We began the day of May 24 with Ian Dubin, Associate Director of Brookings Executive Education, introducing our first speaker, from SIFMA (Securities Industry and Financial Markets Association). Having experience in finance and government, he was able to bestow us with a great deal of insight and a unique perspective on financial regulation.
Ian posed a series of questions to him, leading him to explain that after the global financial crisis, there were many changes and fluctuations in policy. While the Obama administration focused on restructuring the regulatory framework for financial institutions, the Trump administration aims to stimulate economic growth through cutting both regulations and taxes. Thus, it would appear as though America is set to continue on the de-regulatory and re-regulatory path that it has been on since 1990.
After Ian had exhausted his list of queries, we asked the speaker our own questions. He answered a deluge of queries on topics ranging from the President’s proposed budget, to control of rating agencies, to regulator’s understanding of the industries they regulate. All of his responses were very informative and led us to a greater understanding of financial regulation.
After this, we embarked for the United States Department of State. Our speakers began by explaining to us how the United States levies sanctions against foreign entities. Next, our speakers explained the two primary types of sanctions that the United States levies. Primary sanctions are applied to citizens of the United States and prohibit them from interacting with certain entities. Secondary sanctions are applied to non-US citizens to dis-incentivize them from dealing with certain entities. When it is stated that sanctions were levied against a country, this does not imply that sanctions were levied directly against the country. Rather, it implies that primary and secondary sanctions are being used to either freeze the assets of or restrict business with certain powerful entities. These entities are normally either companies, high ranking government officials, or wealthy confidants or political leaders.
After departing the State Department, we returned to the Brookings Institution for our third lecture of the day. Our speaker was from the United States and Association of Southeast Asian Nations (US-ASEAN) Business Council. The US-ASEAN Business Council is an advocacy group that aims to foster economic growth and trade ties between the ASEAN’s ten member countries.
The focus of the talk was on relationship building between the United States and Southeast Asia. He emphasized the importance of Southeast Asia at the beginning of his talk. Southeast Asia is a significant geographic connection center for the global supply chain. It provides plenty of opportunities for American investment, and the relationship between the two regions is of great geopolitical importance. Additionally, Southeast Asia is set to see drastic increases in the percentage of its population that can be classified as middle class. This makes the region a desirable location for American companies to have operations as it would put them near a sizable consumer base. A presence in the region would allow companies to both be better in touch with the wants of their customers and reduce distribution costs. The speaker also noted certain benefits of conducting business in the region. Singapore, for example, has a highly developed infrastructure, a streamlined means of incorporation, very little corruption, and a comprehensive information policy system that allows free flows of global data.
The final speaker of the day was from the Center on Budget and Policy Priorities. To begin his speech, the speaker demonstrated how different economic ideologies and circumstances could lead to different policies. While the Obama administration focused on correcting market failures and regulating the financial market, the current Trump administration has taken the approach that less government intervention and market regulation were necessary to stimulate the economic growth.
The speaker then used several graphs to illustrate the fact that income inequality in America had increased dramatically within the past ten years. This is an issue that the government will have to address in earnest in the coming years. While the low-income sector of the population recovered much slower than the richest sector did from the economic downturn in 2007 and 2008, a large number of middle-income workers also suffered due to stagnant growth in wages in the post-crisis period. Frustration with this situation led many Americans to vote for a candidate that offered a stark contrast to the Obama Administration in the most recent election. He also introduced an interesting term–“Shampoo Cycle”–to describe the “Bubble-Bust-Repeat” cycle that the American economy has experienced for the past 30 years.
Lastly, we learned of several ongoing challenges facing the US economy. The speaker pointed out that a flat growth in productivity, as well as a large funding gap for infrastructure development, could potentially cause a disruption in the growth of the economy. Additionally, the recent fiscal policies proposed by the current administration seem to be dependent upon overly-optimistic economic forecasts. However, he hopes that the United States will eventually adopt an agenda with which it can truly reach out to those who were “left behind” by globalization and the financial crisis.
Guest Bloggers: Wei Huang, Shaoxuan Liu, Alex Roberts, Qiushi (Ted) Yan, Yawen (Elva) Yang (GMF 2017)
Image: students at the State Department
This is a series of blogs chronicling the experiences of 42 Global Master of Finance (GMF) dual degree students during their two week immersion course in New York and Washington, DC. Each blog will be written by a small subset of students during their experience. Names of speakers and presenters at firms are anonymous at the request of the firms and course organizers.