1 00:00:10,240 --> 00:00:14,520 Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast. 2 00:00:14,600 --> 00:00:16,880 Speaker 2: I'm Joe Wisenthal and I'm Tracy Alloway. 3 00:00:17,320 --> 00:00:20,119 Speaker 1: Tracy, I think for like all of our career is 4 00:00:20,120 --> 00:00:22,760 Speaker 1: probably like all of our lives. It feels like there 5 00:00:22,800 --> 00:00:27,040 Speaker 1: has been this story of developing, emerging markets getting better, 6 00:00:27,280 --> 00:00:30,800 Speaker 1: emerging maybe emerging markets becoming rich. Like, you know, just 7 00:00:30,920 --> 00:00:34,480 Speaker 1: this general view that, yeah, you get these hiccups and deglobalization, whatever, 8 00:00:34,520 --> 00:00:36,760 Speaker 1: but the eros are all up in general. 9 00:00:36,840 --> 00:00:40,080 Speaker 2: It's a steady line that kind of goes up over 10 00:00:40,440 --> 00:00:41,240 Speaker 2: the long term. 11 00:00:41,600 --> 00:00:44,440 Speaker 1: What was it like the Victor Schweitz question at a 12 00:00:44,520 --> 00:00:47,480 Speaker 1: recent trivia thing about like what did they call them 13 00:00:47,479 --> 00:00:52,240 Speaker 1: in the sixties In the eighties, it was like underdeveloped 14 00:00:52,520 --> 00:00:55,880 Speaker 1: markets and then emerging and then developing and then emerging, 15 00:00:55,920 --> 00:00:59,160 Speaker 1: And it's like increasing optimism about all these places around 16 00:00:59,200 --> 00:01:02,440 Speaker 1: the world. One day, like capitalism and trade will be everywhere. 17 00:01:02,560 --> 00:01:06,360 Speaker 2: There is definitely this line that, Okay, there might be 18 00:01:06,440 --> 00:01:10,440 Speaker 2: problems and issues, but in general, you know, life expectancy 19 00:01:10,600 --> 00:01:14,120 Speaker 2: is going up. People are wealthier than they were before. 20 00:01:14,360 --> 00:01:17,160 Speaker 2: Maybe people aren't starving as much as they were in 21 00:01:17,160 --> 00:01:20,720 Speaker 2: the Middle Ages. There is this narrative of press progress. 22 00:01:20,800 --> 00:01:25,160 Speaker 1: Yeah, right, progress, less disease things like that, fewer famines 23 00:01:25,240 --> 00:01:27,720 Speaker 1: and stuff, but maybe it's not the case. In the 24 00:01:27,800 --> 00:01:30,160 Speaker 1: last several decades, a lot of people have come out 25 00:01:30,200 --> 00:01:33,160 Speaker 1: of poverty globally, but like a huge chunk of that 26 00:01:33,360 --> 00:01:36,200 Speaker 1: is China specifically, and everyone knows there's sort of been 27 00:01:36,200 --> 00:01:39,319 Speaker 1: this extraordinary boom in China, and then it kind of 28 00:01:39,319 --> 00:01:41,720 Speaker 1: seems like if you look ex China, maybe it's not 29 00:01:41,760 --> 00:01:42,440 Speaker 1: as good. 30 00:01:42,840 --> 00:01:44,440 Speaker 2: I can already tell this is going to be one 31 00:01:44,440 --> 00:01:47,480 Speaker 2: of those really uplifting episodes when we start questioning the 32 00:01:47,600 --> 00:01:50,720 Speaker 2: narrative of economic progress. But I think it does raise 33 00:01:50,760 --> 00:01:54,520 Speaker 2: this interesting question, which is, throughout much of history, there 34 00:01:54,560 --> 00:01:58,360 Speaker 2: has been this one development model, which is, you know, 35 00:01:59,240 --> 00:02:01,640 Speaker 2: usually you have a bunch of workers, you have like 36 00:02:01,680 --> 00:02:04,760 Speaker 2: a labor surplus, maybe they're willing to work for less 37 00:02:04,800 --> 00:02:08,520 Speaker 2: than in more developed countries economically, and so you got 38 00:02:08,520 --> 00:02:11,880 Speaker 2: this big manufacturing boom and then hopefully that leads to 39 00:02:12,360 --> 00:02:15,639 Speaker 2: more education, more resources, and then you transition into some 40 00:02:15,680 --> 00:02:19,560 Speaker 2: sort of services oriented economy. But I think we all 41 00:02:19,600 --> 00:02:23,360 Speaker 2: agree that as we enter this new economic period, is 42 00:02:23,400 --> 00:02:26,760 Speaker 2: that manufacturing model actually going to be viable? 43 00:02:27,080 --> 00:02:27,280 Speaker 3: Right? 44 00:02:27,400 --> 00:02:30,799 Speaker 1: And how many countries can really do that or are 45 00:02:30,800 --> 00:02:32,680 Speaker 1: they going to be stuck of some sort of like 46 00:02:33,200 --> 00:02:36,800 Speaker 1: tourism or cheap commodity exports that don't really move up 47 00:02:36,840 --> 00:02:41,120 Speaker 1: the value chain. And is anyone thinking about alternative growth 48 00:02:41,200 --> 00:02:44,519 Speaker 1: models if you know, these countries can't find a way 49 00:02:44,600 --> 00:02:47,600 Speaker 1: up to do this sort of manufacturing path. Absolutely anyway, 50 00:02:47,639 --> 00:02:50,160 Speaker 1: we're going to be speaking about exactly this. We have 51 00:02:50,200 --> 00:02:53,640 Speaker 1: two guests today. We're going to be speaking with Henry Williams, 52 00:02:53,639 --> 00:02:57,399 Speaker 1: a student at Columbia University and David Och's journalist. They 53 00:02:57,440 --> 00:03:00,400 Speaker 1: have a recent article that came out last year in 54 00:03:00,520 --> 00:03:04,440 Speaker 1: the American Affairs Journal called the Long Slow Death of 55 00:03:04,440 --> 00:03:08,760 Speaker 1: Global Development, and they basically make the case they kind 56 00:03:08,800 --> 00:03:11,000 Speaker 1: of you should be pessimistic about all that stuff and 57 00:03:11,000 --> 00:03:13,840 Speaker 1: that all of these stories about what's working do not 58 00:03:14,160 --> 00:03:17,280 Speaker 1: actually work. Henry and David, thank you so much for 59 00:03:17,360 --> 00:03:18,760 Speaker 1: coming on the podcast. 60 00:03:18,880 --> 00:03:21,239 Speaker 3: Thanks for having us. John Tracy a long time first time. 61 00:03:21,720 --> 00:03:22,679 Speaker 4: Yeah, pleasure to join. 62 00:03:22,840 --> 00:03:25,240 Speaker 1: So why did you write this? I mean it's a 63 00:03:25,400 --> 00:03:30,480 Speaker 1: very long, detailed, like pretty like academic, well cited piece, 64 00:03:31,000 --> 00:03:34,360 Speaker 1: essentially like laying out the case that much of what 65 00:03:34,400 --> 00:03:37,600 Speaker 1: we assume about global progress is not in fact happening. 66 00:03:37,640 --> 00:03:39,640 Speaker 1: So to start, like why endeavor on this What inspired 67 00:03:39,680 --> 00:03:40,120 Speaker 1: you to write this. 68 00:03:40,520 --> 00:03:42,240 Speaker 3: I think the story that you just laid out is 69 00:03:42,280 --> 00:03:45,200 Speaker 3: really dominated the twenty first century so far. It's a 70 00:03:45,240 --> 00:03:48,240 Speaker 3: story that I think people sometimes derisively call the line 71 00:03:48,240 --> 00:03:50,560 Speaker 3: go up story. Basically, when you look at just the 72 00:03:50,640 --> 00:03:54,920 Speaker 3: quantitative measures, it is undoubtable that global poverty has been decreasing, 73 00:03:55,160 --> 00:03:57,600 Speaker 3: that global growth has been pretty strong, and with the 74 00:03:57,640 --> 00:04:01,240 Speaker 3: headwinds of globalization, the entrance of child into the world economy, 75 00:04:01,280 --> 00:04:04,160 Speaker 3: and the demographic push of the last thirty years, there 76 00:04:04,160 --> 00:04:06,440 Speaker 3: were a lot of reasons for optimism. And obviously there 77 00:04:06,440 --> 00:04:08,800 Speaker 3: has been a lot of growth. But what we think 78 00:04:08,920 --> 00:04:12,120 Speaker 3: is that when you dig pass just the quantitative numbers 79 00:04:12,160 --> 00:04:14,920 Speaker 3: on the surface and look at the qualitative and structural 80 00:04:14,920 --> 00:04:17,920 Speaker 3: factors in the world economy, both that which drove the 81 00:04:17,960 --> 00:04:20,240 Speaker 3: growth and rise of China, but also you have to 82 00:04:20,240 --> 00:04:22,360 Speaker 3: look at the next countries on the list. Yeah, there's 83 00:04:22,360 --> 00:04:24,880 Speaker 3: this idea of the birds in flight model. Basically, as 84 00:04:24,960 --> 00:04:28,320 Speaker 3: countries develop, they pass lower value added services down the 85 00:04:28,360 --> 00:04:30,640 Speaker 3: line to the next country. But that's not just an 86 00:04:30,680 --> 00:04:31,720 Speaker 3: automatic process. 87 00:04:31,920 --> 00:04:33,000 Speaker 4: That requires a lot. 88 00:04:32,880 --> 00:04:36,159 Speaker 3: Of economic, political, structural adaptation, and we think there are 89 00:04:36,200 --> 00:04:38,240 Speaker 3: some very deep reasons why that hasn't been happening in 90 00:04:38,279 --> 00:04:38,960 Speaker 3: the rest of the world. 91 00:04:40,040 --> 00:04:42,320 Speaker 2: So one thing I was wondering as I was reading 92 00:04:42,400 --> 00:04:45,760 Speaker 2: this article, how much of this is actually a data story, 93 00:04:45,839 --> 00:04:49,080 Speaker 2: this idea that we tend to look at the line, 94 00:04:49,200 --> 00:04:51,840 Speaker 2: and because the line is an amalgamation of all these 95 00:04:51,880 --> 00:04:56,039 Speaker 2: different countries, it's sort of hiding disparities. And I know 96 00:04:56,160 --> 00:04:58,760 Speaker 2: Joe mentioned in the intro this idea that China has 97 00:04:58,800 --> 00:05:01,200 Speaker 2: actually been the big drive of a lot of economic 98 00:05:01,240 --> 00:05:04,600 Speaker 2: development in the twentieth century. So how much of it 99 00:05:04,680 --> 00:05:07,320 Speaker 2: is about the data and the aggregation going on there? 100 00:05:07,520 --> 00:05:11,720 Speaker 4: Yeah, core core part of our argument is basically that 101 00:05:11,760 --> 00:05:15,040 Speaker 4: you have this kind of statistical compensation going on where 102 00:05:15,160 --> 00:05:18,479 Speaker 4: if you actually look everyone agrees that kind of incomes 103 00:05:18,520 --> 00:05:21,600 Speaker 4: have risen across the world, poverty has decreased. But if 104 00:05:21,640 --> 00:05:23,960 Speaker 4: you look pretty much all of that, depending on the 105 00:05:24,000 --> 00:05:26,600 Speaker 4: threshold that use for poverty, of course, pretty much all 106 00:05:26,640 --> 00:05:30,200 Speaker 4: of that has been in East Asia, basically between fifty 107 00:05:30,279 --> 00:05:33,000 Speaker 4: to seventy five percent basically, So then when you look 108 00:05:33,080 --> 00:05:34,760 Speaker 4: at kind of the world beyond shine, when you look 109 00:05:34,800 --> 00:05:37,640 Speaker 4: at South Asia, the Middle East, Africa, Latin America, you 110 00:05:37,680 --> 00:05:41,880 Speaker 4: get a much more complicated and pessimistic picture, and you 111 00:05:41,920 --> 00:05:45,400 Speaker 4: have to realize that basically China, East Asia are they've 112 00:05:45,440 --> 00:05:48,640 Speaker 4: done well because they've basically they've industrialized. When you look 113 00:05:48,680 --> 00:05:50,400 Speaker 4: beyond that, and this is when you have to move 114 00:05:50,440 --> 00:05:53,800 Speaker 4: beyond statistics to kind of a sort of structural historical approach, 115 00:05:54,360 --> 00:05:59,080 Speaker 4: they have been either deindustrializing and oftentimes deograrinizing as well. 116 00:05:59,320 --> 00:06:02,600 