WEBVTT - 51: Why Everyone Is Freaking Out About Globalization 0:00:00.160 --> 0:00:02.320 But knowledge to work and grow your business with c 0:00:02.520 --> 0:00:06.680 i T from transportation to healthcare to manufacturing. C i 0:00:06.760 --> 0:00:10.520 T offers commercial lending, leasing, and treasury management services for 0:00:10.600 --> 0:00:13.480 small and middle market businesses. Learn more at c i 0:00:13.560 --> 0:00:25.000 T dot com put Knowledge to Work. Welcome to another 0:00:25.040 --> 0:00:29.520 episode of the Odd Lots podcast. I'm Tracy Alloway, executive 0:00:29.600 --> 0:00:34.920 editor of Bloomberg Markets, and unfortunately my normal co host, 0:00:35.000 --> 0:00:40.040 Joe Wisenthal is away this week. He is off globe 0:00:40.080 --> 0:00:44.640 trotting to some very exotic locations on a business trip 0:00:44.680 --> 0:00:48.200 for Bloomberg. So I thought as a sort of protest 0:00:48.320 --> 0:00:51.360 episode that Joe gets to go on an amazing trip 0:00:51.440 --> 0:00:54.280 to some very nice places with very good food and 0:00:54.560 --> 0:00:59.120 very luxurious scenery. We are going to talk about globalization 0:00:59.240 --> 0:01:03.080 and specific quickly, we are going to talk about the 0:01:03.320 --> 0:01:07.520 negative aspects of globalization. And here with me today as 0:01:07.760 --> 0:01:11.160 a replacement co host is Sid Verma. He is one 0:01:11.200 --> 0:01:14.560 of the newest members of the Bloomberg Markets team. Say hello, 0:01:14.600 --> 0:01:19.039 said hi there, So Sid, You're actually the perfect person 0:01:19.160 --> 0:01:22.080 to talk about this because you've done an enormous amount 0:01:22.080 --> 0:01:25.760 of work on globalization and cross border capital flows and 0:01:25.840 --> 0:01:29.200 development over the course of your career. Right, yes. Um. 0:01:29.319 --> 0:01:31.319 For the last couple of years, I've written quite a 0:01:31.319 --> 0:01:37.200 lot about the opportunities and challenges brought by unfettered capital 0:01:37.240 --> 0:01:42.440 flows and the backlash against um, some trade policies that 0:01:42.480 --> 0:01:49.280 have been UM implemented at the behest of Western backed institutions. So, UM, Yeah, 0:01:49.280 --> 0:01:52.800 I'm really excited to have this conversation. It seems like 0:01:52.880 --> 0:01:56.240 it really is the sexy topic of the momentum. We've 0:01:56.280 --> 0:01:59.840 obviously got Brexit votes, the rise of Donald Trump this year, 0:02:00.280 --> 0:02:05.640 declining trade flows, rising income in equality, political populism. It 0:02:05.680 --> 0:02:09.240 all seems to nurture a growing view that globalization isn't 0:02:09.240 --> 0:02:12.280 just out of fashion, it's on life support. And our 0:02:12.320 --> 0:02:15.519 guests today, I actually really like the way you described 0:02:15.600 --> 0:02:19.919 him earlier. Um, it's Danny Roderick. He's an economist. He's 0:02:19.960 --> 0:02:24.280 also a professor of international political economy at Harvard, and 0:02:24.760 --> 0:02:27.960 you kind of said he was the original guy who 0:02:28.480 --> 0:02:31.960 started writing about all the negative aspects of globalization before 0:02:32.000 --> 0:02:36.360 it was cool, right. Yeah. He refused to join in 0:02:36.480 --> 0:02:41.960 the congratulatory party two decades ago, UM, and he argued 0:02:42.000 --> 0:02:46.520 that economists probably overstated the benefits of globalization and that 0:02:46.639 --> 0:02:50.760 policy makers probably risk a backlash if they push ahead 0:02:50.800 --> 0:02:55.359 with unfettered free trade and capital policies. So he's exactly 0:02:55.400 --> 0:02:57.880 the right economist to talk to on this topic, right, 0:02:57.919 --> 0:03:00.640 And in retrospect, it seems like the notion that a 0:03:00.680 --> 0:03:03.880 backlash was coming was very, very imprescient, because here we 0:03:03.960 --> 0:03:07.440 are in two thousand and sixteen and everyone's talking about 0:03:07.480 --> 0:03:12.359 the downsides of globalization on federal trade deals, rightly or wrongly. 