Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast.
Speaker 2: I'm Joe Wisenthal and I'm Tracy Alloway.
Speaker 1: Tracy, I think for like all of our career is
Speaker 1: probably like all of our lives. It feels like there
Speaker 1: has been this story of developing, emerging markets getting better,
Speaker 1: emerging maybe emerging markets becoming rich. Like, you know, just
Speaker 1: this general view that, yeah, you get these hiccups and deglobalization, whatever,
Speaker 1: but the eros are all up in general.
Speaker 2: It's a steady line that kind of goes up over
Speaker 2: the long term.
Speaker 1: What was it like the Victor Schweitz question at a
Speaker 1: recent trivia thing about like what did they call them
Speaker 1: in the sixties In the eighties, it was like underdeveloped
Speaker 1: markets and then emerging and then developing and then emerging,
Speaker 1: And it's like increasing optimism about all these places around
Speaker 1: the world. One day, like capitalism and trade will be everywhere.
Speaker 2: There is definitely this line that, Okay, there might be
Speaker 2: problems and issues, but in general, you know, life expectancy
Speaker 2: is going up. People are wealthier than they were before.
Speaker 2: Maybe people aren't starving as much as they were in
Speaker 2: the Middle Ages. There is this narrative of press progress.
Speaker 1: Yeah, right, progress, less disease things like that, fewer famines
Speaker 1: and stuff, but maybe it's not the case. In the
Speaker 1: last several decades, a lot of people have come out
Speaker 1: of poverty globally, but like a huge chunk of that
Speaker 1: is China specifically, and everyone knows there's sort of been
Speaker 1: this extraordinary boom in China, and then it kind of
Speaker 1: seems like if you look ex China, maybe it's not
Speaker 1: as good.
Speaker 2: I can already tell this is going to be one
Speaker 2: of those really uplifting episodes when we start questioning the
Speaker 2: narrative of economic progress. But I think it does raise
Speaker 2: this interesting question, which is, throughout much of history, there
Speaker 2: has been this one development model, which is, you know,
Speaker 2: usually you have a bunch of workers, you have like
Speaker 2: a labor surplus, maybe they're willing to work for less
Speaker 2: than in more developed countries economically, and so you got
Speaker 2: this big manufacturing boom and then hopefully that leads to
Speaker 2: more education, more resources, and then you transition into some
Speaker 2: sort of services oriented economy. But I think we all
Speaker 2: agree that as we enter this new economic period, is
Speaker 2: that manufacturing model actually going to be viable?
Speaker 3: Right?
Speaker 1: And how many countries can really do that or are
Speaker 1: they going to be stuck of some sort of like
Speaker 1: tourism or cheap commodity exports that don't really move up
Speaker 1: the value chain. And is anyone thinking about alternative growth
Speaker 1: models if you know, these countries can't find a way
Speaker 1: up to do this sort of manufacturing path. Absolutely anyway,
Speaker 1: we're going to be speaking about exactly this. We have
Speaker 1: two guests today. We're going to be speaking with Henry Williams,
Speaker 1: a student at Columbia University and David Och's journalist. They
Speaker 1: have a recent article that came out last year in
Speaker 1: the American Affairs Journal called the Long Slow Death of
Speaker 1: Global Development, and they basically make the case they kind
Speaker 1: of you should be pessimistic about all that stuff and
Speaker 1: that all of these stories about what's working do not
Speaker 1: actually work. Henry and David, thank you so much for
Speaker 1: coming on the podcast.
Speaker 3: Thanks for having us. John Tracy a long time first time.
Speaker 4: Yeah, pleasure to join.
Speaker 1: So why did you write this? I mean it's a
Speaker 1: very long, detailed, like pretty like academic, well cited piece,
Speaker 1: essentially like laying out the case that much of what
Speaker 1: we assume about global progress is not in fact happening.
Speaker 1: So to start, like why endeavor on this What inspired
Speaker 1: you to write this.
Speaker 3: I think the story that you just laid out is
Speaker 3: really dominated the twenty first century so far. It's a
Speaker 3: story that I think people sometimes derisively call the line
Speaker 3: go up story. Basically, when you look at just the
Speaker 3: quantitative measures, it is undoubtable that global poverty has been decreasing,
Speaker 3: that global growth has been pretty strong, and with the
Speaker 3: headwinds of globalization, the entrance of child into the world economy,
Speaker 3: and the demographic push of the last thirty years, there
Speaker 3: were a lot of reasons for optimism. And obviously there
Speaker 3: has been a lot of growth. But what we think
Speaker 3: is that when you dig pass just the quantitative numbers
Speaker 3: on the surface and look at the qualitative and structural
Speaker 3: factors in the world economy, both that which drove the
Speaker 3: growth and rise of China, but also you have to
Speaker 3: look at the next countries on the list. Yeah, there's
Speaker 3: this idea of the birds in flight model. Basically, as
Speaker 3: countries develop, they pass lower value added services down the
Speaker 3: line to the next country. But that's not just an
Speaker 3: automatic process.
Speaker 4: That requires a lot.
Speaker 3: Of economic, political, structural adaptation, and we think there are
Speaker 3: some very deep reasons why that hasn't been happening in
Speaker 3: the rest of the world.
Speaker 2: So one thing I was wondering as I was reading
Speaker 2: this article, how much of this is actually a data story,
Speaker 2: this idea that we tend to look at the line,
Speaker 2: and because the line is an amalgamation of all these
Speaker 2: different countries, it's sort of hiding disparities. And I know
Speaker 2: Joe mentioned in the intro this idea that China has
Speaker 2: actually been the big drive of a lot of economic
Speaker 2: development in the twentieth century. So how much of it
Speaker 2: is about the data and the aggregation going on there?
Speaker 4: Yeah, core core part of our argument is basically that
Speaker 4: you have this kind of statistical compensation going on where
Speaker 4: if you actually look everyone agrees that kind of incomes
Speaker 4: have risen across the world, poverty has decreased. But if
Speaker 4: you look pretty much all of that, depending on the
Speaker 4: threshold that use for poverty, of course, pretty much all
Speaker 4: of that has been in East Asia, basically between fifty
Speaker 4: to seventy five percent basically, So then when you look
Speaker 4: at kind of the world beyond shine, when you look
Speaker 4: at South Asia, the Middle East, Africa, Latin America, you
Speaker 4: get a much more complicated and pessimistic picture, and you
Speaker 4: have to realize that basically China, East Asia are they've
Speaker 4: done well because they've basically they've industrialized. When you look
Speaker 4: beyond that, and this is when you have to move
Speaker 4: beyond statistics to kind of a sort of structural historical approach,
Speaker 4: they have been either deindustrializing and oftentimes deograrinizing as well.
