The Global Imperative: Understanding the Dynamics of a Global Economy

Professor Michael Spence

Professor Michael Spence

Seven years ago, when I met with the board of trustees to interview for my job, I cited various studies, which noted that by 2050, more than 400 million people would live in the United States, Christians would number three billion worldwide, and India and China would dominate the global economy. As we considered together the future of the world and our role in it, we also recognized the pivotal role Westmont could play in preparing graduates to serve in every sphere of society, providing highly educated, thoughtful leaders who could also make a considerable contribution to global Christianity.

We’ve always recognized the genius of our liberal arts approach to education, which seeks both to master every area of human learning and comprehend how these discrete areas of knowledge fit into a greater whole. The importance and value of this approach requires us to continue extolling the virtues of the liberal arts while expanding Westmont’s reach and influence.

As part of my own responsibility in fulfilling this commitment, I feel the persistent tug to consider every area of human learning and determine what role Westmont can play in the global community. I’ve just finished reading “The Next Convergence” (c. 2011) by Nobel Prize-winning economist Michael Spence. Formerly at Harvard and Stanford, Dr. Spence now teaches at NYU. I had the privilege of meeting him in 2009 when he spoke at a conference during the most severe contractions of the global economy. I find his work compelling because Dr. Spence grapples with the reality of these contractions and seeks to understand and articulate where the global economy is going and what its ultimate impact will be.

For many years, I’ve been concerned about what happens to the modestly educated when economies contract or shift and low-educated, manufacturing jobs get sent to production facilities outside our country. At different times, I’ve asked various economists their thoughts about how to handle disruptions to those who become unemployed or underemployed after enjoying stable wages that allowed them to enter the middle class. I’ve rarely found a suitable or sufficient answer to this question. Suggested solutions have included re-training, re-locating or early retirement, which have achieved only modest success at best.

But Dr. Spence is one of the first economists I’ve known or read who speaks directly to the importance of a safety net to soften the blow and sustain the population when these wrenching adjustments ripple through our economy. In “The Next Convergence,” he outlines several considerations that must be addressed to create sustained and positive growth through 2050. In fact, he sums up our current challenge by noting that a “sound basis for employment and growth is the central economic challenge we now face.” He believes we need to answer the key questions of sustainability: What will we need from our infrastructure? How will these policies and practices affect the ecology of our planet? How will we build a sufficient base of knowledge to accomplish this? In particular, Spence considers how to cultivate and promote the tangible and intangible assets that make our economy thrive and preserve our own participation in it. Throughout his discussion, Spence highlights the key sources of these tangible and intangible assets:

  • the role of science in spreading the Industrial Revolution;
  • the necessary developments of civil and geo-political governance;
  • the role of property rights;
  • the rule of law;
  • rapid technological advancement;
  • rising productivity;
  • sufficient educational funding that gives rise to more effective educational outcomes;
  • private-sector investment;
  • foreign direct investment;
  • taxes and government revenues; and
  • learning and knowledge transfers.

These are just a few of the many assets he says must be cultivated and preserved if we are to have a realistic hope of human and economic flourishing.

He concludes this groundbreaking book by calling on the developed countries, essentially the G-20 nations that contain two-thirds of the world’s population and control more than 85 percent of its wealth, to continue working to reconcile the wrenching tensions of growth, long-term employment and structural innovation to preserve and expand open access to the global economy.

In offering these suggestions, he makes the humble and helpful statement that for far too long the political, business and academic elites have lost credibility with the populace in many countries largely because they’ve been wrong or indifferent about the characteristics and impacts of the global economy and its effect on people’s lives and prospects. To put it bluntly, Spence states, “The benefits of global openness have been oversold, and the potentially adverse distributional impacts brushed aside.” It’s so refreshing that an academic of his cultural standing makes such an obvious and helpful statement. But he continues by asking us to stay committed to the global economy. “Given the magnitude of the shock from the recent crisis (economic implosion of 2008; stock market low point of March 2009, etc.), the difficulty of restoring employment, the incentives for protectionist solutions, and the potential for divisive politics could all conspire to make one pessimistic.” But Spence asks us to remain optimistic about the future, about the necessity of solving these problems on a global and not simply a nationalistic scale, and to stay positively and proactively engaged in the global economy. As a result, I find both his analysis and his strategic engagement compelling.

On the Westmont front, celebrity sightings this week include Scott MacDonald and Samantha Kleen, who were married August 17 at a beautiful, vineyard setting in the Santa Ynez Valley. I was privileged to officiate at the wedding ceremony and see many alums from the last five years in attendance. It’s always good to see members of the Westmont family supporting each other! We met this week for First Monday, a lunch with faculty and staff, for faculty retreat at Casa de Maria here in Montecito, and for the welcoming festivities that surround the arrival and move-in of all the first-year and transfer students. Incredible strength and energy comes from the start of a new year. It’s good to feel that familiar rhythm beginning again.

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