donald l kohn : the united states in the world economy speech by mr donald l kohn, member of the board of governors of the us federal reserve system, at the federal reserve bank of atlanta ’ s public policy dinner, atlanta, georgia, 7 january 2004. * * * no public policy issues facing the united states today in the economic realm are more important or prominent than those that touch on our place in the world economy. the greater attention to global economic issues is partly just a natural byproduct of the increasing interdependencies of all national economies. but this focus has been accentuated of late by the potential effects of two trends that have intensified in recent years. one is the emergence of several developing countries - most prominently china and india - as global economic forces and the consequent reorganization of production processes and change in the nature and location of jobs here and abroad. the second is our burgeoning trade and current account deficits and the possibility that they cannot be sustained at these levels. like most interesting policy issues, these are difficult and complex, and they therefore carry a considerable risk that policy prescriptions will be ineffective or even counterproductive. 1 the two developments are related, but only to a limited and indirect extent. importantly, they arise from very different underlying sources. job reorganization results from the integration of china and other developing countries into the world economy. the increase in our current account deficit has numerous roots, including, most prominently, stronger growth here than in our trading partners. but trade and exchange rate relationships with emerging - market economies are a small part of the story. the deficit does mean that the united states has been spending more than we produce, and the rest of the world has done the opposite. because they have different causes, these developments have different public policy implications. their implications for federal reserve policy are indirect. we cannot affect the pace of job restructuring nor correct the current account deficit, and that limitation is important to understand. nonetheless, how these phenomena evolve and how they are addressed are critical background factors for us as we conduct monetary policy. they can influence the balance of aggregate supply and demand and the functioning of the economy - its flexibility and resiliency and its capacity to advance standards of living. let ’ s look at these developments separately. job restructuring i think it is useful to look at job restructuring as the adaptation to a much larger development - a huge increase in global productive capacity. the major increase in global productivity has two main causes

janet l yellen : perspectives on inequality and opportunity from the survey of consumer finances speech by ms janet l yellen, chair of the board of governors of the federal reserve system, at the conference on economic opportunity and inequality, federal reserve bank of boston, boston, massachusetts, 17 october 2014. * * * accompanying graphs can be found at the end of the speech. the distribution of income and wealth in the united states has been widening more or less steadily for several decades, to a greater extent than in most advanced countries. 1 this trend paused during the great recession because of larger wealth losses for those at the top of the distribution and because increased safety - net spending helped offset some income losses for those below the top. but widening inequality resumed in the recovery, as the stock market rebounded, wage growth and the healing of the labor market have been slow, and the increase in home prices has not fully restored the housing wealth lost by the large majority of households for which it is their primary asset. the extent of and continuing increase in inequality in the united states greatly concern me. the past several decades have seen the most sustained rise in inequality since the 19th century after more than 40 years of narrowing inequality following the great depression. by some estimates, income and wealth inequality are near their highest levels in the past hundred years, much higher than the average during that time span and probably higher than for much of american history before then. 2 it is no secret that the past few decades of widening inequality can be summed up as significant income and wealth gains for those at the very top and stagnant living standards for the majority. i think it is appropriate to ask whether this trend is compatible with values rooted in our nation ’ s history, among them the high value americans have traditionally placed on equality of opportunity. some degree of inequality in income and wealth, of course, would occur even with completely equal opportunity because variations in effort, skill, and luck will produce variations in outcomes. indeed, some variation in outcomes arguably contributes to economic growth because it creates incentives to work hard, get an education, save, invest, and undertake risk. however, to the extent that opportunity itself is enhanced by access to economic resources, inequality of outcomes can exacerbate inequality of opportunity, thereby perpetuating a trend of increasing inequality. such a link is suggested by the “ great gatsby curve, ” the finding that, among advanced economies, greater income inequality is associated with diminished intergenerational mobility.