On September 9th, The Chicago Council on Global Affairs and CFA Society Chicago partnered together to welcome Mr. Van Overtveldt, Minister of Finance of Belgium since 2014. He is an economist, journalist and writer based in Brussels. He has authored several books including, The End of the Euro, Bernanke’s Test and The Chicago School and is a contributor to the Wall Street Journal and other publications. His presentation revolved around the topic of his new book, A Giant Reborn: Why the US Will Dominate the 21st Century.
Mr. Van Overtveldt began his presentation by referencing literature and writers, who from 1775 through 1965 had predicted the decline of America. These people had failed to recognize the reasons why America came to dominate and why it will continue to dominate world affairs in the 21st century. Mr. Van Overtveldt uses an economic based argument of American superiority based on three factors:
- Human Capital and Knowledge (non-excludable and non-exhaustible)
- Entrepreneurial Drive (favored in the US economy)
The above factors have created the environment of what Mr. Van Overtveldt describes as “turbo-change” that thrives in America. Other countries cannot cope with change the way Americans have demonstrated they can. Change is part of America’s DNA.
Mr. Van Overtveldt then focused on why Europe and China will not challenge America in the foreseeable future, describing China as having the biggest economic bubble the world has ever seen. The “Confucian Deal” of the Party guaranteeing jobs and higher wages in exchange for little or no freedom will not work. In China, debt as a percentage of GDP has doubled since 2008 and overcapacity in real estate is demonstrated by vacant houses and apartments. China is also surrounded by potential enemies such as Vietnam and Japan.
The European Union has really not achieved a union, since European countries have demonstrated that they will not yield their sovereignty. Mr. Van Overtveldt argues that the French and German coalition that ran the European Union will no longer work as France’s economy has not been able to keep up with the German economy.
In the Q&A that followed the presentation, Mr. Van Overtveldt stated that the UK has a large influence on the European Union and that its vote to remain in the EU will be closely watched. The UK’s influence is especially large in Germany. He also briefly commented on the immigration crisis in Europe, stating that there is no mechanism to arrive at a consensus on this issue.
Mr. Van Overtveldt also demonstrated the effectiveness of the US constitution versus the ineffectiveness of the European Union by comparing the Greek and California bankruptcies. California was able to get money from Washington if it met certain conditions. The Greeks were given certain conditions; however there was no legal right to enforce these conditions. The EU had no legal right to dictate reforms as they had to be approved by the Greeks themselves.