'From a
structural
economie
perspective,
Obama was
certainly
the better
choice
Interview with:
Wim Boonstra,
Chief Economist
Rabobank Group
0 Some critics argue that the Democrats will
use this lack of competitiveness, combined with
the state of the economy, to implement a more
protectionist trade policy. Do you agree?
0 On the subject of excess liquidity and low
interest rates, are these not key aspects in the
economie rescue plans proposed in the past few
months? It is even claimed that John Maynard
Keynes is busy with an unprecedented
come-back...
"I am glad you brought this up. John Maynard
Keynes is the most wrongly cited economist in
the history of mankind. For some reason, he is
identified as a proponent of economie stimulus
programmes. But in reality, Keynes was a true
economie liberal and a strong advocate of the
free market economy. He was one of the first
economists who acknowledged that having a free
market economy is not perfect, and that there
are circumstances in which government has a
responsibility to keep the economy rolling. But he
also said that the government should immediately
step back once the economy is moving again.
Looking at the rescue plans proposed by
Treasury Minister Paulson, I must say I don't really
understand his intentions. First he suggested
buying up bad loans, then strengthening fïnancial
institutions' balance sheets. Most recently, he
suggested buying private mortgages. Hopefully,
the Obama administration will be more consistent."
issue 18 THE WORD
0 And whatabout the impact of Obama's
election on the US dollar?
'That's hard to teil. The economie fundamentais
are not particularly helpful with respect to the
dollar exchange rate. However, we should not
underestimate the confïdence factor. Under
the Reagan administration investor confïdence
was remarkably high. This drove up the dollar
against the economie fundamentais. If Obama
succeeds in gaining this confïdence, the dollar
may strengthen. But a strong dollar is unlikely to
be sustainable in the long run, partly because it
would put even more pressure on the US's already
0 During the US presidential election
campaign, several analysts warned that we
should not expect too much of the incoming
president. Do you expect the change of
leadership to make much difference?
1 "The economie agendas proposed by
the Republicans and the Democrats were
fundamentally different. Barack Obama has
promised to scale up public investments in
education, health care and infrastructure, while
the Republicans suggested pumping even largei
sums into defence. From a structural economie
perspective, Obama was certainly the better
choice. Yet, we should be fair about what we
can realistically expect from the new president-
elect. Obama justifiably argues that his hands are
tied.The Bush administration has left an absolute
mess behind. Stilt, Obama will be anxious to
demonstrate that his election will make a
difference. So both public spending and the fïscal
deficit are quite likely to rise even further in the
short term, but Democratie presidents do have
a far better track record when it comes to public
housekeeping."
high current account deficit. Besides, it is a
matter of fact that one of the shortcomings of the
American economy is its lack of competitiveness,
especially in the manufacturing industry."
'That does not seem very likely to me. Americans
are relatively protectionist by nature. Back in the
eighties, it was the Republicans who imposed
so-called 'voluntary export restraints' on Japanese
producers, and Bush Jr. introduced restrictions on
steel imports. Obama has not been that explicit
about his stance on trade policies. I can only hope
that he will be less protectionist than the previous
president."
