Speaker 1: Welcome to Bloomberg Opinion listeners. I'm Valley Quinn. A special
Speaker 1: episode of Bloomberg Opinion this week. Helen Thompson, Professor of
Speaker 1: Political economy at Cambridge University, is the author of Disorder,
Speaker 1: Hard Times in the twenty one Century. The disorder the
Speaker 1: book presents, emanates essentially from oil and fossil fuels. More broadly,
Speaker 1: the geopolitical and transactional complexities of producing, securing, transporting and
Speaker 1: consuming that energy. According to Disorder, underpinned the great structural changes,
Speaker 1: both economic and political, of the last century. There's more,
Speaker 1: much more, but let's get started. So, Helen, are we
Speaker 1: at a pivotal point now in how the global economy operates? Yeah,
Speaker 1: I think that we are. I think we're actually at
Speaker 1: a pivotal point before the war. I think that what
Speaker 1: we could see during the latter part of last year,
Speaker 1: in the months autumn before Omicon hit, was that the
Speaker 1: world economy is facing some pretty serious energy constraints that really,
Speaker 1: at any point when there's any significant growth, the world
Speaker 1: economy is now running into high energy prices. And we're
Speaker 1: not just talking about high oil prices, as has been
Speaker 1: the case with most past energy crisis. At Lea. Since
Speaker 1: the nineteen seventies, we're talking about high natural gas prices
Speaker 1: and high coal prices too, and I think high core
Speaker 1: prices has really taken a lot of people, including myself,
Speaker 1: trying to follow the energy situation quite by surprise, and
Speaker 1: I think that that goes to show the depth of
Speaker 1: the issues that we're now facing, particularly when we bear
Speaker 1: in mind that we would like the world economy to
Speaker 1: be moving away from coal as rapidly as possible given
Speaker 1: the need to address climate change. One of your main
Speaker 1: visas is that the US failed to secure the stability
Speaker 1: of its relationships in the Middle East, and that created
Speaker 1: an instability around energy which reverberates. So in a sense,
Speaker 1: this shouldn't have taken any of us and by surprise
Speaker 1: by that pieces right, no. I think that what we
Speaker 1: can see during the two thousand and tens is is
Speaker 1: that the United States, in terms of its own energy needs,
Speaker 1: is in a much stronger position than it had been
Speaker 1: in the previous decades. Since the nineteen seventies, because the
Speaker 1: shale oil and gas boom allowed the United States to
Speaker 1: achieve a higher level of energy independence, much reduced energy dependence.
Speaker 1: What was revealing, though, was the way in which as
Speaker 1: the United States achieved that it's very success had so
Speaker 1: many disruptive consequences in the Middle East, in particular because
Speaker 1: it was very problematic from the Saudi point of view
Speaker 1: to now find that American shell producers were big rivals
Speaker 1: for shares of world oil market, and as that came
Speaker 1: at a time when the United States and the Obama
Speaker 1: was also trying to improve relations with around and then
Speaker 1: things didn't work out very well in Syria. Despite the
Speaker 1: fact that Saudis and States have started on the same side,
Speaker 1: what we see through the two thousands and the end
Speaker 1: as the shell boom goes on, is a complete deterioration
Speaker 1: of US Saudi relations. And although to some extent they're
Speaker 1: repaired during the Trump presidencies. That Trump tries to hug
Speaker 1: the Saudi Is hard, he still isn't really able to
Speaker 1: in the Saudis when it comes to the price of oil.
Speaker 1: And as the US show boom foltered during the pandemic,
Speaker 1: particularly during two thousand and twenty, another American president was
Speaker 1: left trying to persuade our oil producers to produce more oil.
Speaker 1: The problem now is, with the exception probably of Saudi
Speaker 1: Arabia and United Arab remberence. It's not quite clear how
Speaker 1: many of them really can produce more oil. Particularly I
Speaker 1: think there are difficulties with Kwait. So there's a great
Speaker 1: global energy rivalry now between the US, Russia, and China,
Speaker 1: and countries from Ukraine to Syria to as you say,
Speaker 1: Saudi have been caught up in this lack of foresight.
