Janet Yellen says this week’s IMF and World Bank meetings will be a ‘Bretton Woods’ moment for the global economy
Treasury Secretary Janet Yellen is prepared to build a new global economy from the ground up, a new, restructured world order.
The former Federal Reserve chair, with a penchant for concise and precise language, is known for her disdain of hyperbole. It’s that aversion to alarmist rhetoric that lends significant weight to the wide-reaching plans she relayed in her first major address as a member of the Biden administration on Monday.
“We must do better,” Yellen told Americans and a global audience in a 25-minute speech delivered from the Chicago Council on Global Affairs, ahead of the International Monetary Fund (IMF) and World Bank spring meetings this week. The economist compared the upcoming meetings, which will take place in Argentina, to 1944’s Bretton Woods Conference, a meeting that redefined the international monetary system after World War II and created a new world order.
“Though it was a different time, I empathize with the enormous weight they faced; the pressure to come together after a global catastrophe in building an enduring and interconnected system aimed at promoting peace and prosperity throughout the world,” said Yellen. “Our current juncture is no less significant—what we do in the coming months and years will have profound impacts on the trajectory of our country and on the global economic order.”
One difference between the meetings, she noted, will be increased diversity. The new, post-COVID world, she said, would now include the voices of women “as well as diverse representatives from all corners of the globe.”
Throughout her speech, Yellen emphasized that a new global economy would have to be based on diversity and inclusion. The Bretton Woods Conference, she said, created an economy in which, “while we embraced trade as an engine for growth, we neglected those who did not benefit.” The Biden administration, she said, would prioritize the “human rights of all people—of women and girls, LGBTQ+ individuals, and people of every race, ethnic background, and religion—to help ensure that those rights are protected at home and abroad.”
Yellen also notably called for a global minimum corporate tax rate, coinciding with President Biden’s plans to raise the U.S. corporate rate to 28% from 21% to help fund his $2 trillion infrastructure plan. A global agreement on a minimum rate would reduce the incentives for U.S. companies to relocate offshore to chase lower taxes. The average corporate rate in the G7 is currently 24%, according to the nonpartisan Tax Foundation.
“Another consequence of an interconnected world has been a thirty-year race to the bottom on corporate tax rates,” said Yellen. “Competitiveness is about more than how U.S.-headquartered companies fare against other companies in global merger and acquisition bids. It is about making sure that governments have stable tax systems that raise sufficient revenue to invest in essential public goods and respond to crises, and that all citizens fairly share the burden of financing government.”