Question: How can we make the global economy work for America?
Parag Khanna: I think that global economy can still be made to work for America. We are still one of the top sovereign foreign direct investments in the world. This whole discussion of sovereign wealth funds, that money doesn’t need to go only into Wall Street to bail out private banks and their misdeeds and wrong decisions and poor judgments. They can also be channeled into broader infrastructural investments in America that build up our capacity to create jobs. To boost our high-tech productivity, and so forth, the ways that make America’s long-term global economic presence renewed for the 21st century, which happens again only in certain pockets.
We brag about Silicon Valley. We have very low broad band internet penetration rate around the country; far lower than in Europe, for example. So we do need a serious infrastructural overhaul. And without a deficit right now, obviously we need foreign capital to do that for us.
So if we were able to redirect some of that creatively, it’s a failure of imagination really on our part.
We still stand the chance of making America competitive.
Well it is interesting; a perfect example of how to reconcile is Latin America. We face competition from Asian producers that are far cheaper and more efficient then we are. But we have Latin America which is very inefficient but yet very close to us. If we were to invest in Latin America for productivity and join exports with Latin firms or American-owned firms in Latin America, we could potentially become as a region, or a hemispheric kind of area, more competitive with Asia and profit more from it.
But we don’t do that. But we did do it in the 1960s. It was called the alliance of progress, and it worked and it built the infrastructural base in Brazil, Argentina and elsewhere.
So to do things like that again would really serve American interests; but we haven't been as broad in our investments as we need to be in those countries in order to keep them afloat and find ways to partner and leverage what they can export to the world in order to profit ourselves.
Recorded on: 3/3/2008