Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2: Hello and welcome to another episode of the Odd Lots Podcast.
Speaker 2: I'm Joe Wisenthal.
Speaker 3: And I'm Tracy Alloway.
Speaker 2: Tracy, we recently interviewed US Trade Representative Catherine Tie about, obviously,
Speaker 2: the changing nature of our relationship with China on trade.
Speaker 2: I feel like though we could this entire podcast could
Speaker 2: just be about that. Really, there's an infinite number of
Speaker 2: angles to explore.
Speaker 3: Okay, we're a China trade podcast. Now it's done.
Speaker 2: Yeah, it's done.
Speaker 3: No, you're absolutely right. So one thing, this has been
Speaker 3: hovering in the background all year basically, but you've been
Speaker 3: hearing this mention of China over capacity, and I think
Speaker 3: even President Joe was talking about this idea of China
Speaker 3: flooding global markets with artificially low priced exports. And then
Speaker 3: beyond that, a big narrative this year has been China's
Speaker 3: economy slowing. And so I guess one question I have,
Speaker 3: or one thing that seems very noteworthy to me that
Speaker 3: I would love to dive into a little bit more,
Speaker 3: is Chinese growth has been slowing. Yeah, the Redman bee
Speaker 3: has been appreciating and there have been all these new
Speaker 3: trade restrictions since the Trump administration and continuing into the
Speaker 3: Biden administration as well, And yet China's current account surplus
Speaker 3: and I know there's some discussion about how accurate the
Speaker 3: official numbers might be, et cetera, et cetera, but the
Speaker 3: surplus is going up again, which seems kind of remarkable.
Speaker 2: Totally. It's a really weird moment because I'll look at
Speaker 2: like images of some sort of like battery plant or
Speaker 2: factory or some transportation, like, oh, this is the future.
Speaker 2: There's extraordinary what's being built and the efficient and all that,
Speaker 2: and then you read these headlines that basically talk about
Speaker 2: an economy in crisis. We're facing their worst challenges since
Speaker 2: dune shell paying or whatever is sort of slow down,
Speaker 2: and it's hard to like they fit together in some way,
Speaker 2: but on some level, like I still have a hard
Speaker 2: time reconciling the dual China narratives right.
Speaker 3: Now, absolutely, And then the other tension that I observe
Speaker 3: all the time, and I have a lot of questions about,
Speaker 3: is this idea that Okay, China seems committed to the
Speaker 3: export driven economic model, even though again, as far as
Speaker 3: I can tell, all the headwinds right now seem to
Speaker 3: be coming on the export side, and yet like there's
Speaker 3: still not that much effort as far as I can tell,
Speaker 3: to increase consumption or to maybe I don't know, do
Speaker 3: like consumer stimulus or something like that. So yeah, you're right,
Speaker 3: it does feel like a strange moment.
Speaker 2: And then I guess two other sort of dimensions of
Speaker 2: this is like one of the points and Ambassador Tai
Speaker 2: mentioned this is like this view that like China isn't
Speaker 2: playing by the rules, or at least the rules that
Speaker 2: you know, maybe the members of the WTO for many
Speaker 2: of the last decades had accepted. And it always sort
Speaker 2: of questions like why, you know, every country has a
Speaker 2: different arrangement, right, you know, in the US, companies pay
Speaker 2: the healthcare of their workers. In Europe the government pays
Speaker 2: for health care. Like every country has different rules. So
Speaker 2: like part of me wonders, like what is it about
Speaker 2: China and the sort of state directed capitalism that they
Speaker 2: have there that's like particularly like, oh no, this crosses
Speaker 2: a line and the rules of trade don't really work
Speaker 2: with them. And then two, you know, this idea of
Speaker 2: like overcapacity and dumping, like I get that perhaps intuitively
Speaker 2: in a pure commodity such as say steel, but when
Speaker 2: it comes to some other things like solar or petrochemicals
Speaker 2: or things that really you know, are very or cars
Speaker 2: like I have I struggle with this that like it's
Speaker 2: a useful concept, but maybe it is.
Speaker 3: But anyway, rather than us wondering about all these questions
Speaker 3: and thinking aloud, let's ask our guests.
Speaker 1: Well.
Speaker 2: I am thrilled to say that we are welcoming back
Speaker 2: on the show multi time odd Lots guests. But it's
Speaker 2: been a while since we've talked to him. But someone
Speaker 2: who could help us understand all of these things, we're
Speaker 2: going to be speaking with Adam Toos, professor at Columbia.
Speaker 2: Here's the director of the European Institute and the chair
Speaker 2: of the Committee for Global Thought. He travels all around
Speaker 2: the world and he's actually in mainland China this summer.
Speaker 2: So Adam, thank you so much for coming back on odlots.
Speaker 2: It's been too long.
Speaker 4: Yeah, it's a pleasure to be here.
Speaker 2: Guess, thank you so much. You know, I just start
Speaker 2: Chinese overcapacity. We just hear so much about it. Do
Speaker 2: you think that's a useful frame? Like, do you find
Speaker 2: that to be a useful sort of analytical concept over
Speaker 2: capacity for understanding either China or a relationship with China.
Speaker 4: Right now, I'm a little bit skeptical. I like the
Speaker 4: tone of doubt in your own voice, Joe, as you
Speaker 4: were introducing this. I don't get it. I mean, I
Speaker 4: think maybe it's easier to define in sectors where the
Speaker 4: technology is relatively static and where we have relatively straightforward
Speaker 4: industrial economics models of trajeatory strategy that would involve building
Speaker 4: massive amounts of capacity, maybe sliding down a cost curve,
Speaker 4: or maybe just establishing some sort of credible threat where
Speaker 4: folks will believe that you're going to fight for market
Speaker 4: share because you've just got so much sunk cost. So
Speaker 4: you could look at industries like steel and aluminium in
Speaker 4: those terms, and I think the Chinese themselves would admit that,
Speaker 4: you know, they went hard on urbanization and so they
Speaker 4: built enormous capacities in steel, cement and so on. That's
Speaker 4: one sort of sector I think where it gets I
Speaker 4: just find kind of vaguely puzzling is in new sectors where,
Speaker 4: thanks to the kind of new world that we're in
Speaker 4: with climate planning, where we use that word advisedly and
Speaker 4: we have an idea of what we need to do
Speaker 4: to get to net zero, and that's apparently taken seriously
Speaker 4: by Western governments. And we know that the demands in
Speaker 4: terms of the buildout of green electricity capacity, transmission, and
Speaker 4: then end use in the form of electric vehicles are
Speaker 4: just huge, and for them all, we're pretty uncertain about
Speaker 4: the technologies that are ultimately going to come and dominate
Speaker 4: those sectors even over the medium term. And it's hard
Speaker 4: for me to really kind of to say that the
Speaker 4: world has got too many photovoltaic panels just seems, you know,
Speaker 4: not for my daughter and granddaughter's future. I think the
Speaker 4: more photovoltaics the better, to be honest. And the fact
Speaker 4: that the price is crashed, you know, enables this this
Speaker 4: extraordinary story about Pakistan importing thirteen gigawatts of photovoltaic capacity
Speaker 4: in the first six months of this year, Pakistan which
Speaker 4: is in real serious financial trouble, and that's because they're
Speaker 4: so damn cheap, and that's because the Chinese have built
Speaker 4: out this huge capacity. So those are the areas where
Speaker 4: I find the story just a little hard to really
Speaker 4: wrap my head around. And I think it's obvious tactical motivation.
