I.O.U.S.A - Addison Wiggin [65]
However, I think that there will be a manifest imperative that the political system and whoever is president at that time will face these issues at some point, because I think if we don ’ t face c09.indd 133
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134 The
Interviews
these issues at some point, they will begin to create the kinds of diffi culties that are going to force the political system to address them. Now, when that might be in time is impossible to predict.
Q: What is it that you enjoy about the career that you ’ ve had and your role? What is it about economics for you that made it not the “ dismal science ” ?
Robert Rubin : I remember a few years ago, I was speaking at a venture capital conference and I started talking about fi scal policy.
And I began to express my views about the absolute imperative that we address our fi scal issues, that we address our trade imbalances and all the rest. Afterwards, somebody said to me that I was the only person they ’ d ever met who could get passionate about the federal budget. But I think it is an imperatively important issue, and every once in a while, in the course of our economic history, the importance of that issue has imposed itself on us because of the adverse effects that can occur from unsound macroeconomic policy.
More generally, I ’ ve been lucky or fortunate in my life in having the opportunity, even though I was involved in a business career, to be engaged pretty much throughout that career in another dimension of life, at least for me, which was political and policy activity and the intersection between the two. And I think it is both enormously important and also endlessly fascinating. Not only is the economic policy itself endlessly fascinating, at least for me, but I think the intersection between economic policy and politics, how to deal with very complicated economic issues of enormous consequence in the political environment, to me is an endlessly fascinating subject.
Q: What would you say to somebody who said, “ I ’ ll never understand that stuff — it ’ s too complicated ” ?
Robert Rubin : It ’ s actually not that complicated. I think you can bring it down to some pretty understandable terms. You know, there ’ s this old saying, there ’ s no free lunch, and I think that almost captures the whole thing. Just as for an individual, in the fi nal analysis there is no free lunch, there ’ s no free lunch for a c09.indd 134
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national economy. I heard someone say not long ago, and I think this is right, that what we ’ ve got to do is to pay our way now, we ’ ve got to be on a road to paying our way for the years and decades ahead, and we ’ ve got to invest in our future. And at the present time, we ’ re not doing any one of those three. If we do them, we can have an enormously successful economy over time, and if we don ’ t, then I think we run the risk of having very serious diffi culty.
Q: Can you talk a little about foreign ownership of debt and its impact on interest rates in this country?
Robert Rubin : If you look at where we are today, debt as a percentage of GDP is not at unreasonable levels, although it should have been much lower because we should have had surpluses during this period of growth, given that we started this decade with surpluses . . . and we ’ ve had some very good fortune with respect to revenues being much higher for all kinds of reasons. I think relatively temporary revenue ’ s been much higher than had been expected. And had we had the surplus, we could have had a much lower level of debt relative to our total economy.
But the problem is that if we stay on our current fi scal path, the ratio of debt to our total economy will grow and grow and grow over time, and as time goes on, the rate of growth is going to increase because we have these very large, unfunded liabilities.
A lot of people, and I think the markets, for that matter,