Global self-interest. (Inside Expert).(interview with Allan Meltzer)(Interview)

Allan Meltzer, a professor at Carnegie Mellon University and a visiting scholar at AEI, is the Institute's leading scholar on monetary policy, economic history, and international financial institutions. In February he received AEI's highest honor, the Irving Kristol Award. In his address, Meltzer focused on creating a "pax americana" based on the stabilizing influence of free trade and better-managed international financial institutions, as well as democracy and military strength. He spoke with TAE senior editor Eli Lehrer and freelance writer Mark Hemingway in Washington, D. C.

TAE: Multi-nation agreements like NAFTA have advantages when it comes to freeing trade and improving economies, but can cut into national sovereignty. Where do you draw the line between national interests and the global interest?

MELTZER: An international economy needs to gather interests in a harmonious way, not subvert national interests to global interests. For a nation-state to prosper, you have to protect people who are traveling and trading. This allows the market system to form, develop, and grow. In the nineteenth century, if you had a trade disagreement you sent gunboats. Now you send lawyers. It may not be great, but it is better. It's true that international agreements require that we give up some sovereignty. But we should give up only the amount of sovereignty that we want to give upi Do we want the tax laws for the United States to be made in Europe by a non-elected government in Brussels, or by the WTO, rather than by the Congress of the United States or the state legislatures?

TAE: How do you rate the Bush administration's record on trade and international economic development?

MELTZER: They've done quite well on economic development. They've really made an effort to reform the grant and loan-making apparatus to introduce much more incentive and much less command and control. On trade, the progress is mixed. We have new free trade agreements with Singapore and Chile, but at the same time the administration puts tariffs on steel.

TAE: What's wrong with the International Monetary Fund and World Bank?

MELTZER: In short, ...