must work to repair recent international frictions or this "deeply resented legacy" could become a "serious impediment for the U.S. to meet its geo-political and social needs."
Worried that forecasters have under-emphasized the ballooning deficit in their economic predictions, Mr. Rubin envisions a strong impact on interest rates, consumer confidence, trade, fiscal resilience and government ability to serve its citizens.
"The future landscape is likely to be quite different from the landscape we have known in previous decades," Mr. Rubin said. "It will be dependent on the intellectual engagement and political courage in political institutions and political leaders."