Speaker 3: Yeah, talking about what those numbers really mean in terms 117 00:06:02,600 --> 00:06:06,560 Speaker 3: of global trade, Chinese demand for commodities has been so 118 00:06:06,920 --> 00:06:10,080 Speaker 3: extreme in the sort of commodity supercycle of twenty to 119 00:06:10,120 --> 00:06:12,880 Speaker 3: twenty fifteen and even through the present that it has 120 00:06:12,960 --> 00:06:15,600 Speaker 3: actually exerted a distorting influence on the rest of the 121 00:06:15,640 --> 00:06:18,400 Speaker 3: world's economies. It means that a lot of economies that 122 00:06:18,480 --> 00:06:21,960 Speaker 3: had been partially industrializing, places like Brazil, India, Africa, and 123 00:06:22,000 --> 00:06:26,839 Speaker 3: Latin America, have actually moved more towards commodity exporters, essentially 124 00:06:26,839 --> 00:06:30,040 Speaker 3: moved down the value chain as commodity prices have risen 125 00:06:30,279 --> 00:06:32,560 Speaker 3: and as there's been this huge demand sink in China 126 00:06:32,640 --> 00:06:34,920 Speaker 3: soaking it all up, which means that even though their 127 00:06:34,920 --> 00:06:36,839 Speaker 3: growth has been better and they've been doing better in 128 00:06:36,880 --> 00:06:40,240 Speaker 3: global trade, it also means that they're not necessarily developing 129 00:06:40,279 --> 00:06:43,520 Speaker 3: domestic manufacturing industrial sectors, and even those that did have 130 00:06:43,600 --> 00:06:46,240 Speaker 3: it have been experiencing something of a phenomenon of what 131 00:06:46,279 --> 00:06:50,800 Speaker 3: people will call premature deindustrialization. Basically, the manufacturing share of 132 00:06:50,800 --> 00:06:54,320 Speaker 3: employment and GDP is going down before they've really moved 133 00:06:54,400 --> 00:06:57,520 Speaker 3: up the value chain into higher value added economic activities 134 00:06:57,560 --> 00:06:58,160 Speaker 3: like services. 135 00:06:58,279 --> 00:07:01,960 Speaker 1: I hadn't thought about that dynamic at all, that it's like, Okay, 136 00:07:01,960 --> 00:07:05,800 Speaker 1: here's this sort of this absolute, you know, avalanche of 137 00:07:05,920 --> 00:07:08,359 Speaker 1: money coming out of China the demand for goods. So 138 00:07:08,480 --> 00:07:12,480 Speaker 1: it's like, Okay, maybe it's not the most high value growth, 139 00:07:12,680 --> 00:07:14,720 Speaker 1: but you gotta take it. But then, as you say, 140 00:07:14,760 --> 00:07:19,440 Speaker 1: it has this distortionary effect. What is special though about manufacturing? 141 00:07:19,480 --> 00:07:21,600 Speaker 1: Because we even have this debate in the US right 142 00:07:21,640 --> 00:07:24,320 Speaker 1: where people's like, Okay, we gotta like bring manufacturing back, 143 00:07:24,440 --> 00:07:26,920 Speaker 1: but some people will say, oh no, you're just clinging 144 00:07:26,960 --> 00:07:31,120 Speaker 1: to old, centuries old ideas of what a robust economy 145 00:07:31,120 --> 00:07:33,760 Speaker 1: looks like. This is just nostalgia or something like that. 146 00:07:34,040 --> 00:07:39,960 Speaker 1: What is it about manufacturing specifically that in theory makes 147 00:07:40,000 --> 00:07:42,560 Speaker 1: it the path towards becoming well towards wealth. 148 00:07:43,600 --> 00:07:43,920 Speaker 4: Yeah. 149 00:07:44,240 --> 00:07:47,040 Speaker 3: The econoist Danny Roderick talks about a set of stylized 150 00:07:47,080 --> 00:07:50,800 Speaker 3: facts related to manufacturing specifically, of which by far the 151 00:07:50,800 --> 00:07:54,720 Speaker 3: most important is the idea that exhibits unconditional productivity convergence 152 00:07:54,880 --> 00:07:58,560 Speaker 3: between all countries. Basically, when you start manufacturing, you enter 153 00:07:58,560 --> 00:08:01,560 Speaker 3: a process where long term manufacturing productivity is going to 154 00:08:01,600 --> 00:08:03,800 Speaker 3: converge with the global average and with the rest of 155 00:08:03,840 --> 00:08:06,720 Speaker 3: the world. And so what that means is that manufacturing 156 00:08:06,800 --> 00:08:09,280 Speaker 3: can really increase your national economic productivity. 157 00:08:09,360 --> 00:08:10,360 Speaker 4: But in addition to that. 158 00:08:10,440 --> 00:08:12,920 Speaker 3: It also absorbs a lot of surplus labor and it 159 00:08:13,000 --> 00:08:17,760 Speaker 3: drives a broader process of economic complexification, density and urbanization. 160 00:08:18,080 --> 00:08:20,480 Speaker 3: That means that you get these economic cores that then 161 00:08:20,560 --> 00:08:23,320 Speaker 3: create richer citizens. And this is sort of a classic 162 00:08:23,480 --> 00:08:25,880 Speaker 3: just so story about the American economy. People will talk 163 00:08:25,920 --> 00:08:28,800 Speaker 3: about Ford and the model t that once you have 164 00:08:29,160 --> 00:08:32,320 Speaker 3: sort of well paid industrial workers, they can suddenly become 165 00:08:32,360 --> 00:08:35,160 Speaker 3: the consumers of the services, they have a need for housing, 166 00:08:35,320 --> 00:08:37,800 Speaker 3: they move into cities, and that this drives the process 167 00:08:37,800 --> 00:08:41,280 Speaker 3: of economic growth going forward. So there's something about manufacturing 168 00:08:41,360 --> 00:08:44,599 Speaker 3: as being a path through to more complex forms of 169 00:08:44,640 --> 00:08:47,600 Speaker 3: economic activity. The other thing is that it has more 170 00:08:47,679 --> 00:08:51,440 Speaker 3: to do really with global tradeable goods than just manufacturing specifically. 171 00:08:51,720 --> 00:08:54,560 Speaker 3: There's the idea of things that world trade consists of 172 00:08:54,880 --> 00:08:59,120 Speaker 3: both durable manufactured goods but also high value added services 173 00:08:59,200 --> 00:09:02,240 Speaker 3: like finance, consulting, technology, the sorts of things that the 174 00:09:02,320 --> 00:09:05,320 Speaker 3: US economy is based on today, and actually getting to 175 00:09:05,360 --> 00:09:09,400 Speaker 3: that stage requires participation in competitive global markets and becoming 176 00:09:09,480 --> 00:09:12,520 Speaker 3: genuinely competitive on those markets. And one thing that has 177 00:09:12,600 --> 00:09:15,120 Speaker 3: driven a lot of the sort of booms and busts 178 00:09:15,120 --> 00:09:18,440 Speaker 3: of development in the past has been overly manufacturing focused 179 00:09:18,440 --> 00:09:21,800 Speaker 3: policy that basically uses tariffs and autarchy to try to 180 00:09:21,880 --> 00:09:26,319 Speaker 3: raise the manufacturing share domestically without becoming authentically globally competitive. 181 00:09:26,520 --> 00:09:29,360 Speaker 3: And so what you get are these uncompetitive sort of 182 00:09:29,400 --> 00:09:31,720 Speaker 3: lost industrial sectors, and these are sort of the global 183 00:09:31,760 --> 00:09:33,840 Speaker 3: rust belts all over the world. These places have de 184 00:09:33,880 --> 00:09:37,079 Speaker 3: industrialized because the industry itself was not globally competitive. 185 00:09:37,800 --> 00:09:40,360 Speaker 4: As you have these kind of stylized facts from I mean, 186 00:09:40,440 --> 00:09:43,719 Speaker 4: Roderick Nicholas Caldor before him, and then you feel kind 187 00:09:43,720 --> 00:09:47,800 Speaker 4: of at the sort of empirical historical experience of countries 188 00:09:47,840 --> 00:09:49,560 Speaker 4: that have moved, you know, in one or the other 189 00:09:49,600 --> 00:09:54,280 Speaker 4: from porterage. Basically almost all of them either have had 190 00:09:54,400 --> 00:09:57,520 Speaker 4: a manufacturing share of employment. You know, at a certain level, 191 00:09:57,640 --> 00:09:59,959 Speaker 4: you know, people say eighteen to twenty sometimes of high 192 00:10:00,080 --> 00:10:02,720 Speaker 4: or sometimes a bit lower for an extended period of time, 193 00:10:02,880 --> 00:10:05,040 Speaker 4: and then they've kind of transitioned from that, usually into 194 00:10:05,160 --> 00:10:08,480 Speaker 4: some sort of high wage service economy, or you know, 195 00:10:08,679 --> 00:10:11,000 Speaker 4: more rarely they've been kind of like Norway or Saudi 196 00:10:11,000 --> 00:10:12,839 Speaker 4: Arabia or something like that, where they've been kind of 197 00:10:12,880 --> 00:10:16,679 Speaker 4: blessed by a huge excess of natural resources. Of course, 198 00:10:16,800 --> 00:10:19,120 Speaker 4: that model, you know, it's a lot of failures, you know, 199 00:10:19,120 --> 00:10:21,920 Speaker 4: in Gola, Iraq, et cetera, and it's kind of a 200 00:10:22,000 --> 00:10:22,920 Speaker 4: much riskier bed. 201 00:10:23,760 --> 00:10:26,280 Speaker 2: Well, I was going to ask, and again Joe kind 202 00:10:26,280 --> 00:10:29,080 Speaker 2: of alluded to this idea that you know, we do 203 00:10:29,160 --> 00:10:31,240 Speaker 2: want to bring manufacturing back to the US, or at 204 00:10:31,280 --> 00:10:33,439 Speaker 2: least that's a line that gets trotted out quite a lot. 205 00:10:33,480 --> 00:10:36,920 Speaker 2: But at the same time, you know, manufacturing in some respects, 206 00:10:36,960 --> 00:10:40,000 Speaker 2: maybe people view it as old fashions. So why couldn't 207 00:10:40,320 --> 00:10:43,360 Speaker 2: a developing country or an emerging economy, why couldn't they 208 00:10:43,400 --> 00:10:47,319 Speaker 2: just leap frog from manufacturing into more of a service's 209 00:10:47,920 --> 00:10:50,800 Speaker 2: oriented economy. And I know some places, I guess India 210 00:10:50,880 --> 00:10:52,439 Speaker 2: springs to mind have kind. 211 00:10:52,280 --> 00:10:57,240 Speaker 4: Of India Philippines, I mean Rwanda. 212 00:10:56,679 --> 00:10:58,600 Speaker 3: Right right, But you know, I think there's two sides 213 00:10:58,640 --> 00:11:01,320 Speaker 3: of that story that are really important to address. You know. 214 00:11:01,360 --> 00:11:04,000 Speaker 3: One is this idea that you just brought up that Okay, 215 00:11:04,000 --> 00:11:06,640 Speaker 3: we want to bring the manufacturing share back in the US, 216 00:11:06,640 --> 00:11:08,840 Speaker 3: that we want to start manufacturing here again. But the 217 00:11:08,880 --> 00:11:11,160 Speaker 3: basic model and you actually saw just the other day 218 00:11:11,360 --> 00:11:13,840 Speaker 3: Donald Trump saying that as president he would essentially start 219 00:11:13,840 --> 00:11:16,839 Speaker 3: a global trade war and require an end to trade 220 00:11:16,840 --> 00:11:19,280 Speaker 3: with China to do that for years, Well, I mean 221 00:11:19,480 --> 00:11:22,640 Speaker 3: a massive escalation a world war trade, right, and this 222 00:11:22,720 --> 00:11:26,120 Speaker 3: would actually be the absolute worst thing for the developing world. 223 00:11:26,160 --> 00:11:28,160 Speaker 3: You know, there's a real question of are we simply 224 00:11:28,200 --> 00:11:31,280 Speaker 3: going to use regressive tariffs to try to raise the 225 00:11:31,280 --> 00:11:33,640 Speaker 3: amount of manufacturing that happens in the US if it's 226 00:11:33,720 --> 00:11:36,960 Speaker 3: not globally competitive, if it's not actually cutting edge, and 227 00:11:37,000 --> 00:11:39,960 Speaker 3: if what that does in general is lower global productivity 228 00:11:39,960 --> 00:11:41,760 Speaker 3: and actually lower growth overall. 