Speaker 4: You can see how the argument is being used by
Speaker 4: Western politicians. But even when you look at the steel sector,
Speaker 4: like you know, if you actually look at the share
Speaker 4: of Chinese capacity that's being sold onto global markets, generally speaking,
Speaker 4: it's a relatively small share of these absolutely immense industries
Speaker 4: the Chinese have built, which are overwhelmingly directed towards their
Speaker 4: own home markets.
Speaker 3: So, just to ask Joe's question in a different way,
Speaker 3: why do you think it seems like policy makers at
Speaker 3: least in the US have landed on China over capacity
Speaker 3: as this issue in trade that they seem to be
Speaker 3: concerned about to the extent that it is one of
Speaker 3: the very few areas of bipartisan consensus.
Speaker 4: Well, I think China generally is an area of bipartisan
Speaker 4: consensus in the US anyway, right, So I think this
Speaker 4: is another instance of something that folks can agree on
Speaker 4: in US politics, and it sounds good and it offers
Speaker 4: a rationale for protectionism, which is very much on those
Speaker 4: in an election year. And with this consensus, what's really interesting,
Speaker 4: isn't it there's been this shift away. I mean, the
Speaker 4: big thing in the background here is that there's been
Speaker 4: such a powerful shift in American economic policy discourse away
Speaker 4: from thinking in terms of consumer interest or holistically in
Speaker 4: terms of the balancing of consumer and producer interest, towards
Speaker 4: a really rather monolithic focus on producer interests. And you don't,
Speaker 4: of course, generally talk about corporate profits in that context.
Speaker 4: You talk about American workers, especially as what the Americans
Speaker 4: called middle class, in other words, for the rest of
Speaker 4: the world, working class, blue collar jobs, and that becomes
Speaker 4: the center of policy discourse. And in that context then
Speaker 4: you can kind of see how overcapacity begins to sound
Speaker 4: like a looming threat as opposed to a free gift
Speaker 4: to American consumers all of a sudden get to benefit
Speaker 4: from whatever subsidies. Ultimately Chinese taxpayers are going to end
Speaker 4: up footing the bill for so I think this shift
Speaker 4: towards a worker centered vision, and this operates, you know,
Speaker 4: in a purely nationalist mode, a rather masculinis mode on
Speaker 4: the Donald Trump side, and it is a huge part
Speaker 4: of the Biden folks interpretation of why they lost in
Speaker 4: twenty sixteen and why the Democrats had to fashion this
Speaker 4: new vision of economic policy which was essentially around restoring
Speaker 4: the prospects of the American working class. And I think
Speaker 4: that's where the sort of the work is being done
Speaker 4: and the segues are being established.
Speaker 2: Do you think there is a good pivot, like, I mean,
Speaker 2: setting aside the actual implementation of the tactics, and it
Speaker 2: is striking. People aren't talking about, oh, it's great that
Speaker 2: we can get all these cheap goods by global trade.
Speaker 2: We are not talking about the sort of consumer centric
Speaker 2: frame where we overdo as this warranted, the sort of
Speaker 2: worker centric frame on the effect of trade.
Speaker 4: I mean, I'm a skeptic also when it comes to
Speaker 4: the China shock. I mean I'm not not at the
Speaker 4: detailed level. Obviously, there are industrial producer communities in the
Speaker 4: US that were hit really high, and that's true all
Speaker 4: the way around the world, and in many cases it's
Speaker 4: preempted industrialization large parts of Africa, you know, there's just
Speaker 4: no prospect of that industrialization any longer happening. So that's real.
Speaker 4: But as a diagnosis of the malaise of American society,
Speaker 4: I don't think it does work. In general, there are
Speaker 4: a whole bunch of things wrong with the conditions of
Speaker 4: life for working class of Americans that aren't reducible to
Speaker 4: the availability of so called you know, good paying blue
Speaker 4: collar jobs. And I think it's a mistake on the
Speaker 4: part of Democratic Party in progressive politics to focus excessively
Speaker 4: on this, because it distracts from what should have been
Speaker 4: a much broader agenda of improving the conditions for the
Speaker 4: service sector, which makes up the vast majority of the
Speaker 4: US economy, and thinking hard about how to improve the
Speaker 4: quality of life, conditions of work, and also to think,
Speaker 4: you know, because the standard argument is it's always a
Speaker 4: manufacturing that you get the productivity increases, Well, maybe it's
Speaker 4: time to think harder about how we could think about
Speaker 4: the service sector also as a driver of productivity and
Speaker 4: improve quality of provision, quality workplace upskilled the workforce in
Speaker 4: those sectors. So and there was a moment in the
Speaker 4: early Biden administration with a Build Back Better agenda which
Speaker 4: was more promising, and I think a lot of people
Speaker 4: may be hoped that Kamala Harris might also be more
Speaker 4: amenable to this. But once Manchin got to work on
Speaker 4: the agenda, and Biden's I think just habits of mine
Speaker 4: euas after all, the very old man. And so he
Speaker 4: comes out of an era in which American industrialism was
Speaker 4: really the trump card, and so we kind of regressed
Speaker 4: into that mode of thinking about industrial policy. And then
Speaker 4: in political terms, it's incredibly easy to sort of form
Speaker 4: a segue where you have a strategic industrial sector that
Speaker 4: China has sort of gobbled up. You have a crisis
Speaker 4: of the American working class and deaths of despair and
Speaker 4: Angus Deaton and Case and so on. Then you have
Speaker 4: the working class voters for Trump, and then you have
Speaker 4: the fentomyl epidemic. And you pile all of these things
Speaker 4: together and you've got yourself a real stack there. And
Speaker 4: the common problem in each case is in a sense
Speaker 4: of China, and you know that's an overcapacity fits quite
Speaker 4: nicely into that, because overcapacity is the result of the
Speaker 4: you know, the unbalanced Chinese growth model that I mean
Speaker 4: over capacity is. You could more charitably say, it's a
Speaker 4: relatively neutral and technocratic way of describing an accusation against
Speaker 4: China that could be put in more forceful than aggressive
Speaker 4: terms along the lines of you stole our ip and
Speaker 4: screwed us, and instead you say no, no, let us
Speaker 4: explain to you, we think you have an overcapacity problem.
