C. Fred Bergsten started the Peterson Institute for International Economics, which has influenced U.S. and international policy debates on trade issues. (Marvin Joseph/The Washington Post)

In a city of powerful think tanks, C. Fred Bergsten is known for building the incomparable shop on the global economy, the Peterson Institute for International Economics. Its high-quality data and analyses drive policy debates on monetary and trade matters.

Bergsten, who was an international economics specialist for Henry Kissinger at Richard Nixon’s National Security Council and assistant treasury secretary in the Carter administration, has been called the “model of a Washington policy entrepreneur.”

Peter G. Peterson, chairman of the board and whose beneficence was recognized in 2006 when his name was affixed to the institute, puts it this way: “Fred was very good about defining policy issues, implementing them, selling them and reaching out and telling the world about them. Second, he attracted top talent. And third, he’s very good at reaching deep into other people’s pockets.”

The institute has successfully steered clear of partisan affiliation. As John Williamson, a British economist who specializes on exchange rates, points out, it “was with the Republicans on trade and with the Democrats on macro issues.”

Earlier this year, Bergsten handed over leadership to his former deputy Adam Posen, a Harvard-trained economist who is a generation younger and recently returned from three years on the Bank of England policy committee.

Bergsten, who turns 72 on Tuesday, stays on as director emeritus and senior fellow. The author or editor of 41 books, he has plans for three more, on U.S. relations with China and India. A basketball fanatic — reportedly deadly from the 20-foot line — he might also spend more time on the court.

Bergsten sat down with The Washington Post to reflect on his career and current economic issues.

How did the son of a Methodist minister and graduate of a small college in rural Missouri become an eminence grise of the global economy?

A turning point was in 1960 aboard the Dutch tramp steamer Groote Beer (Great Bear) that was taking college graduates to Europe. A fellow named Seth Tillman, chief of staff to Sen. J. William Fulbright, was leading a daily on-deck seminar on international affairs. I sort of sidled into that, got to know Tillman, who recognized my interest and said he could get me into the Fletcher School at Tufts University. After completing a master’s and doctorate, I came to Washington as a young Foreign Service officer. Later, George Ball called his friend, the dean at Tufts, and that led to my eventually getting the job as Henry Kissinger’s economics deputy at the National Security Council.

How did you come to set up the institute?

In 1971, I was canvassed by the Ford Foundation about setting up an agency to study the world economy. When I left Treasury 10 years later, I was approached with a similar suggestion by Frank Loy at the German Marshall Fund. He put his job on the line by putting a quarter of the Marshall Fund budget, $4 million, into funding the Institute for International Economics. Peter Peterson, whom I had gotten to know when he was commerce secretary under Nixon, became the first chairman and later a principal benefactor.

How has being nonpartisan contributed to the institute’s success?

It has been essential for our credibility. Pretty much for our 30-plus years, we’ve been able to work with both sides of the aisle in Congress and with Republican and Democratic administrations.

What’s your biggest success?

Having established credible, world-class analysis and recommendations on some of the world’s most important policy issues. Also, having put together and retained the best team of economists of any think tank in the world. People come here, and they don’t leave.

Why do you favor globalization?

No country has ever achieved sustained economic growth without integrating with the global economy. Those that have tried to stay outside have failed miserably, like the Soviet Union, now Cuba or North Korea.

Larry Summers about 10 years back said, “Fred, we need a number on how the U.S. benefits from globalization.” So we put our best people on it, and they concluded that the U.S. economy was $1 trillion a year richer as a result of integration with the world economy over the last 50 years. That’s $10,000 per household, millions of new jobs, 10 percent of national income that can be linked to globalization.

Now, we quickly said there are adjustment costs. We estimated those at about $50 billion per year, not inconsequential; half a million people a year get adversely affected. They lose jobs or have to go to lower-paying jobs. It’s not inconsequential. But it is a 20-to-1 benefit-to-cost ratio.

Why does the negative impact get more attention?

Part of it is that the costs are highly concentrated on a few individuals, where the gains are diffuse. It’s you as a consumer, it’s you as an export worker who gets a higher wage, but you don’t really know it’s because of your export involvement.