Speaker 3: Yeah, talking about what those numbers really mean in terms
Speaker 3: of global trade, Chinese demand for commodities has been so
Speaker 3: extreme in the sort of commodity supercycle of twenty to
Speaker 3: twenty fifteen and even through the present that it has
Speaker 3: actually exerted a distorting influence on the rest of the
Speaker 3: world's economies. It means that a lot of economies that
Speaker 3: had been partially industrializing, places like Brazil, India, Africa, and
Speaker 3: Latin America, have actually moved more towards commodity exporters, essentially
Speaker 3: moved down the value chain as commodity prices have risen
Speaker 3: and as there's been this huge demand sink in China
Speaker 3: soaking it all up, which means that even though their
Speaker 3: growth has been better and they've been doing better in
Speaker 3: global trade, it also means that they're not necessarily developing
Speaker 3: domestic manufacturing industrial sectors, and even those that did have
Speaker 3: it have been experiencing something of a phenomenon of what
Speaker 3: people will call premature deindustrialization. Basically, the manufacturing share of
Speaker 3: employment and GDP is going down before they've really moved
Speaker 3: up the value chain into higher value added economic activities
Speaker 3: like services.
Speaker 1: I hadn't thought about that dynamic at all, that it's like, Okay,
Speaker 1: here's this sort of this absolute, you know, avalanche of
Speaker 1: money coming out of China the demand for goods. So
Speaker 1: it's like, Okay, maybe it's not the most high value growth,
Speaker 1: but you gotta take it. But then, as you say,
Speaker 1: it has this distortionary effect. What is special though about manufacturing?
Speaker 1: Because we even have this debate in the US right
Speaker 1: where people's like, Okay, we gotta like bring manufacturing back,
Speaker 1: but some people will say, oh no, you're just clinging
Speaker 1: to old, centuries old ideas of what a robust economy
Speaker 1: looks like. This is just nostalgia or something like that.
Speaker 1: What is it about manufacturing specifically that in theory makes
Speaker 1: it the path towards becoming well towards wealth.
Speaker 4: Yeah.
Speaker 3: The econoist Danny Roderick talks about a set of stylized
Speaker 3: facts related to manufacturing specifically, of which by far the
Speaker 3: most important is the idea that exhibits unconditional productivity convergence
Speaker 3: between all countries. Basically, when you start manufacturing, you enter
Speaker 3: a process where long term manufacturing productivity is going to
Speaker 3: converge with the global average and with the rest of
Speaker 3: the world. And so what that means is that manufacturing
Speaker 3: can really increase your national economic productivity.
Speaker 4: But in addition to that.
Speaker 3: It also absorbs a lot of surplus labor and it
Speaker 3: drives a broader process of economic complexification, density and urbanization.
Speaker 3: That means that you get these economic cores that then
Speaker 3: create richer citizens. And this is sort of a classic
Speaker 3: just so story about the American economy. People will talk
Speaker 3: about Ford and the model t that once you have
Speaker 3: sort of well paid industrial workers, they can suddenly become
Speaker 3: the consumers of the services, they have a need for housing,
Speaker 3: they move into cities, and that this drives the process
Speaker 3: of economic growth going forward. So there's something about manufacturing
Speaker 3: as being a path through to more complex forms of
Speaker 3: economic activity. The other thing is that it has more
Speaker 3: to do really with global tradeable goods than just manufacturing specifically.
Speaker 3: There's the idea of things that world trade consists of
Speaker 3: both durable manufactured goods but also high value added services
Speaker 3: like finance, consulting, technology, the sorts of things that the
Speaker 3: US economy is based on today, and actually getting to
Speaker 3: that stage requires participation in competitive global markets and becoming
Speaker 3: genuinely competitive on those markets. And one thing that has
Speaker 3: driven a lot of the sort of booms and busts
Speaker 3: of development in the past has been overly manufacturing focused
Speaker 3: policy that basically uses tariffs and autarchy to try to
Speaker 3: raise the manufacturing share domestically without becoming authentically globally competitive.
Speaker 3: And so what you get are these uncompetitive sort of
Speaker 3: lost industrial sectors, and these are sort of the global
Speaker 3: rust belts all over the world. These places have de
Speaker 3: industrialized because the industry itself was not globally competitive.
Speaker 4: As you have these kind of stylized facts from I mean,
Speaker 4: Roderick Nicholas Caldor before him, and then you feel kind
Speaker 4: of at the sort of empirical historical experience of countries
Speaker 4: that have moved, you know, in one or the other
Speaker 4: from porterage. Basically almost all of them either have had
Speaker 4: a manufacturing share of employment. You know, at a certain level,
Speaker 4: you know, people say eighteen to twenty sometimes of high
Speaker 4: or sometimes a bit lower for an extended period of time,
Speaker 4: and then they've kind of transitioned from that, usually into
Speaker 4: some sort of high wage service economy, or you know,
Speaker 4: more rarely they've been kind of like Norway or Saudi
Speaker 4: Arabia or something like that, where they've been kind of
Speaker 4: blessed by a huge excess of natural resources. Of course,
Speaker 4: that model, you know, it's a lot of failures, you know,
Speaker 4: in Gola, Iraq, et cetera, and it's kind of a
Speaker 4: much riskier bed.
Speaker 2: Well, I was going to ask, and again Joe kind
Speaker 2: of alluded to this idea that you know, we do
Speaker 2: want to bring manufacturing back to the US, or at
Speaker 2: least that's a line that gets trotted out quite a lot.
Speaker 2: But at the same time, you know, manufacturing in some respects,
Speaker 2: maybe people view it as old fashions. So why couldn't
Speaker 2: a developing country or an emerging economy, why couldn't they
Speaker 2: just leap frog from manufacturing into more of a service's
Speaker 2: oriented economy. And I know some places, I guess India
Speaker 2: springs to mind have kind.
Speaker 4: Of India Philippines, I mean Rwanda.
Speaker 3: Right right, But you know, I think there's two sides
Speaker 3: of that story that are really important to address. You know.
Speaker 3: One is this idea that you just brought up that Okay,
Speaker 3: we want to bring the manufacturing share back in the US,
Speaker 3: that we want to start manufacturing here again. But the
Speaker 3: basic model and you actually saw just the other day
Speaker 3: Donald Trump saying that as president he would essentially start
Speaker 3: a global trade war and require an end to trade
Speaker 3: with China to do that for years, Well, I mean
Speaker 3: a massive escalation a world war trade, right, and this
Speaker 3: would actually be the absolute worst thing for the developing world.
Speaker 3: You know, there's a real question of are we simply
Speaker 3: going to use regressive tariffs to try to raise the
Speaker 3: amount of manufacturing that happens in the US if it's
Speaker 3: not globally competitive, if it's not actually cutting edge, and
Speaker 3: if what that does in general is lower global productivity
Speaker 3: and actually lower growth overall.
