Opinion

Chrystia Freeland

The Sputnik moment and the zero-sum game

Chrystia Freeland
Feb 1, 2011 18:52 UTC

The best line in U.S. President Barack Obama’s State of the Union address was his contention that “this is our generation’s Sputnik moment.”

It was smart because the essence of the idea is obviously true: Just as the Sputnik launching in 1957 terrified Americans with the prospect that they might lose their global scientific supremacy, the rise of the emerging markets, particularly China, has made them worry they could be losing their technological edge.

Mr. Obama’s evocation of NASA and the moon landing was an emotionally powerful reminder that Americans haven’t always viewed government investment – or even government spending – as an unequivocally bad thing.

Today’s Sputnik moment is playing out in an utterly transformed world economy whose defining characteristic is its interconnectedness. That makes winning a lot harder to define. The United States wanted the Soviet Union to lose – not just in space, but back on Earth. This time around, it isn’t quite that simple. In the age of globalization, America wants to win, and it wants everyone else to win, too – except when it doesn’t.

The President’s speech reflected that ambivalence. At times, he framed the country’s economic challenge as a Cold War-style, zero-sum game: “the competition for jobs is real,” “we need to out-innovate, out-educate, and out-build the rest of the world,” innovation must “produce jobs in America and not overseas.”

The “working rich” and the rest of us

Chrystia Freeland
Jan 26, 2011 14:31 UTC

‘‘The next 10 years is going to be the most exciting time in our lives!’’ said Tejpreet Singh Chopra, an Indian entrepreneur. ‘‘The Indian economy will double! It will be incredible!’’

It was hot and humid  —  typical spring weather in Dar Es Salaam, Tanzania. It was also late  —  close to midnight. But the enthusiastic Mr. Chopra, dressed in a still-crisp light  shirt with blue and white stripes, navy trousers and blue turban, was on his way to yet another meeting.

Mr. Chopra was in East Africa last May as one of the World Economic Forum’s Young Global Leaders, a sort of farm team for the full-grown global business elite that gathers every January in Davos.

GE’s Immelt speaks out on China, exports and competition

Chrystia Freeland
Jan 21, 2011 20:31 UTC

UPDATE — Since I wrote this column early on Thursday morning, my prediction (in the final paragraph), that we would today hear more about Immelt and his ideas on how to create U.S. jobs has been vindicated: President Obama this morning appointed Immelt to lead his outside panel of economic advisers. To hear more from Immelt, watch my exclusive interview with him here.

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For Jeffrey Immelt, the CEO of General Electric, the 130 year-old American industrial behemoth, the financial crisis marked the end of the age of America’s economic dominance.

“I came to GE in 1982,” Immelt told me this week in Washington. “For the first 25 years, until the bubble crashed in 2007, the American consumer was the definitive driver of the global economy.” But Immelt said the future will be different. For the next 25 years, he said, the American consumer “is not going to be the engine of global growth. It is going to be the billion people joining the middle class in Asia, it is going to be what the resource-rich countries do with their new-found wealth of high oil prices. That’s the game.” A lot of that game will be played in China. At a moment when it is compulsory on the American right to pay homage to the exceptionalism of the United States, Immelt, a life-long Republican, is matter-of-fact about China’s inevitable rise.

GE’s Immelt on replacing Paul Volcker

Chrystia Freeland
Jan 21, 2011 17:32 UTC

Earlier this week in her exclusive interview with Jeff Immelt, Chrystia asked whether the GE head would replace Paul Volcker as chairman of President Obama’s outside panel of economic advisers.  Immelt ducked the question a bit, saying he would leave that decision to the President.  Today it became clear why he was noncommittal as the White House announced that Immelt will chair a new Council on Jobs and Competitiveness, the successor to the President’s Economic Recovery of Advisory Board which Paul Volcker chaired.

Watch Chrystia’s exchange with Immelt and read the transcript of his remarks below:

You know, I’m going to leave that alone. I’m going to leave it to the President. What I would say is that I think American companies and American CEOs need to be as constructive as we can be to help, you know, resolve some of these mistrusts and residue that exist in the environment today. 9.5% unemployment is not a tenable situation for any of us. You know, even though, it’s not directly my responsibility, in a broader sense, it’s all of our responsibilities. And so, I think there’s nothing wrong with working constructively with this President to try to drive growth and job creation.

Why the Wall Street-Washington door revolves

Chrystia Freeland
Jan 14, 2011 15:57 UTC

As President Barack Obama’s new lieutenants settle into their offices in the White House, talk has turned again to the revolving door between Washington and Wall Street: William Daley, the president’s chief of staff, arrives from JPMorgan Chase, where he earned millions; Gene Sperling, the new top economic adviser, collected $887,727 from Goldman Sachs for advice on a charity project on a recent hiatus from government.

There’s nothing new about this tradition – indeed there was a time not so long ago when it seemed as if actually running Goldman Sachs was a prerequisite for serving as Secretary of the Treasury. But the triple whammy of the financial crisis, the trillion-dollar government bailout and the return of lavish bonuses to many on Wall Street while unemployment in the United States is stuck above 9 percent has cast the intimacy between political and business elites in a new, often more jaundiced light.

