Transcripts For CSPAN2 Treasury Under Secretary David Malpass On Global Economy 20180222

Live from noon to 3 00 p. M. Eastern. Yesterday the Treasury Department discussed Economic Growth and Currency Exchange rates at a form hosted by the Jack Kemp Foundation. He is introduced by foundation president. The son of former congressman. This is an hour and 15 minutes. Joining us today. My name is jim kemp. We had been around for about nine years and we have a very International Audience today. Many people in the United States remember him mostly for being an nfl quarterback for 13 years for the Buffalo Bills and most of that time in the 1960s after he have a sufficient number of concussions he decided it was appropriate to run for the United States congress. In 1970 my dad was elected for Congress Just outside of buffalo new york. And serve in congress for 18 years. Until he ran for president in 1998. Unsuccessfully losing to George Hw Bush in the primary. They served for four years. And then he went into what he called the political wilderness. In the early 90s. And he was very surprised to receive a call from an old foe a friendly foe but bob dole asked my father to be his Vice President ial nominee in 1986. It was a surprise i happen to be playing football in the Canadian Football League at the time. A buddy of mine told me. I said i think you might want to come check this out. My parents they didnt need to consult me. They have gone on and said yes and not only did it surprise the u. S. Media but as family members did not know either. My dad have empowered america. When he passed away in 2009 i was really fortunate and privileged to start a foundation in his name which exist today. Today we have that kemp forum the kemp forum on global Economic Growth. Its a debate and discussion series that provides a platform for the competition of ideas. I hope you and steve can please be civil today. Isnt that what our country needs. Many people talking about ideas and thinking about the way that reality works. In today talking about global Economic Growth and thinking about the way that business is transacted instantaneously and what the parameters for that business are. How do they set their financial policies so that people can become all that god created them to be. The Jack Kemp Foundation is to advance the american idea and we Cover Economic policy and Foreign Policy and equality of opportunity. Inspired by him. Today if you are interested in what we are talking about and want to have that social media conversation that apparently is pretty that is pervasive you can use the hashtag kemp forum. And one thing that i do want to know about my dad a lot of people knew him for his football career but supply side economics was what he was known for in his political career. He was not a great politician because he knew how to work washington. He was a great politician because he believed in the american idea and believed in the substance that became supplyside economics. Known as the combination of getting tax rates right. To maximize incentives and having tighter Monetary Policy than was have at the time. Which is what helped and the stagflation of the 80s. It really launch dads political career and helped people to take a physical education major from Occidental College seriously in the economic realm. In a quote from him on this topic my father in 1982 said that what is too little recognize is recognizes the fact that the pressure for protectionism more often than not originates in a failure of the Monetary System. A calming and increasingly market requires the medium of exchange. They manifest themselves as disruptions of trade. Not bad for a quarterback. Who had have some concussions. In the 80s to focus attention on a more stable Monetary System he realized there was a lot of people that had written a great step on it. He also realized that lyrically to get anything done you have to be able to engage with folks on the other side. They went to a democratic senator from new jersey. And they convened conferences talking about Monetary Policy and international Monetary Policy that laid the groundwork for the plaza accord 1989. It focused on stabilizing the system. Those accords made important contributions in today given and the financial instability that we have seen in recent years we think it may be time for such consideration of a new Exchange Rate accord. So last year at the Jack Kemp Foundation. We started the project on Exchange Rates in the dollar. It was directed by sean. He seen it in the back. Thank you for being the inspiration behind this and taking the inspiration that you got from mundell and kemp and doing this. Into honor dr. Mundell i would like to read a quote from him as well. At our first event last year he sent us a letter and said the following. There is no valid economic argument in favor global monetary disarray. The major currency shifts. They serve to is that exacerbates. It is just turbulence and waste. To contribute to rising political stresses. I fear continued longterm trade imbalances. They remove barriers while at the same time maintaining a stable account. Debt as i mentioned. He looked for people that were great thinkers on the issues that he believed were central to the Human Flourishing in america should represent. Some years ago i assume it was in the 80s my dad met david and they became friends and dad asked david it rang often. And i think he learned that he needed to respond quickly. There thrilled with the appointment. Grateful for the family. The right man at the right time. Im glad that you are all have the opportunity. And meet him as well. You are really happy to have dr. Steves with us here. When you think and i know everybody thinks about this when they wake up in the morning. When you think of hyperinflation where instability is rising and measuring the hyperinflation. And shake it to its core its a problem that a lot of people arent thinking about. And he is advising nations that want to end or prevent that hyperinflation. Steve is a professor of applied economics and the codirector of the institute for applied economics. It is also a