0:03:12.400 --> 0:03:26.119 I should say, well, without further ado, Danny Roderick, thank 0:03:26.160 --> 0:03:28.640 you so much for joining us today. Nice to be 0:03:28.720 --> 0:03:32.040 with you. Thank you. Should we maybe start with this 0:03:32.200 --> 0:03:37.040 idea of a backlash, you know, to what extent was 0:03:37.240 --> 0:03:40.680 the criticism that we are seeing now of globalization, To 0:03:40.800 --> 0:03:45.160 what extent was that inevitable based on what's happened over 0:03:45.280 --> 0:03:49.360 the past two decades and beyond. I think it was 0:03:49.400 --> 0:03:53.120 pretty inevitable. I mean it seemed clear to me that 0:03:53.640 --> 0:03:57.120 the deal position was going to be building up. I 0:03:57.120 --> 0:04:01.680 guess I wrote a little monograph um a couple of 0:04:01.720 --> 0:04:05.680 decades ago called has Globalization Gone Too Far? And then 0:04:05.760 --> 0:04:08.119 you know, it was different kinds of characters that were 0:04:08.160 --> 0:04:11.440 sort of uh, it was Pat Buchanan and you know, 0:04:11.520 --> 0:04:16.240 in Europe it was the truckers protesting, and the agriculturalists 0:04:16.320 --> 0:04:18.719 and sort of where you know, sort of other kinds 0:04:18.760 --> 0:04:24.760 of people on the scene. But the general trends were 0:04:25.120 --> 0:04:28.320 pretty easy to see and and and they arose from 0:04:28.400 --> 0:04:33.440 some basic fundamentals that the the kind of overall economic 0:04:33.480 --> 0:04:37.560 benefits of of globalization. You sort of began to be 0:04:37.680 --> 0:04:42.000 swamped by a lot of concerns about redistribution, about what 0:04:42.080 --> 0:04:46.400 was happening to specific communities, about the the elites getting 0:04:46.440 --> 0:04:51.560 sort of uh um uprooted from sort of the national 0:04:51.640 --> 0:04:55.480 setting and the larger gap opening up between the people 0:04:55.480 --> 0:04:58.279 who control the politics and what was happening and the 0:04:58.400 --> 0:05:03.120 ordinary people um and sort of you know, decision making 0:05:02.839 --> 0:05:08.080 moving away from national capitals to uh, weird places like 0:05:08.120 --> 0:05:11.640 Brussels or Geneva or or sort of multinationals and banks 0:05:12.000 --> 0:05:16.520 including unclosed doors and and so historically, of course, this 0:05:16.680 --> 0:05:18.919 was also not the first time we were seeing this. 0:05:19.400 --> 0:05:23.440 That We've had an era of high globalization during the 0:05:23.480 --> 0:05:26.840 Gold Standard, and and it kind it came to a 0:05:27.040 --> 0:05:32.120 rather abrupt end for many of the same reasons. I 0:05:32.200 --> 0:05:36.600 don't think we're up quite the same kind of crisis 0:05:36.960 --> 0:05:41.080 uh at this point. I think the the globe kind 0:05:41.080 --> 0:05:45.400 of globalization we have has much firmer foundations than than 0:05:45.920 --> 0:05:49.440 was the case under the gold gold standard. But I 0:05:49.480 --> 0:05:53.080 do think we have pushed it further than it can go, 0:05:53.200 --> 0:05:58.640 either economically actually or politically. I like the idea that 0:05:58.800 --> 0:06:02.599 we're not necessary early facing a huge crisis when it 0:06:02.640 --> 0:06:07.080 comes to a globalization backlash. What exactly can you spell out? 0:06:07.120 --> 0:06:10.919 What exactly makes it different this time compared to, for instance, 0:06:11.160 --> 0:06:14.200 the end of the gold standard. Yeah, I mean, I 0:06:14.200 --> 0:06:16.680 think we're in a much better you know, despite all 0:06:16.800 --> 0:06:19.880 day the backlash. The fact is that we have much 0:06:19.920 --> 0:06:26.320 stronger institutions um today compared to the nineteen twenties and 0:06:26.440 --> 0:06:30.120 nineteen thirties, the inter war period when the gold standard 0:06:30.560 --> 0:06:36.280 eventually collapse. UM. We have much stronger governments that are 0:06:36.320 --> 0:06:42.520 providing much better safety nets. Uh. We have global institutions 0:06:42.560 --> 0:06:48.080 that provide for much greater global cooperation, the World Trade 0:06:48.160 --> 0:06:51.400 Organization and the IMF with nothing like that in the 0:06:51.440 --> 0:06:54.440 inter war period. And by and large, I think, you 0:06:54.480 --> 0:06:59.039 know that people have incorporated the lessons of the rampant 0:06:59.040 --> 0:07:03.000 protectionism of the nineteen thirties, and and I think even 0:07:03.040 --> 0:07:05.240 