Stephen S. Cohen: What Happens When Other Countries Have the Money

Conversations host Harry Kreisler welcomes Professor Stephen S. Cohen for a discussion of the new book he has written with Professor Brad Delong entitled The End of Influence. Professor Cohen argues that the 2008 economic collapse demonstrates the failure both domestically and internationally of neo-liberal economic policies embraced by both democrats and republicans during the last three decades. Neoliberalism assumed that an unfettered market and a fettered government are the best route to prosperity. These policies increased economic inequality and led to the bloating of the financial sector. The policies also led to unbalanced trade and the transfer of dollars to sovereign funds in many of the emerging powers especially China. The future course of the sovereign funds will be a key determinant in whether centers of innovation develop in these emerging powers which control enormous reserves in dollars. In conclusion, Cohen raises a second key question: will the US redefine its reluctance to embrace greater government involvement in the economy once the crisis has past and the U.S. confronts challenges emanating from states with enormous assets in their sovereign funds. Ironically, neoliberal policies intended to limit government intrusion in the market has hastened the increased involvement of government in many emerging countries and led to the redistribution of power in the international system.