senior fellow. And the troubles currency project. The International Monetary research in beijing. Contributing editor at the central banking in london. He is been a key ally to us at this project and steve is going to be very involved in todays program. Steve please come up and share some remarks with us. I will be rather brief in my presentation. I will introduce is probably not further than your dad and david go back. In any case it is a pleasure to be here i would like to make three powerpoint presentations the first one as supplyside economics. In supplyside economics they still wonder what that is. From the fundamental things. Its minding your peace more than your queues. That is prices rather than quantities. If you go back to the start of the crisis that we began actually in 2007 thats where i want to begin. That crisis started bubbling up in august of 2007 in the United States. With the subprime mortgage fiasco. It also more pointedly blossomed in the uk when Northern Iraq with the savings and loan institutions and went under. The first bank run that they had had in a century Northern Iraq fooled in 2007 march of 2007 he was taken over by j. P. Morgan and aig. And then the big one came. And that is september 152008. You have the rampup of all of these problems coming. The supplyside economics side of the story. I will go if i can run this properly. The u. S. Dollar against the euro in three short months it appreciated by over 20 , a fantastic price move in the most important pricing in the world. That important prize by the way was not on the dashboard of anyone at the fed in the higher ranks, meaning the chairman. It was not on the chairman enzi dashboard. But its on the supply side dashboard. So we had the collapse of the euro. We had a sharp appreciation in the dollar, collapse and the price of gold. Thats another price. The price of oil you can see we had a tremendous decline, almost 60 , and almost instantly the Consumer Price index it was 5. 6 in july, and it went down to 1. 1 of 4. 5 percentage point drop, huge collapse. By the time we got into the summer of 2009, 2009, actuallye economy was registering negative on the cpi index. We were actually deflating. The point here is in the supply side view of things focusing on prices is what . The Monetary Policy in the United States at the time these problems were developing, and lehman was getting boxed into a corner was way too tight. We had a huge appreciation of the u. S. Dollar. The dollar was soaring at this time, suggesting Monetary Policy was too tight. So if we go to the second slide, how do we fix this . Well, we fix it, the second slide i like to call my because bob mondale as a group of friends and associates visit him every summer outside of siena and the group usual suspects including former central bankers such as paul volcker is a steadfast member of the group. Talking about stability. Stability might not be everything that everything is nothing without stability. In general, ticket with regard to Exchange Rates. So here you go up at the top, you can see that he quit up there when the dollar was very weak and then we had the summer of 2008 where the thing appreciates massively and comes down. That was a big move on the first slide that i had. Its out of this range of 120140. When its above 140 its very weak and when it is below it is extremely strong and the euro is weak. Our proposal at mundell is that we should have some arrangement between the United States and the europeans to stabilize the Exchange Rate, the most important prize in the world, the dollareuro Exchange Rate. If that was stable all the other satellites would stabilize around it because they are very much focused on that important price. So when the dollar is weak, when its above 140 on that chart, how does it get stabilized . The ecb would buy the dollar and if youre buying the dollar that means they are increasing their Monetary Base so they would loosen up their Monetary Policy, and on the other side if the dollar, the euro is very weak and the dollar is very strong, if you were down below 1. 20 on this, the fed, actually would defend the euro, purchasing euros and, of course, increasing the Monetary Base in the United States as a result loosening up. And the relative values and monetary stands would be stable in europe and the United States which were talking about a big chunk of the World Economy, if, in fact, they found some sort of rule or had some kind of agreement along those lines. In this regard it is interesting, our featured speaker of the day, if you look back to scholarly work, including an article in the 2005 issue of the cato journal had this to say here clearly, a stable currency, not a strong or weak, is appropriate during most of the countries economic life. So im going to introduce david in a minute. We are very much on the same page. And as you can see this idea of stability in general is recognized by people in the supplyside camp, in the economic sphere. Now, the last slide is why does anyone care about stable money, or do Companies Care about stable money . I had two of my Research Assistant spend the better part of an semester reading every annual report of the top 100 companies in the United States. And they wanted to see, one, did they say anything about Exchange Rates or Exchange Rate risk, Exchange Rate exposure . And as you can see every Single Company in these three groups that i have, yes, they noted exposure to Foreign Exchange risk and it was a concern to them. The second item down here, did the company hedge its risk . As you can see 77 77 companies are in column one, so that means 77 in that Group Representing that group did hedge, and also in the third row down there you can see that group was hedging, too. There were 20 companies in there. You had 97 of all top 100 companies actually were not only concerned but also hedging their risk. Now, the last item, did they quantify the foreignexchange losses . The first group you at 77. They did quantify. They gave you a number. The second group also quantified, and they did not hedge. There were only three companies out of the top 100 that did not hedge but the did report their losses. In the third group they were concerned, they hedged, and they did not report their losses. So what kind of losses are we talking about . In 2016 you have microsoft, effects loss, 3. 