Lunch with the FT: Kenneth Rogoff

by Gideon Rachman

Financial Times
February 3, 2012

Ken Rogoff has been coming to the World Economic Forum in Davos for a decade but he has never yet had a decent lunch. Sitting down at a small table in Gentiana, a bistro about 10 minutes’ walk from the Congress Centre, Rogoff says this is the first occasion he has ever had the time to venture out to a restaurant. His normal schedule is so hectic he just has to grab the sandwiches that occasionally appear in the centre.

These days Rogoff, a 58-year-old Harvard economics professor, is more in demand than ever. With his co-author, Carmen Reinhart, he has written the definitive history of financial crises over the centuries. This Time is Different would have been a major contribution to economics and history whenever it appeared, but its publication in 2009, in the immediate aftermath of the financial crisis caused by the collapse of Lehman Brothers, meant that it became an unlikely publishing sensation – rising to fourth on the Amazon bestseller list.

Rogoff’s advice is much sought-after by western leaders trying to navigate their way out of the crisis. Unlike some high-profile academics who relish flaunting their influence, Rogoff is reticent about his meetings with leading politicians. But he has been consulted by President Barack Obama and is known to have spent many hours with George Osborne, Britain’s chancellor. Rogoff’s advice – that heavily indebted governments had to get serious about cutting their deficits – strongly influenced the British government’s decision to make controlling spending its priority.

The financial crises in the US, the UK and the eurozone have caused the Swiss franc to soar in value – and we both do a double-take as we look at the prices on the menu. “It’s just incredible,” says Rogoff, shaking his head sorrowfully. Gentiana is a comfortable but modest one-room restaurant, with the tables packed tightly together. None the less, the Wiener schnitzel and chips I intend to order will cost the equivalent of £30. Rogoff, dressed in a blue blazer and red tie, has issues other than price on his mind. “I better get something I’m not going to spill down my front,” he says, mindful of the sessions he will appear at later in the day. His choice of spaghetti rucola, which has a tomato-based sauce, seems to me a bold call if spills are a concern.

At Davos, everybody is talking about Europe’s debt crisis. Many think the worst is over. Rogoff is more cautious: “There will be more drama ahead,” he predicts. The historical studies that he has done with Reinhart, his long-time collaborator, who is now a fellow at the Peterson Institute in Washington, DC, suggest that the debt levels of several European countries are simply unsustainable without some sort of “restructuring”. So the tortured negotiations that are being conducted in Greece will be repeated in other countries such as Portugal and Ireland. “Portugal only looks good in comparison with Greece,” he says drily. “We’re not in the endgame, we’re in the middle-game.”

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