How to make good in Washington.

Here's an interesting question: What Democratic Washington policy insider actually has nice things to say about former conservative Republican Majority Leader Tom DeLay?

Stumped? Here's a hint. He also speaks favorably about two senior officials of the Reagan Administration.

No, I'm not talking about former Georgia Democratic Senator Zell Miller who blasted Democratic nominee John Kerry as downright unpatriotic in the last presidential election. I'm talking about Fred Bergsten, the director of the Institute for International Economics, which this fall celebrates its twenty-fifth anniversary. (Bergsten praised DeLay because of the congressman's success in brutally forcing House Republicans to support free trade legislation. The two Reagan officials: James A. Baker, III, and Richard Darman who adopted a version of currency target zones, though not in name, while serving at the U.S. Treasury. See TIE's interview with Bergsten on page 14.)

Most people who come to Washington serve briefly in government and then hang around for the next several decades feeding off the system. Not Fred Bergsten. Against all odds, he cobbled together the resources to create a lasting institution that has become a major force in the policy debate on international economics. Sensing a policy vacuum at the IMF, World Bank, and other similar institutions, Bergsten and his core group of impressive policy entrepreneurs moved quickly to fill the void and established an important legacy.

Other individuals have attempted the same, but have failed. Bergsten's success stems in large part from his recognition that the cleavages in this field relate far less to partisan differences than to where one stands on the issue of globalization. Bergsten and his colleagues were also among the first to recognize by the mid-1980s the futility of operating as if the U.S. economy was a closed system.

I met Bergsten twenty years ago this fall. I conceived and helped organize an event called "The U.S. Congressional Summit on the Dollar and Trade." Sponsored by the bipartisan leadership of both houses of Congress, spearheaded by Senator Bill Bradley (D-NJ) and Congressman Jack Kemp (R-NY), and moderated by Alan Greenspan, the two-day gathering proved to be the final nail in the pure floating exchange rate regime coffin. Bergsten participated in this gathering along with the major players at the time within the G7 finance ministries, central banks, and major private financial institutions. As with most things in life, timing is everything. The "summit" discussions proved to be powerfully prescient, recognizing among other things that financial markets were globalizing rapidly and that the so-called G7 industrialized nations needed a better understanding of currency relationships and trade if the global system was to survive and prosper. Clearly, the Institute for International Economics has spearheaded the effort to further develop that understanding.

Sadly, trying to initiate this kind of high profile, bi-partisan initiative today would be a near impossibility. Washington has become a town of cheap shots and policy obstruction. This is sad because the past quarter-century will go down as a kind of historic golden period of prosperity, both for wealth creation and poverty reduction (See "Today's Golden Age of Poverty Reduction" in the Spring 2006 issue of The International Economy.) Some time in the 1980s, a paradigm shift occurred in the United States toward a more free-market form of capitalism. The only surprise was how rapidly technological advances unfolded such that this move became globalized far quicker than anyone realized. In the United States during this period of globalization, the amount of wealth creation achieved under both Democratic and Republican presidents is no less than astounding. Young people born at the beginning of this quarter-century have never known a serious economic downturn. They have lived their lives in a brave new world of ample liquidity, full employment, and seemingly forever free markets. But such a scenario wasn't always the case and, no doubt, won't last forever.

That is why institutions such as the Institute for International Economics are so vital to the future of the global system. No, you don't have to agree with every policy proposal offered. Individuals within the Institute itself constantly pick apart each other's initiatives, including their leader's own infatuation with target zones. But at the end of the day, the Institute makes a continuous and powerful case for the benefits of a globalized free market system. As Gary Hufbauer observed in an IIE study, "The United States is a trillion dollars richer each year because of globalized trade." That's more then 10 percent of GDP or an incredible $10,000 per household.

So let the word go forth: Three cheers for IIE! Congratulations on a job done well. Good luck in the next twenty-five years, during which time the globalization model is likely to come under an attack more ferocious than we can imagine.