Speaker 4: You know, if you look at.
Speaker 3: Places in Africa, officials will say we don't want less globalization,
Speaker 3: we want more. We need more globalization. The question is
Speaker 3: on what terms is that globalization can happen. But the
Speaker 3: other side of the story, which is to say, can
Speaker 3: you just skip to services. Yeah, and this has been
Speaker 3: I think one of the possible narratives in the twenty
Speaker 3: first century that India is going to become an IT
Speaker 3: power instead.
Speaker 4: But the reality is that.
Speaker 3: Since two thousand, ninety percent of the growth in service
Speaker 3: jobs in the US have been sorry in India, have
Speaker 3: been in the informal sector, not in IT or high
Speaker 3: value added services. But what that means is basically people
Speaker 3: working as doing odd jobs.
Speaker 4: So basically that like when you look at kind of
Speaker 4: the reality of service work in these poor economies India, Rwanda,
Speaker 4: et cetera, most of it is not the sort of
Speaker 4: high value added stuff like it. Most of it is
Speaker 4: stuff that you see kind of ubiquitous if you go
Speaker 4: to like a poor world city, so you know, random jobbers,
Speaker 4: you know, domestic workers, fruit peddlers, stuff like that. But
Speaker 4: that's kind of the reality of you know, service work
Speaker 4: in the poor world.
Speaker 3: It's low value added, it doesn't catalyze a process of
Speaker 3: economic growth and development. And just to get that fact right,
Speaker 3: it's ninety percent of jobs created in India since liberalization
Speaker 3: in nineteen ninety one have been in the informal sector
Speaker 3: rather than in IT and in general those are also
Speaker 3: not internationally traded and don't have to be nationally competitive,
Speaker 3: meaning that they're trapped in a low productivity space.
Speaker 1: It's funny you mentioned I hadn't thought about it in years,
Speaker 1: these like global rust belts. Like when I was a kid,
Speaker 1: I lived in Malaysia for a year and there was
Speaker 1: like a local car company, the Proton Saga was like
Speaker 1: this manufacturer in Malaysian car and I don't think I've
Speaker 1: ever heard of one being sold internationally. And now I'm
Speaker 1: like really curious. I'm imagining their fate.
Speaker 4: Yeah, yeah, particularly No, that's the thing. That's the thing.
Speaker 4: It's like, when we think of the industrialization, we tend
Speaker 4: to think of basically an American or European phenomenon, you know,
Speaker 4: the North of France, the American Midwest, et cetera. But really,
Speaker 4: I mean, outside of East Asia, you had a lot
Speaker 4: of economies, I mean Brazil, Iran, India to a lestric extent,
Speaker 4: that had a quite high degree of industrialization. And since
Speaker 4: the nineteen seventies nineteen eighties, you know, manufacturing has fallen
Speaker 4: as a share of employment, services have risen, Agriculture has
Speaker 4: also fallen. You've had this kind of glolobal premature, you know,
Speaker 4: global denestrialization, at a lower rate of manufacturing employment and
Speaker 4: at a lower rate of per caba GDP than you're
Speaker 4: kind of quote unquote supposed to have.
Speaker 1: You mentioned the sort of like what was the birds?
Speaker 1: Why birds and flight metaphor, so, why isn't the process happening?
Speaker 1: It's like everyone's talking about, Okay, labor costs and China
Speaker 1: have definitely gone up over the years, and so the
Speaker 1: labor arbitrage element of China, you would assume that there
Speaker 1: are then other markets where they're less productive but significantly
Speaker 1: cheaper labor. Why isn't that model extending out? Like where
Speaker 1: is it breaking down?
Speaker 4: Yeah? Absolutely?
Speaker 3: I mean, as we said before, and this is one
Speaker 3: thing about the quantitative measures that can really mislead you.
Speaker 3: It's not an automatic process, you know. I think something
Speaker 3: about that story makes its theme natural automatic part of
Speaker 3: the world. But if you go back to nineteen eighty three,
Speaker 3: there's a fascinating World Bank report about China, basically post
Speaker 3: Mao era China, and you would think there would not
Speaker 3: be a lot of reason for optimism after the Great Famine,
Speaker 3: after the Cultural Revolution, extraordinary levels of political dysfunction. But
Speaker 3: one of the interesting things is that China actually had
Speaker 3: surprisingly good social development metrics. It had surprisingly good primary education,
Speaker 3: which they invested in heavily. It had surprisingly good health
Speaker 3: outcomes and life expectancy. And so even though it was
Speaker 3: pretty much exactly as poor as India at the time,
Speaker 3: it actually had far better social development metrics, and in
Speaker 3: certain ways it's been revealed that it had more functional institutions.
Speaker 3: So in the time since then, obviously China has exploded,
Speaker 3: in India has not, even though they were starting from
Speaker 3: the same baseline in the early eighties. One of the
Speaker 3: interesting things about this it kind of shows that there
Speaker 3: are these real pre market structural questions about human capital.
Speaker 3: Basically how educated are people, how literate are they, But
Speaker 3: also these skills that we don't think about. You know,
Speaker 3: people sometimes say, well, there's no such thing as unskilled labor,
Speaker 3: and there is something about manufacturing where there's a lot
Speaker 3: of tacit skills that you pick up. It's not necessarily
Speaker 3: that you have a formal education. But for example, i
Speaker 3: mean since two thousand and eight, this is just in
Speaker 3: the financial times, Apple has trained twenty three million workers
Speaker 3: at their facilities and plants. You know, those are people
Speaker 3: with skills and it forms what sometimes people call an
Speaker 3: industrial ecology. It's an entire universe of people with skills,
Speaker 3: of firms with specialized roles, and that altogether allows you
Speaker 3: to take on higher value added products. But if you
Speaker 3: look at the countries that are sort of next in
Speaker 3: line today, Latin America, India, Brazil, they don't have very
Speaker 3: good social development metrics. They're still really lacking when it
Speaker 3: comes to primary education, hygiene, health. Places like India have
Speaker 3: invested huge amounts in tertiary education in the its in colleges,
Speaker 3: but not in primary education, which is still lacking and
Speaker 3: really regionally differential. So those kinds of things mean that
Speaker 3: some of the basic human and social prerequisites, as well
Speaker 3: as the institutional ones and and corruption really prevent either
Speaker 3: good policy making or simply having the sort of human
Speaker 3: capital necessary to do manufacturing it in a meaningful way.