Speaker 1: I guess on the part of the United States, are
Speaker 1: we doomed to see nuclear powers face off until this
Speaker 1: energy revolution is somehow enacted. Yeah, I mean, I'm not
Speaker 1: sure how much I would say that there was a
Speaker 1: lack of foresight in the United States. I think that
Speaker 1: there was a lack of a joined up strategy at
Speaker 1: various points, and inability perhaps to see the difficulty of
Speaker 1: trying to achieve conflicting aims at the same time. In
Speaker 1: a way, the way to think about what's happened over
Speaker 1: the last decade in particular, is is that two competitions ensued.
Speaker 1: The first actually was in Europe and in some sense
Speaker 1: has been the most geo politically lethal, and that was
Speaker 1: a competition between the United States and Russia to sell
Speaker 1: natural gas in Europe, and the Russian point of view,
Speaker 1: that was a really different situation than the one that
Speaker 1: they had enjoyed in the two thousand's when they could
Speaker 1: take really the European gas market for granted. I think
Speaker 1: the big change that's happened in the United States, ironically
Speaker 1: in good part as a consequence of the US show boom,
Speaker 1: is that Saudi Arabia now has to think much more
Speaker 1: carefully about who it's selling its oil too, and that
Speaker 1: means that there's also a competition, i think, between saud
Speaker 1: Arabia and Russia to sell oil to the Chinese, and
Speaker 1: the Chinese leadership have a very strong awareness of China's
Speaker 1: strategic vulnerabilities around energy. China's also trying to act as
Speaker 1: no large oil importer has ever done before, which is
Speaker 1: really tried to influence the price by stockpiling. So we've
Speaker 1: got complicated dynamics because it's not just actually a competition
Speaker 1: between the producers. We've got this very large consumer in
Speaker 1: China that's actually not quite really doing what other large
Speaker 1: importers have done and is not really prepared to accept
Speaker 1: a passive position. In all this, there is the longer
Speaker 1: term ramifications of everything that's going on, and then there's
Speaker 1: the shorter term ones and there's a scramble now to
Speaker 1: figure out what can be done about Russian oil and
Speaker 1: europe dependents. Are China's ability to access it, if Europe
Speaker 1: dozen and so on? Is there a solution here beyond
Speaker 1: telling people to put on sweaters and reducing demands somehow?
Speaker 1: I think that any solution is going to involve some
Speaker 1: measure any way of reduced energy consumption, particularly when we're
Speaker 1: being the climate situation into the pickup. If we look
Speaker 1: at European unions, whatever the intention, it's going to be very,
Speaker 1: very difficult to reduce quickly imports from Russia, not least
Speaker 1: because Asian countries are also very big purchases of liquid
Speaker 1: natural gas imports, including from the United States. Indeed, prior
Speaker 1: to this crisis, more American exports of liquid natural gas
Speaker 1: we're going to Asia than to Europe. So if European
Speaker 1: countries are suddenly going to start competing for this gas,
Speaker 1: and we can already see these dynamics playing out, gas
Speaker 1: is going to become a lot more expensive only in Europe,
Speaker 1: but it's going to become more expensive in Asia too,
Speaker 1: And it's not so clear that Asian countries can simply
Speaker 1: real and take to Russia because there's only one major
Speaker 1: pipeline that goes to China. Helen, we were speaking of
Speaker 1: the dynamics that are constraining diversification from Russian natural gas,
Speaker 1: and so I want to quote from disorder. You say,
Speaker 1: in two thousand five, the pipelines through Ukraine still carried
Speaker 1: around seventy of the euth Russian gas. Well, Helen, not
Speaker 1: much has changed as we're seeing. Does Russia have the
Speaker 1: potential to pivot to Asia and particularly you know, the
Speaker 1: great consumer. In order for Russia to be able to
Speaker 1: increase its liquid natural gas export capacity, then it's going
Speaker 1: to need capital investment from these Asian countries, and that
Speaker 1: may well happen. I think we've already seen some signs
Speaker 1: of it from Japan and to some extent China as well.