3 billion. Alphabet lost a billion in foreignexchange. Proctor and gamble 880 million. You are talking about real money, so concerned action in most cases hedging, still losses and the losses are quite large. And with that, i will terminate my slide presentation and get to a more pleasurable thing, and that is introducing my good friend, undersecretary David Malpass to you. David is and around and is not only been around, hes very respected on wall street where he was at bear stearns as a chief economist, and also had his own independent consultancy, very well respected on wall street. Hes been in washington on various tours of duty. George bush number one, u. S. Secretary, u. S. Treasury department, assistant secretary. Prior to that ronald reagan. That was my First Encounter with david in the political sphere, u. S. Treasury. Also the chief of staff on the republican step for the joint economic committee. So hes been on the hill. Hes been u. S. Treasury two times around. Hes been on wall street and a number of positions, and i think the main thing about david that i like is the fact that he thinks and he writes. So if you go back and look at the wall street journal, you will find many articles that david and. I quoted one out of the cato journal, so hes a thinker and hes a writer. He likes ideas and likes the action, both on wall street and in washington. So with that, david, the floor is yours. [applause] thank you very much, professor. And im very happy to be here at the Jack Kemp Foundation. I want to thank jim kemp and sean rustin for putting this together. Also steve hankey for the very kind introduction, and warm regards to joann. I watched lyndsay bahn run the downhill yesterday and i thought of joann and jack bombing down the ski slopes where they were excellent skiers. So i want to answer the question of when done at first meet jack. Those in 1984. It was a houseSenate Budget conference, and he was persistent, tenacious in fighting for ideas. I went to mount vernon on monday for president , during president s day, took my family there, and we can all remember and here we are in a Historic Building here. Those were Historic Buildings they are. On how powerful our Country Foundation is inviting for ideas. I want to talk today about peace through strength. Thats one of our strongest ideas, how do we create peace having a Strong Economy and the Trump Administration high priority is on growth, both here and abroad, as a way to make a stronger and to create a Good Environment for people, for higher Median Income spirit we need a Strong Economy that provides sufficient resources for the national security. Thats been a priority in the new budget. So we are sparking the growth side of that equation through a tax reform law that will approve the structure of the economy. Along with regulatory reform, image reform and trade reform. The policies are aimed at allowing new businesses to form and Small Businesses to grow. This sounds a little like jack kemp. The goal is to achieve higher Median Income. That means more pay for workers comp for more workers, and to reverse the policies of weakness and decline that prevailed over the last decade. The council of economic advisers will be releasing a great new report today on these growth policies. Its coming out i think this afternoon. Its chockfull of chapters about how do you grow an economy, 700 pages worth, and i commend it to you. Tax reform is one of the Critical Reforms discussed in the report so i want to go into that a little bit. I was inspired by jack kemp in 19841985 to become the senior tax analyst at the Senate Budget committee, then i transferred to the Treasury Department in 1986 to work on the tax act of 1986, which was very important in sparking u. S. Growth. I then later worked for the joint economic committee, but you know who was the Ranking Member then, bill roth so bill roth insisted on being called the rothkemp tax bill, and so i was schooled in the importance of taxes and growth from the very beginning. Many forecasting models lowballed the longerterm growth effect of the new tax law by focusing on its fiscal mechanisms rather than the structural change. Some economists want to create models that look at deficits as being the source of growth when in reality the real world effective tax cuts come from businesses, large and small, responding to improvements in growth policies, including regulatory tax and Energy Reforms as we are undertaking now. So the tax bill that just passed in december lowered the corporate rate to 21 . That aligns incentives so managers focus more on creating profitable businesses and building the labor pool rather than offshoring jobs and devising expensive financial structures to minimize taxes. Importantly, the new law will benefit many unincorporated businesses geared to jacks heart. They are often the nimbleness and best able to hire and train workers new to the industry. Precisely the workers President Trump wants to draw into the labor force. The new law provides small pass the businesses with a 20 tax deduction, helping them compete with Big Companies and government dominated industries. The tax law encourages u. S. Business investment, allows a better allocation of capital and encourages Small Business dynamism. This combination of structural improvement will draw more workers into the labor force, improving their skill. This will allow the economy to build from the low average growth rate that preceded the Trump Administration. Measures of mrs. Investment, business confidence, hiring intention and profit expectations are all up sharply, and i expect new business for mission to begin to rise from the deep trough of recent years as a result of the combination of Structural Reforms in the new economic program. I want to turn to the International Front where i spend most of my time nowadays. We are creating an apartment that will encourage growth abroad and help growth