Eminent policy expert C. Fred Bergsten’s starting point in this compelling look at the future world order seems straightforward: The systematic economic leadership of the United States has led to functioning global financial markets and a free and open world trading system. But what’s not so simple is how these “global public goods” will survive in changing geopolitical times. Bergsten cogently argues that China’s help in ensuring their continuation is crucial, making US–China cooperation imperative – even as the two nations fiercely compete in other arenas. Bergsten offers readers an original way of understanding complex geopolitical issues.
The 1930s illustrate what happens when the world economy lacks a leader providing “global public goods.”
History shows that the world economy benefits from having an economically dominant country providing global public goods (GPGs) to the rest of the world. Leaving aside the negative elements of colonialism, the British before World War I undoubtedly provided some GPGs to the global economic system. The United Kingdom helped create a more investment-friendly world economy through a framework based on the gold standard, the pound sterling and the financial services of the City of London.
The best way to illustrate economic GPGs is to look at what happened when they were lacking. By the early 20th century, the US economy had already overtaken the UK’s in size, but America did not, at first, take over contributing to these GPGs enough to maintain a growing and evermore interconnected world economy. After the 1929 stock market crash, President Herbert Hoover’s administration infamously introduced tariffs, triggering a wave of “beggar-thy-neighbor” policies in other countries. President Franklin D. Roosevelt reflected&#...
C. Fred Bergsten is a nonresident senior fellow and director emeritus at the Peterson Institute for International Economics. He has held numerous positions in government, including at the US Treasury (1977–1981), on the National Security Council (1969–1971) and on the Advisory Committee on Trade Policy and Negotiations during the Trump administration.