Speaker 1: But new liquid natural gas exports from Russian aren't gonna
Speaker 1: happen quickly. So I think that in a way keeps
Speaker 1: everybody where they are in terms of the supply chains
Speaker 1: of energy, and that means prices are going up. So
Speaker 1: if European citizens want their countries to buy less gas
Speaker 1: from Russia, then the only thing left is really to
Speaker 1: reduce European gas consumption. And we can already see that
Speaker 1: reduced energy consumption is the direction of travel. I don't
Speaker 1: think that that means either that the Russian gas dependency
Speaker 1: can be eliminated quickly. Is the one way in which
Speaker 1: something can be done. Now, the politics of this are
Speaker 1: really difficult at the moment. I think there was at
Speaker 1: least moderate support for the idea of reducing gas consumption
Speaker 1: in Europe amongst many people, but certainly not amongst everybody.
Speaker 1: And I think that some of the people who are
Speaker 1: advocating it probably haven't really quite understood what the systemic
Speaker 1: consequences of ending washing gas imports would be. Helen alliances
Speaker 1: and multilateral institutions. I'm thinking particularly of NATO, which seemed
Speaker 1: to be receiving an importance during Trump's presidency. What happens
Speaker 1: to some of these alliances in terms of the shift
Speaker 1: from globalization to economic nationalism. I think that NATO is
Speaker 1: in a different position. I think that the fundamental difficulty
Speaker 1: that NATO has faced really comes from the differences in
Speaker 1: perspectives between On the one side, I mean, the slightly caricatures,
Speaker 1: but it will do on the one side, like Washington, London,
Speaker 1: Warsaw and the Baltic countries and on the other side, France, Germany, Italy,
Speaker 1: and there's been a very different view taken of the
Speaker 1: nature of the potential Russian throat and the nature of
Speaker 1: Russian power, and that this is very divisive in the
Speaker 1: European Union because obviously there are a number of Eastern
Speaker 1: European European Union states that have got borders with Russia
Speaker 1: and feel very fearful since the war in Ukraine started.
Speaker 1: And on the other side you had someone like President
Speaker 1: Matt Kron who I think it was in late two
Speaker 1: thousand and nineteen, was talking about resetting relations with Russia
Speaker 1: was a necessary condition for the European project being realized.
Speaker 1: So NATO brings out not only its own internal divisions,
Speaker 1: but also go to the heart of the divisions within
Speaker 1: the European Union that enlarged Eastwoods from two thousand and four.
Speaker 1: I think in terms of the international economic organizations we
Speaker 1: can see something different. I think there were trade organization
Speaker 1: has been on the back foot for a long time now.
Speaker 1: It was I would say largely irrelevant during the US
Speaker 1: Chatina trade war. During Trump's presidency, I think there was
Speaker 1: some difficult questions now for the International Monetary Fund, though
Speaker 1: as we see a number of emerging market in developing
Speaker 1: countries in considerable currency and financial difficulties as a result
Speaker 1: of the high and energy prices and the rising food
Speaker 1: prices that have come with them. I think the situation
Speaker 1: in Sri Lanka and Tunisia and Pakistan actually particularly troubling. Here.
Speaker 1: As soon as we get into this minefield, so to speak,
Speaker 1: we've got the question of like, well, what kind of
Speaker 1: international financial credit can be provided to countries and what
Speaker 1: kind of political conditions come with that, And even if
Speaker 1: the I m F is in a position to provide
Speaker 1: loans with tolerable conditions to the governments in these countries,
Speaker 1: is we've seen over the last really since I'd say
Speaker 1: the two thousand and seven eight financial crash. How in
Speaker 1: some ways the lender that really matters in the world
Speaker 1: isn't actually the IMF, but it's the Federal Reserve Board
Speaker 1: essentially as an international lender of last resort, and one
Speaker 1: of the countries that's been in considerable financial difficulty in
Speaker 1: this respect for some time now as Turkey. Turkey is
Speaker 1: obviously pretty geopolitically significant in this war. Turkey doesn't have
Speaker 1: a swap blind to the Federal Reserve Board. So I
Speaker 1: think that the really hard questions, not particularly perhaps a
Speaker 1: question of dealing with the country like Sri Lanka, but
Speaker 1: the question of dealing with the country like Turkey, is
Speaker 1: in something been taken out of the remit of the
Speaker 1: international financial institutions, or at least that that's not where
Speaker 1: the decisive action is. Yeah, I'm glad you mentioned Turkey
Speaker 1: obviously experiencing runaway inflation. In Egypt another one, you know,
Speaker 1: West Africa not getting food aid, and droughts steering places
Speaker 1: like Somalia in the face. I mean, it seems like
Speaker 1: we might be in for a period of extraordinary human
Speaker 1: suffering that was exacerbated by Russia's war in Ukraine, but
Speaker 1: not necessarily caused by it. Anxieties that are under a
Speaker 1: lying many relationships, even multilateral institutions and their members seem
Speaker 1: to be coming to the surface. What reckonings need to happen.
