“Hundreds of millions of people are gaining an opportunity to climb out of poverty” through participation in an increasingly open, market-based global economic system, Federal Reserve Board Governor Donald L. Kohn said on Tuesday.
Speaking to a crowd of almost 300 at The College of Wooster, he urged that protectionist forces be resisted. “If we put up barriers to trade…everyone is going to be a loser,” he said.
In answer to an audience member, who asked whether the end result of globalization was not that the rich are getting richer while the poor are getting poorer, Kohn acknowledged that “there are losers as well as winners,” but stated his belief that what’s really happening is that “the rich are getting richer faster than the poor are getting richer.”
In answer to another question, he said he thought the Chinese were beginning to recognize that maintaining their currency on a fixed exchange rate limited their ability to absorb shocks and respond to changing economic conditions.
Kohn, a 1964 graduate of The College of Wooster, noted with a smile that while his senior Independent Study thesis had advocated shifting to flexible exchange rates as a means of bringing greater stability to international markets, “I don’t pretend that led to the breakdown of the Bretton Woods” system of fixed rates. He also confessed that as an undergraduate, he too often “focused my intellectual energy on figuring out ways to avoid chapel, in favor of a cup of coffee and a cigarette at The Shack.”
A 30-year veteran of the Fed, Kohn has been mentioned as a possible successor to Chairman Alan Greenspan, who is due to step down in January.
“After the chairman…Don has had a greater impact on the Fed’s monetary policy process than any other single person,” says Robert Parry, a former president of the San Francisco Federal Reserve Bank.
Kohn returned to Wooster as part of the James R. Wilson Lecture Series in Business Economics. In addition to his Tuesday evening speech, which was covered by Reuters, Bloomberg Business News, The Associated Press, and The Daily Record, Kohn met with students in James Warner’s economics class on Wednesday morning, giving them a behind-the-scenes look at the workings of the Federal Open Market Committee and fielding questions for almost an hour.
The Wilson lecture series is supported by the James R. Wilson Fund for Business Economics, which was endowed in 2001 by a gift from James R. and Linda R. Wilson.