Ben Bernanke, the chairman of the Federal Reserve Bank, is a smart guy. As the United States heads into an uncertain economic future, this should be a cause for some relief. We're going to need a competent hand at the tiller as the combined forces of high energy prices and a collapsing housing market assault everyone's livelihood, exacerbating political tensions and international dynamics.
But don't take my word for it. Read the speech he gave this morning to kick off a Federal Reserve conference on globalization in Jackson Hole, Wyo. The speech isn't very long, but covers impressive ground -- call it Globalization 101 -- an excellent introduction to the essential nature of current global economic reality.
For its money quote, the Wall Street Journal pulled the obvious kicker; after warning that the differing winners and losers produced by increased trade inevitably encourages protectionist sentiment from the losers, Bernanke said, "The challenge for policy-makers is to ensure that the benefits of global economic integration are sufficiently widely shared ... that a consensus for a welfare-enhancing change can be obtained."
That's a hard sentiment to disagree with, and of course, there's quite a distance from a Fed chairman uttering these words at a conference, and the nuts-and-bolts reality of what U.S. trade negotiators, utterly beholden to U.S. corporate interests, force down the throats of their trading "partners." One has to read the whole speech to get a sense of how strong an argument for further global economic integration Bernanke makes. But perhaps most valuable is his set of four concluding observations:
Sure, one can argue about what the policy implications of these developments are, and there are definitely plenty of well-known economists who might take issue with just how "mature" capital markets have become. But to my mind, Bernanke's speech paints an extraordinarily accurate picture of how the world looks right now. It is reality-based, in other words, which is just what you want from your Federal Reserve Bank chairman, and just what we haven't been getting from our president.
And then there's just the sheer intellectual frisson generated by an economist who quotes Martin Luther:
"But foreign trade, which brings from Calcutta and India and such places wares like costly silks, articles of gold, and spices -- which minister only to ostentation but serve no useful purpose, and which drain away the money of the land and people -- would not be permitted if we had proper government and princes ... God has cast us Germans off to such an extent that we have to fling our gold and silver into foreign lands and make the whole world rich, while we ourselves remain beggars."
Is this a not-so-veiled reference to growing protectionist sentiment in the United States? My expertise in the 16th century German economy is limited, so I don't know if Luther's gripe was valid. But I do know that I'm going to keep reading Bernanke's speeches.