Speaker 1: Helen Well, I think that in the European Union and
Speaker 1: reckoning has really already happened, because quite simply, the view
Speaker 1: and warsaw is triumphed throw over the view of Berlin
Speaker 1: and Paris during the course of this war. That isn't
Speaker 1: to say that the politicians in the German government will
Speaker 1: now do exactly want the Poles of the Latvians, etcetera,
Speaker 1: and want them to do in terms of providing support
Speaker 1: for Ukraine have the kind desired by the Ukrainian government.
Speaker 1: But it does mean I think that the assumption of
Speaker 1: German foreign policy going back to the so going back
Speaker 1: to the Soviet period has really shattered. Now. I think
Speaker 1: that Durman politicians might want to try and reconstruct it,
Speaker 1: but I think they're going to find it extraordinarily difficult
Speaker 1: to go back to the idea that economic interdependence with
Speaker 1: Russians and constraining force on Russian behavior, and they are
Speaker 1: going to have to take the problems of the security
Speaker 1: of the independent states that sit between Germany and Russia
Speaker 1: much more seriously than they've done since that coal I
Speaker 1: think in terms of erecting more generally, I think partly
Speaker 1: what is going on is the realization amongst Western governments,
Speaker 1: perhaps in particular, that the issue of energy and climate
Speaker 1: can't really be thought of in binary terms. We can't
Speaker 1: be in a position where we're only serious about the
Speaker 1: climate if we're not taking any notice of what's going
Speaker 1: on with the problems of fossil fuel energy. And I
Speaker 1: think you can see this in the moves that Iden,
Speaker 1: you know, has made, is that Biden came in wanted
Speaker 1: to prioritize climate hope that oil supply and oil prices
Speaker 1: could take care of themselves. It isn't possible for governments
Speaker 1: to try to demonstrate their climate credibility by disengaging from
Speaker 1: the issue of having a fossil fuel energy strategy. That
Speaker 1: isn't because we don't need to move away from fossil
Speaker 1: fuel energy, but given that we can't do that with
Speaker 1: any alacrity, fossil fuel energy supplies and not going to
Speaker 1: take care of themselves in the immediate present, and the
Speaker 1: only way in which the pressures on them right now
Speaker 1: is reduced is by considering reduced energy consumption. Listeners a
Speaker 1: reminder do get in touch. As always, comments and opinions welcome.
Speaker 1: I'm at vanniy Quinn on Twitter or just email vequin
Speaker 1: at Bloomberg dot net. Helen, I want to talk a
Speaker 1: little more about China's rise yet another global shift that
Speaker 1: you point out is very nuanced. In the last twelve
Speaker 1: months in particular, we're really starting to see chinks in
Speaker 1: China's armor in terms of its growth and COVID strategies,
Speaker 1: market turbulenes too, and developer a faults and on and on.
Speaker 1: Is China going to be the formidable fold that we've
Speaker 1: been suspecting it might be? Yeah, this is an interesting question.
Speaker 1: I mean, I think that actually the two thousands and
Speaker 1: tens showed that China pulled in contradictory directions when it
Speaker 1: came to the question of whether it was arising power.
Speaker 1: So obviously, if we looked at it in terms of
Speaker 1: GDP growth, then China has grew through the two thousands
Speaker 1: and tens quicker than the Western economies, and particularly by
Speaker 1: two thousand and seventeen. Really, I think everybody understood that
Speaker 1: in order for Western economies to grow, for the rest
Speaker 1: of the world economy to grow, China needed to grow
Speaker 1: globally synchronized growth. I think the imf cause of the synchronicity,
Speaker 1: if you like, was China. But on the other hand,
Speaker 1: I think that China had some clear economic difficulties in
Speaker 1: the two thousands and tens that weren't there for in
Speaker 1: the two thousand's. A point in particular to China's two
Speaker 1: thousand and fifteen sixteen financial crisis and when it faced
Speaker 1: a serious outflow of capital. When the casitions of the
Speaker 1: Federal reserves plans to start raising interest rates in the
Speaker 1: ladder part of two thousand and fifteen became clear, China
Speaker 1: I think, acquired a significantly greater vulnerability to the dollar
Speaker 1: and to dollar debt during the two thousand and ten
Speaker 1: compared to what had had in the in the two thousands,
Speaker 1: and that also made the push that China had engaged
Speaker 1: into internationalize its currency there and men be really impossible
Speaker 1: to pull off. It led to a fall away in
Speaker 1: investment to a number of European countries. It became difficult,
Speaker 1: I think for people to see that China could move
Speaker 1: up leagues, so to speak, financially, if it had a
Speaker 1: currency that was still subject to such strict capital controls.