229 00:11:41,960 --> 00:11:42,720 Speaker 4: You know, if you look at. 230 00:11:42,600 --> 00:11:45,920 Speaker 3: Places in Africa, officials will say we don't want less globalization, 231 00:11:46,000 --> 00:11:48,840 Speaker 3: we want more. We need more globalization. The question is 232 00:11:48,840 --> 00:11:51,720 Speaker 3: on what terms is that globalization can happen. But the 233 00:11:51,720 --> 00:11:53,559 Speaker 3: other side of the story, which is to say, can 234 00:11:53,600 --> 00:11:56,040 Speaker 3: you just skip to services. Yeah, and this has been 235 00:11:56,080 --> 00:11:58,400 Speaker 3: I think one of the possible narratives in the twenty 236 00:11:58,400 --> 00:12:00,640 Speaker 3: first century that India is going to become an IT 237 00:12:01,040 --> 00:12:01,840 Speaker 3: power instead. 238 00:12:02,120 --> 00:12:03,480 Speaker 4: But the reality is that. 239 00:12:03,679 --> 00:12:07,120 Speaker 3: Since two thousand, ninety percent of the growth in service 240 00:12:07,200 --> 00:12:09,880 Speaker 3: jobs in the US have been sorry in India, have 241 00:12:09,960 --> 00:12:12,760 Speaker 3: been in the informal sector, not in IT or high 242 00:12:12,800 --> 00:12:15,640 Speaker 3: value added services. But what that means is basically people 243 00:12:15,679 --> 00:12:17,600 Speaker 3: working as doing odd jobs. 244 00:12:18,320 --> 00:12:20,720 Speaker 4: So basically that like when you look at kind of 245 00:12:20,760 --> 00:12:24,880 Speaker 4: the reality of service work in these poor economies India, Rwanda, 246 00:12:24,920 --> 00:12:27,560 Speaker 4: et cetera, most of it is not the sort of 247 00:12:27,840 --> 00:12:30,880 Speaker 4: high value added stuff like it. Most of it is 248 00:12:30,960 --> 00:12:33,120 Speaker 4: stuff that you see kind of ubiquitous if you go 249 00:12:33,200 --> 00:12:36,480 Speaker 4: to like a poor world city, so you know, random jobbers, 250 00:12:36,840 --> 00:12:40,400 Speaker 4: you know, domestic workers, fruit peddlers, stuff like that. But 251 00:12:40,480 --> 00:12:43,360 Speaker 4: that's kind of the reality of you know, service work 252 00:12:43,360 --> 00:12:44,079 Speaker 4: in the poor world. 253 00:12:44,280 --> 00:12:47,080 Speaker 3: It's low value added, it doesn't catalyze a process of 254 00:12:47,120 --> 00:12:49,560 Speaker 3: economic growth and development. And just to get that fact right, 255 00:12:49,559 --> 00:12:53,360 Speaker 3: it's ninety percent of jobs created in India since liberalization 256 00:12:53,440 --> 00:12:55,640 Speaker 3: in nineteen ninety one have been in the informal sector 257 00:12:55,720 --> 00:12:58,000 Speaker 3: rather than in IT and in general those are also 258 00:12:58,080 --> 00:13:00,960 Speaker 3: not internationally traded and don't have to be nationally competitive, 259 00:13:01,120 --> 00:13:03,160 Speaker 3: meaning that they're trapped in a low productivity space. 260 00:13:03,280 --> 00:13:06,040 Speaker 1: It's funny you mentioned I hadn't thought about it in years, 261 00:13:06,080 --> 00:13:08,880 Speaker 1: these like global rust belts. Like when I was a kid, 262 00:13:08,920 --> 00:13:11,719 Speaker 1: I lived in Malaysia for a year and there was 263 00:13:11,920 --> 00:13:15,200 Speaker 1: like a local car company, the Proton Saga was like 264 00:13:15,240 --> 00:13:18,000 Speaker 1: this manufacturer in Malaysian car and I don't think I've 265 00:13:18,040 --> 00:13:22,920 Speaker 1: ever heard of one being sold internationally. And now I'm 266 00:13:22,960 --> 00:13:25,120 Speaker 1: like really curious. I'm imagining their fate. 267 00:13:25,360 --> 00:13:29,040 Speaker 4: Yeah, yeah, particularly No, that's the thing. That's the thing. 268 00:13:29,080 --> 00:13:31,520 Speaker 4: It's like, when we think of the industrialization, we tend 269 00:13:31,520 --> 00:13:34,280 Speaker 4: to think of basically an American or European phenomenon, you know, 270 00:13:34,320 --> 00:13:37,600 Speaker 4: the North of France, the American Midwest, et cetera. But really, 271 00:13:37,679 --> 00:13:40,760 Speaker 4: I mean, outside of East Asia, you had a lot 272 00:13:40,840 --> 00:13:44,880 Speaker 4: of economies, I mean Brazil, Iran, India to a lestric extent, 273 00:13:44,960 --> 00:13:50,480 Speaker 4: that had a quite high degree of industrialization. And since 274 00:13:50,559 --> 00:13:53,840 Speaker 4: the nineteen seventies nineteen eighties, you know, manufacturing has fallen 275 00:13:53,840 --> 00:13:57,880 Speaker 4: as a share of employment, services have risen, Agriculture has 276 00:13:57,920 --> 00:14:01,440 Speaker 4: also fallen. You've had this kind of glolobal premature, you know, 277 00:14:01,480 --> 00:14:06,440 Speaker 4: global denestrialization, at a lower rate of manufacturing employment and 278 00:14:06,520 --> 00:14:08,440 Speaker 4: at a lower rate of per caba GDP than you're 279 00:14:08,520 --> 00:14:09,920 Speaker 4: kind of quote unquote supposed to have. 280 00:14:27,080 --> 00:14:29,720 Speaker 1: You mentioned the sort of like what was the birds? 281 00:14:31,040 --> 00:14:34,560 Speaker 1: Why birds and flight metaphor, so, why isn't the process happening? 282 00:14:34,640 --> 00:14:37,000 Speaker 1: It's like everyone's talking about, Okay, labor costs and China 283 00:14:37,080 --> 00:14:40,280 Speaker 1: have definitely gone up over the years, and so the 284 00:14:40,400 --> 00:14:43,600 Speaker 1: labor arbitrage element of China, you would assume that there 285 00:14:43,640 --> 00:14:47,520 Speaker 1: are then other markets where they're less productive but significantly 286 00:14:47,960 --> 00:14:51,000 Speaker 1: cheaper labor. Why isn't that model extending out? Like where 287 00:14:51,040 --> 00:14:51,800 Speaker 1: is it breaking down? 288 00:14:51,920 --> 00:14:52,760 Speaker 4: Yeah? Absolutely? 289 00:14:52,920 --> 00:14:54,720 Speaker 3: I mean, as we said before, and this is one 290 00:14:54,760 --> 00:14:57,120 Speaker 3: thing about the quantitative measures that can really mislead you. 291 00:14:57,400 --> 00:14:59,720 Speaker 3: It's not an automatic process, you know. I think something 292 00:14:59,760 --> 00:15:02,440 Speaker 3: about that story makes its theme natural automatic part of 293 00:15:02,440 --> 00:15:04,800 Speaker 3: the world. But if you go back to nineteen eighty three, 294 00:15:04,960 --> 00:15:08,720 Speaker 3: there's a fascinating World Bank report about China, basically post 295 00:15:08,960 --> 00:15:11,600 Speaker 3: Mao era China, and you would think there would not 296 00:15:11,600 --> 00:15:14,520 Speaker 3: be a lot of reason for optimism after the Great Famine, 297 00:15:14,560 --> 00:15:18,400 Speaker 3: after the Cultural Revolution, extraordinary levels of political dysfunction. But 298 00:15:18,440 --> 00:15:21,120 Speaker 3: one of the interesting things is that China actually had 299 00:15:21,160 --> 00:15:25,800 Speaker 3: surprisingly good social development metrics. It had surprisingly good primary education, 300 00:15:25,880 --> 00:15:28,560 Speaker 3: which they invested in heavily. It had surprisingly good health 301 00:15:28,560 --> 00:15:31,640 Speaker 3: outcomes and life expectancy. And so even though it was 302 00:15:31,800 --> 00:15:34,200 Speaker 3: pretty much exactly as poor as India at the time, 303 00:15:34,400 --> 00:15:37,560 Speaker 3: it actually had far better social development metrics, and in 304 00:15:37,600 --> 00:15:40,880 Speaker 3: certain ways it's been revealed that it had more functional institutions. 305 00:15:41,200 --> 00:15:44,160 Speaker 3: So in the time since then, obviously China has exploded, 306 00:15:44,160 --> 00:15:46,240 Speaker 3: in India has not, even though they were starting from 307 00:15:46,280 --> 00:15:48,680 Speaker 3: the same baseline in the early eighties. One of the 308 00:15:48,680 --> 00:15:51,000 Speaker 3: interesting things about this it kind of shows that there 309 00:15:51,040 --> 00:15:55,320 Speaker 3: are these real pre market structural questions about human capital. 310 00:15:55,560 --> 00:15:58,280 Speaker 3: Basically how educated are people, how literate are they, But 311 00:15:58,320 --> 00:16:00,480 Speaker 3: also these skills that we don't think about. You know, 312 00:16:00,480 --> 00:16:03,280 Speaker 3: people sometimes say, well, there's no such thing as unskilled labor, 313 00:16:03,600 --> 00:16:06,040 Speaker 3: and there is something about manufacturing where there's a lot 314 00:16:06,040 --> 00:16:08,600 Speaker 3: of tacit skills that you pick up. It's not necessarily 315 00:16:08,680 --> 00:16:11,280 Speaker 3: that you have a formal education. But for example, i 316 00:16:11,320 --> 00:16:13,240 Speaker 3: mean since two thousand and eight, this is just in 317 00:16:13,280 --> 00:16:16,280 Speaker 3: the financial times, Apple has trained twenty three million workers 318 00:16:16,520 --> 00:16:18,600 Speaker 3: at their facilities and plants. You know, those are people 319 00:16:18,640 --> 00:16:21,880 Speaker 3: with skills and it forms what sometimes people call an 320 00:16:21,920 --> 00:16:25,800 Speaker 3: industrial ecology. It's an entire universe of people with skills, 321 00:16:25,800 --> 00:16:30,240 Speaker 3: of firms with specialized roles, and that altogether allows you 322 00:16:30,280 --> 00:16:32,960 Speaker 3: to take on higher value added products. But if you 323 00:16:33,000 --> 00:16:34,720 Speaker 3: look at the countries that are sort of next in 324 00:16:34,760 --> 00:16:38,240 Speaker 3: line today, Latin America, India, Brazil, they don't have very 325 00:16:38,240 --> 00:16:41,120 Speaker 3: good social development metrics. They're still really lacking when it 326 00:16:41,120 --> 00:16:44,600 Speaker 3: comes to primary education, hygiene, health. Places like India have 327 00:16:44,640 --> 00:16:49,640 Speaker 3: invested huge amounts in tertiary education in the its in colleges, 328 00:16:49,760 --> 00:16:52,440 Speaker 3: but not in primary education, which is still lacking and 329 00:16:52,520 --> 00:16:55,720 Speaker 3: really regionally differential. So those kinds of things mean that 330 00:16:55,760 --> 00:16:58,520 Speaker 3: some of the basic human and social prerequisites, as well 331 00:16:58,520 --> 00:17:02,320 Speaker 3: as the institutional ones and and corruption really prevent either 332 00:17:02,360 --> 00:17:04,880 Speaker 3: good policy making or simply having the sort of human 333 00:17:04,960 --> 00:17:08,200 Speaker 3: capital necessary to do manufacturing it in a meaningful way. 334 00:17:09,040 --> 00:17:11,080 Speaker 4: And so the one place where you really have seen 335 00:17:11,119 --> 00:17:13,520 Speaker 4: a sort of strong, you know, flying geese dynamic is 336 00:17:13,560 --> 00:17:16,760 Speaker 4: definitely Southeast Asia. I mean, you know, people call Vietnam, 337 00:17:16,840 --> 00:17:19,760 Speaker 4: you know, China's China, and Vietnam kind of has followed 338 00:17:19,760 --> 00:17:21,480 Speaker 4: a sort of Chinese model. You see this in a 339 00:17:21,520 --> 00:17:24,960 Speaker 4: lot of post comunist states. Basically they get good social 340 00:17:25,320 --> 00:17:27,720 Speaker 4: you know, good kind of health outcomes, good education outcomes 341 00:17:27,840 --> 00:17:30,159 Speaker 4: before entering the market, and so they're kind of like 342 00:17:30,240 --> 00:17:32,880 Speaker 4: very well suited. Obviously they have you know, people who 343 00:17:33,000 --> 00:17:37,080 Speaker 4: are quite healthy, quite educated, but also very poor. So 344 00:17:37,119 --> 00:17:39,040 Speaker 4: when they enter the global economy, they are kind of 345 00:17:39,040 --> 00:17:42,200 Speaker 4: the ideal factory workers. But then, yeah, you look at 346 00:17:42,280 --> 00:17:44,439 Speaker 4: India a lot of stuff, so in Africa you just 347 00:17:44,440 --> 00:17:45,400 Speaker 4: don't have that dynamic. 