Qualification becomes the key to survival - A talk with Robert S. Kaplan- Report by Thomas Seidel

Volker Wieland (l.) in discussion with Robert S. Kaplan (r.)
(Source: Thomas Seidel)

One year after the start of the new administration in the US, with Robert S. Kaplan again visited a regional president of the Federal Reserve System (FED) from Dallas Frankfurt. Here Kaplan is well known. The IMFS Institute hosted a discussion on macroeconomic trends and their impact on US monetary policy. Kaplan spoke more about future challenges for a modern economy.

The hall on the upper floor of the Old Casino of the Goethe University is crowded up to the last seat. That's an estimate of about two hundred listeners in the audience. But the discussion inevitably takes place as a radio play. The organizers of the event simply forgot to set up a stage. For the second time within four weeks, they are thus outing themselves as real "event professionals". So only the participants in the first two rows can experience the guest in persona. After all, this increases the idea of ​​exclusivity.

Yet Robert S. Kaplan wasen't spoiled in his mood from that. He made a little whistle blowing from the inside of the FED in a good temper. But he always remains very focused. This one can't say about his discussion partner Volker Wieland. Wieland did not seem well prepared and let the conversation rather floating by.

The IMFS resides in the House of Finance
(Source: Thomas Seidel)

Kaplan's core theme is change. But nothing was mentioned by him about the conditions in the federal administration of the US. No word also about the forced replacement of FED President Janet Yellen. Instead, Kaplan focuses on the economic and social changes that are already taking place.

The sign of change is technology. Hardly any industry in which no technological changes take place today. These changes, often referred to as "disruption" in English, are nothing other than the "creative destruction" known by Josef Schumpeter. But the strong driving force behind these upheavals is due to the fact that everyone has access to technology and, most importantly, that it is cheap. Much changes are fundamentally. So today's consumers are able to put pressure on prices simply by using the Internet.

In the meantime, soft factors in the economy are often more important than hard ones like capital or an organization. First, there is a passion for developing and producing something. Only then does capital join. The growth and competitiveness of a society will require more than ever before a high level of education. For example, in the US, there are 46 million people with a high school diploma or even less. These people would have to be given priority. Otherwise, they are threatened with being victims of the upheavals and losing their jobs due to underqualification, keyword: digitalization. Germany is traditionally far ahead of the USA in vocational training.

Demographic change is leading to less job growth. Already half of the growth of workers in recent years has come from immigration. Therefore, the immigration should be urgently regulated. Nevertheless, productivity is already suffering from underqualification, especially in middle-sized jobs. But the US budget deficit is hindering necessary investments. Such are expected by the corporate tax reform. This should give the private sector a boost in the direction of sustainable development.

The FED building in Washington D.C.
(Source: AFP Saul Loeb)

Globalization is not a threat! Rather, it must be seen as an opportunity. Unlike in the US, there is a high savings rate in China among the population. This would allow the state to go into debt internally to its own citizens. That is similar to Japan. The result is, that these two Asian countries have little or no foreign debt.

Central bankers could no longer think in isolation only within the framework of their own economy and their own currency area. They need to know what is going on in other countries and what impact decisions in other countries have on their own economy. Meanwhile, the traditional mechanisms of price and wage determination would work differently. That also has an impact on inflation. But how it works, must first be examined exactly.

Overall, Kaplan is optimistic for the future. He does not hide the weaknesses of the American system. He is concerned with the competitiveness of the United States. He sees the challenge of the future above all in the qualification of the working population. The goal is to survive in a multi-polar world. What he meant, but didn't mentioned in words, backwardness and isolation are not the means of choice.