Princeton's Krueger Sees 'Moderation in Globalization' (Audio)

is it heading? Have we reached the end of globalization? This is one of the topics here at Bloomberg Markets Most Influential PIM And we're going to be speaking to a panelist shortly to talk about, you know, maybe Donald Trump shouldn't be so worried the trade is actually shrinking in the global economy. Yes, our guests tub will be Alan Krueger, a Princeton University professor of economics and public affairs, former head of the Council Economic Advisors in the administration.

Right now, that let's Charlie Pellet in the Blue of News Corporder Business left and I think it very much PIM Fox. Thank you, Kathleen, Hayes, speaking of influence, gott to begin with crude oil today surging four point four percent, helping lift equities, the DAL, the SMP nestack all the advancing West Texas intermediate crude now at forty six sixty three for a barrel. OPEC agreeing to cut production for

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OPEC cutting production for the first time in eight years, according to a delegate briefed on the matter, sending oil prices up as Saudi Arabia and Irrong or Iran wrong footed traders who expected a continuation of the pump and Will policy Group adopted it in two thousand fourteen. Crude oil up now by four point four percent, rallying two

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Thatath's a Bloomberg business flash. You're listening to Taking Stock with Kathleen Mays and Pim Fox on Bloomberg Radcroft broadcasting live today for the liver Market's most Influential Summit at our world headquarters here in New York. Take a look at globalization and where are the world is heading now, particularly in this election year when there are so many

debates around trade, trade deals and more. Joining us now is Alan Krueger, who's former head of the Council of Economic Advisors, professor at Princeton University, and he's faring to you talk about his panel today. Whether the sun is setting on globalization? So Ellen, is it? Uh? Is it twilight for globalization? Or is it just some dark clouds obscuring the sun, so it feels like like the sun

is setting. The word I used was moderation. I think we're seeing a moderate ration and globalization when it comes to trade as well as when it comes to immigration. Is this a bad thing or a good thing? I think it was a somewhat inevitable thing in that there was enormous rush of globalization when the Soviet Union collapsed and Eastern Europe joined the modern world, the capitalist system, uh, and then when China joined the world trading system, and I think that that led to a long period of

expanding trade. And now we're reaching more of an equilibrium point where wages have been driven up in China, the infrastructure has been driven down to the point that they are really quite stretched in terms of their infrastructure. We're seeing companies bring more work back to the US. In fact, we're seeing companies re shoring UH some work in the US, and I think that trend will probably continue. The same

thing with immigration. I think we saw very rapid immigration to the US, particularly from Mexico when we had our housing bubble, and since then we've actually had a net autmoinigration to Mexico. Professor Krueger, there's so much I want to answer, so I just want to throw out some topics and maybe get your maybe you can connect them. For for us UM, one of your earliest pieces of research has to do with the restaurant industry and minimum wage.

You've written books about wage inequality. We've also written a book about terrorism. Wondering if there's a way to connect all those things in the context of trade agreements and what they will ultimately do in a variety of ways, because trade is not just about stuff, it's about people. And supposedly, if you actually know somebody, chances are you're gonna feel less aggressive towards them, uh, because you're gonna know something rather than just hear it or think it

or get that information that might not be true. Well, there are a lot of crosscurrents are not So I'll do I'll do my best. The point I think which is underappreciated about trade agreements is they are as much international relations policy as they are economic policy. And if you look at NAFTA, for example, in our eighteen trillion dollar economy in the US, NAFTA had very little effect one way or the other in terms of our economic growth,

or wages. I think it was positive on that. I think that's why the economy did so well in THEES after NAFTA. But I would have to acknowledge that was pretty small. But it did help our relationship with Mexico and Canada. And now when returning to the other parts of the world, do we want to have better relations but the rest of the world or worst relations? I think when it comes to our national security, it's better

to have better relations. So I think one aspect of trade agreements is that it helps to further our national security interests. And if you have a candidate who says I'm going to tear up agreements that we have, I think that works in reverse. And I think it makes it very difficult to negotiate agreements that are in the interests of the US, both economically and in our international

security interests. If we have bluster coming from politicians about withdrawing from agreements which we have previously negotiated in good faith, as we make future trader greaments, assuming that that happens. Uh. Is it important though, to see that our experience with China was not altogether good. Our our relationship with our trade, our trade relatestions and the fact that they pegged their currency for so long helped all about manufacturing in this country.

There's I think it's hard to dispute that also they've blocked intellectual property, they stolen intellectual property. Is there some way in future trade agreements that will makes sure that free trade is fair trade. I think you raised very important points and also recognized it was not trade agreement that led to China's expansion in the US. UM, we

don't have a trade agreement with China. And one of the arguments that President Obamas maybe I think is exactly right is t p P UH would prevent China from writing the rules of the road when it comes to the economic relations in Asia. UH, it will be US standards that would protect intellectual property. For example, we solved them a lot of treasuries. That was something that we

did that they that they bought from us. Well, I think they bought treasuries from US because they recognize that we are the strongest, most responsible country in the world UH and a good place to invest UM. And I think we are now at a point where China's currency is roughly valued appropriately. I think for a long time it did um a weekend its currency. But I think now, given how poorly China has fared over the last few years and how much better the US has grown, you

would see a reversal. UH. So, I think it's very hard to say that the currency manipulation UH is causing a lot of damage to this economy today. Now, I think that's something you need to monitor very closely going forward. I want to thank you very much for coming in and spending time with us. Alan Krueger. He is the former head of the Council of Economic Advisors, currently a professor at Princeton University, and the author of many books,

one Quality Education and Terrorists. You're listening to taking Stock, I'm pin Fox my co host Kathleen Hayes. This is Bloomberg. Bloombertaking's Stock is brought to you by Cone Resnick look Ahead, Gain Insight, Imagine More, Get forward thinking advice that can help turn business possibilities into business opportunities. Find out more at Cone Resnick dot com.