Speaker 4: And so the one place where you really have seen
Speaker 4: a sort of strong, you know, flying geese dynamic is
Speaker 4: definitely Southeast Asia. I mean, you know, people call Vietnam,
Speaker 4: you know, China's China, and Vietnam kind of has followed
Speaker 4: a sort of Chinese model. You see this in a
Speaker 4: lot of post comunist states. Basically they get good social
Speaker 4: you know, good kind of health outcomes, good education outcomes
Speaker 4: before entering the market, and so they're kind of like
Speaker 4: very well suited. Obviously they have you know, people who
Speaker 4: are quite healthy, quite educated, but also very poor. So
Speaker 4: when they enter the global economy, they are kind of
Speaker 4: the ideal factory workers. But then, yeah, you look at
Speaker 4: India a lot of stuff, so in Africa you just
Speaker 4: don't have that dynamic.
Speaker 2: Yeah, So this kind of leads into something else that
Speaker 2: I wanted to ask you, which is, if you think
Speaker 2: of China as a sort of folkrum for a lot
Speaker 2: of global development or global progress, and if you think
Speaker 2: of China as sort of driving this commodities super cycle
Speaker 2: and maybe driving some of the commodities demand in other countries,
Speaker 2: what happens as Chinese growth presumably starts to slow.
Speaker 4: So basically, yeah, you have like from roughly nineteen eighty
Speaker 4: four to two thousand and seven, you have this incredible
Speaker 4: period of Chinese growth, and then you have this, Yeah,
Speaker 4: it kind of as even though kind of a lot
Speaker 4: of poor countries in Latin America, South Asia, et cetera,
Speaker 4: even as they're de industrializing, even as kind of their
Speaker 4: own destrial economies are beginning to Faulter, they're kind of
Speaker 4: boosted by yes, strong Chinese demand for commodities, which kind
Speaker 4: of does sort of lead to this process of decomplexification.
Speaker 4: I mean, you see that in Brazil, a lot of
Speaker 4: Latin America, a lot of a lot of countries kind
Speaker 4: of at that level of income. But then around you know,
Speaker 4: kind of the late two thousands, Chinese growth starts to
Speaker 4: taper off a little bit. And then after twenty fourteen
Speaker 4: is where you have like a real, real decline. And
Speaker 4: when you see that, you kind of see, like you know,
Speaker 4: the commodity supercycle turns and you see that's kind of
Speaker 4: the the negative side. It's sort of boom bust dynamic,
Speaker 4: where twenty fourteen twenty fifteen you see huge crises in
Speaker 4: all the sort of commodity dependent economies. I mean, Nigeria
Speaker 4: and Iraq they were totally dependent on oil exports. Oil
Speaker 4: prices collapsed. They have these huge, like really destructive insurgencies. Brazil, Venezuela,
Speaker 4: they have these, you know, huge periods of political crisis,
Speaker 4: and so you have this kind of like you know,
Speaker 4: when you're totally dependent on one sort of engine of
Speaker 4: global growth, you know, through the demand for commodities. What
Speaker 4: you risk is that when inevitably that growth kind of
Speaker 4: starts to taper off, you have you know, everything kind
Speaker 4: of falls apart right right right.
Speaker 3: And you know, in November of last year, the World
Speaker 3: Bank actually put out a report basically talking about the
Speaker 3: crisis facing development, and they were thinking also about the
Speaker 3: wake of the coronavirus crisis and the coronavirus recession, but
Speaker 3: also something that people have called a poly crisis, a
Speaker 3: sort of multi sided global crisis where different issues global health, climate, chain,
Speaker 3: climactic shifts and demographic shifts feed into each other and
Speaker 3: accelerate each other, and all of those would certainly make
Speaker 3: a more and more pessimistic case, particularly if you see
Speaker 3: a slowdown and increasing sliding in Chinese growth or a
Speaker 3: Chinese economic lost decade like we saw in Japan in
Speaker 3: the nineties.
Speaker 1: Well, you know, the other big thing that's happening right
Speaker 1: now is rich countries. But the US in particular is
Speaker 1: in a major hiking cycle and trying to fight inflation.
Speaker 1: And one of the things that and again I sort
Speaker 1: of keep going back to some of the things that
Speaker 1: Victor Schwetz talked about, but he is like very critical
Speaker 1: of this sort of like vulgar legacy, yes, and what
Speaker 1: it did to the entire world. You know, there's sort
Speaker 1: of like a world of debt, as he said, and
Speaker 1: all like it's sort of like the original sin is
Speaker 1: like the vulgar shock on what it did. And so
Speaker 1: in the like broader story of em development. From your perspective,
Speaker 1: how big of a deal historically is that that since
Speaker 1: we're going to trying to understand analogies that vulgar.
Speaker 4: Preio, No, that's it's the core core thing is that
Speaker 4: you know, we kind of offer something with a periodization
Speaker 4: of growth in kind of the poor world where from
Speaker 4: you know, roughly nineteen fifty ninety eight, you have this
Speaker 4: kind of golden age where a lot of countries that
Speaker 4: you know, you wouldn't think of today as powerhouse as
Speaker 4: a growth success stories. You know, places like the Ivory
Speaker 4: Coast were growing at a huge, huge rate, the every coast.
Speaker 4: Actually they called it the Ivorian Miracle. It had some
Speaker 4: most depressive growth.
Speaker 3: You know, And at a White House speech in nineteen
Speaker 3: sixty seven, LBG actually said to those Cassandras who question
Speaker 3: global development, I say, look at the Ivory Coast, which
Speaker 3: today has I think a smaller economy than it is.
Speaker 4: Right, actually the every coast yeah, median income is lower
Speaker 4: today than it was when the World Bank started recording income.
Speaker 4: But then basically, like nineteen eighty, vulgar is a key,
Speaker 4: key part of it. The commodity supercycle turns, you know,
Speaker 4: commodity prices fall quite precipitously and that means huge, huge
Speaker 4: crisis across the developing world. It leads to this kind
Speaker 4: of cycle of debt crises. And then the nineteen eighties
Speaker 4: you really have to understand, you know, in the US
Speaker 4: Europe it kind of has this sort of cultural legacy
Speaker 4: of like strong economic growth, but the nineteen eighties and
Speaker 4: then kind of bleeding into the nineteen nineties was this
Speaker 4: huge period of you know, the sort of mass stragedy
Speaker 4: where you have economic collapse in Latin America, Africa, South Asia,
Speaker 4: Middle East, and then that sort of leads to social
Speaker 4: and political crisis and you have these civil wars, huge
Speaker 4: I mean huge bloodshed. And you know, people don't really
Speaker 4: think of these sort of eighties nineties period as a
Speaker 4: sort of mass you know, economic and then social political tragedy,
Speaker 4: but it really was.
Speaker 3: And it's worth just saying that monetary policy affects these
Speaker 3: countries everywhere.
Speaker 4: In every way.
