Moving the needle

• Pages: 46-47

46 FINANCE & DEVELOPMENT | December 201846 FINANCE & DEVELOPMENT | December 2018

F&D: What worries you most on the macroeco-

nomic front?

MO: e worries are clearly set out in the World

Economic Outlook: trade tensions and adjustment to

dierential nancial conditions in an environment

of much higher private and public debt than we had

in the past.

Longer term, wage and productivit y growth is

an issue. How do we spur i nnovation?

We need a big rethink on educational invest-

ments everywhere. Huma n capital investments very

early in life have been shown to be critic al to future

success. But even later in life, they can promote

greater exibility of workers, prolong working lives,

and oset eects of aging populations.

at will als o help mitigate some of the adjustment

issues that might be related to tec hnology and trade.

It will make economies more resil ient and better able

to deal with the critica l, long-term problem that we

just haven’t seen working people share in the gains

from growth. ere is now a sense in a lot of countries

that incomes of working people have stagn ated, that

social mobility is lower, that opportunity is lower,

that one’s children will not be better-o and may

indeed be worse o. ese trends poison our politics.

F&D: e United States and China are the world’s

largest, most dynamic economies. How do you see

the economic relations between the two playing out?

MO:

eir disagreements go way beyond economics.

ey go fundamentally to the issue of global lead-

ership. If you are a country like the United States,

which has been a global leader and has shaped the

global governance structure, how do you manage this

relationship, which at once oers opportunities for

cooperation but also hazards of conict?

Moreover, how do you do it dealing with a

system that is very, very dierent from yours

politically? If you look at the approach the Obama

administration took to the trade relationship

with China, one importa nt element was the TPP

[Trans-Pacic Partnership agreement], which

excluded China but which included the exi-

bility for countries (including China) to join if

they subscribed to the rules. is was a strategy

for maintaining US inuence and potentially

inuencing through soft power the way China

conducted tr ade.

Now the relationship seems to have become more

confrontational, certainly in trade. I’m not sure

confrontation is ultimately going to be productive

R

etiring as chief economist of the International Monetary

Fund at the end of 2018, Maurice Obstfeld shares his thoughts

on trade tensions, widening inequality, the importance of

education, and relations between United States and China

in an interview with F&D’s Gita Bhatt. Obstfeld plans to return to

the University of California, Berkeley, where he was a prominent

academic economist for 24 years and cowrote two leading textbooks

on international economics. His successor at the IMF will be Harvard

University’s Gita Gopinath.

MOVING THE

NEEDLE

Maurice Obstfeld discusses his tenure as the IMF’s

chief economist

PHOTO: IMF/STEVE JAFFE