The Future of Economic Growth

Thursday, October 13, 2011

Nobel Laureate and NYU Stern professor Michael Spence, author of author of The Next Convergence: The Future of Economic Growth in a Multispeed World, and The Economist's New York Bureau Chief Matthew Bishop discuss recent trends in the job market, both in the United States and around the world, the rapid growth in developing markets that are catching up with the industrialized West, and what the United States must do to remain competitive. They’ll also look at The Economist’s “Future of Jobs” report.


Matthew Bishop and Michael Spence

Comments [27]


One other thing, Peter. You wrote:

"we'll let your sarcasm about inter-state tariffs pass"

I was NOT being sarcastic. I was making a point that one can take this protection philosophy to any extreme one wants, as long as one has the guns of a government to back one up. As a matter of fact, I live in NYS. The guns of the NYS government do not allow me to buy much cheaper health insurance out of state (as other states do. A friend of mine in Ohio just did. When he told me about it, I told him that NYS won't allow me to.). Who is NYS protecting? Me? (Thanks, NYS, but no thanks.) Perhaps the insurance companies here? Nah. The same goes for states not allowing people to purchase liquor from other states.

Oct. 17 2011 05:55 PM

Peter, I am the farthest thing from a Keynesian or a Neo-Con. I am a libertarian philosophically, a voluntaryist politically (, and a follower of the Austrian school of economics ( economically, i.e., the promoters of the real laissez-faire market (i.e., not Friedman's or Greenspan's pseudo free market). Keynes, Friedman, Marx, Smith, Greenspan, et al. are clueless. Each one, in either a small way or a big way, promotes government interference in the marketplace.

All I am saying is that Hazlitt showed that for any country that places protective tariffs on certain goods, it is unquestionably hurting many other people in that same country (e.g, consumers and other producers). Since I don't believe in using force (i.e., the guns of government) for the benefit of one citizen or group of citizens over another citizen or group of citizens, I am against protective tariffs both philosophically and economically. If you aren't, so be it. You and I obviously have a different viewpoint. (BTW,

Also, Peter, you wrote:

"There hasn't been a President since Eisenhower that I would vote for from the economic perspective, but I'm liking R Paul more every day."

You do know that Ron Paul holds the exact same philosophical and economic—but NOT political—beliefs as I do? I find it strange that you are finding him interesting, yet profoundly disagree with him on economics (since you disagree with me).

I want an economy that helps all people peacefully and the most efficiently. As I previously wrote, promoting forced economic policies for short-term (or even mid-term) gains for some (or even all) people, but not in the long-term, is not good economics in my view.

P.S. I am no fan of the crony capitalism we have in this country either. There's nothing intrinsically wrong with being a big, as opposed to a small, company. It just means you have more customers. What is absolutely wrong is when you use your financial resources as a big company to buy favors from congressmen as an advantage over your competitors.

Oct. 17 2011 05:31 PM


Didn't mean to rile, but we disagree honestly and profoundly:

1. Protectionist tariffs are lousy but a better than the alternative: wars (hot or cold). Unless you foresee wars between the states (again), we'll let your sarcasm about inter-state tariffs pass with Ogden.
2. Banks should never have been able to convince all of us rubes to repeal Glass Steagal. The Volcker rule is right on point, and I support it 100%.
3. I am no fan of corporations as presently licensed and governed. Removal of all personal liability for officers behind the veil of the Justice House' Supreme Court rulings regarding the "personhood" of corporations has reduced us to a fascist state. They would have horrified the founding fathers for the same reasons. No kidding aside: read some history here. There hasn't been a President since Eisenhower that I would vote for from the economic perspective, but I'm liking R Paul more every day.
4. You are repeating popular neo-con cant regarding Keynes, whose errors were no worse than Friedman's and much less severe than Greenspan's. You missed my point: China, Korea, Japan, others are practicing Keynesian stimulus against our interests and we are responding with weak free trade aphorisms, not substantial bilateral or multilateral positions.
5. China stole nothing that we didn't sell. We gave away too much for the sake of chimerical stock prices in too many industries. The German model is better.
6. I'm afraid that the result to the USA's manufacturing and employment base will make my point more forcefully regarding Walmart, et al. We have become a nation that believes that consumerism = economy rather than that consumerism is and always will be essentially anti-economical"

In sum: we don't need bigger government. We need smaller corporations and eviscerated banks.

Oct. 17 2011 03:12 PM

Peter, if you think protective tariffs are economically good, then why stop with tariffs between competing countries? Why not demand tariffs between each of the 50 states where one state can produce something cheaper than another? How about between different cities?

Oct. 14 2011 06:33 PM

How is free trade "corporate" propaganda. It is CORPORATIONS that go to the government asking for tariff protection. As a matter of fact, the irony is that the tariffs collected aren't even paid to the corporations that lose business to the foreign competitors. The tariffs go to the government.

So, let's see: A (company) is losing money from B (customer). A asks C (government) to demand that B pay the difference (tariff) in what A is losing from B, but A doesn't get that difference back from C. C keeps it for itself. Makes "sense" to me.

