The US economy has turned downward. People are feeling insecure. There are grave concerns about jobs moving overseas and about losing ground to Asian countries. Heavy pressures are mounting on the presidential candidates in both parties to pander to protectionist and even isolationist sentiments. The year, however, is 1992. Fortunately, the two parties’ candidates – Bill Clinton and George H.W. Bush – refuse to cave in to the pressure. They resist the special interests and stand strong for the long-term health of the American economy – and the country begins one of the greatest economic expansions of our history.
Today, we would do well to remember this lesson. It is easy to say that times have changed and take a more protectionist viewpoint. In fact, times have changed. Dramatic advances in technology and increased global trade are creating enormous economic opportunities, but also challenges. If America is to remain the world’s economic superpower, it must capitalise on the opportunities and confront the challenges. Countries that run away from globalisation in the 21st century – as with those that ran away from capitalism in the 20th century – will pay a heavy price for decades to come.
This week I am meeting with business leaders and government officials in Beijing and Shanghai to discuss the increasingly important relationship between the US and China – and the opportunities that we hold for each other. Some in the west believe that a growing Chinese economy is a threat. As a businessman, and now as mayor of the world’s largest financial capital, I believe the opposite is true: Chinese growth is, in fact, an opportunity for the US and the world, because the global economy is not a zero-sum game. We all share in each other’s success.
A growing China creates jobs for our export producers, keeps consumer prices low, expands our choice of goods and services, and increases our access to capital and talent. It also intensifies pressure on China itself to act responsibly on international issues, including security, trade, product safety and climate change. Our serious differences with China in these and other areas must be managed through engagement, not used as excuses to pursue politically expedient – and economically wrong-headed – short-term retaliatory measures.
What of the argument that China is taking jobs from America? Those jobs – if they did not go to China – would go somewhere else. The US government cannot keep them here through costly consumer-funded tariffs and taxpayer-funded subsidies. We learnt that lesson the hard way in the 1970s, when congressional protection of the automotive industry only hurt Detroit and helped its foreign competitors.
When politicians suggest that the benefits of globalisation go primarily to low-wage countries, they are playing to people’s fears. In fact, globalisation benefits every country that maximises its strategic advantages – and no country has more strategic advantages than the US. We are blessed with many of the best universities in the world; an enormous domestic consumer market; the most cutting-edge technological, medical and scientific research communities; deep capital markets that offer financing to businesses of every kind; and a level of freedom, opportunity and diversity that is unmatched.
These strategic advantages are a powerful magnet for the investors, entrepreneurs and innovators who are pioneering new fields and creating good jobs. But when the federal government builds walls around industries, it also blocks the exploration of new frontiers. Countries that offer open and fair access to new frontiers will be the winners in the new global economy, while those that build barriers will increasingly see their productivity decline and their innovators move elsewhere.
The opportunities created by globalisation will raise salaries and living standards for American families, but the transition can be difficult. The way to help workers affected by globalisation is not to prop up uncompetitive industries, but to assist the people who are displaced, so that they do not bear the costs of globalisation alone. This means strengthening our support of displaced workers and increasing investment in them, so that we can help them acquire the skills that the new economy demands.
At the same time, we have a responsibility to prepare today’s students for tomorrow’s economy. To compete in the 21st century, our students must learn more mathematics, more science, more engineering and more computer technology. Students around the world are outpacing American students in these subjects and unless we change that we will begin falling behind. That is why I have made public education reform a top priority in New York City and the progress we have begun making – substantial gains on math and English scores and graduation rates at 20-year highs – offers hope that by injecting accountability and standards into schools, we can aim for excellence, rather than settle for mediocrity.
Investing in infrastructure is equally critical to a nation’s competitiveness. China is finishing what will be the world’s largest airport terminal in Beijing. It is building 20,000km of railway lines and has already built the world’s fastest train, which runs at a top speed of 267mph. These are the kinds of investments we need more of in America if we are to keep pace with our international competition.
The new global economy holds enormous promise for fulfilling the American dream – that each of us can build a better life for our family. But capitalising on that promise requires courageous leadership. We had it in 1992 and we could use more of it now.
The founder of the eponymous financial information services empire and current New York mayor Michael Bloomberg has just penned an op-ed in the Financial Times warning against mounting protectionist sentiment Stateside. Of course, Mayor Mike is hardly a disinterested party. His city benefits from a continued influx of foreign funds which would likely dissipate in the event of harsh protectionist measures. And, doubtlessly, his Bloomberg services would suffer a downturn in client activity should America get Dobbs-ified. Strongly pro-trade rhetoric does something that should prove instructive to media hounds out for a quick story: Mayor Mike isn't likely to run for office given that he is not making concessions to trade bashing rhetoric, now favored (or more likely affected) by even the likes of Hillary Clinton. There is nothing new in his arguments here, though they ought to prevent more silly stories on Bloomberg being a possible Jewish bachelor president.