Treasury official speaks on future of world economy

Addressing an overflowing crowd of 150, Lawrence Summers, Undersecretary of the U.S. Treasury for international affairs, began the International Economic Policy Lecture Series yesterday afternoon. Summers, who was the former chief economist at the World Bank, spoke on "The Clinton Administration's International Economic Policy Agenda." He is also a former professor of political economy at Harvard University and winner of the prestigious J.B. Clarke Award, according to Public Policy and Management Professor Howard Pack. Referring to the challenges facing him and President Clinton since they took office in 1993, Summers focused his speech on the need for a new foreign policy after the end of the Cold War. "There had to be a new vision of American international policy and American international economic policy, in particular," he said. Stressing the connection between economic prosperity and world peace, Summers made references to the economic crisis in Weimar Germany that helped bring Hitler to power in the early 1930s. After outlining the administration's overall policy objectives, he discussed the promising nations of the developing world. "Within the lifetimes of the people in this room, China and India may become the largest economies in the world," Summers said. "People have traditionally thought of these countries as poor." But while outlining these countries' strengths, he also addressed their many weaknesses. Summers pointed to China's high inflation rate and production bottlenecks as genuine concerns. He said, though, that most of his time in 1995 has been spent dealing with the recent Mexican financial crisis. He spoke at great length about the troubles there. "In the last 12 months, Mexico has made critical macroeconomic errors," Summers said. "As this situation unfolded, it had consequences that went far beyond Mexico?The president decided that the costs of inaction were greater than the costs of action." Concluding with a passionate call for American internationalism, Summers warned against the nativist and isolationist winds blowing through America. "Our interests as a nation do not lie in isolationism," he said. "Our interests lie in world prosperity." The event -- jointly sponsored by the Economics and Public Policy and Management Departments -- was intended to honor Summers' mother and father, who both taught at the University.