Soros, Sachs Discuss Globalization

Two of the biggest players on the world financial stage debated last night at the ARCO Forum about solutions for the major problem of globalization: the rich are getting richer, and the poor, poorer.

International financier George Soros and Stone Professor of International Trade Jeffrey D. Sachs '76 both blamed the International Monetary Fund (IMF) and similar institutions for the growing wealth disparities, but they disagreed on what needed to be changed.

Sachs said the IMF, which makes loans to developing nations, should be all but abolished because it is a pawn of U.S. interests. Soros said reforming the IMF would be more effective.

But the two agreed that globalization has benefited what Soros called the "core" of the world economy--developed nations like the United States--more than the "periphery." They also predicted a worldwide economic slowdown.

Soros, who has made much of his money through speculation on world financial markets, said global capitalism now puts "the periphery . . . at great disadvantage" on an uneven playing field.

"And the idea of leveling the playing field is not acceptable at present to this international community," he said.

In particular, Soros blamed the IMF for the Russian financial crisis of 1999, for holding the nascent capitalist government there to expectations it could not have met.

It was "one of the great tragedies of recent history," he says.

Sachs then began his talk by recommending Soros' new book, Open Society: The Crisis of Global Capitalism Reconsidered.

"He's gotten it almost all right. I want to guide you to its ultimate conclusion," he said, earning a laugh from an audience so diverse it seemed that every country mentioned in the discussion might have had a representative.

Sachs said that global capitalism neglected the needs of the world's poorest countries.

"Globalization is not delivering benefits to a large part of the world," Sachs said. "There are two billion people at the absolute bottom. Ten to 15 million of them die needless deaths every year from preventable diseases."

They're not at the edge of survival, they're falling off every day," he said." "They don't even have the benefit of a financial crisis because no one gave them finances. They just suffer."

He argued vehemently against the IMF's loan system, which he said favored American interests.

"The role of the IMF is to keep poor people away from U.S. taxpayers," he said. "You used to send in the British Army, now you send in the IMF. The U.S. runs [the IMF] for its own interests. We're so cheap, we're faking it with those institutions."

Near the end of the talk, the topic turned to the world's macroeconomic future.

"We've had a bubble that is gently deflating," Sachs said. "And if we have no president by next April, it will get worse."

Soros agreed, but expressed confidence in the long-term stability of global financial institutions.

"I went overboard in 1998 saying that system was about to collapse," he said confidently. "If it were to collapse next year, it wouldn't be that prediction."

Sachs and Soros remained on the podium for a few minutes after the program as the crowd swarmed around them to ask questions, shake hands, and, in Soros' case, get autographs.

"I was very happy with tonight's discussion," Sachs said after the talk. "I was very happy to have George Soros here. He wrote a great book, he's a stimulating personality, and we share a lot of misgivings about the way globalization has gone."