348 00:17:45,600 --> 00:17:48,399 Speaker 2: Yeah, So this kind of leads into something else that 349 00:17:48,440 --> 00:17:50,480 Speaker 2: I wanted to ask you, which is, if you think 350 00:17:50,680 --> 00:17:53,240 Speaker 2: of China as a sort of folkrum for a lot 351 00:17:53,280 --> 00:17:56,640 Speaker 2: of global development or global progress, and if you think 352 00:17:56,680 --> 00:18:00,880 Speaker 2: of China as sort of driving this commodities super cycle 353 00:18:01,119 --> 00:18:04,920 Speaker 2: and maybe driving some of the commodities demand in other countries, 354 00:18:05,400 --> 00:18:10,119 Speaker 2: what happens as Chinese growth presumably starts to slow. 355 00:18:10,960 --> 00:18:14,840 Speaker 4: So basically, yeah, you have like from roughly nineteen eighty 356 00:18:14,840 --> 00:18:17,040 Speaker 4: four to two thousand and seven, you have this incredible 357 00:18:17,119 --> 00:18:20,040 Speaker 4: period of Chinese growth, and then you have this, Yeah, 358 00:18:20,080 --> 00:18:23,120 Speaker 4: it kind of as even though kind of a lot 359 00:18:23,160 --> 00:18:27,119 Speaker 4: of poor countries in Latin America, South Asia, et cetera, 360 00:18:27,600 --> 00:18:30,400 Speaker 4: even as they're de industrializing, even as kind of their 361 00:18:30,440 --> 00:18:33,439 Speaker 4: own destrial economies are beginning to Faulter, they're kind of 362 00:18:33,480 --> 00:18:37,679 Speaker 4: boosted by yes, strong Chinese demand for commodities, which kind 363 00:18:37,720 --> 00:18:40,640 Speaker 4: of does sort of lead to this process of decomplexification. 364 00:18:40,800 --> 00:18:42,560 Speaker 4: I mean, you see that in Brazil, a lot of 365 00:18:42,640 --> 00:18:45,920 Speaker 4: Latin America, a lot of a lot of countries kind 366 00:18:45,920 --> 00:18:49,240 Speaker 4: of at that level of income. But then around you know, 367 00:18:49,359 --> 00:18:52,520 Speaker 4: kind of the late two thousands, Chinese growth starts to 368 00:18:52,720 --> 00:18:55,000 Speaker 4: taper off a little bit. And then after twenty fourteen 369 00:18:55,119 --> 00:18:57,399 Speaker 4: is where you have like a real, real decline. And 370 00:18:57,440 --> 00:18:59,480 Speaker 4: when you see that, you kind of see, like you know, 371 00:18:59,520 --> 00:19:02,440 Speaker 4: the commodity supercycle turns and you see that's kind of 372 00:19:02,480 --> 00:19:04,600 Speaker 4: the the negative side. It's sort of boom bust dynamic, 373 00:19:04,720 --> 00:19:08,840 Speaker 4: where twenty fourteen twenty fifteen you see huge crises in 374 00:19:08,960 --> 00:19:11,919 Speaker 4: all the sort of commodity dependent economies. I mean, Nigeria 375 00:19:12,000 --> 00:19:15,920 Speaker 4: and Iraq they were totally dependent on oil exports. Oil 376 00:19:15,920 --> 00:19:21,280 Speaker 4: prices collapsed. They have these huge, like really destructive insurgencies. Brazil, Venezuela, 377 00:19:21,520 --> 00:19:24,480 Speaker 4: they have these, you know, huge periods of political crisis, 378 00:19:24,920 --> 00:19:26,560 Speaker 4: and so you have this kind of like you know, 379 00:19:26,600 --> 00:19:29,879 Speaker 4: when you're totally dependent on one sort of engine of 380 00:19:30,000 --> 00:19:33,080 Speaker 4: global growth, you know, through the demand for commodities. What 381 00:19:33,119 --> 00:19:35,680 Speaker 4: you risk is that when inevitably that growth kind of 382 00:19:35,720 --> 00:19:37,719 Speaker 4: starts to taper off, you have you know, everything kind 383 00:19:37,720 --> 00:19:39,520 Speaker 4: of falls apart right right right. 384 00:19:39,560 --> 00:19:42,360 Speaker 3: And you know, in November of last year, the World 385 00:19:42,440 --> 00:19:45,000 Speaker 3: Bank actually put out a report basically talking about the 386 00:19:45,040 --> 00:19:48,320 Speaker 3: crisis facing development, and they were thinking also about the 387 00:19:48,359 --> 00:19:51,800 Speaker 3: wake of the coronavirus crisis and the coronavirus recession, but 388 00:19:51,880 --> 00:19:54,920 Speaker 3: also something that people have called a poly crisis, a 389 00:19:55,040 --> 00:19:59,960 Speaker 3: sort of multi sided global crisis where different issues global health, climate, chain, 390 00:20:00,280 --> 00:20:03,639 Speaker 3: climactic shifts and demographic shifts feed into each other and 391 00:20:03,720 --> 00:20:07,040 Speaker 3: accelerate each other, and all of those would certainly make 392 00:20:07,119 --> 00:20:10,360 Speaker 3: a more and more pessimistic case, particularly if you see 393 00:20:10,359 --> 00:20:12,520 Speaker 3: a slowdown and increasing sliding in Chinese growth or a 394 00:20:12,640 --> 00:20:15,320 Speaker 3: Chinese economic lost decade like we saw in Japan in 395 00:20:15,359 --> 00:20:15,920 Speaker 3: the nineties. 396 00:20:16,080 --> 00:20:19,080 Speaker 1: Well, you know, the other big thing that's happening right 397 00:20:19,119 --> 00:20:22,359 Speaker 1: now is rich countries. But the US in particular is 398 00:20:22,359 --> 00:20:25,520 Speaker 1: in a major hiking cycle and trying to fight inflation. 399 00:20:25,640 --> 00:20:28,040 Speaker 1: And one of the things that and again I sort 400 00:20:28,040 --> 00:20:29,520 Speaker 1: of keep going back to some of the things that 401 00:20:29,600 --> 00:20:33,240 Speaker 1: Victor Schwetz talked about, but he is like very critical 402 00:20:33,880 --> 00:20:37,040 Speaker 1: of this sort of like vulgar legacy, yes, and what 403 00:20:37,080 --> 00:20:39,080 Speaker 1: it did to the entire world. You know, there's sort 404 00:20:39,080 --> 00:20:40,760 Speaker 1: of like a world of debt, as he said, and 405 00:20:40,760 --> 00:20:43,280 Speaker 1: all like it's sort of like the original sin is 406 00:20:43,320 --> 00:20:45,679 Speaker 1: like the vulgar shock on what it did. And so 407 00:20:46,000 --> 00:20:50,960 Speaker 1: in the like broader story of em development. From your perspective, 408 00:20:51,320 --> 00:20:55,280 Speaker 1: how big of a deal historically is that that since 409 00:20:55,320 --> 00:20:58,120 Speaker 1: we're going to trying to understand analogies that vulgar. 410 00:20:57,800 --> 00:21:00,560 Speaker 4: Preio, No, that's it's the core core thing is that 411 00:21:01,000 --> 00:21:03,280 Speaker 4: you know, we kind of offer something with a periodization 412 00:21:03,640 --> 00:21:06,840 Speaker 4: of growth in kind of the poor world where from 413 00:21:06,960 --> 00:21:08,960 Speaker 4: you know, roughly nineteen fifty ninety eight, you have this 414 00:21:09,040 --> 00:21:11,720 Speaker 4: kind of golden age where a lot of countries that 415 00:21:11,840 --> 00:21:14,600 Speaker 4: you know, you wouldn't think of today as powerhouse as 416 00:21:14,640 --> 00:21:17,080 Speaker 4: a growth success stories. You know, places like the Ivory 417 00:21:17,119 --> 00:21:20,600 Speaker 4: Coast were growing at a huge, huge rate, the every coast. 418 00:21:20,600 --> 00:21:22,879 Speaker 4: Actually they called it the Ivorian Miracle. It had some 419 00:21:22,960 --> 00:21:24,200 Speaker 4: most depressive growth. 420 00:21:24,000 --> 00:21:25,560 Speaker 3: You know, And at a White House speech in nineteen 421 00:21:25,600 --> 00:21:28,960 Speaker 3: sixty seven, LBG actually said to those Cassandras who question 422 00:21:29,000 --> 00:21:32,000 Speaker 3: global development, I say, look at the Ivory Coast, which 423 00:21:32,000 --> 00:21:34,320 Speaker 3: today has I think a smaller economy than it is. 424 00:21:34,400 --> 00:21:37,520 Speaker 4: Right, actually the every coast yeah, median income is lower 425 00:21:37,560 --> 00:21:40,439 Speaker 4: today than it was when the World Bank started recording income. 426 00:21:40,640 --> 00:21:43,880 Speaker 4: But then basically, like nineteen eighty, vulgar is a key, 427 00:21:43,960 --> 00:21:47,840 Speaker 4: key part of it. The commodity supercycle turns, you know, 428 00:21:47,880 --> 00:21:52,639 Speaker 4: commodity prices fall quite precipitously and that means huge, huge 429 00:21:52,640 --> 00:21:55,360 Speaker 4: crisis across the developing world. It leads to this kind 430 00:21:55,359 --> 00:21:58,600 Speaker 4: of cycle of debt crises. And then the nineteen eighties 431 00:21:58,640 --> 00:22:01,680 Speaker 4: you really have to understand, you know, in the US 432 00:22:01,760 --> 00:22:04,920 Speaker 4: Europe it kind of has this sort of cultural legacy 433 00:22:04,920 --> 00:22:08,639 Speaker 4: of like strong economic growth, but the nineteen eighties and 434 00:22:08,680 --> 00:22:10,680 Speaker 4: then kind of bleeding into the nineteen nineties was this 435 00:22:10,880 --> 00:22:14,480 Speaker 4: huge period of you know, the sort of mass stragedy 436 00:22:14,680 --> 00:22:19,600 Speaker 4: where you have economic collapse in Latin America, Africa, South Asia, 437 00:22:19,720 --> 00:22:22,840 Speaker 4: Middle East, and then that sort of leads to social 438 00:22:22,880 --> 00:22:26,480 Speaker 4: and political crisis and you have these civil wars, huge 439 00:22:26,520 --> 00:22:29,080 Speaker 4: I mean huge bloodshed. And you know, people don't really 440 00:22:29,119 --> 00:22:31,760 Speaker 4: think of these sort of eighties nineties period as a 441 00:22:31,840 --> 00:22:34,920 Speaker 4: sort of mass you know, economic and then social political tragedy, 442 00:22:34,920 --> 00:22:35,520 Speaker 4: but it really was. 443 00:22:35,880 --> 00:22:38,880 Speaker 3: And it's worth just saying that monetary policy affects these 444 00:22:38,880 --> 00:22:40,200 Speaker 3: countries everywhere. 