the you know, the populist and the way they talk 0:07:05.279 --> 0:07:10.000 about trade policy. It's it's historically speaking, it's it's a 0:07:10.160 --> 0:07:14.480 rather measured kind of protectionism. I don't think smooth and 0:07:14.520 --> 0:07:18.000 holy would be something that that even Donald Trump would 0:07:18.560 --> 0:07:20.800 would bring up as something that that you would like 0:07:20.880 --> 0:07:25.960 to to to reenact. So I think the intellectual consensus 0:07:26.000 --> 0:07:30.200 has actually shifted quite a bit. And even though they're 0:07:30.240 --> 0:07:32.360 a bit more done in dumps than usual, I mean, 0:07:32.360 --> 0:07:36.840 I think the political forces that push for open markets, 0:07:37.040 --> 0:07:42.520 um you know, big multinationals or banks or the trade 0:07:42.560 --> 0:07:45.760 elite date also happened to be much more there's still 0:07:45.800 --> 0:07:49.680 politically quite quite powerful. So I don't see a fundamental 0:07:49.840 --> 0:07:52.280 breaking down of the system and the way that that 0:07:52.360 --> 0:07:55.240 we saw. But that doesn't mean that you know that 0:07:56.000 --> 0:07:59.560 you know, we could you know, seriously mismanaged the situation 0:07:59.800 --> 0:08:03.680 and in fact fuel the rise of the growth of 0:08:04.680 --> 0:08:08.320 populism that I think, you know, the damage will be 0:08:08.720 --> 0:08:11.160 not just to globalization. I think the damage will be 0:08:11.200 --> 0:08:15.160 to our liberal democratic order. Anythink that's that's in fact 0:08:15.320 --> 0:08:18.720 a much bigger price to pay. So, Danny, you mentioned 0:08:18.920 --> 0:08:23.560 the idea that globalization may in some way have been mismanaged. 0:08:23.600 --> 0:08:26.360 Can you spell out exactly what you mean by that 0:08:26.440 --> 0:08:29.480 and give us maybe some examples. I think I I 0:08:29.600 --> 0:08:34.120 time the transition to the ninety nineties where I think 0:08:34.120 --> 0:08:36.560 we began to mosh push for a model of of 0:08:36.679 --> 0:08:44.160 globalization that I call hyperglobalization, which is where gradually globalization 0:08:44.440 --> 0:08:49.040 turned into an end for itself rather than being a 0:08:49.160 --> 0:08:54.520 means to an end. And and we so increasingly governments 0:08:54.800 --> 0:09:00.600 negotiating deals or undertaking changes in policies that that that 0:09:00.760 --> 0:09:05.040 began to constrain um what they could do domestically, began 0:09:05.120 --> 0:09:08.640 to constrain the way that they could address domestic um 0:09:09.440 --> 0:09:15.760 concerns and UH and oversold the benefits of the resulting 0:09:15.880 --> 0:09:19.480 arrangements and didn't pay a whole lot of attention to 0:09:19.600 --> 0:09:22.839 the disruption that those things would cause. And I think 0:09:22.960 --> 0:09:27.400 there are sort of two concrete things. One was the 0:09:27.480 --> 0:09:31.120 creation of the World Trade Organization in the nineties, which 0:09:31.200 --> 0:09:35.640 which went significantly beyond any trade agreement that had been negotiated. 0:09:35.679 --> 0:09:38.120 And what really stands out about the w t O 0:09:39.160 --> 0:09:45.000 is that it reached significantly beyond borders into deep domestic 0:09:45.120 --> 0:09:50.320 territory and economic policy making UH with growth sort of 0:09:50.320 --> 0:09:53.040 restrictions on on what governments could do in the way 0:09:53.360 --> 0:09:56.520 of dealing with subsidies in the area of health and 0:09:56.600 --> 0:10:01.040 safety standards with respect to intellectual property rights. And on 0:10:01.120 --> 0:10:03.560 the financial side, of course, even though this was not 0:10:03.679 --> 0:10:09.600 an international agreement, by and large, complete mobility of capital, 0:10:10.559 --> 0:10:14.880 particularly of short term financial capital, became effectively the norm 0:10:16.000 --> 0:10:20.240 through the workings of the European Union and on and 0:10:20.440 --> 0:10:22.960 on a broader scale through the o e C. D 0:10:23.320 --> 0:10:27.000 UM and I think this this new um sort of 0:10:27.120 --> 0:10:30.880 understandings from the nineteen nineties. On the one hand, you know, 0:10:31.040 --> 0:10:34.960 complete mobility of capital as