Speaker 3: It weakens global demand and demand from the developed world,
Speaker 3: but it also means that their debt servicing and costs
Speaker 3: are higher. It means that it's a lot harder for
Speaker 3: them to get new debt issued. It means that there's
Speaker 3: potentially greater financial instability. It also means and from their perspective,
Speaker 3: this is one of the really big problems that when
Speaker 3: it comes to the global commodity supercycle and global commodity
Speaker 3: prices that they might reverse and even going into the nineties,
Speaker 3: prior to China's growth really taking off, globalization, the first
Speaker 3: waves of globalization actually brought agricultural prices down all over
Speaker 3: the world, and a lot of the early anti globalization
Speaker 3: movement came from farmers in Latin America and the poor
Speaker 3: world who were really brutally affected by the liberalization of
Speaker 3: prices and the sort of first waves of globalization, especially
Speaker 3: in agriculture.
Speaker 1: I know it's not the point, but it's kind of funny,
Speaker 1: like that you put out on in the article that
Speaker 1: Cassandra is right, and so it's funny. It feels like
Speaker 1: you should never criticize and call your mood as Cassandras.
Speaker 1: You're telling them that they're going to be the ones who.
Speaker 2: Have right, Cassandra will always eventually be Actually, just on
Speaker 2: that note, I mean, one of the themes that we
Speaker 2: talk a lot about now and others talk a lot
Speaker 2: about now is this idea of a multipolar world. And
Speaker 2: you know, speaking of monetary policy, yes, the rest of
Speaker 2: the world is deeply tied to the fate of US
Speaker 2: policy vis the dollar and things like that. But if
Speaker 2: we are moving towards more of a fractured globe both
Speaker 2: financial system and you know, that's a big if, and
Speaker 2: I realize there's a massive debate over it. But if,
Speaker 2: for instance, there's more room for China or maybe Russia
Speaker 2: to develop this new maybe bricks contingent, what does that
Speaker 2: mean for global development? Is that a bigger opportunity or
Speaker 2: are we just sort of reviving the same problems.
Speaker 3: Well, you know, I want to be very careful that
Speaker 3: not necessarily wading into the entire debate, but talking about
Speaker 3: the present, if you look at the developing world, they
Speaker 3: say decoupling.
Speaker 4: What decoupling?
Speaker 3: You know, you see a lot of this in Latin
Speaker 3: America and you see it as well with their position
Speaker 3: on the war in Ukraine. A lot of these countries say, listen,
Speaker 3: what matters to us is still development, and what we
Speaker 3: need for development is a robust global economy, and is
Speaker 3: the structure of global trade that we built in the nineties.
Speaker 3: You know, obviously they'd like globalization on different terms, but
Speaker 3: they definitely don't want a world of autarchic trade blocks.
Speaker 3: And this is one thing that the US I think
Speaker 3: threatens to do at this point in time, which is,
Speaker 3: you know, you see it in the things that Trump
Speaker 3: is saying right now that there is a sort of
Speaker 3: vision of an autarcic, closed American economy of trade blocks.
Speaker 3: That's not really good for anyone, but it certainly isn't
Speaker 3: good for these developing world countries.
Speaker 4: You know.
Speaker 3: The other side of it with respect to a new
Speaker 3: global system, obviously, there was a lot of hot air
Speaker 3: about Chinese investment in Africa and the developing world in
Speaker 3: the last ten years, the built in Road initiative and
Speaker 3: all of the infrastructure development. But one of the big
Speaker 3: question marks here one is how much of that investment
Speaker 3: actually failed. I think that trapped to homacy is a
Speaker 3: really fawed framework because the reality is nobody wants ports
Speaker 3: and bridges in economies that are broken and that aren't
Speaker 3: being used. You don't want to port if there's not
Speaker 3: trade going through it. You would rather that they pay
Speaker 3: off their debts. You don't necessarily want the infrastructure in
Speaker 3: countries that can actually utilize it well. But one thing
Speaker 3: about Builton Road, not only has it led to a
Speaker 3: cutoff in Chinese investment, but we're not seeing investment from
Speaker 3: certainly not from states in the rich world. And this
Speaker 3: is I think one of the real crises right now
Speaker 3: with respect to climate change. You know, all of these
Speaker 3: developing countries face a real paradox, which is that as
Speaker 3: part of industrializing you need electricity and energy. And the
Speaker 3: story behind that has been coal. Coal and oil and
Speaker 3: to some extent natural gas have driven the industrialization of
Speaker 3: the world. When you go back to the first industrialized
Speaker 3: places on Earth in the Rare Valley in Britain, in
Speaker 3: parts of Pennsylvania, they're the places where the coal fields were.
Speaker 4: Right.
Speaker 3: The story is, though, you know, India is on the
Speaker 3: front lines of climate change. So every incremental amount more
Speaker 3: coal it burns in order to industrialize it may suffer
Speaker 3: back in the form of worse floods and droughts and
Speaker 3: extreme heat in the future. So what they need is
Speaker 3: a development path that does involve a kind of leap
Speaker 3: frogging over fossil fuels. And what that requires is infrastructure
Speaker 3: of global finance that simply hasn't been there. You know,
Speaker 3: the rich world really hasn't even met its state level
Speaker 3: commitments of around one hundred billion dollars and they're saying, well,
Speaker 3: private finance will step in and do it. But what
Speaker 3: that actually requires is this de risking process where you
Speaker 3: need developing world countries to essentially take on the risks
Speaker 3: for global investors because they say, no, no, it's too
Speaker 3: risky for us right now. You essentially have to be
Speaker 3: the ones holding the bag if you want our money
Speaker 3: in the first place, which means that these countries face
Speaker 3: really a sort of devil's bargain to get the money
Speaker 3: that they need in order to build green energy in
Speaker 3: the first place. And what I think you're seeing the
Speaker 3: status quo is places like the Congo, loosening restrictions on
Speaker 3: coal mining and sort of international agreements that have kept
Speaker 3: coal and oil in the ground are starting to be
Speaker 3: torn up when energy prices go up, and unless there's
Speaker 3: a real answer to that from the international community and
Speaker 3: an answer to obviously the failures of Belton Road in
Speaker 3: the last ten years, but a real program of state
Speaker 3: level investment, you know, you really won't see the money
Speaker 3: you need for green development and leapfrogging.
Speaker 1: Can I ask a sort of Devil's advocate question, because,
Speaker 1: as you point out, like the last thing that a
Speaker 1: lot of these poor economies need is for the rich
Speaker 1: economies to go into autarchy mode. But we just spent
Speaker 1: the first twenty minutes of this conversation talking about how
Speaker 1: this status quo wasn't working or wasn't actually contributing to
Speaker 1: a sort of steady wealth advance, So like, is there
Speaker 1: a different model? I mean, and it's not just the
Speaker 1: poorer countries. I mean Europe is complaining too about our
Speaker 1: trade policies here, particularly with the Inflation Reduction Act. But like,
Speaker 1: why necessarily fear this sort of inward turn if the
Speaker 1: sort of outward turn was not actually delivering on growing
Speaker 1: wealth for so much as the world, And could there
Speaker 1: be a different path?