in the United States by balancing and creating Growth Opportunities and investment opportunities. First is redirecting our china policy. Trade and investment should be reciprocal. China stop liberalizing so they were on a trend that wouldve brought in more and more toward market economies, but they seem to have stalled in that and even reversed in that policy. White House National Security Strategy guides a new direction on china that will insist on reciprocity in terms of trade and investment as a step, a key step in creating a more growth oriented environment for the u. S. And for other countries. And theres been broad consensus outside china around the world that its critical, its important for the world to recognize chinas reversal and its liberalization trend, and to begin to take steps that will allow our own growth to continue in spite of the change of trend. We need also to find solutions that counter the Mission Creep that controls international organizations. When you work on the International Side of government as i do now and having some past parts of my career, you find theres a giant sprawl as big on the International Side as it is on the domestic side. A host of organizations are creating mountains of debt without solving problems. Huge organizations like the world bank and the many Multilateral Development banks have created an environment where their own growth in set being as important as their clients growth. I think thats a direction that we can and have to change in order to Foster Global growth. In short, multilateralism has gone too far. We are working, in the administration, are working with likeminded countries to focus the missions of the g20, the group of 20 countries, the g7, the Financial Stability board which is a giant Regulatory Oversight organization, the oecd, and so on. In order to focus the nation so they are more amenable to rising Median Income in the u. S. For American Workers. China itself is lending like crazy to poor countries trying to buy friends and exports but often sustaining work government and leaving for people with loads of debt. Venezuela is a case in point. In the western hemisphere venezuela is chinas biggest investment and biggest set of credits, meaning of china the most amount of money in the western hemisphere. The imf Christine Lagarde said over the weekend that the u. S. Tax cut was creating a race to the bottom by choosing tax policies that might cause governments to reduce, to cause a reduction in government spending. The best way to reduce the dependence on government is to allow the private sector to grow and you cant do that through taxes or evaluation. Trade renegotiations that work for americans are also critical in a international approach. Nafta, of course, the korean freetrade agreement, need to be renegotiated in a way that benefits American Workers and that creates a winwin situation so that we can grow our own economy as well as growth abroad. I want to also mention dependable money in one of our topics today, the imf see communicate that was issued in october and then the asiapacific Economic Cooperation finance minister statement that was issued in november both included statements noting the importance of Exchange Rate stability as a goal of sound policy, and as a contributor to strong and Sustainable Growth and investment. I will quote from the communique, strong fundamental, sound policies and Resilient International Monetary System are essential to the stability of Exchange Rates contributing to start and Sustainable Growth and investments. One final area i want to mention is we are laying out an innovative set of western hemisphere initiatives. This year is the year of the americas with argentina, peru and canada all hosting summits. We support freedom, democracy, free and fair elections, and we have a goal that this year 2018 the year when all of the people of latin america and the western hemisphere could live in freedom and democracy. Venezuela and cuba are not in that condition at present. Stronger policies abroad would allow higher Median Incomes abroad and at home in the United States. That benefits us all and thats part of our policy on latin america. I i gave a speech at the csis ad described a tenpoint plan called america grow that encourages reciprocal trade and investment, especially in energy that will allow all of the people of the western hemisphere to have faster growth in Median Income. So in conclusion, growth isnt rocket science. It comes from liberal markets, hard work, dependable money, the rule of law, democracy, good ideas, lots of leadership. In short, peace through strength. And i want to stop with that and see if we have discussion and participation. Thank you. [applause] david and i will start the conversation, and then open it up for q a as we segue into the audience. I think, david, maybe as we start, do you have any reflections on specific anecdotes, for example, about jack kemp and roth and how the operator to get something actually done . Because they got a lot of big things done, or at least one big thing. They did. I think core ideas are really important, so they had the core idea that growth can be faster, that you can achieve that mostly through private sector growth. So you start from that and then i think you add persistence persistence. And so pushing all the time for a core principle was critical to it. That its in, of course that gets into economics, seek and think about lower rates on it, lower tax rates on a broader base being a critical part as a think about the current corporate rate having moved from 35 to 21 . That sparks a whole range of improvement in behavior by companies not only in the is permitted around the world. Because when you have one rate that sticks out and is too high it causes distortions. Of those kinds of ideas are exactly what they talked about. I was in senators roth office when he began thinking about the roth, what became the roth ira, and so the idea was how do you help people save money. The roth ir is a powerful tool to do that. Ira procured by the idea, thought about the idea and adopted it right away. It took ten years