Speaker 4: Let us help you think this through and figure out
Speaker 4: how we deal with it.
Speaker 3: You mentioned adam the importance of the services sector to
Speaker 3: the US economy. And China, of course has a very
Speaker 3: different economic model, and I alluded to this in the intro,
Speaker 3: but it is still one that seems very much committed
Speaker 3: to export driven growth. So I'm curious why you think
Speaker 3: that is why, despite all the ostensible headwinds to manufacturing
Speaker 3: and exports, China remains committed to growth coming from that.
Speaker 3: And then I know there have been some rumblings about
Speaker 3: maybe like increasing I think she called it domestic circulation
Speaker 3: or something like that, but it doesn't seem like there's
Speaker 3: been a real push to boost the services sector or
Speaker 3: boost consumption.
Speaker 4: Yeah, so this is a really interesting point. And as
Speaker 4: I was listening to you Chaces you opened up, I
Speaker 4: was thinking, Hm, I'm not sure.
Speaker 3: If you don't agree, that's fine, Yeah.
Speaker 4: I'm not sure. I'm not sure that I would agree
Speaker 4: that the Chinese strategy is export led. I mean, and
Speaker 4: we shouldn't confuse Germany in China because I think the Germans,
Speaker 4: really you'd have a hard time actually putting a pin
Speaker 4: in German strategy, but they celebrate exports per se as
Speaker 4: a kind of national achievement, whereas I don't think that
Speaker 4: is the same enter of Chinese policy discourse. I mean,
Speaker 4: rather the opposite. They actually now have this dual circulation
Speaker 4: model where they recognize there is an external sector, but
Speaker 4: that's very vulnerable to external shocks, and the center is
Speaker 4: really domestic production. You know, if you were to look
Speaker 4: at steel, for instance, you know, in a good year
Speaker 4: in China either too. And before they did the whole
Speaker 4: gearshift with urbanization and construction and real estate, I mean
Speaker 4: ninety five percent, certainly ninety two to ninety three percent
Speaker 4: of Chinese immense steel production was consumed domestically. Right, They
Speaker 4: produced a billion tons of steel and would explore sixty
Speaker 4: to seventy million tons. The vast majority of it is
Speaker 4: being consumed at home. If you look at Adam Wolfe's
Speaker 4: amazing breakdowns of the Chinese motor vehicle industry, you see
Speaker 4: exactly the same thing. Right, The vast majority of Chinese
Speaker 4: motor vehicle production is domestic. The vast majority of their
Speaker 4: ev the electric vehicles, the ones that everyone's up in
Speaker 4: arms about, are also being consumed in China. And that's
Speaker 4: one of the really impressive things you see on the
Speaker 4: streets and the highways around Shanghai just one fancy ev
Speaker 4: after another, stuff you've never seen before. Gull wings, it's
Speaker 4: so futuristic, you know, it's over. The competent is extraordinary.
Speaker 4: But so far it's really largely internal. The big surge
Speaker 4: in Chinese motor vehicle exports which has made them all
Speaker 4: of a sudden, this huge force in the industry, which
Speaker 4: is hugely disruptive to the Europeans, notably is actually in
Speaker 4: internal combustion engines, so as it were, lower tech Chinese manufacturing,
Speaker 4: and a lot of it is joint ventures. In other words,
Speaker 4: Western firms who can no longer find markets in China
Speaker 4: for their now defunct and stigmatized You know, folks in
Speaker 4: China really don't want to be driving, especially American badged
Speaker 4: cars now, and so when what we see is the
Speaker 4: export surge. But to attribute that to policy, I think
Speaker 4: is a nonsecutar. There is an industrial policy in China
Speaker 4: which is driving towards modernization. And then what mediates between
Speaker 4: the two things, what hooks these two things up is
Speaker 4: the Michael Pettis argument about macroeconomic imbalance. The real issue
Speaker 4: is they have this very very heavy driven industrial policy
Speaker 4: and they don't have the macro demand to sustain it,
Speaker 4: and so it spills over as a result of corporate
Speaker 4: strategies of desperation, basically gambling for salvation through looking in
Speaker 4: foreign markets. That I think is a convincing overall picture.
Speaker 4: When you look at there's one sector where I think
Speaker 4: you could tell us slightly different stories and always have
Speaker 4: been able to, which is fault voltaics. Because they're about
Speaker 4: half of output is exported. They've so overbuilt in Fota
Speaker 4: voltaics that that really is they basically decided we're going
Speaker 4: to be the monopoly supplier to the entire energy transition worldwide.
Speaker 4: There was already the case ten years ago when they
Speaker 4: built out to meet European demand for photovoltaics. But across
Speaker 4: the board in the Chinese economy, I think it's more
Speaker 4: convincing to tell a story of industrial policy, which is
Speaker 4: primarily domestically orientated, this huge Chinese innovative scrambling response to
Speaker 4: that strategy, which then generates such fierce competition within China,
Speaker 4: especially in light of the Michael pektis demand constrained situation
Speaker 4: that then the firms go looking for foreign markets to
Speaker 4: to find the demand. A story like that I think
Speaker 4: is more convincing than to say Beijing is aiming at
Speaker 4: export led growth.
Speaker 2: You know, it raises a question and one of the
Speaker 2: things again Tracy mentioned it, but why isn't China doing
Speaker 2: more to boost its consumer and they have it. You know,
Speaker 2: we have seen very sluggish growth. Objectively, consumption has been
Speaker 2: very mediocre, particularly ever since the COVID lockdowns, and Matt
Speaker 2: Klein had a really great piece in his sub stack recently. Basically,
Speaker 2: no matter how you slice it, it looks like the
Speaker 2: consumer has been very weak. And so if you just
Speaker 2: look at like train miles traveled or restaurant bookings or
Speaker 2: things like that, it still looks very mediocre. On the
Speaker 2: other hand, despite the lack of sort of direct in
Speaker 2: the pockets of consumer stimulus, I see convincing things from
Speaker 2: time to time that, like the real goal of economic
Speaker 2: policy improve everyone's standard of living is still going on,
Speaker 2: that there's still growth and improvement in the standard of
Speaker 2: living in Chinese society. I've never been to the mainland.
Speaker 2: You were there this summer, and I assume it was
Speaker 2: not your first time. When you're there and when you
Speaker 2: talk to people, does it seem like overall that whether
Speaker 2: it's clearly measurable in retail sales or whatever, that the
Speaker 2: current model is continuing to lift people up.