To many U.S. business people, and to centrists in both parties, the concern that Mr. Obama’s White House is too close to business sounds absurd. Far from being a dangerous example of an overly intimate relationship between business and politics, Mr. Obama’s recent appointments, particularly of Mr. Daley, are seen as a welcome sign that the White House will work harder to bring business onto its side.

“Frisson” at Davos

Chrystia Freeland
Jan 13, 2011 17:19 UTC

Watch Chrystia and Reuters finance blogger Felix Salmon discuss how to find “frisson” at the World Economic Forum’s annual meeting at Davos, starting with that 20-minute cab ride with the Ayatollah.  Oh, and the reinstatement of Russia’s president – all because of Davos.

Posted by Peter Rudegeair.

Putin’s authoritarianism has a sad logic

Chrystia Freeland
Jan 7, 2011 14:00 UTC

For anyone who ever hoped Russia could become a liberal, free-market democracy, the grim trial last month of Mikhail Khodorkovsky, the former oil tycoon who was once his country’s richest man, offered a slender solace—it was widely and loudly condemned.

David Remnick, editor of The New Yorker, compared the prosecution to that of the late poet and Nobel laureate Joseph Brodsky. Joe Nocera, writing about the business and economic consequences in The New York Times (whose global edition is the International Herald Tribune), described the Kremlin’s tactics as “boneheaded.” Secretary of State Hillary Clinton warned that the case would “have a negative impact on Russia’s reputation,” and particularly on its “investment climate.” What was notable about this chorus of foreign criticism was the implication that, even judged by the Kremlin’s own standards of realpolitik, the treatment of Mr. Khodorkovsky was a mistake. Moscow’s leaders want to restore Russia’s wealth and greatness: Western assertions that the Khodorkovsky trial had hurt Russia’s reputation and would discourage foreign investment suggested that the Kremlin was harming its own cause.

But some investors, economists and political analysts are drawing a different, and much starker, conclusion: The Khodorkovsky verdict was an inevitable and logical act of self-preservation by a regime that is fully and lucratively in control of Russia.

The new global elites

Chrystia Freeland
Jan 4, 2011 21:51 UTC

The January/February issue of The Atlantic features Chrystia’s cover story, “The Rise of the New Global Elite.” The piece discusses the rise in income inequality over the past few decades, how today’s tycoons are more likely to be self-made and cosmopolitan than the plutocrats of the past, and how the new elite have more in common with the nouveau riche in emerging markets than with their own countrymen.

Chrystia was on Morning Joe this morning to preview the article along with James Bennett, The Atlantic‘s editor-in-chief. Here’s the video of their conversation:

And, here is an excerpt from Chrystia’s piece in the Atlantic:

Before the recession, it was relatively easy to ignore this concentration of wealth among an elite few. The wondrous inventions of the modern economy—Google, Amazon, the iPhone—broadly improved the lives of middle-class consumers, even as they made a tiny subset of entrepreneurs hugely wealthy. And the less-wondrous inventions—particularly the explosion of subprime credit—helped mask the rise of income inequality for many of those whose earnings were stagnant.

Cooperation among economies is fraying, says IMF head

Chrystia Freeland
Dec 22, 2010 20:23 UTC

Though the ongoing crisis in Europe dominated Chrystia’s interview with Dominique Strauss-Kahn last Thursday, the IMF head has much to say about the economic outlook for the United States. He believesthe biggest issue facing the U.S. right now is growth — not deficits — although he added that America needs a medium-term plan for fiscal consolidation.

Last week’s passage of the tax compromise should raise America’s growth prospects, but in response to a question about whether the tax cuts on high-earners are stimulative, Strauss -Kahn said, “of course not”.

When asked about the Federal Reserve’s latest round of quantitative easing, Strauss-Kahn endorsed the move, saying it will restore growth both outside and inside the U.S.:

Euro is not in danger, IMF chief says

Chrystia Freeland
Dec 17, 2010 17:02 UTC

Yesterday,  IMF Managing Director Dominique Strauss-Kahn sat down with Chrystia at the Newseum in Washington, D.C., for an hour-long Newsmaker interview. The European sovereign debt crisis dominated most of the conversation. The IMF chief admitted that the situation “worried” him and that he wanted Europeans to find a more “comprehensive” solution:

Well, I’m worried. And that’s why I’m urging the Europeans — I just attended the Euro Group meeting, which is the group of the finance minister of the eurozone — two weeks ago. I’m urging for the European Union to provide a comprehensive solution. Because this piecemeal approach, which the deal with Greece — as was Ireland after, and maybe another country later on — obviously doesn’t work. And the markets are just waiting for what’s next …  The institutions are still thinking too local when they’re facing global problems.

A more comprehensive solution will require better coordination among national European governments.  As Strauss-Kahn said, “You can’t have a single currency, especially in times where you have troubles, without having more coordination in economic policy.” Two concrete proposals the managing director endorsed were stronger stress tests for the banking sector and an increase in resources for the European Financial Stability Facility, the European bailout fund.

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