for that to become law. He had to first become the finance committee chairman, which he wasnt, and that gave him a position of enough power to begin putting forward an idea. And then year after year he pushed for that kind of law. So the lesson is, have some good ideas, have them be in sync, in synchronous with good principles, and then push for them. The one thing id be curious about, both kemp and roth leaned on heavyduty intellectuals and were very much interacting with people like mundell for example, and a whole host of people that were associated with wall street journal at the time. Bob barkley, all these people were intellectual for journalists or almost pure academic. Do you have any well, and we still have a lot of the challenges today in the Economic Community as part as what is growth really originate. And so i think holding to the principal that it originates in a rule of law apply to private sector that has freedom is core to that view. Thats a battle that we really need fight i think everyday. Moving into the contemporary scene, i mean, weve got the slogan America First. How does the thinking of supplyside economics, i mean, going back to kind of your origin and we think about things, how does this really fit in . I know you were outlining some it in your speech but could you maybe elaborate a little bit on that . Thanks, yeah. And i talked about it in previous speeches in more detail, but what is happened over the recent decades is multilateral institutions, and candidate trump talked about globalism, not globalization. People swap the two terms. So globalization can mean a supply chain that creates sufficient production around the world, if there is a fair basis within trade agreements for doing that. Globalism is often the governments working together for the benefit really of people at the upper ends of the scale to make government bigger and have grow more than the private sector actually grows, which if you look back has been part of the problem in the slow world growth that weve seen in recent years. So i describe it as multilateralism gone too far. And i emphasized in speeches that the u. S. , the Trump Administration is thoroughly engaged and wants to be engaged in world affairs, and leadership, and helping other countries and seeing growth grow faster around the world, but thats separate from what i government does that. That means we want private sectors around the world. That means free people working together in Market Pricing in order to create more jobs. And so that really in zap being the goal of the policies inns up. Staying on the international thing, one thing that jack kemp was big on, i can remember ever being in a meeting with jack what he didnt mention the fact that the smoothawley tariff in 1930 was one of the major contributing factors to the great depression. And now im reading in the paper the administration is threatening, the tears on aluminum and steel for example. How do we square this . This is oppressive because you remember this. I dont want to go too far in that but i will explain. So as we view the situation in the u. S. For workers at the median level, workers in need many states were feeling the pressure of unfair trade practice abroad, some of which came about from trade agreements that were struck at times and then not implemented. If we think about china, for example, it liberalized into the world, until the point that he got into the world trade organization. That organization doesnt really have the strength to stand up to china subsidized industrial policies, which is an explicit set of goals to take over Global Manufacturing sectors as well as services sector. So that went forward into an agreement that many countries entered into, thinking that they had a deal that china would continue that trend. And then that backed off. So we ended up with a situation in the u. S. Where many of the industries simply moved away offshoring their jobs. The point that we are at now is the need for a renegotiation of some of the previous trade agreements, and then also a set of responses to what china is doing, which is patently nonmarket behavior. I think that should be an inclusive kind of goal for the world, for a world that is headed or that desires more freedom for its people and more market orientation. And what we find is that of the countries are very much seeing similar, their perception of whats going on in china is similar to what we are seeing. We saw recently president macron of france go to china. This is about a month ago, and come back saying you need to reorient frances policies with regard to china. We saw Prime Minister theresa may of the uk go to china in the last couple of weeks and return, come back to the uk with the view that chinas policies were not moving in the direction that they had thought they were moving. And so thats a global view that i think should be welcomed by the u. S. , that theres a perception that the policies that were in place were not working and that new direction is going to work better from the standpoint of American Workers and of Global Growth. And we are seeing it in the Business Community picking up its investment levels. World growth is already beginning to accelerate from the very low levels that have been suffered in 2012, 13 and 14. I think my big concern with that, reflecting back on the Reagan Administration when i was at the council of economic advisers, i spent most of my time fighting with colleagues over in effect protectionist measures in the spirit of renegotiating things, putting voluntary restraints. Remember then the Japanese Cars were the big thing. The kind of shall we say free trade people were primarily in treasury, as you know, and the council of economic advisers at commerce and some of the other elements in the Reagan Administration. They basically won the day, and as bill concluded in his book reflecting on the reagan years, the reagan years we had the perfect rhetoric from the president was free trade. Thats it. But the reality is i dont want to relitigate those years with those policies, so where we stand today is an observation that there are unfair trade