a norm uh and uh 0:10:35.080 --> 0:10:38.600 and and trade agreements, you know, being no longer about 0:10:39.320 --> 0:10:42.720 tariffs and quotas at the border, but increasingly about domestic 0:10:42.760 --> 0:10:46.280 regulations and how those had to be coordinated and harmonized 0:10:46.320 --> 0:10:52.000 across countries. I think sort of both um made domestic 0:10:52.040 --> 0:10:56.199 economic policy making much more hostage, left it much more 0:10:56.280 --> 0:10:59.679 hostage to uh this sort of you know, this anonymous 0:10:59.679 --> 0:11:04.120 force of globalization uh and and created this this juncture 0:11:04.200 --> 0:11:06.920 between sort of you know where uh, you know, the 0:11:06.960 --> 0:11:09.800 life that the ordinary people were living and their their 0:11:09.840 --> 0:11:13.760 own economic existence and the kind of policy making that 0:11:13.880 --> 0:11:17.640 happened at that sort of international sort of globalization or 0:11:17.760 --> 0:11:20.960 hyper globalization driven sphere. We are going to take a 0:11:21.040 --> 0:11:26.920 quick break for our sponsors. But knowledge to work and 0:11:26.920 --> 0:11:30.240 grow your business with c i T from transportation to 0:11:30.320 --> 0:11:34.319 healthcare to manufacturing. C i T offers commercial lending, leasing, 0:11:34.360 --> 0:11:38.040 and treasury management services for small and middle market businesses. 0:11:38.240 --> 0:11:40.920 Learn more at c I T dot com. Put Knowledge 0:11:40.920 --> 0:11:50.719 to work and we're back, Danny. I'm interested in this 0:11:50.880 --> 0:11:56.280 idea of globalization, hyper globalization, if you will, going too far. 0:11:56.480 --> 0:11:59.280 And I always wonder how did that actually happen? Like 0:11:59.640 --> 0:12:03.360 did politicians just wake up one day and realize that 0:12:03.400 --> 0:12:06.360 there was a lot of opportunity for them personally in 0:12:06.520 --> 0:12:10.920 creating these sort of super national structures that they could 0:12:10.920 --> 0:12:14.880 then have careers in or walk us through this? How 0:12:14.920 --> 0:12:19.160 this actually happened? Um? You know, it's a combination as 0:12:19.240 --> 0:12:21.960 usual of interests and ideas. On the one hand, of course, 0:12:22.000 --> 0:12:25.960 you had very specific interests at work, um, and so 0:12:26.000 --> 0:12:28.640 in in financial globalization, of course, they were you know, 0:12:28.840 --> 0:12:32.199 banks that became bigger and were interested in in in 0:12:32.720 --> 0:12:38.080 removing impediments to capital flows and across borders. You had 0:12:38.160 --> 0:12:41.360 multinationals who wanted to get market access and therefore were 0:12:41.440 --> 0:12:45.280 interested in in in reshaping the regulations of different countries. 0:12:45.360 --> 0:12:47.839 So as to remove impediments in terms of their being 0:12:47.880 --> 0:12:53.079 able to access these markets. You had definitely interests at play, 0:12:53.120 --> 0:12:55.960 but there was also ideas. I mean, there's sort of 0:12:55.960 --> 0:13:00.400 the whole you know, ideational context of how the things 0:13:00.440 --> 0:13:05.640 happened in the ninety nineties had as its background, of course, 0:13:05.679 --> 0:13:09.880 sort of the notion that you know, markets couldn't do 0:13:10.240 --> 0:13:15.000 much wrong, that that governments, when they intervened with on 0:13:15.120 --> 0:13:18.240 these sort of muck things around, and that you know, 0:13:18.280 --> 0:13:21.400 sort of that that trade liberalization in the fifties and 0:13:21.480 --> 0:13:24.880 sixties and seventies had been um, you know, had been 0:13:25.240 --> 0:13:28.720 had produced the booming world economy, and therefore, which by 0:13:28.760 --> 0:13:33.160 the way, is true, but then sort of misleading conclusion 0:13:33.280 --> 0:13:35.600 was the wrong that therefore this was the most important 0:13:35.600 --> 0:13:38.640 thing to keep doing so effectively a good thing was 0:13:38.679 --> 0:13:42.440 taken too far in my view. And third, I would 0:13:42.480 --> 0:13:45.920 add that on top of of you know, sort of 0:13:45.920 --> 0:13:50.320 the general mediational context and the interests of various actors. Um, 0:13:50.360 --> 0:13:53.760 I think there was