445 00:22:40,240 --> 00:22:40,840 Speaker 4: In every way. 446 00:22:41,080 --> 00:22:44,080 Speaker 3: It weakens global demand and demand from the developed world, 447 00:22:44,119 --> 00:22:46,160 Speaker 3: but it also means that their debt servicing and costs 448 00:22:46,160 --> 00:22:48,159 Speaker 3: are higher. It means that it's a lot harder for 449 00:22:48,200 --> 00:22:51,040 Speaker 3: them to get new debt issued. It means that there's 450 00:22:51,119 --> 00:22:55,040 Speaker 3: potentially greater financial instability. It also means and from their perspective, 451 00:22:55,240 --> 00:22:57,680 Speaker 3: this is one of the really big problems that when 452 00:22:57,680 --> 00:23:00,880 Speaker 3: it comes to the global commodity supercycle and global commodity 453 00:23:00,920 --> 00:23:03,760 Speaker 3: prices that they might reverse and even going into the nineties, 454 00:23:03,800 --> 00:23:06,840 Speaker 3: prior to China's growth really taking off, globalization, the first 455 00:23:06,880 --> 00:23:10,560 Speaker 3: waves of globalization actually brought agricultural prices down all over 456 00:23:10,560 --> 00:23:12,919 Speaker 3: the world, and a lot of the early anti globalization 457 00:23:13,040 --> 00:23:16,000 Speaker 3: movement came from farmers in Latin America and the poor 458 00:23:16,040 --> 00:23:19,040 Speaker 3: world who were really brutally affected by the liberalization of 459 00:23:19,080 --> 00:23:22,080 Speaker 3: prices and the sort of first waves of globalization, especially 460 00:23:22,080 --> 00:23:22,840 Speaker 3: in agriculture. 461 00:23:23,160 --> 00:23:24,919 Speaker 1: I know it's not the point, but it's kind of funny, 462 00:23:25,040 --> 00:23:26,840 Speaker 1: like that you put out on in the article that 463 00:23:26,960 --> 00:23:29,119 Speaker 1: Cassandra is right, and so it's funny. It feels like 464 00:23:29,160 --> 00:23:32,080 Speaker 1: you should never criticize and call your mood as Cassandras. 465 00:23:32,080 --> 00:23:33,960 Speaker 1: You're telling them that they're going to be the ones who. 466 00:23:33,840 --> 00:23:39,000 Speaker 2: Have right, Cassandra will always eventually be Actually, just on 467 00:23:39,040 --> 00:23:41,840 Speaker 2: that note, I mean, one of the themes that we 468 00:23:41,880 --> 00:23:43,680 Speaker 2: talk a lot about now and others talk a lot 469 00:23:43,680 --> 00:23:46,840 Speaker 2: about now is this idea of a multipolar world. And 470 00:23:47,000 --> 00:23:49,639 Speaker 2: you know, speaking of monetary policy, yes, the rest of 471 00:23:49,680 --> 00:23:52,960 Speaker 2: the world is deeply tied to the fate of US 472 00:23:53,080 --> 00:23:56,520 Speaker 2: policy vis the dollar and things like that. But if 473 00:23:56,560 --> 00:24:00,240 Speaker 2: we are moving towards more of a fractured globe both 474 00:24:00,320 --> 00:24:02,679 Speaker 2: financial system and you know, that's a big if, and 475 00:24:02,720 --> 00:24:05,320 Speaker 2: I realize there's a massive debate over it. But if, 476 00:24:05,359 --> 00:24:09,120 Speaker 2: for instance, there's more room for China or maybe Russia 477 00:24:09,160 --> 00:24:13,680 Speaker 2: to develop this new maybe bricks contingent, what does that 478 00:24:13,760 --> 00:24:17,840 Speaker 2: mean for global development? Is that a bigger opportunity or 479 00:24:18,200 --> 00:24:20,760 Speaker 2: are we just sort of reviving the same problems. 480 00:24:20,800 --> 00:24:22,680 Speaker 3: Well, you know, I want to be very careful that 481 00:24:22,920 --> 00:24:26,040 Speaker 3: not necessarily wading into the entire debate, but talking about 482 00:24:26,080 --> 00:24:28,159 Speaker 3: the present, if you look at the developing world, they 483 00:24:28,200 --> 00:24:29,040 Speaker 3: say decoupling. 484 00:24:29,320 --> 00:24:30,080 Speaker 4: What decoupling? 485 00:24:30,400 --> 00:24:31,520 Speaker 3: You know, you see a lot of this in Latin 486 00:24:31,560 --> 00:24:33,399 Speaker 3: America and you see it as well with their position 487 00:24:33,440 --> 00:24:35,879 Speaker 3: on the war in Ukraine. A lot of these countries say, listen, 488 00:24:36,080 --> 00:24:38,159 Speaker 3: what matters to us is still development, and what we 489 00:24:38,200 --> 00:24:40,679 Speaker 3: need for development is a robust global economy, and is 490 00:24:40,680 --> 00:24:43,120 Speaker 3: the structure of global trade that we built in the nineties. 491 00:24:43,359 --> 00:24:45,960 Speaker 3: You know, obviously they'd like globalization on different terms, but 492 00:24:46,040 --> 00:24:49,040 Speaker 3: they definitely don't want a world of autarchic trade blocks. 493 00:24:49,400 --> 00:24:51,360 Speaker 3: And this is one thing that the US I think 494 00:24:51,400 --> 00:24:53,399 Speaker 3: threatens to do at this point in time, which is, 495 00:24:53,720 --> 00:24:55,480 Speaker 3: you know, you see it in the things that Trump 496 00:24:55,520 --> 00:24:57,199 Speaker 3: is saying right now that there is a sort of 497 00:24:57,240 --> 00:25:01,000 Speaker 3: vision of an autarcic, closed American economy of trade blocks. 498 00:25:01,200 --> 00:25:03,360 Speaker 3: That's not really good for anyone, but it certainly isn't 499 00:25:03,400 --> 00:25:05,640 Speaker 3: good for these developing world countries. 500 00:25:05,840 --> 00:25:06,040 Speaker 4: You know. 501 00:25:06,080 --> 00:25:07,840 Speaker 3: The other side of it with respect to a new 502 00:25:07,960 --> 00:25:11,120 Speaker 3: global system, obviously, there was a lot of hot air 503 00:25:11,160 --> 00:25:13,720 Speaker 3: about Chinese investment in Africa and the developing world in 504 00:25:13,720 --> 00:25:16,159 Speaker 3: the last ten years, the built in Road initiative and 505 00:25:16,240 --> 00:25:19,200 Speaker 3: all of the infrastructure development. But one of the big 506 00:25:19,280 --> 00:25:22,120 Speaker 3: question marks here one is how much of that investment 507 00:25:22,119 --> 00:25:25,000 Speaker 3: actually failed. I think that trapped to homacy is a 508 00:25:25,040 --> 00:25:28,400 Speaker 3: really fawed framework because the reality is nobody wants ports 509 00:25:28,440 --> 00:25:31,359 Speaker 3: and bridges in economies that are broken and that aren't 510 00:25:31,359 --> 00:25:33,399 Speaker 3: being used. You don't want to port if there's not 511 00:25:33,480 --> 00:25:35,840 Speaker 3: trade going through it. You would rather that they pay 512 00:25:35,840 --> 00:25:39,000 Speaker 3: off their debts. You don't necessarily want the infrastructure in 513 00:25:39,080 --> 00:25:41,960 Speaker 3: countries that can actually utilize it well. But one thing 514 00:25:41,960 --> 00:25:43,760 Speaker 3: about Builton Road, not only has it led to a 515 00:25:43,800 --> 00:25:46,560 Speaker 3: cutoff in Chinese investment, but we're not seeing investment from 516 00:25:46,600 --> 00:25:48,840 Speaker 3: certainly not from states in the rich world. And this 517 00:25:48,920 --> 00:25:50,560 Speaker 3: is I think one of the real crises right now 518 00:25:50,600 --> 00:25:53,280 Speaker 3: with respect to climate change. You know, all of these 519 00:25:53,280 --> 00:25:56,320 Speaker 3: developing countries face a real paradox, which is that as 520 00:25:56,359 --> 00:25:59,520 Speaker 3: part of industrializing you need electricity and energy. And the 521 00:25:59,560 --> 00:26:02,440 Speaker 3: story behind that has been coal. Coal and oil and 522 00:26:02,520 --> 00:26:05,639 Speaker 3: to some extent natural gas have driven the industrialization of 523 00:26:05,680 --> 00:26:07,960 Speaker 3: the world. When you go back to the first industrialized 524 00:26:07,960 --> 00:26:10,760 Speaker 3: places on Earth in the Rare Valley in Britain, in 525 00:26:10,880 --> 00:26:13,520 Speaker 3: parts of Pennsylvania, they're the places where the coal fields were. 526 00:26:13,600 --> 00:26:13,800 Speaker 4: Right. 527 00:26:14,160 --> 00:26:16,920 Speaker 3: The story is, though, you know, India is on the 528 00:26:16,920 --> 00:26:19,840 Speaker 3: front lines of climate change. So every incremental amount more 529 00:26:19,840 --> 00:26:22,959 Speaker 3: coal it burns in order to industrialize it may suffer 530 00:26:23,040 --> 00:26:25,240 Speaker 3: back in the form of worse floods and droughts and 531 00:26:25,640 --> 00:26:28,560 Speaker 3: extreme heat in the future. So what they need is 532 00:26:28,680 --> 00:26:30,880 Speaker 3: a development path that does involve a kind of leap 533 00:26:30,880 --> 00:26:34,679 Speaker 3: frogging over fossil fuels. And what that requires is infrastructure 534 00:26:34,680 --> 00:26:37,399 Speaker 3: of global finance that simply hasn't been there. You know, 535 00:26:37,480 --> 00:26:40,520 Speaker 3: the rich world really hasn't even met its state level 536 00:26:40,520 --> 00:26:43,440 Speaker 3: commitments of around one hundred billion dollars and they're saying, well, 537 00:26:43,600 --> 00:26:46,400 Speaker 3: private finance will step in and do it. But what 538 00:26:46,440 --> 00:26:50,040 Speaker 3: that actually requires is this de risking process where you 539 00:26:50,119 --> 00:26:53,080 Speaker 3: need developing world countries to essentially take on the risks 540 00:26:53,240 --> 00:26:55,679 Speaker 3: for global investors because they say, no, no, it's too 541 00:26:55,760 --> 00:26:58,359 Speaker 3: risky for us right now. You essentially have to be 542 00:26:58,560 --> 00:27:00,840 Speaker 3: the ones holding the bag if you want our money 543 00:27:00,880 --> 00:27:03,160 Speaker 3: in the first place, which means that these countries face 544 00:27:03,200 --> 00:27:05,280 Speaker 3: really a sort of devil's bargain to get the money 545 00:27:05,320 --> 00:27:07,280 Speaker 3: that they need in order to build green energy in 546 00:27:07,320 --> 00:27:09,240 Speaker 3: the first place. And what I think you're seeing the 547 00:27:09,240 --> 00:27:12,919 Speaker 3: status quo is places like the Congo, loosening restrictions on 548 00:27:12,960 --> 00:27:15,640 Speaker 3: coal mining and sort of international agreements that have kept 549 00:27:15,760 --> 00:27:17,840 Speaker 3: coal and oil in the ground are starting to be 550 00:27:17,880 --> 00:27:20,720 Speaker 3: torn up when energy prices go up, and unless there's 551 00:27:20,760 --> 00:27:23,439 Speaker 3: a real answer to that from the international community and 552 00:27:23,480 --> 00:27:26,240 Speaker 3: an answer to obviously the failures of Belton Road in 553 00:27:26,240 --> 00:27:28,760 Speaker 3: the last ten years, but a real program of state 554 00:27:28,880 --> 00:27:31,600 Speaker 3: level investment, you know, you really won't see the money 555 00:27:31,640 --> 00:27:33,680 Speaker 3: you need for green development and leapfrogging. 