““I would give you one very simple economic truth: Would you rather live in a country that capitalists are rushing to go into, or would you rather live in a country capitalists are rushing to get out of?””
— Larry Summers
Economist Larry Summers on Wednesday sounded an ultimately optimistic note about the U.S. economy despite high inflation and continued tough times ahead.
Summers, the former U.S. Treasury secretary under President Bill Clinton, gave a talk on the future of the economy at Salesforce Inc.’s
Dreamforce conference in San Francisco. In conversation with Salesforce co-CEO Bret Taylor, Summers talked about his high-profile warning, via an op-ed in the Washington Post early last year, that President Joe Biden’s COVID-19 stimulus plan would help set off inflationary pressures.
“You turned out to be right,” Taylor told Summers, who’s also a former president of Harvard University.
“We’re unlikely to be able to achieve a soft and easy landing,” Summers said. But he added that the U.S. is making adjustments, such as raising interest rates, and will “get through” those adjustments. The Fed raised interest rates again on Wednesday, and signaled further action by the end of the year.
Acknowledging that he has said “some negative things,” Summers then proceeded to tell the audience that filled the Blue Shield of California Theater at the Yerba Buena Center for the Arts why he thinks the U.S. will be OK: It remains a country that immigrants from all over the world are wanting to enter; it has the “best universities” and the “greatest entrepreneurship”; it is home to many big companies’ headquarters; and it is energy-independent.
He said “we are not dependent in the way that Europe is on a pipeline controlled by a tyrant,” adding that “that puts us in a stronger position to weather this and work through this.”
The former secretary then shared his thoughts about China, saying that that nation has had “difficulty with COVID,” and that it is unclear whether its vaccination strategy will get past that. He also pointed to other challenges in China, including a continued low birthrate and many empty apartments.
“You look globally at financial crises, they tend to have roots in real estate,” Summers said, predicting “a difficult time ahead” for China.
His parting thought about China was related to its position relative to the United States. “The tide of history is moving our way,” he said. “People are scared to be dependent on [China].”