Speaker 1: And now China is in this difficult position in regard
Speaker 1: to COVID. Clearly the Chinese vaccine is not as effective
Speaker 1: as Western vaccine, as the take up has not been great.
Speaker 1: They're now obviously in a position where they've decided that
Speaker 1: the only way that they can deal with this outbreak,
Speaker 1: however severe or not it turns out to be, it
Speaker 1: is with these lockdowns and locking down Shanghai is obviously
Speaker 1: a very very different proposition. This clearly has profound consequences
Speaker 1: for China, but it also has profound consequences for the
Speaker 1: rest of the world in terms of the way in
Speaker 1: which China's weakness then moves itself around the world because
Speaker 1: the importance of China to international trade. So I think
Speaker 1: that what's true about the world, and has been true
Speaker 1: at some point in the two thousands and tens, is
Speaker 1: that the rest of the world is now as much
Speaker 1: exposed to China's weakness as it is to China's strengths.
Speaker 1: And in terms of capital flows and so on, I
Speaker 1: mean that the momentum had been towards increased too easier
Speaker 1: capital flows from China to the rest of the world
Speaker 1: and vice versa capital market openers. Are we coming to
Speaker 1: the end of that area, you think, Helen, it's very
Speaker 1: striking the way in which the Wall Street films have
Speaker 1: been very keen to move into China over the last
Speaker 1: thirteen months. And I think that one of the things
Speaker 1: that I actually spent quite a bit of time on
Speaker 1: in the book that looked like it was going to
Speaker 1: be consequential, which was the break down really of Hong
Speaker 1: Kong's position as a kind of portal between the Western
Speaker 1: China and financially looks like it's less significant than I
Speaker 1: thought that it that it might be that the tightening
Speaker 1: up in Hong Kong hasn't led to a sort of
Speaker 1: a greater financial separation between China and the rest of
Speaker 1: the world. Yeah, so the fact that the financial interdependence
Speaker 1: is deepened it is really both quite striking and how
Speaker 1: it plays out in terms of the decoupling on the
Speaker 1: trade and technology side, which doesn't look to me that
Speaker 1: it's gone away before we even get onto the sense
Speaker 1: of green energy competition. This is going to be really
Speaker 1: interesting to watch how these competing dynamics interact with each other.
Speaker 1: There's a lot of handwringing about small d democracy, you know,
Speaker 1: you talk a lot about representative democracy and about neoliberalism
Speaker 1: and the death of the Anglo American model. What happens
Speaker 1: in the next electoral cycle, Well, I mean, I think
Speaker 1: the United States is in for another tough at least
Speaker 1: presidential election in two thousand and twenty four, because it's
Speaker 1: difficult to see how the Democrats go into it in
Speaker 1: any kind of good shape. I'm not saying it's particularly
Speaker 1: Biden's fault. But Biden has ended up having to deal
Speaker 1: with a set of really, really hard problems of the
Speaker 1: kind that we were just talking about in the first
Speaker 1: part of our conversation, particularly about energy. And if you
Speaker 1: look at the history since the nineteen seventies of American
Speaker 1: presidential approval ratings and oil prices, they quite strongly correlate.
Speaker 1: At times they extraordinarily strongly correlate. So it's very difficult,
Speaker 1: I think, to see how Biden would get reelected, assuming
Speaker 1: he does want to run again. But at the same time,
Speaker 1: you clearly have, you know, some pretty profound divisions within
Speaker 1: the Republican Party, and how actually there can be an
Speaker 1: election that doesn't bring this issue of losers consent back
Speaker 1: into play again. I find that quite difficult to see.
