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Economic summit talks recession, features Rice





By: Nikhil Joshi
Published: March 16, 2009

We are at a critical juncture, say economic and political leaders

A Friday the 13th gathering of economic and political leaders, mostly from the Bush era, the annual Stanford Institute of Economic Policy Research (SIEPR) Economic Summit was marked by a sense of urgency. Speakers stressed the need to find out why the economy has tumbled, as well as how to take bold corrective action.

The summit featured a group that has shaped the world economy for years, and is now pondering ways to kick start a recovery - former Secretaries of State Condoleezza Rice and George Shultz, former Treasury Secretary Robert Rubin, former Bush chief economic advisor Edward Lazear and Wells Fargo Chairman Richard Kovacevich, along with an assortment of the most influential economics professors in the country.

Condoleezza Rice

In her first on-campus public address since returning to Stanford, Rice drew on her experience at the top of the State Department and called on the U.S. to take a strong leadership role in pushing a global recovery, lest developing economies that are on “the cusp” snap away from the liberal capitalist model.

Rice framed her remarks by saying that this is more than an economic crisis – it is a crisis of governance, and is calling into question which model of development governments should employ to best serve their people.

The former Secretary of State warned strongly against turning inward in tough economic times, noting that one of her deepest regrets from her time in the Bush administration was the government’s failure to implement immigration reform. Rice also voiced concern that America could lapse into a destructive, protectionist trade philosophy.

According to Rice, this isn’t just a recession; it is an international crisis that is calling globalism into question in some parts of the world. She argued that countries in Eastern Europe and Latin America, for example, are in particular danger because of aggressive policies in recent years, such as the Estonian flat tax.

“It is my belief that these countries have democratic institutions that are strong enough to survive these pressures,” Rice said, “but we should not underestimate the degree to which they are under pressure.”

Several times, Rice returned to the specific challenges and successes she faced while in government.

“Oil warped international politics in a way that nothing else did,” she said.

Rice was especially proud of the Bush administration’s foreign assistance program, the Millennium Challenge, which included large grants in the hundreds of millions of dollars that were tied to governance benchmarks, such as shortening the number of days it takes to open a business. She expressed hope that the U.S. would not sharply curtail foreign assistance in the midst of the current financial troubles.

Rice concluded her talk by discussing the American psyche, a theme that was repeated throughout the day. But Rice added an international flavor, saying that the U.S. needs to project a confident, optimistic image not for just its own sake, but for the health of the global economy.

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I was thinking about cities being on the brink and going bankrupt: But can you imagine what would happen in a city the size of New York with millions of people in it if suddenly they couldn’t pay the garbage men or the train drivers or the truck or the bus drivers, subway drivers electrical workers, water men, all the various utilities, school teachers–if suddenly the whole city went totally bankrupt. Well, you can imagine what would happen if suddenly nobody in a city that size got paid and they couldn’t buy their food, or the water stopped running, the sewage stopped flowing and the lights went out? Now what do you think would happen?–Riots, brother?–No!–There’d be war!
The tables are once more being over turned as the rich are beginning to themselves be destroyed by their own riches and evil pollution of the earth! The rich United States and Europe are beginning to have their money system collapsing because they have built it on paper and now even mere electronic impulses instead of real valuables such as the gold and silver from whence it came. The paper empires of the paper tigers of paper money, paper stocks, paper bonds, paper cheques, paper securities, paper deeds and paper contracts are beginning to burn like a wick without the oil and raw goods that used to feed it!