WEBVTT - So Much of the World Economy Has Been Going in Reverse 0:00:10.240 --> 0:00:14.520 Hello, and welcome to another episode of the Odd Lots Podcast. 0:00:14.600 --> 0:00:16.880 I'm Joe Wisenthal and I'm Tracy Alloway. 0:00:17.320 --> 0:00:20.119 Tracy, I think for like all of our career is 0:00:20.120 --> 0:00:22.760 probably like all of our lives. It feels like there 0:00:22.800 --> 0:00:27.040 has been this story of developing, emerging markets getting better, 0:00:27.280 --> 0:00:30.800 emerging maybe emerging markets becoming rich. Like, you know, just 0:00:30.920 --> 0:00:34.480 this general view that, yeah, you get these hiccups and deglobalization, whatever, 0:00:34.520 --> 0:00:36.760 but the eros are all up in general. 0:00:36.840 --> 0:00:40.080 It's a steady line that kind of goes up over 0:00:40.440 --> 0:00:41.240 the long term. 0:00:41.600 --> 0:00:44.440 What was it like the Victor Schweitz question at a 0:00:44.520 --> 0:00:47.480 recent trivia thing about like what did they call them 0:00:47.479 --> 0:00:52.240 in the sixties In the eighties, it was like underdeveloped 0:00:52.520 --> 0:00:55.880 markets and then emerging and then developing and then emerging, 0:00:55.920 --> 0:00:59.160 And it's like increasing optimism about all these places around 0:00:59.200 --> 0:01:02.440 the world. One day, like capitalism and trade will be everywhere. 0:01:02.560 --> 0:01:06.360 There is definitely this line that, Okay, there might be 0:01:06.440 --> 0:01:10.440 problems and issues, but in general, you know, life expectancy 0:01:10.600 --> 0:01:14.120 is going up. People are wealthier than they were before. 0:01:14.360 --> 0:01:17.160 Maybe people aren't starving as much as they were in 0:01:17.160 --> 0:01:20.720 the Middle Ages. There is this narrative of press progress. 0:01:20.800 --> 0:01:25.160 Yeah, right, progress, less disease things like that, fewer famines 0:01:25.240 --> 0:01:27.720 and stuff, but maybe it's not the case. In the 0:01:27.800 --> 0:01:30.160 last several decades, a lot of people have come out 0:01:30.200 --> 0:01:33.160 of poverty globally, but like a huge chunk of that 0:01:33.360 --> 0:01:36.200 is China specifically, and everyone knows there's sort of been 0:01:36.200 --> 0:01:39.319 this extraordinary boom in China, and then it kind of 0:01:39.319 --> 0:01:41.720 seems like if you look ex China, maybe it's not 0:01:41.760 --> 0:01:42.440 as good. 0:01:42.840 --> 0:01:44.440 I can already tell this is going to be one 0:01:44.440 --> 0:01:47.480 of those really uplifting episodes when we start questioning the 0:01:47.600 --> 0:01:50.720 narrative of economic progress. But I think it does raise 0:01:50.760 --> 0:01:54.520 this interesting question, which is, throughout much of history, there 0:01:54.560 --> 0:01:58.360 has been this one development model, which is, you know, 0:01:59.240 --> 0:02:01.640 usually you have a bunch of workers, you have like 0:02:01.680 --> 0:02:04.760 a labor surplus, maybe they're willing to work for less 0:02:04.800 --> 0:02:08.520 than in more developed countries economically, and so you got 0:02:08.520 --> 0:02:11.880 this big manufacturing boom and then hopefully that leads to 0:02:12.360 --> 0:02:15.639 more education, more resources, and then you transition into some 0:02:15.680 --> 0:02:19.560 sort of services oriented economy. But I think we all 0:02:19.600 --> 0:02:23.360 agree that as we enter this new economic period, is 0:02:23.400 --> 0:02:26.760 that manufacturing model actually going to be viable? 0:02:27.080 --> 0:02:27.280 Right? 0:02:27.400 --> 0:02:30.799 And how many countries can really do that or are 0:02:30.800 --> 0:02:32.680 they going to be stuck of some sort of like 0:02:33.200 --> 0:02:36.800 tourism or cheap commodity exports that don't really move up 0:02:36.840 --> 0:02:41.120 the value chain. And is anyone thinking about alternative growth 0:02:41.200 --> 0:02:44.519 models if you know, these countries can't find a way 0:02:44.600 --> 0:02:47.600 up to do this sort of manufacturing path. Absolutely anyway, 0:02:47.639 --> 0:02:50.160 we're going to be speaking about exactly this. We have 0:02:50.200 --> 0:02:53.640 two guests today. We're going to be speaking with Henry Williams, 0:02:53.639 --> 0:02:57.399 a student at Columbia University and David Och's journalist. They 0:02:57.440 --> 0:03:00.400 have a recent article that came out last year in 0:03:00.520 --> 0:03:04.440 the American Affairs Journal called the Long Slow Death of 0:03:04.440 --> 0:03:08.760 Global Development, and they basically make the case they kind 0:03:08.800 --> 0:03:11.000 of you should be pessimistic about all that stuff and 0:03:11.000 --> 0:03:13.840 that all of these stories about what's working do not 0:03:14.160 --> 0:03:17.280 actually work. Henry and David, thank you so much for 0:03:17.360 --> 0:03:18.760 coming on the podcast. 