Speaker 3: Yeah, I mean, I think there are different paths in
Speaker 3: terms of policy, But the hard parts are politics, you know,
Speaker 3: domestic political economy and international geopolitics. And what that means
Speaker 3: is that rebalancing domestically in China, for example, rebalancing to
Speaker 3: a larger household share of income, more domestic consumption, potentially
Speaker 3: a more balanced form of growth, or on the other hand,
Speaker 3: more balanced infrastructure investment in places like India where it's
Speaker 3: been heavily driven by these very top heavy firms that
Speaker 3: have bad construction practices, have cronyistic deals.
Speaker 4: With the state.
Speaker 3: Corruption, these are political problems. They're political problems in the
Speaker 3: US too, by the way. I mean, you talk about
Speaker 3: this as a developed country, but it's very difficult to
Speaker 3: build new housing or transit or infrastructure. And our infrastructure
Speaker 3: is certainly not first rate or cutting hedges in any sense.
Speaker 3: So the technology is there, I mean, we have cutting
Speaker 3: edge infrastructure, we have you know, renewable energy, but getting
Speaker 3: the financing for it and creating political deals that allow
Speaker 3: you to build it domestically in a way that doesn't
Speaker 3: end up croneistic or inefficient.
Speaker 4: That's a lot of the hard part.
Speaker 3: The other thing is, you know, in terms of the
Speaker 3: last twenty thirty years not working the answer. We tried
Speaker 3: a different answer before that, and there was an era
Speaker 3: of modernization where there were a lot of tariffs, and
Speaker 3: there was a lot of domestic infant industry protection. You
Speaker 3: talked about Malaysian car companies, you know, that really was
Speaker 3: its own era. The problem there is until you have
Speaker 3: strong institutions that can actually practice export discipline, as in
Speaker 3: your companies are actually competitive on the world market, all
Speaker 3: that you get is cronyism and domestic inefficiency. You know,
Speaker 3: there's a sort of story about this that South Korea,
Speaker 3: it's not that it produces automobiles, it produces Hyundai and Samsung.
Speaker 3: You know, it has brands that have that are high
Speaker 3: on could value chain cultural exports brands.
Speaker 4: I mean, it came up right.
Speaker 3: There's no solution other than to build a competitive and
Speaker 3: robust economy that's competitive in world markets. I mean there's
Speaker 3: sort of no shortcuts. That's the hard part, and there
Speaker 3: are a lot of political bearriers to that. And there's
Speaker 3: also certainly too little state level investment, both in rich
Speaker 3: countries but also between countries in general.
Speaker 2: So just on that note, this might be a slightly
Speaker 2: unfair question, but I completely agree that politics is the
Speaker 2: constraint here and the barrier here, and we see that,
Speaker 2: for instance, in China, quite a lot there is a
Speaker 2: recognition within China that they should be aiming for a
Speaker 2: more balanced economy. But then what tends to happen is
Speaker 2: that when growth slows to a sort of troublesome level, politically,
Speaker 2: they start to roll back some of the rebalancing act,
Speaker 2: and you know, they open the flood gates of credit.
Speaker 2: Everything goes back into housing and unproductive sectors of the economy.
Speaker 4: So how do you.
Speaker 2: Actually get past those political barriers and constraints, right?
Speaker 4: I mean when you look historically countries that have successfully
Speaker 4: done it, I mean China, South Korea, Japan are three
Speaker 4: of the most famous. You need sort of a hegemonic
Speaker 4: state of sort of you know, elite reformers basically, and
Speaker 4: a lot of the time when you have in I
Speaker 4: mean some soun Africa, South Asia is instead a sort
Speaker 4: of hegemony of a sort of a rentier class that
Speaker 4: have no real sort of developmental interest.
Speaker 1: Yeah, well, I was gonna say, I mean, it kind
Speaker 1: of feels like that we're in like Klein pedest trade
Speaker 1: wars are class wars territory here where I mean the
Speaker 1: people saying like, no, don't roll back globalization, don't do
Speaker 1: autarchy are presumably that slice of the elite, the rentier
Speaker 1: class within these poor countries that have done and probably
Speaker 1: many of them have accumulated extraordinary wealth even while their
Speaker 1: economies have stagnated. But again, like I mean, Devil's advocate,
Speaker 1: could it be that if you sort of like break
Speaker 1: that globalization model, then that, you know, becomes a forcing
Speaker 1: mechanism for domestic political.
Speaker 3: Change, right right, Well, it's you know, I think I
Speaker 3: think clin Pats, I think they'd probably be among the
Speaker 3: first to say they know it's difficult, that struggling with it.
Speaker 3: It isn't certainly true though, that domestic and global imbalances
Speaker 3: are related, and that domestic inequality which has also been
Speaker 3: the condition of growth in the last thirty forty years, Right,
Speaker 3: It's been huge amounts of domestic inequality and relatively weak
Speaker 3: investment in social programs. I mean, a lot of the
Speaker 3: improvements in health outcomes at the bottom end have been
Speaker 3: from international aid and charity in the worst off parts
Speaker 3: of the world, not from strong state led social development programs.
Speaker 3: But I think the other side of this is, with
Speaker 3: respect to how difficult it is to do this rebalancing,
Speaker 3: that you really do need a sort of developmental coalition.
Speaker 3: You need one that sort of recognized the interests and
Speaker 3: you talked to you know, there's different interests, different groups
Speaker 3: are going to have necessarily different interests internally politically.
Speaker 4: Yeah, and you know, like a core question for us
Speaker 4: is how do you strengthen the state in very poor
Speaker 4: countries because the reality of the last few decades is
Speaker 4: that a lot of countries that kind of used to
Speaker 4: have functional regimes, even if kind of corrupt. You know,
Speaker 4: a lot of issues that used to have kind of
Speaker 4: functional governments no longer have that. I mean, Haiti, a
Speaker 4: lot of countries in the Sahel and Africa. You know,
Speaker 4: it is a core thing is like you cannot do
Speaker 4: any of this if the state does not have you know,
Speaker 4: mono and violent stuff like that.
Speaker 3: Yeah, and there has been this decline in decomplexification as
Speaker 3: well that we talked about that I think is one
Speaker 3: of the problems in the more sophisticated institutions. And then
Speaker 3: the last thing that I would say is that this
Speaker 3: idea that we can just crash out of the current system.
