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Surviving Trump:"America First" and Japan

Original Broadcast Date:
December 16, 2017(UTC)

Grading President Trump

The panelists kicked things off with an overall evaluation of President Donald Trump's economic policy. All four expressed concern.
Hubbard said he was surprised that the President is not supporting low-skilled workers, many of whom voted for Trump. Stiglitz called the Trump presidency "abnormal" and advised Asia and Japan to focus on the long run and try to strengthen the economic regime that Trump is working to undermine. Weinstein said uncertainty is rising across the globe, now that the US has withdrawn from the Trans-Pacific Partnership (TPP) and called for NAFTA to be renegotiated. Ito said that if Trump insists on purely bilateral, results-oriented monetary and trade relationships, Japan will likely be at a disadvantage. He worries in particular about US complaints concerning the exchange rate, which remind him of the circumstances that led to the 1985 Plaza Accord.

Impact of America First

The panel discussed the US withdrawal from the TPP, which Trump holds up as an economic policy achievement. The group was divided on its significance. Stiglitz, a critic of the TPP, argued that the agreement was not that important for the US. Weinstein thinks the withdrawal will create losses for the US, as trade will be diverted away from the US toward member countries. He also worries about the signal the Trump administration has sent to the world, that the US is no longer really a part of global society. Ito finds it puzzling that the Trump administration does not realize that the withdrawal is costing American businesses market share: the US beef and dairy industries are now demanding their government reverse its decision. Hubbard said that the real issue is not trade but how to help low-skilled workers. Stiglitz agreed, saying the US hasn’t done enough for these people, whether they’ve lost their jobs as a result of technology or trade. Stiglitz also said that US inaction on filling vacancies at the World Trade Organization could hamper its ability to function, perhaps threatening the rules-based global trading system.

America First and Japan

The discussion moved on to the possibility of a US-Japan free trade agreement outside the TPP. Ito said the Japanese government is reluctant to start talks along those lines, because it would be difficult to make concessions beyond TPP levels. Hubbard agreed, but insisted that bilateral talks between the two countries are still very important. Stiglitz predicted that such negotiations with the Trump administration are doomed to fail. He suggested bilateral talks should be handled through other, non-governmental channels.

Whither Japan's Economy

Next, the panelists discussed the two main problems facing Japan's economy: a shrinking working-age population and low productivity. The Japanese government has been trying to bring more women into the work force, but Weinstein pointed out that the rate of female labor participation in Japan is already high. He argued that Japan should instead deploy women workers more efficiently and effectively. Ito said accepting foreign workers, postponing retirement, and using robots and AI would help solve the labor shortage. With regard to automation, Weinstein warned that it could increase inequality. Stiglitz agreed, arguing for a policy to protect people who have been -- and will be -- adversely affected.

The Future of Globalization

Doubts about globalization are growing. As the discussion drew to a close, the economists shared their ideas on how to achieve sustainable growth. Hubbard called for a focus on those who are left behind, and fixing the problems faced by low-skilled workers. Stiglitz emphasized the importance of a rules-based global economic system, and argued that the US must remain engaged with the world. Ito said that Japanese corporations are sitting on too much cash: they should raise wages in order to stimulate consumption and generate a good growth spiral. Weinstein pointed out that income inequality is rising not just in the US and Japan but all around the world, and said we must figure out a way to create less-divisive societies.


Glenn Hubbard

Dean, Columbia Business School

Hubbard was chair (2001-2003) of the US Council of Economic Advisors under President George W. Bush.
He is a finance and economics expert and a proponent of tax cuts and deregulation.

Joseph E. Stiglitz

Professor, Columbia University
Nobel Memorial Prize laureate (2001)

Nobel Memorial Prize laureate (2001)
Stiglitz was chair (1995-1997) of the US Council of Economic Advisers under President Bill Clinton and former Chief Economist (1997-2000) of the World Bank.
He is a leading critic of market fundamentalism and economic inequality.

David E. Weinstein

Director of Research, Center on Japanese Economy and Business,
Columbia Business School

Weinstein is an expert on the Japanese economy and monetary policy.

Takatoshi Ito

Professor, School of International and Public Affairs
Columbia University

Ito is a former member (2006-2008) of Japan's Council on Economic and Fiscal Policy.
He is an expert on international finance and Japanese fiscal policy.


Hugh Patrick

Director, Center on Japanese Economy and Business
Columbia Business School

Patrick has published extensively on US-Japan economic relations since the 1960s.