556 00:27:34,000 --> 00:27:37,399 Speaker 1: Can I ask a sort of Devil's advocate question, because, 557 00:27:37,440 --> 00:27:40,760 Speaker 1: as you point out, like the last thing that a 558 00:27:40,840 --> 00:27:43,520 Speaker 1: lot of these poor economies need is for the rich 559 00:27:43,560 --> 00:27:46,440 Speaker 1: economies to go into autarchy mode. But we just spent 560 00:27:46,480 --> 00:27:49,880 Speaker 1: the first twenty minutes of this conversation talking about how 561 00:27:49,960 --> 00:27:55,320 Speaker 1: this status quo wasn't working or wasn't actually contributing to 562 00:27:55,520 --> 00:27:58,639 Speaker 1: a sort of steady wealth advance, So like, is there 563 00:27:58,680 --> 00:28:00,399 Speaker 1: a different model? I mean, and it's not just the 564 00:28:00,400 --> 00:28:02,880 Speaker 1: poorer countries. I mean Europe is complaining too about our 565 00:28:02,920 --> 00:28:06,720 Speaker 1: trade policies here, particularly with the Inflation Reduction Act. But like, 566 00:28:06,960 --> 00:28:11,800 Speaker 1: why necessarily fear this sort of inward turn if the 567 00:28:11,840 --> 00:28:14,800 Speaker 1: sort of outward turn was not actually delivering on growing 568 00:28:14,840 --> 00:28:16,560 Speaker 1: wealth for so much as the world, And could there 569 00:28:16,560 --> 00:28:17,280 Speaker 1: be a different path? 570 00:28:17,359 --> 00:28:19,440 Speaker 3: Yeah, I mean, I think there are different paths in 571 00:28:19,520 --> 00:28:22,639 Speaker 3: terms of policy, But the hard parts are politics, you know, 572 00:28:22,800 --> 00:28:27,359 Speaker 3: domestic political economy and international geopolitics. And what that means 573 00:28:27,440 --> 00:28:31,359 Speaker 3: is that rebalancing domestically in China, for example, rebalancing to 574 00:28:31,440 --> 00:28:35,200 Speaker 3: a larger household share of income, more domestic consumption, potentially 575 00:28:35,240 --> 00:28:38,120 Speaker 3: a more balanced form of growth, or on the other hand, 576 00:28:38,360 --> 00:28:41,400 Speaker 3: more balanced infrastructure investment in places like India where it's 577 00:28:41,440 --> 00:28:44,280 Speaker 3: been heavily driven by these very top heavy firms that 578 00:28:44,320 --> 00:28:47,200 Speaker 3: have bad construction practices, have cronyistic deals. 579 00:28:46,920 --> 00:28:47,400 Speaker 4: With the state. 580 00:28:47,720 --> 00:28:50,880 Speaker 3: Corruption, these are political problems. They're political problems in the 581 00:28:50,960 --> 00:28:52,920 Speaker 3: US too, by the way. I mean, you talk about 582 00:28:52,920 --> 00:28:54,720 Speaker 3: this as a developed country, but it's very difficult to 583 00:28:54,760 --> 00:28:58,080 Speaker 3: build new housing or transit or infrastructure. And our infrastructure 584 00:28:58,120 --> 00:29:00,640 Speaker 3: is certainly not first rate or cutting hedges in any sense. 585 00:29:00,880 --> 00:29:03,480 Speaker 3: So the technology is there, I mean, we have cutting 586 00:29:03,520 --> 00:29:07,240 Speaker 3: edge infrastructure, we have you know, renewable energy, but getting 587 00:29:07,240 --> 00:29:10,400 Speaker 3: the financing for it and creating political deals that allow 588 00:29:10,480 --> 00:29:12,840 Speaker 3: you to build it domestically in a way that doesn't 589 00:29:12,920 --> 00:29:14,800 Speaker 3: end up croneistic or inefficient. 590 00:29:15,120 --> 00:29:16,360 Speaker 4: That's a lot of the hard part. 591 00:29:16,600 --> 00:29:18,720 Speaker 3: The other thing is, you know, in terms of the 592 00:29:18,800 --> 00:29:22,400 Speaker 3: last twenty thirty years not working the answer. We tried 593 00:29:22,400 --> 00:29:24,200 Speaker 3: a different answer before that, and there was an era 594 00:29:24,280 --> 00:29:26,320 Speaker 3: of modernization where there were a lot of tariffs, and 595 00:29:26,360 --> 00:29:28,560 Speaker 3: there was a lot of domestic infant industry protection. You 596 00:29:28,640 --> 00:29:31,360 Speaker 3: talked about Malaysian car companies, you know, that really was 597 00:29:31,400 --> 00:29:33,720 Speaker 3: its own era. The problem there is until you have 598 00:29:33,800 --> 00:29:37,400 Speaker 3: strong institutions that can actually practice export discipline, as in 599 00:29:37,440 --> 00:29:40,280 Speaker 3: your companies are actually competitive on the world market, all 600 00:29:40,320 --> 00:29:43,880 Speaker 3: that you get is cronyism and domestic inefficiency. You know, 601 00:29:43,960 --> 00:29:45,840 Speaker 3: there's a sort of story about this that South Korea, 602 00:29:45,880 --> 00:29:49,440 Speaker 3: it's not that it produces automobiles, it produces Hyundai and Samsung. 603 00:29:49,640 --> 00:29:51,840 Speaker 3: You know, it has brands that have that are high 604 00:29:51,840 --> 00:29:54,440 Speaker 3: on could value chain cultural exports brands. 605 00:29:54,480 --> 00:29:55,960 Speaker 4: I mean, it came up right. 606 00:29:56,040 --> 00:29:58,560 Speaker 3: There's no solution other than to build a competitive and 607 00:29:58,680 --> 00:30:02,080 Speaker 3: robust economy that's competitive in world markets. I mean there's 608 00:30:02,080 --> 00:30:04,280 Speaker 3: sort of no shortcuts. That's the hard part, and there 609 00:30:04,320 --> 00:30:05,840 Speaker 3: are a lot of political bearriers to that. And there's 610 00:30:05,840 --> 00:30:08,920 Speaker 3: also certainly too little state level investment, both in rich 611 00:30:08,920 --> 00:30:10,960 Speaker 3: countries but also between countries in general. 612 00:30:11,480 --> 00:30:13,920 Speaker 2: So just on that note, this might be a slightly 613 00:30:14,080 --> 00:30:17,720 Speaker 2: unfair question, but I completely agree that politics is the 614 00:30:17,800 --> 00:30:20,239 Speaker 2: constraint here and the barrier here, and we see that, 615 00:30:20,280 --> 00:30:23,000 Speaker 2: for instance, in China, quite a lot there is a 616 00:30:23,080 --> 00:30:25,880 Speaker 2: recognition within China that they should be aiming for a 617 00:30:25,920 --> 00:30:28,880 Speaker 2: more balanced economy. But then what tends to happen is 618 00:30:28,880 --> 00:30:32,840 Speaker 2: that when growth slows to a sort of troublesome level, politically, 619 00:30:32,960 --> 00:30:35,560 Speaker 2: they start to roll back some of the rebalancing act, 620 00:30:35,600 --> 00:30:37,560 Speaker 2: and you know, they open the flood gates of credit. 621 00:30:37,840 --> 00:30:42,200 Speaker 2: Everything goes back into housing and unproductive sectors of the economy. 622 00:30:42,760 --> 00:30:43,440 Speaker 4: So how do you. 623 00:30:43,440 --> 00:30:48,520 Speaker 2: Actually get past those political barriers and constraints, right? 624 00:30:48,800 --> 00:30:51,960 Speaker 4: I mean when you look historically countries that have successfully 625 00:30:51,960 --> 00:30:54,680 Speaker 4: done it, I mean China, South Korea, Japan are three 626 00:30:54,680 --> 00:30:57,600 Speaker 4: of the most famous. You need sort of a hegemonic 627 00:30:57,680 --> 00:31:01,120 Speaker 4: state of sort of you know, elite reformers basically, and 628 00:31:01,200 --> 00:31:04,080 Speaker 4: a lot of the time when you have in I 629 00:31:04,080 --> 00:31:07,200 Speaker 4: mean some soun Africa, South Asia is instead a sort 630 00:31:07,200 --> 00:31:10,200 Speaker 4: of hegemony of a sort of a rentier class that 631 00:31:10,240 --> 00:31:12,320 Speaker 4: have no real sort of developmental interest. 632 00:31:12,520 --> 00:31:14,120 Speaker 1: Yeah, well, I was gonna say, I mean, it kind 633 00:31:14,120 --> 00:31:17,400 Speaker 1: of feels like that we're in like Klein pedest trade 634 00:31:17,400 --> 00:31:21,640 Speaker 1: wars are class wars territory here where I mean the 635 00:31:21,680 --> 00:31:24,400 Speaker 1: people saying like, no, don't roll back globalization, don't do 636 00:31:24,480 --> 00:31:29,280 Speaker 1: autarchy are presumably that slice of the elite, the rentier 637 00:31:29,320 --> 00:31:32,520 Speaker 1: class within these poor countries that have done and probably 638 00:31:32,560 --> 00:31:36,200 Speaker 1: many of them have accumulated extraordinary wealth even while their 639 00:31:36,560 --> 00:31:40,480 Speaker 1: economies have stagnated. But again, like I mean, Devil's advocate, 640 00:31:40,560 --> 00:31:42,440 Speaker 1: could it be that if you sort of like break 641 00:31:42,440 --> 00:31:46,400 Speaker 1: that globalization model, then that, you know, becomes a forcing 642 00:31:46,440 --> 00:31:48,240 Speaker 1: mechanism for domestic political. 643 00:31:47,960 --> 00:31:50,320 Speaker 3: Change, right right, Well, it's you know, I think I 644 00:31:50,320 --> 00:31:52,240 Speaker 3: think clin Pats, I think they'd probably be among the 645 00:31:52,280 --> 00:31:55,920 Speaker 3: first to say they know it's difficult, that struggling with it. 646 00:31:55,920 --> 00:31:58,880 Speaker 3: It isn't certainly true though, that domestic and global imbalances 647 00:31:58,920 --> 00:32:02,000 Speaker 3: are related, and that domestic inequality which has also been 648 00:32:02,080 --> 00:32:04,120 Speaker 3: the condition of growth in the last thirty forty years, Right, 649 00:32:04,120 --> 00:32:06,960 Speaker 3: It's been huge amounts of domestic inequality and relatively weak 650 00:32:07,000 --> 00:32:09,160 Speaker 3: investment in social programs. I mean, a lot of the 651 00:32:09,200 --> 00:32:11,640 Speaker 3: improvements in health outcomes at the bottom end have been 652 00:32:11,680 --> 00:32:14,160 Speaker 3: from international aid and charity in the worst off parts 653 00:32:14,160 --> 00:32:17,800 Speaker 3: of the world, not from strong state led social development programs. 654 00:32:18,080 --> 00:32:20,320 Speaker 3: But I think the other side of this is, with 655 00:32:20,360 --> 00:32:22,960 Speaker 3: respect to how difficult it is to do this rebalancing, 656 00:32:23,040 --> 00:32:25,280 Speaker 3: that you really do need a sort of developmental coalition. 657 00:32:25,680 --> 00:32:27,760 Speaker 3: You need one that sort of recognized the interests and 658 00:32:27,760 --> 00:32:29,920 Speaker 3: you talked to you know, there's different interests, different groups 659 00:32:29,920 --> 00:32:32,960 Speaker 3: are going to have necessarily different interests internally politically. 660 00:32:33,520 --> 00:32:36,640 Speaker 4: Yeah, and you know, like a core question for us 661 00:32:36,800 --> 00:32:39,160 Speaker 4: is how do you strengthen the state in very poor 662 00:32:39,200 --> 00:32:41,840 Speaker 4: countries because the reality of the last few decades is 663 00:32:41,880 --> 00:32:43,440 Speaker 4: that a lot of countries that kind of used to 664 00:32:43,480 --> 00:32:47,040 Speaker 4: have functional regimes, even if kind of corrupt. You know, 665 00:32:47,080 --> 00:32:48,840 Speaker 4: a lot of issues that used to have kind of 666 00:32:48,840 --> 00:32:51,560 Speaker 4: functional governments no longer have that. I mean, Haiti, a 667 00:32:51,560 --> 00:32:54,000 Speaker 4: lot of countries in the Sahel and Africa. You know, 668 00:32:54,240 --> 00:32:57,560 Speaker 4: it is a core thing is like you cannot do 669 00:32:57,600 --> 00:32:59,600 Speaker 4: any of this if the state does not have you know, 670 00:32:59,720 --> 00:33:01,240 Speaker 4: mono and violent stuff like that. 671 00:33:02,000 --> 00:33:05,200 Speaker 3: Yeah, and there has been this decline in decomplexification as 672 00:33:05,240 --> 00:33:07,160 Speaker 3: well that we talked about that I think is one 673 00:33:07,160 --> 00:33:11,200 Speaker 3: of the problems in the more sophisticated institutions. And then 674 00:33:11,200 --> 00:33:13,480 Speaker 3: the last thing that I would say is that this 675 00:33:13,560 --> 00:33:15,800 Speaker 3: idea that we can just crash out of the current system. 