US economist urges Swiss to embrace globalisation

Lester Thurow, professor of economics at MIT in Boston swissinfo.ch

American economics professor Lester Thurow pulls no punches when it comes to globalisation and how countries should react to it.

In an interview with swissinfo’s Robert Brookes, Thurow said that globalisation was here to stay and the Swiss should seize the opportunity to shape it before it was too late.

Thurow was in Zurich to present his new book entitled “Fortune Favours the Bold: What We Must Do to Build a New and Lasting Global Prosperity” at the Gottlieb Duttweiler Institute.

Thurow, who teaches at the Massachusetts Institute of Technology and is a prolific writer, said that only a “bold embrace” of globalisation would bring prosperity.

swissinfo: The word “globalisation” means many things to many people. What do you understand by it?

Lester Thurow: Globalisation basically has to do with the search behaviour of private business firms.

The important thing to understand is that globalisation is not being built by governments. It’s being built by private business firms when they seek the cheapest location to produce.

swissinfo: Why should we embrace globalisation when it has plenty of opponents?

L.T.: What you have to understand is that it’s like the steam engine and electrification. It’s coming and the question is if you can shape it so that it’s positive as far as you are concerned.

People die from electrocutions all the time. You could say, let’s reject electricity because people get killed. But we all want electricity. The same thing is basically going to be true about globalisation.

swissinfo: What are some of the real threats to short-term and long-term wellbeing in the world?

L.T.: One is that we’re building up a kind of unbalanced global economy because America is growing, and Japan and Europe are not. And it’s very hard to make the global economy work if only America grows.

The other thing is that the First World needs a global system of intellectual property rights.

You need a global system because in capitalism you need to know who owns what, who can sell what and how to protect property rights.

swissinfo: You’ve said we’ve got to seize the moment. How should we do that?

L.T.: It depends where you live in the world. One of the places where Europe needs to seize the moment is with biotechnology.

The 21st century is going to be the century of biology, and Europe’s basically deciding not to participate.

The European Union has a ten-year moratorium on research on biotechnology. It’s going to run out in a year or two but Europe’s going to extend that for another ten years because it’s saying that it doesn’t want to do this until it can be proven that it’s safe.

But what you have to understand is that science can never prove a negative. Science can’t prove there isn’t a monster in the middle of Lake Zurich. One’s never been seen, but it could pop up tomorrow morning.

So if you wait until something’s absolutely safe, you can’t ever start…

swissinfo: But we do have a global player here in Switzerland with Serono, don’t we?

L.T.: Yes, you have global players. But probably everybody in Switzerland knows that last summer Novartis announced it was moving its research headquarters from Switzerland to Boston, precisely because of those restrictions on biotechnology.

So it’s still a Swiss company but with its research being done in the US.

swissinfo: Will the US continue to play the role of the global economy locomotive… and should it?

L.T.: Yes, it will and yes, it should, but it needs some help. We need three locomotives.

We need a Europe and a Japan locomotive to really make this work. Think of the analogy of the Canadian geese, which fly in a V formation. The lead goose is never the same one all day long, and what we need to do is rotate that position.

Sometimes it should be Europe that’s running the trade deficit, sometimes it should be Japan and sometimes the US. But it shouldn’t be the US all the time.

swissinfo: Fortune favours the bold, you write. Is that a plea for rapid action?

L.T.: Not necessarily rapid but as I mention ‘bold’.

If you go back to the biotechnology issue, that’s an example of being bold. There’s no question, it could be dangerous. But if you don’t participate, you can’t win. You’re going to lose.

swissinfo-interview: Robert Brookes

Key facts

Lester Thurow has been a professor of economics and management at Massachusetts Institute of Technology for more than 30 years.
In his academic work, Thurow focuses on international economics, public finance, macroeconomics and income distribution economics.
He is the author of several books, three of them “New York Times” best sellers, aimed at a general audience.
He was in Switzerland to give a presentation at the Gottlieb Duttweiler Institute in Rüschlikon, in the third of the institute’s “Food for Thought” events.