Speaker 3: We did try this in the nineteen twenties and thirties,
Speaker 3: and it was the Great Depression. The Great Depression was
Speaker 3: very much linked to a breakdown of the international monetary order,
Speaker 3: as people like Perry Merling have talked about, and a
Speaker 3: breakdown of global trade. So but it was also driven
Speaker 3: by pretty robust and dynamic political coalitionis in rising powers
Speaker 3: all over the world, including rising fascist powers, that had
Speaker 3: an idea which was that we're going to crash out
Speaker 3: of the global system and build something different. So I
Speaker 3: think it is really a cautionary tale to say, well,
Speaker 3: we can merely go it alone, whereas what I think
Speaker 3: the hope is is a new type of global order
Speaker 3: that we participate in collectively.
Speaker 2: So the name of your article was the long slow
Speaker 2: death of global development. And of course when we think
Speaker 2: and talk about global development, there is a huge sort
Speaker 2: of industry around development or you know, academia slash whole
Speaker 2: collection of global institutions, you know, places like the World Bank,
Speaker 2: the International Monetary Fund, things like that. To what extent
Speaker 2: do you think that ecosystem is grasping the crux of
Speaker 2: this problem and adapting to it.
Speaker 4: I mean, I think basically the irony is that they're
Speaker 4: still very powerful. If you look at very poor countries,
Speaker 4: like a lot of government functions are basically exported to them,
Speaker 4: to the aid industry to people like that. And yet
Speaker 4: poor countries today are just you know, even though their
Speaker 4: incomes tend to be higher, they are structurally in a
Speaker 4: worse position than they were a few decades ago. They
Speaker 4: are in a worse position for a sort of industrial
Speaker 4: take off, Like they are much worse position to eventually
Speaker 4: become you know, wealthy or even kind of middle income whatever.
Speaker 4: And so yeah, I think that they kind of and
Speaker 4: sometimes they'll admit this themselves, that they don't really have
Speaker 4: an answer, that they're kind of grasping at straws. You know,
Speaker 4: there have been real improvements i mean in health outcomes,
Speaker 4: in educational outcomes, and that's very encouraging because that does
Speaker 4: kind of set the stage for like, you know, long term,
Speaker 4: long term growth.
Speaker 3: Yeah, and some of the good trends have been I
Speaker 3: think the end to a certain post two thousand and
Speaker 3: eight Ryan Hardrokoff obsession with the debt level, this sort
Speaker 3: of most austerity focused initiatives of the last ten to
Speaker 3: twenty years. I think a lot of that has died,
Speaker 3: which is good. The hard part is, yeah, politics, you know,
Speaker 3: even when development scholars I think grasp this stuff, there's
Speaker 3: not a ton that can be done from just the
Speaker 3: UN or development agencies, and you need political forcing functions
Speaker 3: internal to the domestic politics of the rich world, one
Speaker 3: of which will inevitably be migration and global refugee flows.
Speaker 1: Can we talk a little bit about commodity exporters that
Speaker 1: aren't doing completely terribly and you know, I'm thinking of
Speaker 1: like Indonesia. You know, I don't think it's like having
Speaker 1: an incredible boom, but I also don't get the impression
Speaker 1: it's like massively backsliding. They seem to be doing interesting
Speaker 1: things policy wise in terms of like, oh, if you
Speaker 1: want to mine our nickel, you have to refine it
Speaker 1: domestically so that our domestic you know that we sort
Speaker 1: of have a knowledge transfer move up the value chain. Chile,
Speaker 1: I think similar stories like that, Like Okay, maybe like
Speaker 1: not as rich as maybe some of hope twenty years ago,
Speaker 1: but like it seems to have made some progress. It
Speaker 1: seems like there are parts of the story that are
Speaker 1: not all bad, or maybe countries figuring out a way
Speaker 1: to move up the value chain from the commodity side.
Speaker 4: Indonesia and like, yeah, a lot of Southeast Asia, Indonesia
Speaker 4: is definitely kind of globally outside of China. The most
Speaker 4: positive picture what Indonesia is doing now. I mean they're
Speaker 4: taking a very conscious sort of industrial policy, and you know,
Speaker 4: Indonesia in terms of demographics is quite well situation for
Speaker 4: quite significant economic growth and not just kind of the
Speaker 4: empty growth that's sort of a lot of a lot
Speaker 4: of commodity exporters have, but kind of a real dura
Speaker 4: higher quality. Yeah.
Speaker 3: Yeah, And I think you got the idea exactly, which
Speaker 3: is that you need reinvestment. You need to capture that surplus,
Speaker 3: and you need to drive it into making the economy
Speaker 3: more complex, but also into social development. And I think
Speaker 3: that's actually the hard part. In Indonesia and elsewhere. You
Speaker 3: need a developmental coalition that is also not just self
Speaker 3: interested business elites, right, because one thing you really need
Speaker 3: is social development, and that does entail a large degree
Speaker 3: of redistribution. You need social programs that develop the educational
Speaker 3: health basis for the economy, and that can supercharge what
Speaker 3: sometimes people call sort of an industrious revolution, where people
Speaker 3: essentially become better workers, have better habits, and all those
Speaker 3: things actually drive the productivity of their labor and allow
Speaker 3: them to integrate in the world economy better. You know,
Speaker 3: things also like thermal load from climate change. Really hot
Speaker 3: places on Earth are actually harder to work, and so
Speaker 3: people are lower productivity. So even if their labor costs
Speaker 3: are lower, the cost of hiring an additional worker and
Speaker 3: the actual productivity of that labor is not necessarily the highest.
Speaker 3: And so that's kind of the question mark. Right, Maybe
Speaker 3: you can have industrial investment, maybe you can have industrial policy,
Speaker 3: but if you don't make basic investments in your population,
Speaker 3: and this is I think the question for a country
Speaker 3: like Indonesia, you're not really going to be able to
Speaker 3: make it higher up the value chain.
Speaker 4: And with Indonesia you have kind of the looming sort
Speaker 4: of ecological question because yeah, climate wise, you're going to
Speaker 4: have a huge number of days with lethal heat in
Speaker 4: Indonesia by you know, twenty fifty, then later on twenty
Speaker 4: one hundred, and that will be a destabilizing factor. Even
Speaker 4: if you know, Jacobi is like doing you know, interesting
Speaker 4: industrial policy things.
Speaker 2: Yeah, just to try to end this on a happier note,
Speaker 2: can you give us an example of a place where
Speaker 2: you think, you know, the development policy is probably like
Speaker 2: close to an ideal or a positive example of where
Speaker 2: we want to get to.
Speaker 4: I think, yeah, I mean, Vietnam outside of China is
Speaker 4: probably the single most encouraging story. You know, before before
Speaker 4: they industrialized, really you've had very serious sort of investment
Speaker 4: in health and education outcomes kind of on a mass basis.