676 00:33:16,080 --> 00:33:18,080 Speaker 3: We did try this in the nineteen twenties and thirties, 677 00:33:18,280 --> 00:33:20,560 Speaker 3: and it was the Great Depression. The Great Depression was 678 00:33:20,760 --> 00:33:23,480 Speaker 3: very much linked to a breakdown of the international monetary order, 679 00:33:23,600 --> 00:33:25,880 Speaker 3: as people like Perry Merling have talked about, and a 680 00:33:25,880 --> 00:33:29,360 Speaker 3: breakdown of global trade. So but it was also driven 681 00:33:29,440 --> 00:33:33,520 Speaker 3: by pretty robust and dynamic political coalitionis in rising powers 682 00:33:33,560 --> 00:33:36,240 Speaker 3: all over the world, including rising fascist powers, that had 683 00:33:36,240 --> 00:33:38,360 Speaker 3: an idea which was that we're going to crash out 684 00:33:38,360 --> 00:33:40,600 Speaker 3: of the global system and build something different. So I 685 00:33:40,640 --> 00:33:43,120 Speaker 3: think it is really a cautionary tale to say, well, 686 00:33:43,160 --> 00:33:45,360 Speaker 3: we can merely go it alone, whereas what I think 687 00:33:45,400 --> 00:33:47,520 Speaker 3: the hope is is a new type of global order 688 00:33:47,640 --> 00:33:55,160 Speaker 3: that we participate in collectively. 689 00:34:06,360 --> 00:34:09,320 Speaker 2: So the name of your article was the long slow 690 00:34:09,440 --> 00:34:12,440 Speaker 2: death of global development. And of course when we think 691 00:34:12,520 --> 00:34:16,080 Speaker 2: and talk about global development, there is a huge sort 692 00:34:16,080 --> 00:34:20,840 Speaker 2: of industry around development or you know, academia slash whole 693 00:34:20,880 --> 00:34:25,479 Speaker 2: collection of global institutions, you know, places like the World Bank, 694 00:34:25,560 --> 00:34:28,840 Speaker 2: the International Monetary Fund, things like that. To what extent 695 00:34:28,880 --> 00:34:35,080 Speaker 2: do you think that ecosystem is grasping the crux of 696 00:34:35,120 --> 00:34:37,799 Speaker 2: this problem and adapting to it. 697 00:34:38,160 --> 00:34:41,080 Speaker 4: I mean, I think basically the irony is that they're 698 00:34:41,120 --> 00:34:44,239 Speaker 4: still very powerful. If you look at very poor countries, 699 00:34:44,280 --> 00:34:48,439 Speaker 4: like a lot of government functions are basically exported to them, 700 00:34:48,480 --> 00:34:50,759 Speaker 4: to the aid industry to people like that. And yet 701 00:34:50,920 --> 00:34:53,160 Speaker 4: poor countries today are just you know, even though their 702 00:34:53,160 --> 00:34:56,239 Speaker 4: incomes tend to be higher, they are structurally in a 703 00:34:56,239 --> 00:34:58,040 Speaker 4: worse position than they were a few decades ago. They 704 00:34:58,080 --> 00:35:00,560 Speaker 4: are in a worse position for a sort of industrial 705 00:35:00,600 --> 00:35:04,160 Speaker 4: take off, Like they are much worse position to eventually 706 00:35:04,200 --> 00:35:07,640 Speaker 4: become you know, wealthy or even kind of middle income whatever. 707 00:35:08,520 --> 00:35:11,560 Speaker 4: And so yeah, I think that they kind of and 708 00:35:11,600 --> 00:35:13,759 Speaker 4: sometimes they'll admit this themselves, that they don't really have 709 00:35:13,800 --> 00:35:17,040 Speaker 4: an answer, that they're kind of grasping at straws. You know, 710 00:35:17,080 --> 00:35:20,239 Speaker 4: there have been real improvements i mean in health outcomes, 711 00:35:20,560 --> 00:35:23,080 Speaker 4: in educational outcomes, and that's very encouraging because that does 712 00:35:23,160 --> 00:35:25,320 Speaker 4: kind of set the stage for like, you know, long term, 713 00:35:25,680 --> 00:35:26,520 Speaker 4: long term growth. 714 00:35:26,600 --> 00:35:28,719 Speaker 3: Yeah, and some of the good trends have been I 715 00:35:28,760 --> 00:35:31,239 Speaker 3: think the end to a certain post two thousand and 716 00:35:31,280 --> 00:35:34,359 Speaker 3: eight Ryan Hardrokoff obsession with the debt level, this sort 717 00:35:34,400 --> 00:35:37,880 Speaker 3: of most austerity focused initiatives of the last ten to 718 00:35:37,880 --> 00:35:39,799 Speaker 3: twenty years. I think a lot of that has died, 719 00:35:39,800 --> 00:35:42,520 Speaker 3: which is good. The hard part is, yeah, politics, you know, 720 00:35:42,600 --> 00:35:45,680 Speaker 3: even when development scholars I think grasp this stuff, there's 721 00:35:45,680 --> 00:35:47,840 Speaker 3: not a ton that can be done from just the 722 00:35:47,960 --> 00:35:51,440 Speaker 3: UN or development agencies, and you need political forcing functions 723 00:35:51,760 --> 00:35:54,520 Speaker 3: internal to the domestic politics of the rich world, one 724 00:35:54,560 --> 00:35:57,880 Speaker 3: of which will inevitably be migration and global refugee flows. 725 00:35:58,120 --> 00:36:02,000 Speaker 1: Can we talk a little bit about commodity exporters that 726 00:36:02,080 --> 00:36:05,239 Speaker 1: aren't doing completely terribly and you know, I'm thinking of 727 00:36:05,320 --> 00:36:08,160 Speaker 1: like Indonesia. You know, I don't think it's like having 728 00:36:08,160 --> 00:36:10,440 Speaker 1: an incredible boom, but I also don't get the impression 729 00:36:10,480 --> 00:36:13,640 Speaker 1: it's like massively backsliding. They seem to be doing interesting 730 00:36:13,760 --> 00:36:16,320 Speaker 1: things policy wise in terms of like, oh, if you 731 00:36:16,360 --> 00:36:18,839 Speaker 1: want to mine our nickel, you have to refine it 732 00:36:18,880 --> 00:36:21,719 Speaker 1: domestically so that our domestic you know that we sort 733 00:36:21,719 --> 00:36:25,120 Speaker 1: of have a knowledge transfer move up the value chain. Chile, 734 00:36:25,360 --> 00:36:28,799 Speaker 1: I think similar stories like that, Like Okay, maybe like 735 00:36:29,120 --> 00:36:31,759 Speaker 1: not as rich as maybe some of hope twenty years ago, 736 00:36:31,840 --> 00:36:35,080 Speaker 1: but like it seems to have made some progress. It 737 00:36:35,160 --> 00:36:37,279 Speaker 1: seems like there are parts of the story that are 738 00:36:37,320 --> 00:36:40,320 Speaker 1: not all bad, or maybe countries figuring out a way 739 00:36:40,640 --> 00:36:43,560 Speaker 1: to move up the value chain from the commodity side. 740 00:36:43,680 --> 00:36:46,880 Speaker 4: Indonesia and like, yeah, a lot of Southeast Asia, Indonesia 741 00:36:47,040 --> 00:36:49,520 Speaker 4: is definitely kind of globally outside of China. The most 742 00:36:49,560 --> 00:36:53,160 Speaker 4: positive picture what Indonesia is doing now. I mean they're 743 00:36:53,280 --> 00:36:57,359 Speaker 4: taking a very conscious sort of industrial policy, and you know, 744 00:36:57,400 --> 00:37:00,480 Speaker 4: Indonesia in terms of demographics is quite well situation for 745 00:37:00,920 --> 00:37:03,440 Speaker 4: quite significant economic growth and not just kind of the 746 00:37:03,440 --> 00:37:06,440 Speaker 4: empty growth that's sort of a lot of a lot 747 00:37:06,440 --> 00:37:08,680 Speaker 4: of commodity exporters have, but kind of a real dura 748 00:37:08,840 --> 00:37:10,080 Speaker 4: higher quality. Yeah. 749 00:37:09,800 --> 00:37:12,040 Speaker 3: Yeah, And I think you got the idea exactly, which 750 00:37:12,080 --> 00:37:15,120 Speaker 3: is that you need reinvestment. You need to capture that surplus, 751 00:37:15,120 --> 00:37:17,280 Speaker 3: and you need to drive it into making the economy 752 00:37:17,320 --> 00:37:19,960 Speaker 3: more complex, but also into social development. And I think 753 00:37:19,960 --> 00:37:22,640 Speaker 3: that's actually the hard part. In Indonesia and elsewhere. You 754 00:37:22,719 --> 00:37:26,439 Speaker 3: need a developmental coalition that is also not just self 755 00:37:26,440 --> 00:37:29,359 Speaker 3: interested business elites, right, because one thing you really need 756 00:37:29,400 --> 00:37:32,000 Speaker 3: is social development, and that does entail a large degree 757 00:37:32,000 --> 00:37:36,120 Speaker 3: of redistribution. You need social programs that develop the educational 758 00:37:36,360 --> 00:37:39,520 Speaker 3: health basis for the economy, and that can supercharge what 759 00:37:39,600 --> 00:37:42,680 Speaker 3: sometimes people call sort of an industrious revolution, where people 760 00:37:42,760 --> 00:37:46,439 Speaker 3: essentially become better workers, have better habits, and all those 761 00:37:46,480 --> 00:37:49,560 Speaker 3: things actually drive the productivity of their labor and allow 762 00:37:49,600 --> 00:37:51,279 Speaker 3: them to integrate in the world economy better. You know, 763 00:37:51,320 --> 00:37:54,680 Speaker 3: things also like thermal load from climate change. Really hot 764 00:37:54,719 --> 00:37:57,520 Speaker 3: places on Earth are actually harder to work, and so 765 00:37:57,560 --> 00:37:59,759 Speaker 3: people are lower productivity. So even if their labor costs 766 00:37:59,760 --> 00:38:02,480 Speaker 3: are lower, the cost of hiring an additional worker and 767 00:38:02,520 --> 00:38:05,800 Speaker 3: the actual productivity of that labor is not necessarily the highest. 768 00:38:05,920 --> 00:38:08,080 Speaker 3: And so that's kind of the question mark. Right, Maybe 769 00:38:08,080 --> 00:38:11,240 Speaker 3: you can have industrial investment, maybe you can have industrial policy, 770 00:38:11,320 --> 00:38:14,120 Speaker 3: but if you don't make basic investments in your population, 771 00:38:14,480 --> 00:38:16,040 Speaker 3: and this is I think the question for a country 772 00:38:16,080 --> 00:38:18,320 Speaker 3: like Indonesia, you're not really going to be able to 773 00:38:18,320 --> 00:38:19,399 Speaker 3: make it higher up the value chain. 774 00:38:19,480 --> 00:38:22,040 Speaker 4: And with Indonesia you have kind of the looming sort 775 00:38:22,040 --> 00:38:25,400 Speaker 4: of ecological question because yeah, climate wise, you're going to 776 00:38:25,440 --> 00:38:28,360 Speaker 4: have a huge number of days with lethal heat in 777 00:38:28,360 --> 00:38:31,080 Speaker 4: Indonesia by you know, twenty fifty, then later on twenty 778 00:38:31,080 --> 00:38:35,480 Speaker 4: one hundred, and that will be a destabilizing factor. Even 779 00:38:35,600 --> 00:38:38,320 Speaker 4: if you know, Jacobi is like doing you know, interesting 780 00:38:38,400 --> 00:38:39,480 Speaker 4: industrial policy things. 781 00:38:39,560 --> 00:38:43,360 Speaker 2: Yeah, just to try to end this on a happier note, 782 00:38:43,480 --> 00:38:45,279 Speaker 2: can you give us an example of a place where 783 00:38:45,320 --> 00:38:48,600 Speaker 2: you think, you know, the development policy is probably like 784 00:38:48,920 --> 00:38:53,319 Speaker 2: close to an ideal or a positive example of where 785 00:38:53,320 --> 00:38:54,120 Speaker 2: we want to get to. 786 00:38:54,400 --> 00:38:56,719 Speaker 4: I think, yeah, I mean, Vietnam outside of China is 787 00:38:56,760 --> 00:39:00,239 Speaker 4: probably the single most encouraging story. You know, before before 788 00:39:00,280 --> 00:39:04,239 Speaker 4: they industrialized, really you've had very serious sort of investment 789 00:39:04,360 --> 00:39:08,680 Speaker 4: in health and education outcomes kind of on a mass basis. 