Oct. 14 2011 06:29 PM

BTW, Peter, you're "right" about Wal-Mart: Selling goods at very low prices. How terrible for their customers.

You're right, Peter: Governments will give us great economies. They did it under Stalin. They did it under Mao. They obviously did it in Europe for the past 10 years. And they obviously did it in this country in the last 10 years. Next you'll be telling me that we have a "free" market here and that the banking industry wasn't regulated "enough."

I have a surprise for you: Keep believing YOUR corporate propaganda (corporate, as in banks). The Banksters who have been making their fortunes off of governments for the last 100 years love it when people like you call for bigger government.

Oct. 14 2011 06:20 PM

Peter, since you refer to Hazlitt as "corporate propaganda," I presume you were not a fan of corporations nor George W. Bush? The reason I bring up George W. Bush is because he's a fan of yours, at least as far as protective tariffs are concerned. (And you thought there wasn't anything you could like about "Dumbya.")

Oct. 14 2011 06:08 PM

Keynes? Oh, you mean those "great" Keynesian policies that have brought this country to the brink of bankruptcy?

If certain governments are stupid enough to enforce bad economic policies as far as interfering with INDIVIDUALS' right to voluntarily exchange with other individuals, it isn't too smart to want other governments to follow those bad policies.

Oct. 14 2011 05:57 PM

Corporate propaganda? Yes—consumers here paying less for products from another country than they would pay for here is "corporate" propaganda. (I'm waiting for you to next say that China has "stolen" our jobs—as if anyone "owns" his or her job.)

Oct. 14 2011 05:50 PM

Well, Peter, then keep escalating the problem instead of resolving it.

Oct. 14 2011 05:46 PM


Hazlitt's facile answer is truly Econ 101, but filled with half truths that prove my point. I could answer each paragraph in the citation you made with vitriol for the corporate propaganda that it is, but won't waste your time. Nothing in Hazlitt answers my point: we cannot be free trade when our partners are not. Reciprocation in a level playing field is not something you "work towards" it's something you either legislate or enforce by all sovereign means. The truth is that Americans have bought a partial and uncritical reading of Adam Smith while China and others are practicing a very political version of Keynes a la Bismarck and we are powerless to prevent the complete destruction of American residual value. To use Hazlitt's homespun example: a farmer doesn't make his own shoes, true, but he doesn't sell his cows because others can work longer hours for less money to milk them. The arguments for unilateral free trade are childish.

Oct. 14 2011 02:00 PM

Peter: Perhaps this may give you second thoughts about the "benefits" of protectionism:

Em: If you are wondering why economics seems like a pseudo science to you, it is people (like Nobel Prize winner in pseudo-economics Michael Spence) who continue to promote pseudo-economic ideas that will only make things worse. I strongly suggest that you read the book I posted. You might get a very different view of the world (I know I certainly did) than what we are told by our "wise" leaders. (And I mean "wise" leaders on BOTH sides of the political spectrum.)

Oct. 13 2011 03:59 PM

Em: Economics is not a pseudo-science. What it is not is a natural science like physics, chemistry, and biology. It is a social science. While there are economic laws/axioms that are a priori truths, you cannot fit them into fixed mathematical formulas as can be done with natural science theories.

If you are interested in learning some real basic economics, here is an excellent economics primer (both in online and pdf version).

Oct. 13 2011 03:52 PM

Listened with ears straining to this entire discourse. Heard some truth (e.g.: the US did not address the structural problems attendant on free trade policies over the past decade; etc) Heard some truisms that don't bear much analysis (e.g., the jobs bill (now struck down in the Senate) would add employment but not affect total unemployment numbers, etc.) And some outright lies (e.g.: US education must be changed to promote and stress math and science as a way of matching labor to the market for labor; etc.)

Both Spence and Bishop said the following things that are hogwash:

a) Protectionism is bad. Protectionism is bad for the consumer (who pays more for domestically produced goods, and more for imported goods from other countries that reciprocate). It is bad for the exporter indirectly, because barriers in other countries make them non-competitive with overseas domestic producers. But the myth of "free trade" is just that: there is no "free trade". The developing world expends huge efforts to contain and constrain overseas investments and sales in their countries: from local ownership rules and currency stops to state encouraged intellectual property seizures/sharing either in contract demands or in outright piracy. The US has no such protections, nor do its corporations do anything to protect more than their own patents and copyrights (uncaring about wider enfringements or selling advantages that can impact their own domestic businesses later). Your guests admitted this unintentionally when they saluted Germany for just such industry specific and manufacturing centric protections. Germany and Northern Europe did not stress math and science any more than the US. They made sure that for EVERY key industry that they maintained at least 20-30% domestic manufacturing capability AT ANY COST. The whole canard about relative education is just that: a lie to cover the rapacious and unpatriotic greed of multinational companies and retailers in the USA, abetted by a public that has defined its economics by consumerism without regard to "residual value".