Speaker 4: I mean the overwhelming impression one has if you visit
Speaker 4: a city like Shanghai, it's just it's absolutely awesome. I
Speaker 4: mean it's in the sort of technical sense, you're just overawed.
Speaker 4: It's so vast. I mean, it's twenty million plus people,
Speaker 4: it's so well organized, it's so modern, it's so rich
Speaker 4: the infrastructure, and you know, there's an upside about the capacity,
Speaker 4: which is just like there's no limits on it. There's space,
Speaker 4: there's ample room. It is incredibly impressive and clearly still
Speaker 4: highly dynamic. It doesn't feel like a society which hasn't
Speaker 4: been invested in the last five years of ten years,
Speaker 4: like some bits of Europe feel at this point. So
Speaker 4: the technological innovation continues. And after all, I mean, even
Speaker 4: if we think the numbers have fudged, their growth rates
Speaker 4: are higher or at least on a par with the
Speaker 4: US and way above those of Europe and Japan. So
Speaker 4: it's definitely still growing and still generating affluent and the
Speaker 4: innovation and technological change. Yet there's really no there's no
Speaker 4: question about that. But what you also hear really quite vocally,
Speaker 4: and I was surprised this isn't North Korea or Stalinism
Speaker 4: or something where everyone's worried about bugs in the walls
Speaker 4: or something. People will tell you quite openly how miserable
Speaker 4: they're feeling, and there is definitely a sense that something's broken.
Speaker 4: The real estate markets headed in the wrong direction. The
Speaker 4: regime is not friendly to go getting just simple wealth
Speaker 4: accumulation anymore. The pressures of the intensely examined ri of
Speaker 4: an education system on young people and the parents of
Speaker 4: young people are relentless and brutal, and there is that
Speaker 4: sense of like a system that is straining. It's not
Speaker 4: obvious where the next seven to eight percent per annum
Speaker 4: growth machine is going to come from, and it's always
Speaker 4: an adjustment to go from seven eight per cent per
Speaker 4: annum to three or four, even if three and four
Speaker 4: is still very respectable and loads of economists. I don't
Speaker 4: know whether you folks read the amazing blog Peakonology by
Speaker 4: Zishen Wong, who's now actually a student at Princeton. I
Speaker 4: don't know whether he'd agreed to be on the show.
Speaker 2: We should have a Mine, yeah, meaning yeah.
Speaker 4: He's like the top and does such a service to
Speaker 4: the Anglo sphere and just translating document off to document,
Speaker 4: and he's and you'll have seen it. He has this
Speaker 4: roundup of eleven prominent and we're talking like vice ministerial
Speaker 4: level voices from within the Chinese economic scene, who are
Speaker 4: all saying exactly what you're saying, Joe, like, oh, where
Speaker 4: this is? Why aren't we doing this? It's so obvious, Like,
Speaker 4: here's another way we could do this. We could provide
Speaker 4: better housing for rural to urban migrants. We could do
Speaker 4: various types of discounts scheme for parents. We could the
Speaker 4: tax system in a way it should be more beneficial.
Speaker 4: We could build out a welfare system that will be
Speaker 4: more supportive. What's really fascinating is that at the top
Speaker 4: level there seems to be and this is what this
Speaker 4: drum roll of expert opinion from within the Chinese hierarchy.
Speaker 4: None of these people are remotely dissident. There does seem
Speaker 4: to be almost a German style level of resistance around
Speaker 4: a series of ideological ideas, crucially around wealth are dependence,
Speaker 4: which basically say, no, we should create this really tough
Speaker 4: environment in which Chinese families and households have to prove
Speaker 4: themselves and no, we're not going to, you know, just
Speaker 4: easily provide support. And it does seem to be something
Speaker 4: of a hang up almost about a society. I guess
Speaker 4: the regime fears that China will lose that incredible restless,
Speaker 4: you know, hungry edge that drove it through the last
Speaker 4: twenty to thirty years. It's I guess all I don't
Speaker 4: have a good answer. What I'm saying is that within
Speaker 4: the system itself, people are just during this perplexity, and
Speaker 4: the answer you get back runs along the lines of, well,
Speaker 4: the higher ups just don't think that would be a
Speaker 4: good idea.
Speaker 3: Since you mentioned Germany, my framework for the China German
Speaker 3: economic relationship at least has always been sort of frenemies
Speaker 3: where they both benefit in some way and they're quite
Speaker 3: closely linked, but there are obviously tensions and points of
Speaker 3: issue there. I'm wondering, how do you see the evolution
Speaker 3: of the China German relationship right now? Like, how much
Speaker 3: has it changed from say pre COVID to where we
Speaker 3: are today.
Speaker 4: Yeah, I mean we could start with the structural similarity.
Speaker 4: I mean, they both are chronic trade surplus countries and
Speaker 4: have kind of competed with each other to have the
Speaker 4: largest not just trade imbalance, the current account surplus. So
Speaker 4: they have that structural similarity. They were once complementary in
Speaker 4: that China would produce with German equips the cheap manufactured
Speaker 4: goods that American consumers would buy. Of course, American consumers
Speaker 4: also bought high end German exports directly, as did the
Speaker 4: Chinese upper middle class, but the direct link was the
Speaker 4: American aggregate demand excess provided a market for both German
Speaker 4: and Chinese exports, with Chinese industrialization providing a market for
Speaker 4: German manufactured goods. And that still is a link, and
Speaker 4: you see it in the commitment of capital goods industries
Speaker 4: in Germany and industrial companies in Germany. Two ongoing direct
Speaker 4: investment in China, which is still live. I saw this
Speaker 4: when I was visiting, because I speak German and I'm
Speaker 4: known there. I bump into German business people when I'm
Speaker 4: in China and they will tell you flat out that
Speaker 4: they have to be there for two reasons. Fundamentally, because
Speaker 4: it's a big market and it's rapidly growing. If you're
Speaker 4: saying heavy chemicals of your basf, you can't not be there.
Speaker 4: But the other reason why a VW, for instance, can't
Speaker 4: not be there is that if you're actually going to
Speaker 4: compete in the global market in the next generation of
Speaker 4: vehicles motor vehicles, you can't do what the US firms
Speaker 4: are doing, which is basically retreating behind national protectionism. You
Speaker 4: have to at least try and stay with the Chinese
Speaker 4: manufacturers in the Chinese market, and so VW is doubling
Speaker 4: down on its investments in China because they just see
Speaker 4: it as the market it's already the biggest, but it's
Speaker 4: also now at the qualitative at the technological frontier, and
Speaker 4: unless you can compete there, and they've been having a
Speaker 4: brutal period of the last eighteen months, you're basically done.