Speaker 1: And if we move to the mid terms, then clearly,
Speaker 1: if the Democrats were to lose the mid terms quite badly,
Speaker 1: which seems looking from here quite possible, then that makes
Speaker 1: things very legislatively difficult for Biden in the second half
Speaker 1: of his presidency, which kind of creates more impast politics,
Speaker 1: which again I don't think there's anything to help the
Speaker 1: strains on democracy. How are the deep structural forces that
Speaker 1: you've been explaining that are at work in the international
Speaker 1: economy interacting with political contingency. So I guess previously I
Speaker 1: would have said things like Brexit from selection, but now
Speaker 1: it's Biden's low polling the outlook for the midterms. Yeah,
Speaker 1: I mean, I think that what we can see like
Speaker 1: through the two thousand and tens was that things that
Speaker 1: look like they've got nothing to do with each other,
Speaker 1: I that look quite contingent on something quite specific to
Speaker 1: a country's politics, actually can be linked to these changing
Speaker 1: structural forces. And that's one of the reasons why I
Speaker 1: wanted to write the book in the way in which
Speaker 1: I did so. You wouldn't think on the surface, for example,
Speaker 1: that Brexit referendum and the difficulties that David Cameron, but
Speaker 1: as Prime Minister had him winning that referendum, had got
Speaker 1: anything to do with high oil prices in two thousand
Speaker 1: and eleven. But I think that there was a relationship
Speaker 1: because of the difficulties that those high oil prices caused
Speaker 1: for the European Central Bank in responding to high oil
Speaker 1: prices by raising interest rates twice in two thousand and eleven,
Speaker 1: the Eurozone got pushed back into recession that made for
Speaker 1: a macroeconomic divergence with the UK economy, led to an
Speaker 1: increase in migration that produced something of a political reaction
Speaker 1: in the United Kingdom that spurred the rise of the
Speaker 1: United Kingdom Independence Party wanting a referendum money you membership.
Speaker 1: That was part of the story in which Camera not
Speaker 1: necessarily came to the decision in the first place in
Speaker 1: two thousand adverting to hold a referendum, but the way
Speaker 1: he tried to renegotiate the terms of UK membership before
Speaker 1: holding the referendum I think was very much influenced by
Speaker 1: the rise of UK. So things in one sense that
Speaker 1: look contingent actually I think had considerably more struct or
Speaker 1: forces behind them. The Pandemics an interesting example because in
Speaker 1: lots of ways it was a contingency. But I think
Speaker 1: that the nilists would say that actually there were some
Speaker 1: reasons to think that the nature of the global economy,
Speaker 1: particularly the way in which global air transport were actually
Speaker 1: acted as a rather rapid carrier. I think that the
Speaker 1: thing about elections we didn't see it in the French
Speaker 1: election is is that sometimes that they can be, you know,
Speaker 1: like incredibly close, and I think we saw that to
Speaker 1: some extent in both the last two US presidential elections,
Speaker 1: where the margins and individual states that were decisive didn't
Speaker 1: turn out to be very large at all. It doesn't
Speaker 1: take much to imagine either of those elections, particularly perhaps
Speaker 1: the first one when Trump was elected, going the other way,
Speaker 1: and then much of what happened in the second half
Speaker 1: of the two thousand tents might have been different. I mean,
Speaker 1: I think some things wouldn't have been. For instance, I
Speaker 1: think that Helloy Klington election victory and two thousand and
Speaker 1: sixteen would still have led the United States to pursue
Speaker 1: a rather more confrontational policy with China than it had
Speaker 1: done to during the Obama years, because I think by
Speaker 1: the time that two thousands and sixteen have come about,
Speaker 1: given gg Ping's articulation of the made in China strategy
Speaker 1: in two thousand and fifteen, there was quite a strong
Speaker 1: consensus in the United States for a more confrontational approach.
Speaker 1: In that sense, Trump just articulated it in a crude
Speaker 1: way rather than actually creating that break himself. You talk
Speaker 1: a lot about the problem of losers consent and how
Speaker 1: that's been a bugbear and may continue to be, but
Speaker 1: losers consent has always been a problem, right, Absolutely, Losers
Speaker 1: consent is necessary in a democracy, and there are times
Speaker 1: when it's been pretty absent. I think would say particularly
Speaker 1: perhaps in the United States and number of moments. On
Speaker 1: the other hand, I would say that what we can
Speaker 1: see in United States is a weakening of losers consents.
