Professor Lawrence Summers optimistic address of the US and the future of the global economic system at the Herzliya Conference included three main factors which highlighted his prediction that the “American economy will grow by 3.5% this coming year”; the change in where the economy grows from, emerging nations and their effect on the United States as a global leader, and the reason why the US prevails.
Using Facebook as an example, Prof. Summers demonstrated how the American economy is “shifting from an industrial economy to a knowledge economy”. By using its capacity to adjust to world changes, the US has benefited from the shift in change.
In response to the concern of emerging economies overtaking the US, Summers said, “There is no reason why the success of emerging markets need to threaten those in industrial countries.” Exemplifying this through the global economy post World War II, when Japan and Germany recovered, this did not infringe on the American economy, so too, today, if the US embraces an open trade market, China’s growth will not impede on the US. He highlighted this point by stating that statistically speaking, “if you work very hard at flattering China, it has the standard of living of the US during the 1930s.”
Looking at current global issues, such as the protests in Egypt, the reaction of Washington is what people were interested in. “Those who believe that the US does not have the capacity or strength to respond to global events may be making a very serious mistake.”
Summers concluded by stating what is most crucial is that America “maintains the momentum of recovery”, which is achieved through its virtue of resilience. It has shown time and again that their own fears as well as the worlds’ were wrong and will continue to be so, proving most of the prophecies of “American decline will be not self fulfilling, but self denying once again”.
about: The Herzliya Conference is the flagship of the Institute of Policy and Strategy (IPS) at the Lauder School of Government of IDC Herzliya. The Herzliya Conference addresses Israel’s national agenda by encouraging public debate and influencing the country’s public policy planning. This is achieved through convening Israeli and international elite policy makers, conducting cutting edge research, fostering a global network of contacts in a public forum by attracting the best and the brightest to take part in the conference and its discussions.