practices in a lot of our trading partners, and concentrated in some, that can be addressed to better trade negotiations. So thats where we stand, and its a key part of world growth Going Forward to find ways to make that work in an International Trading and five that is based on freedom, based on as i say reciprocity. You know, in china we have allowed china to trade relatively freely with the u. S. , but theres not reciprocity on their side. Much more difficult for u. S. Businesses to try to compete and try to enter markets in china. Much harder for u. S. Businesses to sell into china. So its a relationship that is not working. So however you think about it in terms of the philosophy, doesnt really matter. What we are looking at is a way to have jobs for American Workers based on fair relationships within the world marketplace. Okay. Youve obviously touched on china, just touched on china again, and the u. S. Would you like to say anything about japan, for example, in the context of the international scene, anything in particular . I know we have guests from japan here and they might be interested in any issues, any thoughts . You know, im happy to, on quite a few countries and our own in terms of the benefit of structural reform, in terms of growth. As japan faces a competition from its neighbors, from around the world, from the United States, japan, just like the u. S. And other countries, needs to think about its own structural policies. The u. S. Has stepped forward with a major structural change in its tax policies which would make us more competitive. And so in a recent wall street journal article i wrote how one hoped for that, is other countries then step up with Structural Reforms of their own. It would be in u. S. Interest to see other countries doing better policies. Japans policies, one that i dont have been aware of for a long time is their agricultural policies that dont really allow as much seal of goods into japan as should happen. The japanese, people would benefit and that would Spark Innovation within japan if there were Structural Reforms. But that applies we go through africa, latin america with individual policy that would allow people income to go up relatively fast. If they were able to make those reforms. And if i may, in one obstacles how do you get those two governments . One of the challenges is governments want to resist that. I often like the quo. They benefit from the status quo prickett allows governments to keep its own place within the society picks one of the big challenges, and both jack kemp and bill roth, senator bill roth, recognize that within use economy one of the Biggest Challenges was to do with the government itself. President trump has been outspoken in the need to make changes that allow the government to improve so that people, the private sector can grow faster. Do you have any other thoughts you want to conclude with before we open up to the floor . No, because thank you. Do you want to take the questions or you want me to do . Would you prefer to have me do it . That would be fine. However you want. Okay. We have a mic that is moving around. [inaudible] in light of recent market volatility what policies which recommend to the Federal Reserve to restore market Interest Rates without interrupting the emerging trump boom . Boone. That that is independent and im not about to give them advice here. What i will say is that were in a situation that is beneficial for private sector in terms of having capital relatively available so big challenge for government policy, probably speaking, is how do you allow Small Businesses to have access to credit as they create a new business or as they want to grow. That something people working on everyday as a way to find, to find growth within the functioning of the Financial System. Thanks. When paul volcker had your job can you introduce yourself from now on . Im daniel heath, president of max will step economics. When paul volcker had your job at the time of the smithsonian [inaudible] Exchange Rates in the 70s, he ran something called c20 which was searching for alternatives to present system. Have you plans for looking at alternatives to the present Exchange Rate regime . No. So as i mentioned in my remarks, the imf communicate and october described an environment where, theres more context in that communique where it welcomed the relative stability of Financial Markets now, and that is, thats beneficial for growth and investment. So looking for ways to allow that, those conditions that are relatively beneficial to continue and persist. Thank you. Carl, i deal with [inaudible] question whether hes is relative object and equilibrium rather than just growth can be achieved through monetary integrity. With those who labor pay an honest account, people prosper and historically that was recognized as gold and silver coin which of course weve abandon our obligations under britain wants to maintain the dollar as redeemable in gold. Is there a potential for new Bretton Woods meeting prep someplace neutral like reykjavik with the nations can meet and consider restoring an honest Gold Monetary unit of account which is a longer limited in its liability by a gold coin which ill get wireless technology, a company like apple could have privatelabel monetary unit redeemable digitally in gold or physically, perhaps at an apple store. So thank you. In general innovation is really the heart blood of the Financial System comes together, so you want to encourage that, whether that is in a distributed ledger which is the Technology Concept underneath some of that. We want to find ways that that can happen on the other hand, the danger from money laundering, from terrorism and so on is a pervasive problem that we have two ovoid, stop en bloc and fight back against as a core part of our values and upper future ovoid here let me leave with that. As i described in my remarks, dependable money is an important step in growth and investment for countries around the world. So i think that, an objective that we can aspire to and promote. I note today venezuela is running 13000 inflation rate, which he did think about