Speaker 4: You're basically going to be a legacy manufacturer of sophisticated
Speaker 4: internal combustion engines, not of the new cutting edge siemens.
Speaker 4: I think the electrical engineering firm is kind of a
Speaker 4: little bit in between the two. I think it also
Speaker 4: sees especially in like process manufacturing, so the sort of
Speaker 4: highly sophisticated, fully integrated electrollically controlled manufacturing lines which the
Speaker 4: German firms specialize in, they feel they have to still
Speaker 4: be there. So there is this substantial investment driven, market
Speaker 4: orientated technologically you know, inspired link between Germany and China.
Speaker 4: And you see it in the way the German government
Speaker 4: maintains its relationships with China through thick and thin. And
Speaker 4: when Schultz goes, he takes these large delegations of German
Speaker 4: business leaders with him, and they're quite outspoken. That sort
Speaker 4: of anti China consensus that you quite rightly pointed out
Speaker 4: is prevailing in the US and which I really think
Speaker 4: ways on American business leaders now doesn't prevent German business
Speaker 4: leaders openly saying, if we're in the business of car making,
Speaker 4: we need to be in China. I mean, they'll just
Speaker 4: simply say that flat out. And BASF, who's played real
Speaker 4: hard ball with the German government over the Ukraine War
Speaker 4: and the energy costs issue, has openly said, you know,
Speaker 4: basically it's you know, you either give us the support
Speaker 4: we need or we're leaving for China. And in the
Speaker 4: end they've left for China where they will get you know,
Speaker 4: the power plant they need. This isn't dirty stuff. That
Speaker 4: the BSF has this commitment to being carbon neutral in
Speaker 4: the foreseeable future, and so what they said to their
Speaker 4: Chinese the region where they're investing is, Hey, we need
Speaker 4: to get walt of clean power. And guess what, the wind farm,
Speaker 4: the offshore wind farm is already in the process of construction.
Speaker 4: So yes, the German relationship is different, and it's based
Speaker 4: on this division of labor industrial integration.
Speaker 2: So since we pivoted to Germany, you know, there's just
Speaker 2: a ton of stories these days about frailties within the
Speaker 2: German model and the poor growth. And it feels like
Speaker 2: a very flipped the script from the twenty tens when
Speaker 2: Germany was booming and the periphery.
Speaker 3: Was so weak.
Speaker 2: And then of course early September we had the AfD party,
Speaker 2: which is a right wing party, one big in regional elections.
Speaker 2: So there's a lot of anxst right now about what's
Speaker 2: going on in Germany, what is going on in Germany?
Speaker 2: Even like how much of the concern is like, okay,
Speaker 2: German legacy manufacturers are having trouble competing with Chinese manufacturers.
Speaker 2: There's obviously the politics of immigration and so forth, Like
Speaker 2: how much of a direct line can you draw between
Speaker 2: what's going on with the economy and then sort of
Speaker 2: what's going on in the political scene.
Speaker 4: I think there's three issues in play that the extraordinary
Speaker 4: election results that we saw into Engia and Saxony, two
Speaker 4: states Germany's a federal system. Toingia and Saxony are two
Speaker 4: states from the newly joined East German provinces. One element
Speaker 4: of this is the legacy impact of German unification, which
Speaker 4: I mean, if you've ever had the chance to travel
Speaker 4: through East Germany was accomplished, you know, it's really a
Speaker 4: gold plated regional policy program. In cities like Dresden are
Speaker 4: absolutely gorgeous, hugely invested, wonderful places to live. But nevertheless,
Speaker 4: there is this reasonably well founded understanding on the part
Speaker 4: of East Germans that they are some level new to
Speaker 4: the party. They were basically bolted onto the West German
Speaker 4: experiment and had to largely accept its terms and for
Speaker 4: a traumatic period in the nineties and the early two thousands.
Speaker 4: This is largely the parents or the middle aged generation
Speaker 4: of East Germans. There was huge unemployment and massive disruption
Speaker 4: and the industrialization of a really shocking variety, and that
Speaker 4: lingers in the political system. And if you ask the
Speaker 4: voters for the two extreme formations, one is the AfD,
Speaker 4: the Alternativa for deutschtand originally an anti Drages eurosceptic party,
Speaker 4: and the other one is Sarah Wagan connect so truly
Speaker 4: a Marxist philosopher who is also keen to make a
Speaker 4: compromise with Putin over Ukraine. So there's a left and
Speaker 4: a right wing extreme. And if you ask their voters
Speaker 4: how they feel about their standing in German society, eighty
Speaker 4: percent plus will say we feel that second class citizens.
Speaker 4: So that's that's one key element. The second key element
Speaker 4: is the migration issue. And the AfD didn't start as
Speaker 4: an anti migrant, nphobia racist party. It started as the
Speaker 4: alternative was to Qe to Dragi, but after the refugee
Speaker 4: shock in Syria in fifteen sixteen, it became an openly racist,
Speaker 4: openly in neo Nazi formation. Where I think the de
Speaker 4: industrialization element of the story comes in is that that
Speaker 4: removes the last best hope, if you like, of the mainstream,
Speaker 4: which says, you know, the way we're going to address
Speaker 4: these problems and as it were, integrate the ease more
Speaker 4: successfully is by Germany's economic success story that's ultimately going
Speaker 4: to take care of this problem, will achieve successful integration,
Speaker 4: and they plowed money into Intel and the Taiwanese manufacturing
Speaker 4: chips around Dresden. That hasn't brought off the East German voters.
Speaker 4: And the real nightmare of the shift in the motor
Speaker 4: vehicle industry, which is a huge piece of the German
Speaker 4: industrial infrastructure still is that if that goes, then your antidote,
Speaker 4: if you like, to what is essentially a politics of
Speaker 4: racism and is Lamophobia, that is no longer plausible, and
Speaker 4: it isn't. I don't think that, you know, folks in
Speaker 4: Dresden or in Cheering Gear are voting AfD because they're
Speaker 4: worried about jobs being lost in VW. It's more that
Speaker 4: in Berlin there's total panic because if you haven't got
Speaker 4: the VW model, it's not obvious that Germany really has
Speaker 4: a growth model. And in part it's the same blind
Speaker 4: spot as we were talking about with the US. In
Speaker 4: other words, they aren't actually focused on what, even in
Speaker 4: Germany is the main source of employment and GDP, which
Speaker 4: is services and not the manufacturing base. But they have
Speaker 4: been they've trapped themselves. They are trapped by powerful interest groups,
Speaker 4: the very strong voice of organized labor in Germany, but
Speaker 4: also the industrial lobby and a kind of lack of imagination.
Speaker 4: They're kind of clinging to industrialism as really the last straw.