a political failure on the part particularly, 0:13:53.800 --> 0:13:56.679 I would say, of the sort of you know what 0:13:57.720 --> 0:14:00.520 in the United States context, what would call sort liberals 0:14:00.600 --> 0:14:03.720 or left liberals, and in the United in Europe would 0:14:03.720 --> 0:14:06.640 be the socialists and the social Democrats a sort of 0:14:07.200 --> 0:14:11.920 a certain abdication of their responsibility, and they they bought 0:14:12.120 --> 0:14:16.920 into that whole story of how sort of, you know, 0:14:17.120 --> 0:14:21.360 moving on this hyperglobalization agenda either was something that was 0:14:21.520 --> 0:14:24.120 necessary that they couldn't do much about it, or as 0:14:24.480 --> 0:14:27.840 was the case in many cases, that this is something 0:14:27.880 --> 0:14:30.960 that they should actually back, that they should support. So 0:14:31.120 --> 0:14:35.000 somewhat surprisingly, some of the the most avid supporters of 0:14:35.040 --> 0:14:39.720 financial globalization where the Socialists in France or the Clinton 0:14:39.760 --> 0:14:43.640 Democrats in the United States. So I think, you know, 0:14:43.680 --> 0:14:47.080 sort of the political group that you might have thought 0:14:47.680 --> 0:14:50.440 would have acted as a break in fact, it was 0:14:50.600 --> 0:14:55.440 very much in behind this this push towards hyperglobalization. So 0:14:55.480 --> 0:14:57.200 I think that that's I think it's sort of the 0:14:57.240 --> 0:15:02.880 combination of the forces that brought us to to to 0:15:02.920 --> 0:15:08.120 where we are. So so where do we go going forward? Um, 0:15:08.200 --> 0:15:13.240 the Trans Pacific Partnership and the Transatlantic Trade Partnership deals 0:15:13.320 --> 0:15:18.360 look like they don't have sufficient political backing. The IMF 0:15:18.400 --> 0:15:21.880 has issued a mere culpus saying that they have probably 0:15:22.320 --> 0:15:26.920 overstated the virtues of neoliberalism, which tends to argue for 0:15:26.960 --> 0:15:31.120 the wholesale privatization of companies, as well as a modest 0:15:31.200 --> 0:15:35.400 role for fiscal policy and fully open trade and financial borders. 0:15:35.400 --> 0:15:38.600 At the same time, you know, governments and the IMF 0:15:38.760 --> 0:15:42.480 are more sympathetic to the view that capital controls can 0:15:42.560 --> 0:15:47.600 shield themselves from volatility of international finance. Um. So you 0:15:47.600 --> 0:15:51.080 know what, what where are we going next? Are there 0:15:51.360 --> 0:15:54.160 sufficient number of you know? Um? You know, is there 0:15:54.160 --> 0:15:56.640 a moral leadership on the international stage to try and 0:15:57.000 --> 0:16:01.360 craft a new trading model or is it just a 0:16:01.440 --> 0:16:05.520 model through scenario? Yes? So, as I said earlier, you know, 0:16:05.600 --> 0:16:09.440 I don't think the really bad scenario is one of 0:16:09.440 --> 0:16:12.120 a very high likelihood where we have a complete collapse 0:16:13.080 --> 0:16:17.760 of the world economy and and and globalization with all 0:16:17.800 --> 0:16:22.480 the really terrible political ramifications of the type that we 0:16:22.520 --> 0:16:27.600 saw in the interwar period. But but leaving that aside, 0:16:27.640 --> 0:16:31.920 I think whether we take a relatively good path or 0:16:32.440 --> 0:16:40.480 relatively ugly path depends largely on how the mainstream political 0:16:41.160 --> 0:16:46.000 groups react, um. And and that's both sort of you know, 0:16:46.160 --> 0:16:53.480 center right, center left parties and also the technocratic establishment. Now, 0:16:54.360 --> 0:16:57.240 I think both of these groups have have are sort 0:16:57.280 --> 0:17:00.720 of halfway down the line. I mean, as you say, 0:17:01.240 --> 0:17:03.760 there has been a sort of a couple of sorts 0:17:04.280 --> 0:17:07.480 on a number of different dimensions. Uh. You know that, 0:17:07.640 --> 0:17:11.560 you know, the free mobility of capital. I think sort 0:17:11.560 --> 0:17:14.719 of the consensus around that has dissipated, and even the 0:17:14.760 --> 0:17:17.399 IMF is saying, you know that that we need to, 0:17:18.119 --> 0:17:21.200 you know, accept that there are circumstances which capital