The truth is that America has been killed by its support of, and addition to, Walmart; and it is not going to recover without a truly terrible loss of "human" capital undreamt of in Spence's pro-monetarist and Bishop's uncritical capitalist philosophies. The great depression of the 1870's, not more recent history, contains all the lessons and the solutions required. Among them: capitalists are not good judges of markets. Taxpayers will not pay for what they need unless they are forced to on the point of the sword. Public expenditures for "entitlements" (like public education itself) are not evils in and of themselves. What cured America in the 1890's was an enormous protective tariff and massive, rabid imperialist adventuring. Those options no longer obtain. I heard nothing from these gentlemen about the hard truths.

Oct. 13 2011 01:44 PM
Aeriadne from New York

Regarding better preparing young people for the workplace: Though I graduated eight years ago, ahead of the 2008 collapse but during the "mini-recession" of the early '00s, I think what allowed me to land a job at a major media company just a month after graduation without any related internship experience was having to pay for my own college education. I started working at 16, was an assistant manager at 19, an office manager at 21, and also worked many other paying jobs (some menial) along the way that were not at all related to my current career. But I think that experience and the work ethic it produced is what propelled me so quickly into the workforce and also enabled me to weather being laid off twice in the last three years as well as minimizing my employment downtimes to just one week and five weeks, respectively. It's quite terrifying that not only is basic work experience now not readily available to young people whose parents do pay for their schooling, but that those who do not have parents who are willing or able to pay for their educations will have a very difficult time finding a job at all, much less one that will enable them to fund their continued education themselves. That college tuition exponentially grows over the years makes this all the more worrisome.

Oct. 13 2011 01:21 PM

God help us if these are the "experts." No wonder we're in such a mess. Economics is a pseudoscience and here are 2 premium pseuds. Now if everyone could just work out a way of getting paid handsomely to talk through a lower orifice then that would be one way out of this depression.

Oct. 13 2011 12:53 PM
george from NJ

to revive demand, the only driver of the economy: Fannie & Freddi (a treasury function under the executive branch, no useless congress required) could restructure the 80% of mortgages they hold to be 4% per year for 40 yrs. This allows people to stay in houses, towns to preserve their tax base, (won't need rescue), preserve housing prices, allow demand for new housing to develop, thus driving a slew of industries (jobs) allied with housing construction

Oct. 13 2011 12:37 PM

Germany insisted on keeping manufacturing jobs, maintaining a strong apprenticeship program, guaranteeing, if partial, employment.

This is called "protectionism". The Nobel laureates on this program just can't say this word....

Oct. 13 2011 12:33 PM
j from blyn

can you please discuss 2 topics if possible:
1. the effect of current patent law in innovation, how it's being updated and how that might affect market outlooks and investment
2. Frank Koller's book "Spark", about Lincoln Electric and it's profit sharing and guaranteed employment model between management and workers.

Oct. 13 2011 12:32 PM

You don't have to be a weatherman to know where the wind blows. And you don't have to be an economist to understand the job situation.

The base was taken from underneath many in this country. There are plenty of college graduates who are now employed at menial jobs - IF they cat get it.

We outsourced everything. The only source for GDP growth was housing market. We all know how it ended up.

THERE IS NOTHING LEFT. "Green jobs" will be just another bubble. Financial industry is just sucking the juices from the rest of the country creating an incredible imbalance of wealth.

NOTHING will change until there is a drastic change in this country's policies.

Oct. 13 2011 12:29 PM
Henry from Katonah

The current "recovery" has no job creation?
There was low job creation and little rise in median income in the last business cycle.
Americans ( on the coasts, at least) were too busy sucking the equity out of their homes to notice.

Oct. 13 2011 12:24 PM
John from Office

Funny, we worship at the alter of Steve Jobs, but he built his products over seas, to maximize profit. The corporate elite has to decide to build here, at a reduced profit but a stable country.

Oct. 13 2011 12:23 PM
Maria from Upper West Side

LABOR ARBITRAGE -- please ask your guests to address this intentional "redistribution" of jobs and wealth downward.
Middle-aged engineers were dismissed from their jobs over the past decade, and we are now decrying the lack of engineers!

Oct. 13 2011 12:22 PM

This is a total b/s regarding immigrants being "job creators". This is the mantra repeated by the industry justifying importation of cheap labor.

There are plenty of skilled workers in this country, many with advanced degrees, but they are priced out of the labor market by the young less-skilled, but cheaper, non-immigrant workers, imported into the country based on faulty arguments similar to the ones presented at the show.

Oct. 13 2011 12:18 PM

Republicans would sacrifice the future well-being of this country if it meant seeing Obama fail. It's seems obvious from the intensity of their opposition and at times inflammatory and disrespectful rhetoric that borders on hatred that they can't stand having a black man for president. In the end it's first and foremost about race.

Oct. 13 2011 12:16 PM

Why not to "invest" in protectionism?

Oct. 13 2011 12:13 PM
jgarbuz from Queens

You can't have economic growth without growth in demand. And you can't have much growth in demand if your population is aging and not having many children. You can import people through immigration, but that carries its own difficult challenges with it.

Basically I don't see much economic growth over the horizon for the US and the West, and we'll be lucky just to tread water and not slip into further recession.

Oct. 13 2011 12:05 PM

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