46 FINANCE & DEVELOPMENT | December 201846 FINANCE & DEVELOPMENT | December 2018
F&D: What worries you most on the macroeco-
MO: e worries are clearly set out in the World
Economic Outlook: trade tensions and adjustment to
dierential 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 oset eects 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?
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 oers opportunities for
cooperation but also hazards of conict?
Moreover, how do you do it dealing with a
system that is very, very dierent 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-Pacic 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 inuence and potentially
inuencing 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
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.
Maurice Obstfeld discusses his tenure as the IMF’s
PHOTO: IMF/STEVE JAFFE