How to create the next ‘long boom’?
Economists from both sides of the Atlantic on Oct. 9 found cause for guarded optimism on the global economy at the inaugural USC Global Conversation in London.
With a theme, “The Future of the Global Economy,” that at least presupposed its continued existence, speakers pointed to growth in developing countries and in a global knowledge economy as reasons for a rosier outlook.
Elizabeth Garrett, USC provost and senior vice president for academic affairs, started off the discussion by noting the ways in which USC has been a global institution from the beginning: from its diverse entering class in 1880, to its leadership among American universities in enrolling international students, to its location in a city that is “a microcosm for the world,” and to its intense efforts to develop a global presence through international offices and classroom technologies that unite students from around the world.
Keynote speaker The Right Honorable Jack Straw listed the biggest challenges facing the world, including turmoil in the eurozone, overly optimistic expectations for China’s ability to rescue the economy, and continued unrest and risk of war in the Middle East.
Straw noted that many Western countries are slashing their defense budgets and urged them to reverse course to keep the peace in a world of “sharper elbows” with more centers of power. He also called for greater openness to immigration as a vital source of talent and new ideas.
Looking forward, Straw said the growth of developing countries, including India, and the ongoing move toward a knowledge economy gave him some optimism that the first half of the 21st century could produce another long economic boom.
Moderator Lord John Eatwell, a leading economist and president of Queens’ College in Cambridge, who also teaches at USC, struck a less cheerful tone when he started the panel discussion by asking why, during a period of historic technological innovation, “are we doing so badly”?
Manuel Castells, USC University Professor and the most cited communication scholar in the world, said the most damaging consequence of the financial crisis has been loss of trust in the two most powerful institutions in the world: the financial and political systems.
“People don’t trust their governments,” he said.
Mergers and acquisitions specialist Pip McCrostie, global vice chair for conference sponsor Ernst & Young, defended the financial industry.
“Corporate business has brought a lot of growth in past decades, specifically through means of [mergers and acquisitions],” she said, adding that such deals are at an all-time low despite fundamentally sound finances at major corporations.
USC Provost Elizabeth Garrett, center, with panelists, from left, Jack Straw, Pip McCrostie, John Eatwell, Manuel Castells and Mohammad Hashem Pesaran (Photo/Simon Lane)
Economist Mohammad Hashem Pesaran, holder of the John Elliott Chair in Economics at USC, called on the world’s financial centers in New York, London and Frankfurt, Germany, to loosen their grip on capital and make room for market makers in developing countries.
“You have an imbalance in the world recovery,” he said, noting that developing countries creating more of the world’s wealth are forced to invest it in a handful of closely related markets, often at great risk for both them and individual investors.
“The correlation among these markets has been rising since 1995,” Pesaran said. “You can’t put your eggs in any other basket. It doesn’t exist.”
Sir David Anthony King, former chief scientific adviser to the British government and a professor at Oxford and Cambridge universities, moved the conversation past strictly financial terms. He said that while population growth is tapering off, resource use continues to increase sharply, with disastrous implications for the planet and its people.
“We are damaging the global commons at an alarming rate,” he said, adding that he considered “short-termism” in policy is the greatest obstacle to sustainable growth.
After a Q-and-A period, Eatwell ended the panel on a positive note, reminding the audience that “universities are optimistic places” where solutions are born.
“The program which USC has defined for itself points toward that fundamental optimism,” he said.
Echoing that note, Trojan Olympian and three-time gold medalist Rebecca Soni ’09 closed the program with an inspirational talk about her successful quest to repeat her gold-medal performance from Beijing and achieve a new personal best time, which was also good enough for a world record.
Watch the panel discussion here
From left, The Right Honorable Jack Straw, Lord John Eatwell, Manuel Castells and Pip McCrostie (Photo/Simon Lane)