WE MUST CHANGE POLICY DIRECTION
January 24, 2006
To meet the challenge of Asia's emerging Asian market economies (especially in China and India), we must re-establish our own seriousness of purpose about economic policy, and we must change policy direction on many fronts, says Robert E. Rubin, U.S. Treasury Secretary from 1995 to 1999 and a director of Citigroup.
To move forward, we should start by agreeing on two basic bedrock principles: that there is no free lunch; and that a strong future requires incurring costs now for benefits later. We should then put everything on the table. Our strategy should have four components, says Rubin:
- Re-establish sound fiscal conditions for the intermediate term (the 10-year federal budget window) and put in place a real plan to get entitlements on a sound footing for the long term.
- Develop a strong public investment program -- paid for, not funded by increased public borrowing -- to promote productivity growth, to help those dislocated by technology and trade, and to equip all citizens to share in our economic well-being and growth.
- Pursue an international economic policy that continues global integration, especially multilaterally, and proactively addresses our other international economic interests, including combating global poverty.
- Work toward a regulatory regime that meets our needs and sensibly weighs risks and rewards.
Our strategy should reaffirm market-based economics as the most effective organizing principle for economic activity, while recognizing the critical role of government in providing the many requisites for economic success that markets, by their very nature, will not provide.
None of this is easy, but our economy could well be at a critical juncture for the longer term. To realize our bright future and to minimize the risk of serious difficulty, we urgently need our own sense of mission to meet the challenges facing our economy, says Rubin.
Source: Robert E. Rubin, "We Must Change Policy Direction," Wall Street Journal, January 24, 2006.
For text (subscription required):
Browse more articles on Economic Issues