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would be so much better off if all the restrictions on capital flows were just lifted, if investors had a perfect capability to invest and withdraw from investments whenever they wanted. And all of a sudden, due to the widespread financial deregulation starting in the early 1980s, that is what we have. And we find that a world of hot money is not such a great world after all.

Fourth, I will make explicit some points that I believe have been a little bit too implicit in other sessions of this conference. Everyone in the economic, business, and political science fields throws around words such as interdependence, integration, globalization, even cooperation.

In my view, without fully recognizing their implications, the prevailing assumption seems to be that these are forces that are strangely one dimensional in their nature, in the sense that they can only unfold naturally in ways consistent with the worldwide triumph of pure laissez faire and comparative advantage, whether static or dynamic or whatever form of comparative advantage you happen to believe in. And the only thing that could mess this up would be if governments step in and try to capture advantages for their own particular community.

What is too often forgotten is that these words describe relationships, and that all relationships, especially relationships as complex as the ones we are talking about, have terms. They have structure, they have content. Even cooperation has terms in the private sector. That is why we have contracts.

Contracts are not simply a jobs program for lawyers. We have contracts because different parties want to make sure that cooperation works as well as it possibly can for them.

And because these terms have to be shaped by someone or something, and because the actors playing this role will inevitably bring different experiences, interests, values, and economic structures to this process, the terms will not always be equally desirable for everyone involved. Let me just give you one quick example. The master-slave relationship is an interdependent relationship. But it is not equally desirable for both parties. Therefore, the process of shaping the terms of interdependence will inevitably be political in nature to a very large extent.

So my closing thought is that we should spend less time discussing whether interdependence, integration, and globalization are good or bad in the abstract. We need to understand that they can turn out in many different ways, and we should spend more time figuring out how actively to shape the terms of interdependence to favor whichever community or communities we happen to feel loyalty to. In my view, that is the main public policy challenge involved here.

Thank you.

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