Speaker 1: It's at least the nineties. For instance, the attempt to
Speaker 1: impeach Bill Clinton, I think is an example of the
Speaker 1: fact that a section of Republican Party and interests aligned
Speaker 1: around it weren't actually willing to accept elections determining who
Speaker 1: was the president and wanted to come to remove from
Speaker 1: office by other means. I think what's happened in the
Speaker 1: United States is more tricky than it is elsewhere because
Speaker 1: of the nature of the presidential election system and the
Speaker 1: fact that it straddles the federal part of the US
Speaker 1: with the democratic part of the UNS via the electoral college,
Speaker 1: and once you've had two elections in sixteen years, as
Speaker 1: it was, where the electoral college and the popular vote
Speaker 1: diverged from each other, I think that in itself put
Speaker 1: considerable pressure on loser's consent. So I think it's always
Speaker 1: a risk that it isn't there in democratic politics. But
Speaker 1: I think the United States over the last thirty years
Speaker 1: has gone further down the road of having a problem
Speaker 1: with it. So, Helen, if we're to just take a
Speaker 1: look at some of the large forces at work globalization,
Speaker 1: do we need to save the current global order in
Speaker 1: some fashion? Yeah, I'm not sure what global order there
Speaker 1: is right now. Yeah, you can say, I mean, I
Speaker 1: guess the the idea that even trade relationships are changing,
Speaker 1: but there is still this impetus to try and create
Speaker 1: trade alliances that are global, you know, so Orcus would
Speaker 1: be one of them, for example. Yeah, I mean I
Speaker 1: think that that's clearly still interest and some kind of
Speaker 1: rule based international trading order. I think the difficulty is,
Speaker 1: and we saw this I think during the Trump years,
Speaker 1: is that there are some issues around the size of
Speaker 1: certain countries, particularly perhaps China's and Germany's trade services, that
Speaker 1: themselves have destabilizing effect on the world economy and in
Speaker 1: the case of Germany, on the Eurozone and to some extent,
Speaker 1: the European Union. I think the difficulty is, though, what
Speaker 1: do you do beyond maintaining the rules of the World
Speaker 1: Trade Organization about some of the underlying causes of those differences,
Speaker 1: and I think that's where we get into considerable difficulty
Speaker 1: in imagining that we're moving too a world of greater
Speaker 1: international cooperation. And I think we can see that with
Speaker 1: exchange rates in particular. Ever since really the middle of
Speaker 1: the nineteen eighties, Western governments plus Japan and now more
Speaker 1: recently China have kind of inched their way towards sort
Speaker 1: of tacit at least agreements about how to manage exchange rates,
Speaker 1: and then pulled back from them because they're actually, I
Speaker 1: think incredibly difficult given the nature of the world economy,
Speaker 1: particularly how financialized it is. And I think that what
Speaker 1: we've seen more generally over the last few years is
Speaker 1: am pulling a part of the globalization story when it
Speaker 1: comes to finance, to trade, and to some extent production.
Speaker 1: So if we take finance, actually there's been extraordinary little
Speaker 1: decoupling between the US and China in recent years. Indeed,
Speaker 1: since the pandemic, Wall Street is more embedded in China,
Speaker 1: I would say than it was before. And yet we
Speaker 1: can see on the productive side of the economy and
Speaker 1: supply chains increased pressure for the coupling. I think that
Speaker 1: we can see that governments across the world actually have
Speaker 1: got much more of an interest than they did have
Speaker 1: in the resilience of supply chains and in security and
Speaker 1: relation to supply chains. And the more that they think
Speaker 1: in those terms, I think, the harder it is to
Speaker 1: be putting back together a globalized productive economy. So I
Speaker 1: had to stop underlining because I found myself underlining something
Speaker 1: on every page. But you write a lot about the
Speaker 1: nineteen seventies and how important the nineteen seventies are in
Speaker 1: terms of our understanding where we are now and how
Speaker 1: we got here, especially the latter part of the seventies.