Speaker 4: And yeah, that's why then the threat of China is
Speaker 4: really ominous.
Speaker 3: You alluded earlier to the idea that maybe both China
Speaker 3: and Germany seem to be hoping for or I guess,
Speaker 3: the immaculate emergence of supply side solutions to their problems
Speaker 3: rather than having to do some sort of large scale stimulus.
Speaker 3: How realistic is that, Like, where could relief actually come from?
Speaker 4: I mean, in the Chinese case, it's pretty easy to see.
Speaker 4: I mean, they could do. There's a whole series of
Speaker 4: moves that they could make that would be it's hard
Speaker 4: to see that they're just not straightforwardly win win win,
Speaker 4: really and they would be an expansion of household demand
Speaker 4: and expansion of high quality human services. There's a lot
Speaker 4: of remedial stuff that actually needs doing to backfill the
Speaker 4: China dream. The extraordinary sophistication of a city like Shanghai
Speaker 4: is not matched in the Chinese hinterland, which is of
Speaker 4: course vast and its contained hundreds of millions of people,
Speaker 4: and even elementary stuff like schooling is really miserable in
Speaker 4: provincial China. We of course, think of the huge success
Speaker 4: of elite education in China, but that isn't the majority experience,
Speaker 4: and so you know, you would very easily imagine a
Speaker 4: kind of comprehensive upskilling upgrading strategy. Implementing it would be
Speaker 4: a different thing, but that would be the way you
Speaker 4: would go. First, economy as large as China's, it's a
Speaker 4: domestics policy story in the end that will make the
Speaker 4: difference for Germany. I think it has to be a
Speaker 4: year wide that's the way to go. I mean, they
Speaker 4: could break the impast domestically over the debt break and
Speaker 4: invest and that would be one option, and that's certainly
Speaker 4: a big priority. And there's some promising noises now mercifully
Speaker 4: finally out of the SPD, out of the Social Democratic Party, Chancellor,
Speaker 4: the Schultz Party about a frontal attack on this debt break.
Speaker 4: So the debt break is the German version of the
Speaker 4: European debt rules, or vice versa, the European rules, or
Speaker 4: aversion of the German debt break, which limits the deficit
Speaker 4: and constraints borrowing, even when Germany pays hardly any real
Speaker 4: interest and is in need of several hundred billion euros
Speaker 4: worth of investment in every area of public infrastructure of digitization.
Speaker 4: So that would be one way out. The other one
Speaker 4: I think has got to be Europe, and it may
Speaker 4: be shocks which you know, deliver the opportunity to do this.
Speaker 4: A Trump victory followed by disaster for the Ukrainians would
Speaker 4: I think unleash a new europe level borrowing package, maybe
Speaker 4: another half trillion years worth of borrowing, and that would
Speaker 4: be the kind of structural stimulus that would benefit the
Speaker 4: German economy quite considerably.
Speaker 2: You know, I mentioned this in the intro, but one
Speaker 2: of the arguments that you hear in the US about
Speaker 2: why ramping up the trade restrictions with China is this
Speaker 2: idea that they're cheating in some way, right, maybe over
Speaker 2: whether it's a pure sort of industrial espionage. But then
Speaker 2: there's this question like, well, there's all this state support
Speaker 2: and these aren't the rules of global trade. Just from
Speaker 2: like the historian perspective, Is this a novel argument or
Speaker 2: has there always been this idea that like, no, you're
Speaker 2: you're doing it the wrong way, or you've built up
Speaker 2: this industrial capacity in a different way than we built
Speaker 2: up and you know, again, and it strikes me that
Speaker 2: like every country has different domestic rules and so forth.
Speaker 2: You know, in the US we subsidize education to quite
Speaker 2: a degree, and so that is a form of subsidizing
Speaker 2: worker training that then corporations can take advantage. How novel
Speaker 2: is this claim that like, we get to do these
Speaker 2: things because we don't like the way you've developed. Has
Speaker 2: that always been part of these global trade debates.
Speaker 4: The first thing to say is that as far as
Speaker 4: we're able to estimate, there've been a couple of fairly
Speaker 4: serious minded efforts to estimate the scale of Chinese industrial
Speaker 4: policy spending, and it's significant. I think the most widely
Speaker 4: cited estimate puts in about one point seven percent of GDP,
Speaker 4: which when you compare it to a similarly defined measure,
Speaker 4: though I agree with Joe there's like lots of different
Speaker 4: ways of defining, but if you player the same classification
Speaker 4: to Europe and the US, that's about three times the
Speaker 4: share that they spend. So that's one element of this
Speaker 4: that's clearly for real. Another, I think horizon against which
Speaker 4: to measure this like the regime that we had before,
Speaker 4: And I think the ferocity of this argument has to
Speaker 4: be judged against the assumption that somehow we had outgrown
Speaker 4: that kind of era of state led and state subsidized support.
Speaker 4: And in the European case, you'd have to say that
Speaker 4: since the nineties they've taken that really quite seriously. In
Speaker 4: other words, the Europeans do have rules that bite to
Speaker 4: prevent national governments and regional governments from doing the kind
Speaker 4: of subsidy that the Chinese take for granted. Why, because
Speaker 4: the Europeans are balancing this really complicated multi European union,
Speaker 4: and so to avoid just these crazy subsidy races and
Speaker 4: Germany winning all of them, that have to be these
Speaker 4: very tight rules. And the Europeans take this seriously to
Speaker 4: an extent that is at times quite fascical. The argument
Speaker 4: coming from the American side is a little less plausible,
Speaker 4: because that kind of subsidy never really went away, and
Speaker 4: the American states and cities have always competed in a
Speaker 4: fairly brutal way for investment. But I think that's an
Speaker 4: horizon against which sort of the point the finger is
Speaker 4: pointed at China, which was okay in the nineties, we
Speaker 4: expected you to do this because you were still poor then,
Speaker 4: and then you did wto and then we were expecting
Speaker 4: you to get rich and grow out of this, and
Speaker 4: goddamn it, you haven't. No, in fact, you've somehow doubled down.
Speaker 4: Since the twenty tens, you've been doing it more and
Speaker 4: more intensely. And there's a new study of China which
Speaker 4: suggests that, in fact, this was a policy learning on
Speaker 4: the part of Beijing out of two thousand and eight.
Speaker 4: So the Chinese imagine that after the great financial crisis
Speaker 4: in the West, the Europeans and the Americans would realize
Speaker 4: that finance centered growth was not a great thing, and
Speaker 4: they would double the hub on industry and to get
Speaker 4: ahead of the game, the Chinese thought they should. And
Speaker 4: of course it turned out that no one else really
Speaker 4: ever did quite make that move, and the Chinese really did.
