As to the fears of globalization, what is not much debated is our need to do two things: First, achieve substantial reforms of our educational system, particularly our output of technically trained people to augment our legendary innovativeness and entrepreneurialism. Second, we must beef up and improve our social safety nets (notably unemployment and wage insurance and trade-adjustment assistance) that cushion the inevitable transition costs for dislocated workers, rather than leaving them feeling victimized by globalization.

To be sure, America must import relatively less, consume and borrow relatively less, and save more and export more. But the rest of the world must be persuaded to do the opposite. They must import relatively more and consume more, and we must somehow persuade them that they have to stimulate their own domestic demand. They cannot depend indefinitely on exports to the United States. This unsustainable and unhealthy symbiosis, a new version of supply-side economics-where they supply the goods and the money-must stop.

In terms of foreign policy, we must also strengthen our diplomacy, move away from our recent unilateralist tendencies and constructively address issues that are of paramount concern to other countries, such as immigration and foreign assistance. We must renew our efforts to create and strengthen multilateral institutions, especially in the economic area, where we can work effectively with both richer and poorer countries.

To achieve these reforms in the multipolar world, we must place a new premium on international cooperation as a critical means of restoring our own global economic and political influence.

Peter G. Peterson is senior chairman and co-founder of The Blackstone Group. He is also chairman of the Council on Foreign Relations and the Peterson Institute for International Economics, and a former Secretary of Commerce.

Essay Types: Essay