Speaker 1: I mean, there are a lot of economis out there
Speaker 1: that would suggest that we are in an a regime
Speaker 1: that's nothing like the nineteen seventies. But explain to us
Speaker 1: what you mean by the importance of the seventies too, Now, Yeah,
Speaker 1: I mean, I would agree that there were some significant
Speaker 1: differences between the seventies and and now, and one pretty
Speaker 1: big differences is that there were very well organized trade
Speaker 1: unions capable of imposing serious harm on Western economy. Is
Speaker 1: I mean you think of the minor strike in Britain,
Speaker 1: for example, in seventy four that led to a national
Speaker 1: emergency and everybody going onto a three day working week
Speaker 1: and sitting around in the at night in the darkness,
Speaker 1: that world doesn't exist anymore. I think that the reason
Speaker 1: why I think the seventies are important is twofold. Really
Speaker 1: the first of them is the origins of some of
Speaker 1: the economics and geopolitical issues that we now face lie
Speaker 1: in the seventies, particularly would say on the geo political
Speaker 1: side in terms of what's happened in the Middle East.
Speaker 1: But I think I in a way want to draw
Speaker 1: intentions to the seventies now to show the ways in
Speaker 1: which actually the predicaments that we face are harder than
Speaker 1: the ones that existed in the seventies, despite the parallels
Speaker 1: in relation to energy shocks. So if we take oil,
Speaker 1: for instance, there wasn't any real problem with the supply
Speaker 1: of oil in principle in the nineteen seventies. The problem
Speaker 1: came because it was geopolitically constrained by the reaction of
Speaker 1: the Arab States and to some extent around to the
Speaker 1: Okapa War in nineteen seventy three, and then it was
Speaker 1: geo politically constrained by the Iranian Revolution and the Iran
Speaker 1: Iraq War. At the end of the decade. What's different
Speaker 1: now is that there are reasons beyond geopolitics why the
Speaker 1: supply of oil is constrained. It Actually the major oil
Speaker 1: producers are all in different ways struggling with the limits
Speaker 1: of oil production. And you can see that in the
Speaker 1: faltering of the US shale boom. You can see that
Speaker 1: in the fact that probably the Russian oil fields in
Speaker 1: West Siberia have passed their peak. The production difficulties in
Speaker 1: q Way, and even in a country like Venezuela where
Speaker 1: there wouldn't in principle be any difficulty, was supplied as
Speaker 1: enormous difficulty with the politics. And then the other really
Speaker 1: big difference with the nineteen seventies is that these were
Speaker 1: Western problems largely in the nineteen seventies, plus to some
Speaker 1: extent Japan. Now they're Chinas and India's too, and that
Speaker 1: has pretty important consequences for US in where Eastern countries.
Speaker 1: That means that there's going to be much more competition
Speaker 1: for the supply of energy that's available, and that means
Speaker 1: I think that it's going to be harder to find
Speaker 1: a way out of the problems the energy causes. In
Speaker 1: a way in which there was a way out in
Speaker 1: the late nineteen seventies, which was increased production in both
Speaker 1: the western hemisphere Alaska and Mexico, but also in the
Speaker 1: North Sea. And then on top of all this, you know,
Speaker 1: we weren't having to face the situation that we are
Speaker 1: now with climate change in the senties, and principle could
Speaker 1: have been, but we didn't understand enough about it. So
Speaker 1: we're trying to deal with all these present tense energy
Speaker 1: problems while we need to engage in this energy transition now.
Speaker 1: I think that that's going to take longer time and
Speaker 1: the many people think, but it doesn't change the fact
Speaker 1: that it's got to be done. It's got to be done,
Speaker 1: I think, not just for climate reasons, but also to
Speaker 1: deal with these fossil fuel energy problems in their own terms.
Speaker 1: So the seventies is useful as a story about the
Speaker 1: origins of our present crisis, but I think it's just
Speaker 1: as useful actually in holding it up and showing the
Speaker 1: ways in which actually what we are facing now is
Speaker 1: really quite different. Helen Thompson, Thank you listeners. The book
Speaker 1: is disorder hard times in the twenty one century. Do
Speaker 1: get in touch with your thoughts and opinions I'm at
Speaker 1: Vonny Quinn on Twitter or email Vquinn at bloomberg dot Net.
Speaker 1: We're produced by Eric mollow Till next Time on Bloomberg
Speaker 1: Opinion