the impact of that on poor people within venezuela, remember what happens when theres a high inflation rate. Wealthier people are protected, poor people lose even the food in the refrigerator because of the inflation taking away their value. Its a desperate situation that we all should be working to avoid. You know, im interested in all kinds of ideas on innovation, but i think from the standpoint of what principles can we put forward, i think jack kemp was part of this, having money that is dependable over long periods of time is a goal that we can aspire to. Go ahead. Worn coats, retired from the International Monetary fund. As the u. S. And europe and hopefully the rest of the world economies grow in the coming years as we expect and hope, the demand for an International Reserve asset will also grow. And if it continues to be supplied by the United States in the form of the u. S. Dollar, this requires continued balance of payments deficit on the u. S. Part in order to supply those dollars. The sdr of the International Monetary fund was meant to supplement dollars and International Reserves to relieve that pressure, but the imf has been very resistant to promoting it in any way such as encouraging the world bank and other International Development agencies to borrow in sdr is, the nominating globally traded commodities like oil, et cetera, in sdr. Things that would encourage the development of a private infrastructure in sdr assets that would be necessary. The imf has been very resistant to promoting any of that because they felt a cold wind from the u. S. Treasury. Question . The question is, in light of the need for a balance of payments deficit on the part of the u. S. To supply these reserves, will you consider giving the imf a green light and encouraging them to promote a larger role for the sdr . I dont agree with the economics that you postulated in the question, so i dont see that theres a need to address that through sdrs. Rick kessler. Since bill roth and jack kemp and my old boss were on my board at the same time in those days, my question is this, david. How do we get the global institutions, some of which you named, how do we get them also to allow u. S. Products and Services Abroad to have a chance to showcase . Example, mcc, we give tremendous amount of money. Many u. S. Companies are actually stopped right at the border from ever participating in those contracts. We see this time and time again. So when recent development at the u. N. Where a u. S. Firm actually got a master agreement, but we see almost everywhere i travel around the world countries go in and leverage their aid, Economic Health with also showcasing their National Product line. They United States just doesnt do that. Given that i i come from sort f the congressional side which is a constituent services side, how do we get those global institutions to better promote u. S. Products and services in a much fairer, competitive Playing Field . I would phrase that a little differently of how do we create a level Playing Field for american businesses so that they can compete within the contracting opportunities that are out there. One of the most unbalancing effects thats going on today is chinas credit agencies and also at state owned banks pics of china is operating a very government controlled, government centric system that makes nonmarket loans in two countries and has nontransparent terms that end up causing china to have the best shot at getting all of the businesses from those behavior. So we are, where pushing back on that in a number of International Fora to try to achieve a level Playing Field for u. S. Products and services in those. Another aspect of this is simply to have less of the World Economy controlled by governments and more of it by private sectors which would be a key way to give u. S. Businesses a fair shake and another is on the corruption front, and i spoken in similar speeches on this, that to have standards be more transparent so that u. S. Companies can fully participate in that. A lot of times the u. S. Companies are being held to higher standard than other countries do with their own companies. So that creates also an unlevel Playing Field. So theres three ways that we can do that. It fits well into the America First concept that steve mentioned early on, how do we create a fair shake for American Workers. Over on this site. Ive been neglecting my left for some reason, i dont know why. Thank you. Dana marshall. David, thank you very much for that. Along with the challenges we have with china on trade and don inbound investment, another challenge is on the enormous Infrastructure Development activities abroad. Weve seen recent, Administration Proposal on the dfi, Development Finance institution for fiscal 19, and a very free i get that report of the Australian Partnership bring up a quadrilateral sort of flash of providing defilement finance, money that might help companies in from those four countries. I wonder if you could elaborate a little bit about administrations inking about those schemes others to try to be able to put a a u. S. Flag in that important space . Thank you. In a way, thank you for the question to the edge is going to be similar to the one i just gave that the best way to have an attractive environment for u. S. Companies is often going to be to have less governments occupying the space. And so im hesitant to think of u. S. Development finance to the u. S. Government as a solution to the problem. A better solution i think is to persuade china to abide by more coherent rules in terms of their own financial loans. They are piling debt onto countries, at the debt, remember, goes to the existing government of a country, and then that existing government benefits and then they are gone and the country is left with the debt for years and years and years so ends up being a burden rather than a benefit. So i think i want to stick with that approach as a way to encourage Global Growth and benefit American Workers. One thing if i could ask on china because you mention it a number of times, the plan seems to be, totally resistant to what you you are talking