Education level is the single explanatory variable. College graduates or people who have any college love globalization because of the opportunities. High school graduates or dropouts are terrified of globalization, because they can’t cope with it.

But globalization is a relatively new thing to the United States. When I started in this business in 1960, exports of goods and services and investment income was 10 percent of the U.S. economy. Today, it is 40 percent. At the same time, our share of the world economy, which is a proxy for our clout, has come from 40 to 20 percent.

How has U.S. clout diminished?

I mean our actual ability to get things done. Look at what we’ve tried to do on exchange rates with China over the past five years. We’ve made only modest progress. We couldn’t push the Doha trade round through.

What about NAFTA, the 1994 North American Free Trade Agreement, do you still regard it favorably?

I’m still for it. At the same time, I recognize that it really did put the fat in the fire in terms of the costs of globalization. It was essentially a free trade deal with Mexico. We already had one with Canada. It was the first we ever did with a low-income country and triggered, in my view, the backlash against globalization. And we’ve been fighting this for 20 years.

It is said that the Peterson Institute is behind every free trade deal in the past 30 years. Is that correct?

Yes, we’ve been closely involved in almost every one. Let me tell you about the Korea-U.S. free trade deal that took effect last year. I regard it as the most important one the U.S. has done.

Han Duk-soo, South Korea’s trade minister, came to see me in 2000. He said, “Fred, you should do a serious study of a Korea-U.S. free trade agreement.” I visited Seoul, and the Korean business people hated the idea. We did the study, and it started the debate. I went to Bob Zoellick, then the U.S. trade representative, who said if they’re willing to talk about agriculture, then we’d consider an agreement. We showed how it could be done with long phase-ins, maybe excluding rice. We did the blueprint. The business community eventually got on the bandwagon. It was about 12 years from initiation to implementation, but it is the thing of which I’m most proud.

Korea is a bigger economy than Mexico, and there is strategic importance. KORUS is a real U.S. wedge into the Asia-only trade agreements that are happening. It is the template for the planned Trans Pacific Partnership, TPP.

On trade and economics, how do you rank the presidents with whom you’ve worked?

On trade, I give the highest marks to the two George Bushes. Bush 43 not only supported free trade agreements, he was effective in articulating support for them. The most protectionist president was Ronald Reagan. His main tool was “voluntary export restraints.” I rate Reagan lowest overall on economics. Bill Clinton is easily Number  1 in understanding economics.

What’s the best way to engage China?

I still favor a G2 between the U.S. and China. It should be the Nike approach of “Just do it.” It can be informal. You don’t need to talk about it. Unless the U.S. and China agree, nothing is going to happen. Look at Doha. Look at climate change. Look at currency misalignments. Empirically, a G2 is happening. What President Obama is doing is very much G2 in procedural terms. Obama has met with his top counterpart in China on average every quarter. And then there is a thickening network of contacts. Of course, what has not yet happened is a meeting of the minds substantively on these big issues. China is moving, painfully slowly, our way on currencies and rebalancing, but it is going to be a long process.

Does the Group of 20 that is replacing the G7/8 as a steering committee of the world economy have a future?

Not without the G2. You have to have the G20 or something close to it for legitimacy reasons, but the G20 is too big to be operationally effective. You need somebody to steer the steering committee.

Is the euro going to survive?

Yes, and come out stronger. When it was created, it was formally called an economic and monetary union. They had a kind of blind faith that once you got the currency, you would get the other stuff. When the euro debt crisis arrived, they were forced to get serious in two ways: Get the weak countries shaped up. And particularly, get the E.U. institutions to complete the economic union — banking union, fiscal union, etc. So the process that might have taken 10 to 20 years is now probably going to take five to 10.

What are the biggest challenges facing the global economy?

I think currency wars are a big threat. We are pretty convinced that currency manipulation is responsible for the loss of 2 or 3 million jobs in this country. It’s not just China; there are a couple dozen countries holding down their currencies. That is shifting something like half a trillion dollars a year of output from the U.S. and other countries to the manipulators. If you could wave a magic wand and induce or coerce all these countries that have competitively undervalued not to do it, our trade deficit would be half of what it is.

Wood is a columnist and North American economics correspondent for RTHK radio in Hong Kong.