J. Bradford DeLong, Professor of Economics at the University of California, Berkeley, is a research associate at the National Bureau of Economic Research and the author of Slouching Towards Utopia: An Economic History of the Twentieth Century (Basic Books, 2022). He was Deputy Assistant US Treasury Secretary during the Clinton Administration, where he was heavily involved in budget and trade negotiations. His role in designing the bailout of Mexico during the 1994 peso crisis placed him at the forefront of Latin America’s transformation into a region of open economies, and cemented his stature as a leading voice in economic-policy debates.
Card-carrying neo-liberals like me, who pushed for opening capital flows wide in the early 1990's, had a particular vision in mind. But the future that we hoped for did not come to pass.
We looked at how extraordinarily strongly the world's system of relative prices was tilted against the poor: how cheap were the products they exported, and how expensive were the capital goods that they needed to import in order to industrialize and develop.
"Why not free up capital flows and so encourage large-scale lending from the rich to the poor?" we asked. Such large-scale lending might cut a generation off the time it would take economies where people were poor to converge with the industrial structures and living standards of rich countries.
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