about. Is there any indication that theres movement or progress along the lines you were thinking of, david . One of the challenges for the world is that as china has grown and decided not to move toward market orientation, that means the misallocation of capital actually increases as the percentage of the world. Youve got this giant capital allocator, china, choosing its investments in nonmarket ways. So that actually ends up depressing or slowing world growth pics i think that something that the world can come together on and realize that thats a drag on the world. So as that discussion occurs, china hears that more and more. We were coming off of that period of years where china was congratulated by the u. S. , by other countries, for whatever they were doing. They went to davos a year ago and said we are into trade, when in reality what they were doing was perpetuating and continuing a system that worked for their benefit but ended up costing jobs in most of the rest of the world. And so reorienting that discussion i think will at least make clear to the world where the different point of view on freedom and economics, on growth, what are the different positions on that. China is in one camp kind of alone in that, and the rest of the world is standing saying we really dont want to go in that direction. We want to go in a better way. Okay. Have a question over here. The gentleman in the red tie. Thank you. Question first for david. Your office would seem to be a logical one to which other international affairs, officials of countries would come for advice on tax cuts. After the 81 tax cuts and 86 cats many countries adopted very, very similar approaches to keep up with the United States. Im glad to see Christine Lagarde isnt bothered by that but use of evidence of countries moving in this direction . One more academic question after that, and that is this. Shouldnt we be talking in terms of developments of Economic Growth as changes in relative prices . Obviously taxes change relative prices as do, as does deregulation. Thank you. Yes, to the second point, we could think of it as a wedge if we think of a tax wage, europe runs a big tax wedge on labor. Labor is loaded up with taxes and we can observe that the Unemployment Rate there tends to be higher than in countries that dont have such a wedge. And the same could be said of regulatory policy creating a wedge between the price between the prophet or the price that the seller benefit from. So that is certainly a way to think about those. As part of that tax regime. I guess i would, you know, people around the world talk about policies, but when you really get to it, a lot of it is national and is local. The dialogue is going to be different in the u. S. That it will be in france, then it will be in canada because our governmental systems are so different. So i guess my thought would be that we should broaden it to Structural Reforms. So each country did come had an internal dialogue about what the best policy change is that would allow meeting in, to go up, and then they proceeded to try hard to get that the policy passed n their own country, that would be good for them. That would end up being good for American Workers as well because we would have a faster growing world. And it really will is going toe different. Some countries have labor immobility where they cant hire the workers that they really need to hire. Of the countries, theres some countries that have a very expensive legal stamp it has gone all documents. You might think havent those days gone . A notary of the public in the u. S. Is a relatively inexpensive concept, but in some other countries its very expensive and you have to wait in line in order to get the document so that you can have property rights, so that you can have a bill of sale and things like that. And so for those countries that might be the single biggest thing that would allow faster growth. And so i come back to a point i made earlier that in a lot of cases we could wonder why does that happen. And when you really dig into it, governments have a vested interest in keeping the status quo, which is often that big wedge that we were talking about, that causes costs to be much higher in the benefits. So if we could change that you could get faster growth abroad, faster growth in the u. S. Thanks. So before we thank under secretary malpass and steve, david, you love ideas. The folks in our kemp network and here today, weve got a lot of ideas. How do you want to take in ideas from the people who care and want what you just described to happen . Whats the best way for people to interact . Thanks. Thanks, jimmy. Public service is one way. In other words, get involved. Thats one. Number two, write articles as you do, as your colleagues do. And those are red. People look at ideas and have an interaction with that. And a four like this i think are important for people to actually have an open discussion of ideas forum. Innovative radical ideas. Im sorry want today, i was brushed with, but in a way we have to hear ideas, react, you know, take some good ones and move on. Im always looking for ideas. I played out a little bit lines that raise Median Income is a a great one, and are part of the world where needing income today are just plain too low. So we are desperate for ways, we encourage and invite ways for countries to raise their meeting income. That way we would have better markets for u. S. Products. We would have a better life for people as we go into that. So those are some ideas. Its not a fixed by . Speed it will lead us to go to conversation on consolidation among Health Insurance Companies Providing the medical care. To hospitals and health systems. The alliance for Health Policy is hosting this discussion. Particularly since i know tom, i think well have a very lively discussion this morning. So i am actually looking forward to hearing something today and im sure we will hear something quite interesting. So thank you and turn it over to sarah. So, welcome this morning to those who are joining us live on cspan2 and watching from home. Before we begin, i just want to make a quick note for