Speaker 4: And then when they did move into industry, and you
Speaker 4: see this as early as like the late nineties or
Speaker 4: two thousands, who's always in very high value added stuff.
Speaker 4: Their industrial X sports were always kind of had a
Speaker 4: very large share of high tech electronics stuff. And so Vietnam,
Speaker 4: even though per capita GDP remains quite low in terms
Speaker 4: of life expectancy, does very very well. And if you
Speaker 4: go to like Vietnam, you know, we're big believers that
Speaker 4: if you want to really understand development picture in a country,
Speaker 4: you actually have to go there experience it, you know,
Speaker 4: see what life is actually like. Apart apart from the statistics,
Speaker 4: Vietnam is an extremely peaceful, safe country. Even though per
Speaker 4: capitae GDP remains quite low. Isn't a very good trajector.
Speaker 3: It's just to be a contrariant and to pick a
Speaker 3: different example than David, but also one that's i think
Speaker 3: desperately poor, but in some way shows the power of
Speaker 3: institutions is but Swana. You know, in but Swana, the
Speaker 3: actually functioning, high functioning merit democratic institutions of the state
Speaker 3: and the sort of investment in social development and in
Speaker 3: pretty robust institutional culture I think has given the sort
Speaker 3: of baseline, especially for international investment. And in their problem
Speaker 3: it adds access to capital and finance. It's the ability
Speaker 3: to integrate with global corporations. It's the lack of, for example,
Speaker 3: port access. You know, Vietnam is conveniently situated, it has reports,
Speaker 3: it has a lot of natural endowments that not only
Speaker 3: do a lot of countries in Africa lack, but even
Speaker 3: the really good institutional stories like Botswana or even something
Speaker 3: like Rwanda, they don't really have. And so that's kind
Speaker 3: of the other tragedy here. Even when you get the
Speaker 3: institutional or policy mix right, sometimes you really have burdens
Speaker 3: of geography and sort of deeper structural factors. I mean,
Speaker 3: you're not in the great position either.
Speaker 4: And Botswana, yeah, like a lot of the time you
Speaker 4: have countries that realistically are not going to industrialize. I mean,
Speaker 4: Botswana is landlocked. It has a huge amount of mental
Speaker 4: resources that is basically the entire economy. But that's also
Speaker 4: a core thing is like, if you're going to become
Speaker 4: commodity dependent and a lot of countries are permanently based,
Speaker 4: how can you kind of make the best of that.
Speaker 1: Well, I'm that sort of like I guess moderately, moderately hopeful,
Speaker 1: note that there are some interesting positive cases. Henry and David,
Speaker 1: thank you so much for coming on the podcast, like
Speaker 1: fascinating research and way to think.
Speaker 2: About the world.
Speaker 3: Thank you so much for having us.
Speaker 4: Crazy.
Speaker 1: I thought it was an absolutely fascinating conversation. You know,
Speaker 1: one of the dynamics setting aside, like the growth trajectory trends,
Speaker 1: is this idea of like complexification of the economy as
Speaker 1: its own specific thing. And you know, I always think,
Speaker 1: like you know, in the East Village sometimes I actually
Speaker 1: don't know if it's still there. But at one point
Speaker 1: there was like this Hungarian bookstore, and I was like,
Speaker 1: it's so amazing that like a physical Hungarian bookstore like
Speaker 1: can can exist, but it can in like a rich,
Speaker 1: complex economy like New York City. And this idea that
Speaker 1: that's like a sort of like marker of like development,
Speaker 1: to me, is like a really interesting thing to think
Speaker 1: about with these economies.
Speaker 2: My favorite bookstore emblem of complicated economies in the East
Speaker 2: village is there's a used cookbook store and they only
Speaker 2: sell like vintage and historical cookbooks.
Speaker 1: There's amazing that, like, we can have an economy that
Speaker 1: supports some of the niche things, but beyond that, I mean,
Speaker 1: I did find like that to be like a sobering conversation. Obviously,
Speaker 1: and you know, I always see the charge of like
Speaker 1: line go up, this country is so much richer, et cetera.
Speaker 1: But I do think, like to your point in the
Speaker 1: very beginning, a lot of the is like when you
Speaker 1: sort of like scratch behind the data look a bit,
Speaker 1: or look at how much was simply selling raw commodities
Speaker 1: not high on the value chain to China during this
Speaker 1: like incredible boom, the story looks a bit worse.
Speaker 2: So that's definitely a theme that stood out to me.
Speaker 2: This idea of China. I think, I use the word
Speaker 2: ful crum, but China is a full crew of a
Speaker 2: lot of this economic progress that maybe isn't in an
Speaker 2: ideal form for a lot of economies. And then the
Speaker 2: other thing that really stood out to me was this
Speaker 2: bird's in flight idea that both Henry and David mentioned
Speaker 2: and also this idea that I think historically people have
Speaker 2: always been looking for an economic model to copy, and
Speaker 2: it's like, oh, they see manufacturing works here, so let's
Speaker 2: do manufacturing. Or you know, commodities exports works here, Let's
Speaker 2: do commodities exports the Singapore model. I cannot tell you
Speaker 2: how many countries in the Middle East have tried to
Speaker 2: replicate the Singapore Financial Center model. But like this idea
Speaker 2: that everyone's always looking for an easy sort of copycat solution.
Speaker 1: Yeah, well, you know, the other thing about the birds
Speaker 1: in flight metaphor is that it gives the illusion of
Speaker 1: like physics and science, right, and to their point, like,
Speaker 1: it's not physics, it's choices and it's politics, and there
Speaker 1: is not just like this sort of like natural phenomenon
Speaker 1: where like one hands off to the another, Like it
Speaker 1: may look like that superficially historically, but actually is a
Speaker 1: series of like active choices. And if the political coalition,
Speaker 1: that growth coalition, that social investment coalition, that social investment
Speaker 1: impulse has gone, then what looked like a sort of
Speaker 1: like physical process like is actually not going to show
Speaker 1: up totally.
Speaker 2: I think that's a really interesting point. Shall we leave it.
Speaker 1: Then let's leave it there.
Speaker 2: Okay, this has been another episode of the All Thoughts Podcast.
Speaker 2: I'm Tracy Alloway. You can follow me on Twitter at
Speaker 2: Tracy Alloway.
Speaker 1: And I'm Joe Wisenthal. You can follow me on Twitter
Speaker 1: at The Stalwart. Follow our guests on Twitter Henry Williams
Speaker 1: He's at Humphord and David os He's at David e Ox.
Speaker 1: Follow our producers Carman Rodriguez at Carman Arman and Dash
Speaker 1: Bennett at Dashbock. And check out all of our podcasts
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