Speaker 4: And you know, by twenty fifteen they had made in
Speaker 4: China twenty twenty five policies. So there was an asynchronicity
Speaker 4: in which, as it were, European and American policy theory
Speaker 4: thought we would get grow out of this, So the
Speaker 4: Chinese suddenly in fact doubled down.
Speaker 2: There's so funny because I always think, like all these
Speaker 2: things chips act inflacial reduction act. I always have this idea.
Speaker 2: It's like you know, two thousand and nine might have
Speaker 2: been a good time to have done this, and there
Speaker 2: was a lot of spare capacity and cheap labor and
Speaker 2: all this stuff. Anyway, I just have one last question
Speaker 2: for you, And you know you've been fairly critical of
Speaker 2: the Biden administration. You know, we have had this turn right,
Speaker 2: so the administration and maybe starting with Trump, but certain
Speaker 2: the administration is like pivoted away from the sort of
Speaker 2: I guess people call it neoliberal consensus of the decades
Speaker 2: that preceded it, the worker centered approach to thinking about
Speaker 2: our trade relationships, et cetera, domestic investment, maybe belatedly getting
Speaker 2: to do some of the policies that maybe we should
Speaker 2: have implemented fifteen years ago after the financial crisis. What
Speaker 2: do you see as your role as I guess a
Speaker 2: public intellectual, someone on the left. You know, you're someone
Speaker 2: who people in the Democratic Party might read and listen to.
Speaker 2: What do you what do you see is sort of
Speaker 2: what you trying to accomplish with your writing and your
Speaker 2: public work.
Speaker 4: Yeah, it's been it's been quite a shock, actually. I mean,
Speaker 4: on the one hand, we were listened to and I'll
Speaker 4: say weird advisedly, but it's the bit of Biden economics
Speaker 4: which is now buried and they prefer to forget, which
Speaker 4: is my team. I was one of the leading spokespeople
Speaker 4: of the team that basically said Obama didn't go big
Speaker 4: enough with the stimulus in two thousand and nine, and
Speaker 4: we needed to go really big, you know, this time.
Speaker 4: And we were listened to, like you know, I know
Speaker 4: from Schumer's people that absolutely that argument that they missed
Speaker 4: a trick in two thousand and nine. It really that
Speaker 4: actually got through. After all, they did the huge stimulus
Speaker 4: early in the Biden administration, and I would argue that
Speaker 4: it delivered a miraculous macroeconomic record, right. But the funny
Speaker 4: thing is that that's the bit of Biden economics that
Speaker 4: everyone wants to forget because of the Larry Summer's invasion argument, right,
Speaker 4: because that was anathematized almost as it was happening. Instead,
Speaker 4: the entire team have swarmed around this industrial policy element,
Speaker 4: and I think there I've discovered a new role. So
Speaker 4: I think in the first phase I felt okay, there
Speaker 4: was policy learning that was going on, and the kind
Speaker 4: of left critique of the Obama administration was making a
Speaker 4: very positive contribution in feeding that. Then we came to
Speaker 4: what actually emerged in the industrial policy, and I have
Speaker 4: to say that a lot of folks that I would
Speaker 4: you know, consider allies, friends, whatever, shifted roles to essentially
Speaker 4: the role of a kind of cheerleading around the Biden administration.
Speaker 4: And I get it right, they're Americans. I'm not an
Speaker 4: American non American citizen. For them, this is life and
Speaker 4: death fate of the Republic. We have to rally behind
Speaker 4: our team. And by joke, they did, like the Biden administration,
Speaker 4: if nothing else, was brilliant at message management and worked
Speaker 4: you know the usual suspects in the finance twitter space,
Speaker 4: incredibly hard to get everyone on side and keep pushing.
Speaker 4: And at that point I have to say I'd discovered
Speaker 4: a slightly different role, which was more that it's a
Speaker 4: less attractive role. It's a less it's less comfortable, which
Speaker 4: is really that sort of inside critic or just simply
Speaker 4: somebody who wasn't necessarily drinking the kool aid and was saying, well,
Speaker 4: by what metric, by what scale is this really adequate?
Speaker 4: And so that was on the IRA side, the Inflation
Speaker 4: Reduction Act, where this was turned into this gigantic epic
Speaker 4: of industrial policy, and I just don't see it. I
Speaker 4: don't see it in the data. I don't see it
Speaker 4: in the scale. I don't see it if you run
Speaker 4: any kind of counterfaction on what we would have expected
Speaker 4: anyway to have happened. I think there's been a real
Speaker 4: sort of soft kid glove treatment of this. And much
Speaker 4: more seriously, however, is the is the question of war,
Speaker 4: is the question of warm peace and the way in
Speaker 4: which natural security has come to form an essential part
Speaker 4: of even of a progressive economic policy in the United States.
Speaker 4: And I come from the generation of Europeans whose childhood
Speaker 4: and youth was entirely dominated by the prospect that we
Speaker 4: were all going to end our lives in a nuclear incineration.
Speaker 4: And I find that turned towards a hawkish, anti China
Speaker 4: synthesis of industrial, economic and military policy profoundly troubling, and
Speaker 4: at the very least, I think the role of folks
Speaker 4: with you my kind of biography, I will become an
Speaker 4: American citizen. But nevertheless, I feel like our role at
Speaker 4: this point is to push back because there's an element
Speaker 4: of flag waving, a kind of left American exceptionalism that
Speaker 4: comes very rapidly to the foe in moments like that,
Speaker 4: and there is a willingness to believe that, yes, you know,
Speaker 4: I don't know America can do a Green Marshall Plan
Speaker 4: or that whole rhetoric they're very familiar with. And I've
Speaker 4: discovered a different role for myself than I really imagined
Speaker 4: in I don't know whether I've anchored anything, but that's
Speaker 4: just consistently asking the question is this And it's not
Speaker 4: a skepticism about, you know, the potentially beneficial role of
Speaker 4: US leadership. It's just actually, more often than not, a
Speaker 4: kind of asking, are you actually serious at all? Because
Speaker 4: I see hundreds of millions and single digit billions when
Speaker 4: we all know that the problems we're talking about, if
Speaker 4: you're serious and if you actually want to compete with China,
Speaker 4: ask one hundreds of billions, if not trillions of dollars
Speaker 4: that need mobilizing. And what I definitely don't think we
Speaker 4: should buy is the kind of weak soup of a
Speaker 4: promise of giant and dramatic action which we all kind
Speaker 4: of you know, can get excited about, when in fact
Speaker 4: what's being delivered is something far less than that.
Speaker 2: Adam joos so great at having you back on odd lot.
Speaker 2: It's fantastic conversation and looking forward to the next time.