controls 0:17:21.280 --> 0:17:23.840 might make sense. Uh. And there's sort of you know, 0:17:23.960 --> 0:17:26.480 wider agreement that you know, maybe we needed kind of 0:17:26.480 --> 0:17:31.000 a different models on trade negotiations, but we're not quite 0:17:31.040 --> 0:17:33.199 there yet. And we see it, for example, in the 0:17:33.240 --> 0:17:36.439 way that you know, an institution like the IMF response 0:17:36.920 --> 0:17:39.000 to where we are. On the one hand, you have 0:17:39.200 --> 0:17:43.840 these sort of um revisions in its thinking. On the 0:17:43.880 --> 0:17:46.760 other hand, you have Christine Lagarde coming out and saying that, 0:17:47.160 --> 0:17:49.359 you know, we need to stay strong on trade and 0:17:49.720 --> 0:17:53.200 the only way that we can progress is by signing 0:17:53.200 --> 0:17:56.320 more trade agreements, and it's it's very important that we 0:17:56.400 --> 0:17:59.760 do that. So I think, you know, the realization hasn't 0:18:00.200 --> 0:18:03.399 kin that the way that you respond to these things 0:18:03.520 --> 0:18:09.040 is not by you know, simply doing a better marketing 0:18:09.119 --> 0:18:12.000 job on the benefits of trade. That's not the issue. 0:18:12.560 --> 0:18:19.399 The issue is is that ordinary people feel that policymaking 0:18:19.600 --> 0:18:23.000 and and and and the technocratic and policy elites are 0:18:23.000 --> 0:18:26.439 pursuing a set of interest which is not theirs, and 0:18:26.440 --> 0:18:30.439 and uh and and and. The main constraint that the 0:18:30.480 --> 0:18:33.720 world economy faces right now is not that it is 0:18:33.760 --> 0:18:36.400 not sufficiently open and so you need to sign new 0:18:36.440 --> 0:18:40.359 trade agreements. The main constraint is that it's lacking the 0:18:40.480 --> 0:18:43.840 legitimacy in the eyes of the ordinary people that you 0:18:43.880 --> 0:18:48.240 need to sustain a moderately open economy. And once you 0:18:48.320 --> 0:18:52.359 realize that the main constraint is legitimacy, not lack of openness, 0:18:52.720 --> 0:18:56.160 then you have to really start thinking that that what 0:18:56.200 --> 0:18:59.720 we should be doing is not pushing for more trade agreements, 0:18:59.760 --> 0:19:04.720 but really fundamentally revisiting what we are negotiating when we 0:19:04.760 --> 0:19:08.159 talk about trade. And we're not there yet. But Danny, 0:19:08.200 --> 0:19:10.840 this is why I get confused, because when people talk 0:19:10.960 --> 0:19:17.680 about reforming trade or better distributing the benefits of free trade, 0:19:18.119 --> 0:19:22.200 it seems like by doing that, by definition, you almost 0:19:22.240 --> 0:19:26.919 go into protectionism, right because you know, improving trade for 0:19:27.160 --> 0:19:31.360 one group is inevitably going to be good from their 0:19:31.359 --> 0:19:34.960 perspective and perhaps bad for someone else. So how do 0:19:35.040 --> 0:19:41.359 you make it better without automatically going backwards and entering 0:19:41.480 --> 0:19:45.119 a sort of protectionist everyone for themselves game. Yeah. I 0:19:45.160 --> 0:19:50.159 think one of the obstacles in thinking creatively and productively 0:19:50.400 --> 0:19:54.280 about the world of trade is that we have this, 0:19:55.359 --> 0:19:59.000 you know, we we think about trade on what we're 0:19:59.040 --> 0:20:02.560 doing in trade as a so moving in this unidirectional 0:20:03.400 --> 0:20:06.480 uh sort of road that goes from you know, more 0:20:06.520 --> 0:20:08.800 open trade to less open trade. So it's you know, 0:20:08.920 --> 0:20:12.199 the battle between protection has been free trade. You know. 0:20:12.359 --> 0:20:14.480 This may have been the battle that we were fighting 0:20:14.480 --> 0:20:17.679 in the fifties and sixties and seventies, and that battle 0:20:17.720 --> 0:20:21.200 has been won, and it's been won by by by 0:20:21.280 --> 0:20:24.720 free traders. But really since the ninety nineties and since 0:20:24.760 --> 0:20:29.560 the World Trade Organization, trade negotiations and trade agreements are 0:20:29.720 --> 0:20:33.520 not about free trade uh and and so you know, 0:20:33.880 --> 0:20:38.600 so what we're really talking about is not protectionism versus 0:20:39.160 --> 0:20:42.800 free trade. Large part of the t PP is really 0:20:42.840 --> 0:20:46.600 about talking about regulations um and and and regulations that 0:20:46.640 --> 0:20:51.000 are fundamental to running in open economy uh and a 0:20:51.119 --> 0:20:54.840 market based system. The question is, you know, where should 0:20:54.880 --> 0:20:58.600 those regulations be designed, and what's the role of international 0:20:58.600 --> 0:21:03.560 agreements or global market forces in shaping those regulations. So 0:21:04.320 --> 0:21:09.560 should corporations, for example, have access to a completely separate 0:21:09.600 --> 0:21:14.040 track in the way that they can pursue their interests 0:21:14.640 --> 0:21:19.440 and impose their own preferences on certain on governments when 0:21:20.000 --> 0:21:24.560 no other group NGOs or labor unions or others have 0:21:24.720 --> 0:21:28.199 a similar ability. So, of course I'm talking about the 0:21:28.240 --> 0:21:31.400 I S d S so called the Investor States Dispute 0:21:31.400 --> 0:21:35.840 Settlement System, which is part of the Transpacific Partnership and 0:21:35.880 --> 0:21:39.720 other trade agreements. Are we talking about now, We're talking about, 0:21:39.800 --> 0:21:43.159 you know, the rules with respect to capital flows and 0:21:43.240 --> 0:21:48.840 capital account regulations and patent and intellectual property rights, and 0:21:49.240 --> 0:21:52.280 you know, what are appropriate rules in those areas for 0:21:52.320 --> 0:21:55.600 a country like Vietnam or her country like Malaysia, And 0:21:55.600 --> 0:21:59.320 should those be designed by international agreement? And should the 0:21:59.359 --> 0:22:03.280 main act so we you know, shaping those regulations be 0:22:04.080 --> 0:22:08.880 banks and and and and and and large amountain national corporations. 0:22:08.920 --> 0:22:13.000 These are not issues that are helpfully discussed in in 0:22:13.400 --> 0:22:17.400 the light of you know, sort of protectionism versus free 0:22:17.440 --> 0:22:21.000 trade kind of a mindset, because they're not about those 0:22:21.760 --> 0:22:24.679 um and so that's why I don't think the issue 0:22:24.800 --> 0:22:27.359 is really love of of you know, if we if 0:22:27.400 --> 0:22:30.280 we don't negotiate T P P or t t I 0:22:30.320 --> 0:22:36.920 P that we're necessarily falling into, um, a protectionist hell hole. Uh. 0:22:36.960 --> 0:22:40.560 The issue is can we have better rules that address 0:22:40.840 --> 0:22:46.280 issues of fairness, of distuputive justice, of equity UM in 0:22:46.280 --> 0:22:49.120 a sense that people want to make sure that the 0:22:49.200 --> 0:22:52.520 rules and regulations that affect their lives are made democratically 0:22:53.160 --> 0:22:57.080 in fluad that they can actually openly participate. And are 0:22:57.119 --> 0:23:02.000 we allowing for democratic deliberation, sufficient democrats deliberation for the 0:23:02.040 --> 0:23:06.560 determination of such rules. So those are the kinds of issues, 0:23:06.640 --> 0:23:09.720 and I think they're certainly are the ones that ought 0:23:09.720 --> 0:23:13.119 to be discussed. I think that brings us quite neatly 0:23:13.119 --> 0:23:16.760 on to kind of two separate topics, whether it's trade 0:23:16.760 --> 0:23:21.199 globalization or financial globalization. But one way of looking at 0:23:21.400 --> 0:23:25.160 slowing globalization is a fact that trade growth has been 0:23:25.480 --> 0:23:29.080 weaker than GDP growth in recent years, UM, and that 0:23:29.160 --> 0:23:33.199 trade elasity, so called trade alasity, is projects to be 0:23:33.320 --> 0:23:36.320 weak again this year. UM. And I know that you 0:23:36.440 --> 0:23:39.040 say that that's a very blunt way of looking at, 0:23:39.320 --> 0:23:43.880 you know, globalization, but it seems that trade volumes are 0:23:43.960 --> 0:23:47.119 weak and there seems to be an existential threat for 0:23:47.160 --> 0:23:51.159 emerging markets in the in the coming decades, given the 0:23:51.160 --> 0:23:56.000 fact that there are new manufacturing techniques that could increase 0:23:56.440 --> 0:24:00.600 UM import, substitution and developed markets. You know what extent 0:24:00.800 --> 0:24:04.399 are you concerned that in