790 00:39:09,040 --> 00:39:11,759 Speaker 4: And then when they did move into industry, and you 791 00:39:11,800 --> 00:39:14,000 Speaker 4: see this as early as like the late nineties or 792 00:39:14,000 --> 00:39:17,600 Speaker 4: two thousands, who's always in very high value added stuff. 793 00:39:17,920 --> 00:39:20,560 Speaker 4: Their industrial X sports were always kind of had a 794 00:39:20,640 --> 00:39:25,440 Speaker 4: very large share of high tech electronics stuff. And so Vietnam, 795 00:39:25,480 --> 00:39:28,120 Speaker 4: even though per capita GDP remains quite low in terms 796 00:39:28,160 --> 00:39:30,680 Speaker 4: of life expectancy, does very very well. And if you 797 00:39:30,719 --> 00:39:33,239 Speaker 4: go to like Vietnam, you know, we're big believers that 798 00:39:33,280 --> 00:39:35,320 Speaker 4: if you want to really understand development picture in a country, 799 00:39:35,320 --> 00:39:38,040 Speaker 4: you actually have to go there experience it, you know, 800 00:39:38,080 --> 00:39:41,560 Speaker 4: see what life is actually like. Apart apart from the statistics, 801 00:39:41,840 --> 00:39:45,600 Speaker 4: Vietnam is an extremely peaceful, safe country. Even though per 802 00:39:45,600 --> 00:39:47,960 Speaker 4: capitae GDP remains quite low. Isn't a very good trajector. 803 00:39:47,960 --> 00:39:49,400 Speaker 3: It's just to be a contrariant and to pick a 804 00:39:49,440 --> 00:39:52,000 Speaker 3: different example than David, but also one that's i think 805 00:39:52,040 --> 00:39:54,520 Speaker 3: desperately poor, but in some way shows the power of 806 00:39:54,560 --> 00:39:57,440 Speaker 3: institutions is but Swana. You know, in but Swana, the 807 00:39:57,800 --> 00:40:02,640 Speaker 3: actually functioning, high functioning merit democratic institutions of the state 808 00:40:02,760 --> 00:40:05,719 Speaker 3: and the sort of investment in social development and in 809 00:40:06,200 --> 00:40:09,799 Speaker 3: pretty robust institutional culture I think has given the sort 810 00:40:09,800 --> 00:40:13,160 Speaker 3: of baseline, especially for international investment. And in their problem 811 00:40:13,400 --> 00:40:16,320 Speaker 3: it adds access to capital and finance. It's the ability 812 00:40:16,440 --> 00:40:19,480 Speaker 3: to integrate with global corporations. It's the lack of, for example, 813 00:40:19,520 --> 00:40:23,000 Speaker 3: port access. You know, Vietnam is conveniently situated, it has reports, 814 00:40:23,239 --> 00:40:25,520 Speaker 3: it has a lot of natural endowments that not only 815 00:40:25,520 --> 00:40:27,200 Speaker 3: do a lot of countries in Africa lack, but even 816 00:40:27,239 --> 00:40:30,640 Speaker 3: the really good institutional stories like Botswana or even something 817 00:40:30,680 --> 00:40:33,080 Speaker 3: like Rwanda, they don't really have. And so that's kind 818 00:40:33,120 --> 00:40:35,560 Speaker 3: of the other tragedy here. Even when you get the 819 00:40:35,560 --> 00:40:38,480 Speaker 3: institutional or policy mix right, sometimes you really have burdens 820 00:40:38,520 --> 00:40:41,759 Speaker 3: of geography and sort of deeper structural factors. I mean, 821 00:40:41,760 --> 00:40:42,919 Speaker 3: you're not in the great position either. 822 00:40:43,040 --> 00:40:45,000 Speaker 4: And Botswana, yeah, like a lot of the time you 823 00:40:45,040 --> 00:40:47,640 Speaker 4: have countries that realistically are not going to industrialize. I mean, 824 00:40:47,680 --> 00:40:51,000 Speaker 4: Botswana is landlocked. It has a huge amount of mental 825 00:40:51,080 --> 00:40:54,759 Speaker 4: resources that is basically the entire economy. But that's also 826 00:40:54,800 --> 00:40:57,040 Speaker 4: a core thing is like, if you're going to become 827 00:40:57,120 --> 00:41:00,000 Speaker 4: commodity dependent and a lot of countries are permanently based, 828 00:41:00,719 --> 00:41:02,040 Speaker 4: how can you kind of make the best of that. 829 00:41:02,920 --> 00:41:07,560 Speaker 1: Well, I'm that sort of like I guess moderately, moderately hopeful, 830 00:41:07,800 --> 00:41:11,440 Speaker 1: note that there are some interesting positive cases. Henry and David, 831 00:41:11,520 --> 00:41:13,320 Speaker 1: thank you so much for coming on the podcast, like 832 00:41:13,400 --> 00:41:15,560 Speaker 1: fascinating research and way to think. 833 00:41:15,400 --> 00:41:15,959 Speaker 2: About the world. 834 00:41:16,120 --> 00:41:17,279 Speaker 3: Thank you so much for having us. 835 00:41:30,840 --> 00:41:31,200 Speaker 4: Crazy. 836 00:41:31,239 --> 00:41:34,239 Speaker 1: I thought it was an absolutely fascinating conversation. You know, 837 00:41:34,320 --> 00:41:39,360 Speaker 1: one of the dynamics setting aside, like the growth trajectory trends, 838 00:41:40,000 --> 00:41:42,799 Speaker 1: is this idea of like complexification of the economy as 839 00:41:42,880 --> 00:41:45,279 Speaker 1: its own specific thing. And you know, I always think, 840 00:41:45,360 --> 00:41:47,640 Speaker 1: like you know, in the East Village sometimes I actually 841 00:41:47,680 --> 00:41:49,040 Speaker 1: don't know if it's still there. But at one point 842 00:41:49,080 --> 00:41:51,920 Speaker 1: there was like this Hungarian bookstore, and I was like, 843 00:41:51,960 --> 00:41:55,360 Speaker 1: it's so amazing that like a physical Hungarian bookstore like 844 00:41:55,400 --> 00:41:57,879 Speaker 1: can can exist, but it can in like a rich, 845 00:41:57,960 --> 00:42:01,479 Speaker 1: complex economy like New York City. And this idea that 846 00:42:01,480 --> 00:42:03,680 Speaker 1: that's like a sort of like marker of like development, 847 00:42:03,680 --> 00:42:05,920 Speaker 1: to me, is like a really interesting thing to think 848 00:42:05,960 --> 00:42:07,080 Speaker 1: about with these economies. 849 00:42:07,400 --> 00:42:11,279 Speaker 2: My favorite bookstore emblem of complicated economies in the East 850 00:42:11,320 --> 00:42:15,080 Speaker 2: village is there's a used cookbook store and they only 851 00:42:15,160 --> 00:42:18,880 Speaker 2: sell like vintage and historical cookbooks. 852 00:42:18,920 --> 00:42:21,239 Speaker 1: There's amazing that, like, we can have an economy that 853 00:42:21,320 --> 00:42:24,680 Speaker 1: supports some of the niche things, but beyond that, I mean, 854 00:42:24,719 --> 00:42:28,759 Speaker 1: I did find like that to be like a sobering conversation. Obviously, 855 00:42:28,960 --> 00:42:31,480 Speaker 1: and you know, I always see the charge of like 856 00:42:31,600 --> 00:42:35,160 Speaker 1: line go up, this country is so much richer, et cetera. 857 00:42:35,640 --> 00:42:37,600 Speaker 1: But I do think, like to your point in the 858 00:42:37,680 --> 00:42:39,640 Speaker 1: very beginning, a lot of the is like when you 859 00:42:40,040 --> 00:42:42,440 Speaker 1: sort of like scratch behind the data look a bit, 860 00:42:42,800 --> 00:42:46,440 Speaker 1: or look at how much was simply selling raw commodities 861 00:42:46,560 --> 00:42:49,200 Speaker 1: not high on the value chain to China during this 862 00:42:49,280 --> 00:42:52,160 Speaker 1: like incredible boom, the story looks a bit worse. 863 00:42:52,640 --> 00:42:54,920 Speaker 2: So that's definitely a theme that stood out to me. 864 00:42:55,000 --> 00:42:56,959 Speaker 2: This idea of China. I think, I use the word 865 00:42:56,960 --> 00:42:59,440 Speaker 2: ful crum, but China is a full crew of a 866 00:42:59,480 --> 00:43:02,920 Speaker 2: lot of this economic progress that maybe isn't in an 867 00:43:02,960 --> 00:43:05,719 Speaker 2: ideal form for a lot of economies. And then the 868 00:43:05,760 --> 00:43:08,520 Speaker 2: other thing that really stood out to me was this 869 00:43:08,760 --> 00:43:13,200 Speaker 2: bird's in flight idea that both Henry and David mentioned 870 00:43:14,000 --> 00:43:16,920 Speaker 2: and also this idea that I think historically people have 871 00:43:17,000 --> 00:43:21,040 Speaker 2: always been looking for an economic model to copy, and 872 00:43:21,080 --> 00:43:24,560 Speaker 2: it's like, oh, they see manufacturing works here, so let's 873 00:43:24,600 --> 00:43:28,239 Speaker 2: do manufacturing. Or you know, commodities exports works here, Let's 874 00:43:28,280 --> 00:43:31,880 Speaker 2: do commodities exports the Singapore model. I cannot tell you 875 00:43:31,960 --> 00:43:34,560 Speaker 2: how many countries in the Middle East have tried to 876 00:43:34,600 --> 00:43:38,680 Speaker 2: replicate the Singapore Financial Center model. But like this idea 877 00:43:38,680 --> 00:43:42,560 Speaker 2: that everyone's always looking for an easy sort of copycat solution. 878 00:43:42,880 --> 00:43:45,200 Speaker 1: Yeah, well, you know, the other thing about the birds 879 00:43:45,239 --> 00:43:49,440 Speaker 1: in flight metaphor is that it gives the illusion of 880 00:43:49,480 --> 00:43:52,920 Speaker 1: like physics and science, right, and to their point, like, 881 00:43:53,000 --> 00:43:56,480 Speaker 1: it's not physics, it's choices and it's politics, and there 882 00:43:56,560 --> 00:43:59,359 Speaker 1: is not just like this sort of like natural phenomenon 883 00:43:59,440 --> 00:44:02,319 Speaker 1: where like one hands off to the another, Like it 884 00:44:02,360 --> 00:44:05,719 Speaker 1: may look like that superficially historically, but actually is a 885 00:44:05,800 --> 00:44:09,280 Speaker 1: series of like active choices. And if the political coalition, 886 00:44:09,400 --> 00:44:13,600 Speaker 1: that growth coalition, that social investment coalition, that social investment 887 00:44:13,640 --> 00:44:16,440 Speaker 1: impulse has gone, then what looked like a sort of 888 00:44:16,440 --> 00:44:18,920 Speaker 1: like physical process like is actually not going to show 889 00:44:19,000 --> 00:44:20,200 Speaker 1: up totally. 890 00:44:20,520 --> 00:44:22,920 Speaker 2: I think that's a really interesting point. Shall we leave it. 891 00:44:22,960 --> 00:44:23,839 Speaker 1: Then let's leave it there. 892 00:44:23,880 --> 00:44:27,320 Speaker 2: Okay, this has been another episode of the All Thoughts Podcast. 893 00:44:27,360 --> 00:44:29,960 Speaker 2: I'm Tracy Alloway. You can follow me on Twitter at 894 00:44:30,000 --> 00:44:30,800 Speaker 2: Tracy Alloway. 895 00:44:30,840 --> 00:44:33,440 Speaker 1: And I'm Joe Wisenthal. You can follow me on Twitter 896 00:44:33,520 --> 00:44:37,000 Speaker 1: at The Stalwart. Follow our guests on Twitter Henry Williams 897 00:44:37,000 --> 00:44:41,400 Speaker 1: He's at Humphord and David os He's at David e Ox. 898 00:44:41,520 --> 00:44:45,560 Speaker 1: Follow our producers Carman Rodriguez at Carman Arman and Dash 899 00:44:45,600 --> 00:44:48,799 Speaker 1: Bennett at Dashbock. And check out all of our podcasts 900 00:44:48,800 --> 00:44:53,000 Speaker 1: at Bloomberg under the handle at podcasts and for more 901 00:44:53,040 --> 00:44:56,360 Speaker 1: odd Lags content, go to Bloomberg dot com slash Oddlogs. 902 00:44:56,440 --> 00:44:59,560 Speaker 1: We post transcripts, we blog. We have a newsletter that 903 00:44:59,600 --> 00:45:03,320 Speaker 1: comes out every Friday. Go there sign up. Thanks for listening.