Speaker 4: Thank you really appreciate the way you guys do. It's
Speaker 4: such a such an essential list and together. I can't
Speaker 4: tell you how many like, Oh my god, I can't
Speaker 4: stand this airport moment, you know what I mean, listened
Speaker 4: to odd lots everything can keep that seriously, I kid
Speaker 4: you not. Just in he throwed three days ago. It
Speaker 4: was like a nightmare of security line. I just put
Speaker 4: them on great stuff from Johnson Whole.
Speaker 2: Oh, thank you so much.
Speaker 4: Like you know, it's really it's really a huge.
Speaker 3: Sence and it warms my cynical heart to know that
Speaker 3: we make the experience of Heathrow Airport a little bit better.
Speaker 3: That's great.
Speaker 4: I mean there are other also better moments. I could
Speaker 4: just go, but yeah, it's really.
Speaker 2: Well, thank you so much and take care and hope
Speaker 2: to see around soon.
Speaker 4: Yeah you too.
Speaker 2: I love talking to Adam. It really had been too long,
Speaker 2: but you know, I love talking to people. You just
Speaker 2: throw out anything and they'll have something interesting to say.
Speaker 2: That's a great guest.
Speaker 3: Yeah, he definitely makes it easy, that's for sure. I
Speaker 3: did like his point about the sort of etymological point
Speaker 3: about the word over capacity and this idea that like, okay,
Speaker 3: well you have a grievance with China that basically boils
Speaker 3: down to while they're not playing fair. But if you
Speaker 3: can put this sort of seemingly neutral, technocratic, almost it
Speaker 3: sounds scientific term onto it, and maybe you can use
Speaker 3: that as the basis for like adding specific number or
Speaker 3: just giving it this veneer of like scientific feeling. I
Speaker 3: thought that was really interesting because it does seem to
Speaker 3: be like maybe that has happened over the past year
Speaker 3: or so.
Speaker 2: You know what I've found to be a very interesting point.
Speaker 2: And actually something else made me think about this recently
Speaker 2: and maybe we should talk about it more is the
Speaker 2: sort of acceptance that we have that if we want
Speaker 2: productivity growth, we can't get that in the service sector, right,
Speaker 2: And so like you know, you see, you know, health
Speaker 2: care costs. I think that actually the cost curve has
Speaker 2: been bent a little bit in recent years, but like
Speaker 2: there's a growing growing like health care costs, housing services
Speaker 2: continuing to be a major source of strain. We all
Speaker 2: know the frustrations that people have with like university costs,
Speaker 2: or childcare costs or elder care costs, things like that.
Speaker 2: And so when we think about like economic growth and
Speaker 2: where productivity gains are going to come from, we default
Speaker 2: to the manufacturing sector. Mean, while there's this huge swath
Speaker 2: of our economy that I think many people intuitively feel
Speaker 2: like we're losing ground on that we're getting the same thing,
Speaker 2: but it's more expensive every year, and that perhaps the
Speaker 2: sort of big challenge or a task that we should
Speaker 2: take up at some point is like, why do we
Speaker 2: make our services cheaper?
Speaker 3: Well, I think it's true, and you see that's a
Speaker 3: totally that's a great point, and you see it born
Speaker 3: out in the inflation statistics.
Speaker 4: Right.
Speaker 3: I sometimes think, Okay, the cost of things is going down,
Speaker 3: but the cost of living is going up, and you
Speaker 3: see that delineated very clearly in the statistics where like, okay,
Speaker 3: TVs have become more sophisticated and more advanced than they're
Speaker 3: cheaper than ever, but rents, home ownership, insurance, medical costs,
Speaker 3: college education, childcare, food prices to some extent, all of
Speaker 3: those have gone up phenomenally. So yeah, I think it's
Speaker 3: a great.
Speaker 2: Point totally, and I'm glad dam brought that up. Another
Speaker 2: interesting thing that he said was just this idea that
Speaker 2: like there is a lot of dissatisfaction in China. I mean,
Speaker 2: there's a lot of dissatisfaction in the United States. And
Speaker 2: you hear this from multiple people when you talk to them,
Speaker 2: that like there really is this sort of like deeply
Speaker 2: negative vibe. And maybe it's just because you know, GDP
Speaker 2: growth has been weak, but it feels like, at least
Speaker 2: again there's all secondhand for me that there is like
Speaker 2: something something wrong going on there with the way the
Speaker 2: domestic population perceives how the economy is unfolding.
Speaker 3: Well, one thing I was thinking, you know, we talked about, well,
Speaker 3: why didn't the US maybe have bigger stimulus post two
Speaker 3: thousand and eight, And again, I think that's a really
Speaker 3: valid point that has been brought up by a number
Speaker 3: of people at this point. But conversely, if you look
Speaker 3: at China, China had massive stimulus posts two thousand and eight,
Speaker 3: and people have even described China as saving the global
Speaker 3: economy in that time period, And I think you kind
Speaker 3: of have to wonder like if that stimulus had been
Speaker 3: somewhat scaled down, would that have made I guess the
Speaker 3: transition or the post two thousand sort of twelve years
Speaker 3: a little bit easier like the US, if we had
Speaker 3: scaled up fiscal sooner post two thousand and eight, maybe
Speaker 3: things would have been better. But conversely, if China had
Speaker 3: maybe scaled some of it down post two thousand and eight,
Speaker 3: would it have been better for the economy. It maybe
Speaker 3: enabled it to move more to you know, market driven
Speaker 3: consumer demands. That's interesting.
Speaker 4: I don't know, no, but it's so funny.
Speaker 2: I had not realized that this idea that like, after
Speaker 2: the financial system in the US collapsed, that the Chinese
Speaker 2: may have thought, oh, the West is going to give
Speaker 2: up on their financialized economy, and then we basically just
Speaker 2: went right back to the same approach. So much to
Speaker 2: pull from that convery.
Speaker 3: Yeah, always great catching up with Adam. Shall we leave
Speaker 3: it there?
Speaker 2: Let's leave it there.
Speaker 3: This has been another episodisode of the All Thoughts podcast.
Speaker 3: I'm Tracy Alloway. You can follow me at Tracy Alloway.
Speaker 2: And I'm Jill Wisenthal. You can follow me at The Stalwart.
Speaker 2: Follow our guest Adam Twos He's at Adam Underscore two is.
Speaker 2: Also check out his podcast ones and twos, and also
Speaker 2: check out his fantastic newsletter chartbook. Follow our producers Carmen
Speaker 2: Rodriguez at Carman armand dash Ol Bennett at dashbod and
Speaker 2: Kelbrooks at Kelbrooks. And thank you to our producer Moses Onam.
Speaker 2: For more Oddlots content, go to Bloomberg dot com slash
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