emerging markets like the comparative 0:24:04.440 --> 0:24:09.880 advantage from new innovative technologies such as drive list cars, 0:24:10.000 --> 0:24:14.320 three D printing, and new softwares, because traditionally we know 0:24:14.400 --> 0:24:17.480 that for emerging markets to grow, they need to build 0:24:17.480 --> 0:24:22.560 out competitive manufacturing hubs. Yes, I mean, first, I think 0:24:22.720 --> 0:24:28.360 the decline of trade volumes in relation to global output 0:24:28.800 --> 0:24:33.640 um in recent years that I don't think it's much 0:24:33.680 --> 0:24:38.560 to do with the populist backlash so far, So I 0:24:38.560 --> 0:24:42.800 don't think it's really driven through by the rise of protectionism. 0:24:42.800 --> 0:24:45.560 There are much you know sort of there you know, 0:24:45.680 --> 0:24:50.280 supply chains are being sort of brought in home because 0:24:50.320 --> 0:24:54.760 of technological changes um and and the slowing down of 0:24:54.760 --> 0:24:58.440 of of China and is also a very big factor 0:24:58.480 --> 0:25:00.879 in that. So there are you know, what's happening to 0:25:01.359 --> 0:25:05.480 trade recently. I think it's largely driven by by economic 0:25:05.520 --> 0:25:09.200 and technological changes and not by the politics around trade. 0:25:09.640 --> 0:25:15.040 Although I do think that if we mismanage globalization, political 0:25:15.160 --> 0:25:18.919 risks and and uh, political barriers will start the player 0:25:18.960 --> 0:25:22.399 all as well. But going back to the question of 0:25:22.760 --> 0:25:28.000 developing countries in emerging markets, I'm indeed very concerned by 0:25:28.040 --> 0:25:34.879 the fact that manufacturing is increasingly becomes becoming skill and 0:25:34.920 --> 0:25:40.520 technology and intensive and effectively compared to advantage in manufacturing 0:25:40.600 --> 0:25:45.240 is moving away from many low income countries. UH. And 0:25:45.320 --> 0:25:50.439 then the traditional route whereby countries developed very rapidly was 0:25:50.520 --> 0:25:53.960 one of export oriented industrialization. That's of course what China 0:25:54.000 --> 0:25:57.760 did before China, It's what South Korea and Taiwan did 0:25:57.800 --> 0:26:01.240 before them, it was Japan. And what we see around 0:26:01.280 --> 0:26:07.280 the world these days is that that really a process 0:26:07.320 --> 0:26:10.639 of what I've called premature the industrialization in law to 0:26:10.760 --> 0:26:15.439 middle income countries that they're that they are becoming the 0:26:15.480 --> 0:26:19.480 industrialized at very low levels of development in manufacturing isn't 0:26:19.520 --> 0:26:23.639 serving the kind of escalator role that it did. So 0:26:24.600 --> 0:26:27.200 you know, you know, a country like Ethiopia that really 0:26:27.240 --> 0:26:31.720 should in some sense ideally ideally placed to be the 0:26:31.800 --> 0:26:37.760 next sort of low cost source for manufactured exports um 0:26:37.760 --> 0:26:41.520 you know, has received some Chinese investment, but I really 0:26:41.520 --> 0:26:43.840 don't see it developing in quite the same way that 0:26:43.960 --> 0:26:47.280 the station countries before. And I think technology has a 0:26:47.280 --> 0:26:49.480 lot to do with it. UM. You know, when we 0:26:49.520 --> 0:26:52.800 start talking about you know, three D printing of shoes, 0:26:53.800 --> 0:26:56.320 you've suddenly, you know, taken away, you know, one of 0:26:56.359 --> 0:27:02.120 the main mechanisms through which law in gump countries developed. UH. 0:27:02.160 --> 0:27:05.160 And you've taken that, that that escalator away from them, 0:27:05.280 --> 0:27:06.960 you know. So it is it is an issue that 0:27:07.040 --> 0:27:12.240 I think UM will mark developing countries in the decades 0:27:12.280 --> 0:27:17.439 ahead and of course going forward. UM. Financial globalization UM 0:27:17.680 --> 0:27:20.639 is a big question mark. UM. You know, obviously we 0:27:20.760 --> 0:27:26.200 have a dollar driven global financial order, but nothing there's 0:27:26.240 --> 0:27:28.560 nothing new under the sun. UM. And you have been 0:27:28.640 --> 0:27:32.960 warning for years about the risks of boom bust capital 0:27:33.000 --> 0:27:38.160