0:03:18.880 --> 0:03:21.239 Thanks for having us. John Tracy a long time first time. 0:03:21.720 --> 0:03:22.679 Yeah, pleasure to join. 0:03:22.840 --> 0:03:25.240 So why did you write this? I mean it's a 0:03:25.400 --> 0:03:30.480 very long, detailed, like pretty like academic, well cited piece, 0:03:31.000 --> 0:03:34.360 essentially like laying out the case that much of what 0:03:34.400 --> 0:03:37.600 we assume about global progress is not in fact happening. 0:03:37.640 --> 0:03:39.640 So to start, like why endeavor on this What inspired 0:03:39.680 --> 0:03:40.120 you to write this. 0:03:40.520 --> 0:03:42.240 I think the story that you just laid out is 0:03:42.280 --> 0:03:45.200 really dominated the twenty first century so far. It's a 0:03:45.240 --> 0:03:48.240 story that I think people sometimes derisively call the line 0:03:48.240 --> 0:03:50.560 go up story. Basically, when you look at just the 0:03:50.640 --> 0:03:54.920 quantitative measures, it is undoubtable that global poverty has been decreasing, 0:03:55.160 --> 0:03:57.600 that global growth has been pretty strong, and with the 0:03:57.640 --> 0:04:01.240 headwinds of globalization, the entrance of child into the world economy, 0:04:01.280 --> 0:04:04.160 and the demographic push of the last thirty years, there 0:04:04.160 --> 0:04:06.440 were a lot of reasons for optimism. And obviously there 0:04:06.440 --> 0:04:08.800 has been a lot of growth. But what we think 0:04:08.920 --> 0:04:12.120 is that when you dig pass just the quantitative numbers 0:04:12.160 --> 0:04:14.920 on the surface and look at the qualitative and structural 0:04:14.920 --> 0:04:17.920 factors in the world economy, both that which drove the 0:04:17.960 --> 0:04:20.240 growth and rise of China, but also you have to 0:04:20.240 --> 0:04:22.360 look at the next countries on the list. Yeah, there's 0:04:22.360 --> 0:04:24.880 this idea of the birds in flight model. Basically, as 0:04:24.960 --> 0:04:28.320 countries develop, they pass lower value added services down the 0:04:28.360 --> 0:04:30.640 line to the next country. But that's not just an 0:04:30.680 --> 0:04:31.720 automatic process. 0:04:31.920 --> 0:04:33.000 That requires a lot. 0:04:32.880 --> 0:04:36.159 Of economic, political, structural adaptation, and we think there are 0:04:36.200 --> 0:04:38.240 some very deep reasons why that hasn't been happening in 0:04:38.279 --> 0:04:38.960 the rest of the world. 0:04:40.040 --> 0:04:42.320 So one thing I was wondering as I was reading 0:04:42.400 --> 0:04:45.760 this article, how much of this is actually a data story, 0:04:45.839 --> 0:04:49.080 this idea that we tend to look at the line, 0:04:49.200 --> 0:04:51.840 and because the line is an amalgamation of all these 0:04:51.880 --> 0:04:56.039 different countries, it's sort of hiding disparities. And I know 0:04:56.160 --> 0:04:58.760 Joe mentioned in the intro this idea that China has 0:04:58.800 --> 0:05:01.200 actually been the big drive of a lot of economic 0:05:01.240 --> 0:05:04.600 development in the twentieth century. So how much of it 0:05:04.680 --> 0:05:07.320 is about the data and the aggregation going on there? 0:05:07.520 --> 0:05:11.720 Yeah, core core part of our argument is basically that 0:05:11.760 --> 0:05:15.040 you have this kind of statistical compensation going on where 0:05:15.160 --> 0:05:18.479 if you actually look everyone agrees that kind of incomes 0:05:18.520 --> 0:05:21.600 have risen across the world, poverty has decreased. But if 0:05:21.640 --> 0:05:23.960 you look pretty much all of that, depending on the 0:05:24.000 --> 0:05:26.600 threshold that use for poverty, of course, pretty much all 0:05:26.640 --> 0:05:30.200 of that has been in East Asia, basically between fifty 0:05:30.279 --> 0:05:33.000 to seventy five percent basically, So then when you look 0:05:33.080 --> 0:05:34.760 at kind of the world beyond shine, when you look 0:05:34.800 --> 0:05:37.640 at South Asia, the Middle East, Africa, Latin America, you 0:05:37.680 --> 0:05:41.880 get a much more complicated and pessimistic picture, and you 0:05:41.920 --> 0:05:45.400 have to realize that basically China, East Asia are they've 0:05:45.440 --> 0:05:48.640 done well because they've basically they've industrialized. When you look 0:05:48.680 --> 0:05:50.400 beyond that, and this is when you have to move 0:05:50.440 --> 0:05:53.800 beyond statistics to kind of a sort of structural historical approach, 0:05:54.360 --> 0:05:59.080 they have been either deindustrializing and oftentimes deograrinizing as well. 0:05:59.320 --> 0:06:02.600 Yeah, talking about what those numbers really mean in terms 0:06:02.600 --> 0:06:06.560 of global trade, Chinese demand for commodities has been so 0:06:06.920 --> 0:06:10.080 extreme in the sort of commodity supercycle of twenty to 0:06:10.120 --> 0:06:12.880 twenty fifteen and even through the present that it has 0:06:12.960 --> 0:06:15.600 actually exerted a distorting influence on the rest of the 0:06:15.640 --> 0:06:18.400 world's economies. It means that a lot of economies that 0:06:18.480 --> 0:06:21.960 had been partially industrializing, places like Brazil, India, Africa, and 0:06:22.000 --> 0:06:26.839 Latin America, have actually moved more towards commodity exporters, essentially 0:06:26.839 --> 0:06:30.040 moved down the value chain as commodity prices have risen 0:06:30.279 --> 0:06:32.560 and as there's been this huge demand sink in China 0:06:32.640 --> 0:06:34.920 soaking it all up, which means that even though their 0:06:34.920 --> 0:06:36.839 growth has been better and they've been doing better in 0:06:36.880 --> 0:06:40.240 global trade, it also means that they're not necessarily developing 0:06:40.279 --> 0:06:43.520 domestic manufacturing industrial sectors, and even those that did have 0:06:43.600 --> 0:06:46.240 it have been experiencing something of a phenomenon of what 0:06:46.279 --> 0:06:50.800 people will call premature deindustrialization. Basically, the manufacturing share of 0:06:50.800 --> 0:06:54.320 employment and GDP is going down before they've really moved 0:06:54.400 --> 0:06:57.520 up the value chain into higher value added economic activities 0:06:57.560 --> 0:06:58.160 like services. 0:06:58.279 --> 0:07:01.960 I hadn't thought about that dynamic at all, that it's like, Okay, 0:07:01.960 --> 0:07:05.800 here's this sort of this absolute, you know, avalanche of 0:07:05.920 --> 0:07:08.359 money coming out of China the demand for goods. So 0:07:08.480 --> 0:07:12.480 it's like, Okay, maybe it's not the most high value growth, 0:07:12.680 --> 0:07:14.720 but you gotta take it. But then, as you say, 0:07:14.760 --> 0:07:19.440 it has this distortionary effect. What is special though about manufacturing? 0:07:19.480 --> 0:07:21.600 Because we even have this debate in the US right 0:07:21.640 --> 0:07:24.320 where people's like, Okay, we gotta like bring manufacturing back, 0:07:24.440 --> 0:07:26.920 but some people will say, oh no, you're just clinging 0:07:26.960 --> 0:07:31.120 to old, centuries old ideas of what a robust economy 0:07:31.120 --> 0:07:33.760 looks like. This is just nostalgia or something like that. 0:07:34.040 --> 0:07:39.960 What is it about manufacturing specifically that in theory makes 0:07:40.000 --> 0:07:42.560 it the path towards becoming well towards wealth. 0:07:43.600 --> 0:07:43.920 Yeah. 0:07:44.240 --> 0:07:47.040 The econoist Danny Roderick talks about a set of stylized 0:07:47.080 --> 0:07:50.800 facts related to manufacturing specifically, of which by far the 0:07:50.800 --> 0:07:54.720 most important is the idea that exhibits unconditional productivity convergence 0:07:54.880 --> 0:07:58.560 between all countries. Basically, when you start manufacturing, you enter 0:07:58.560 --> 0:08:01.560 a process where long term manufacturing productivity is going to 0:08:01.600 --> 0:08:03.800 converge with the global average and with the rest of 0:08:03.840 --> 0:08:06.720 the world. And so what that means is that manufacturing 0:08:06.800 --> 0:08:09.280 can really increase your national economic productivity. 0:08:09.360 --> 0:08:10.360 But in addition to that. 0:08:10.440 --> 0:08:12.920 It also absorbs a lot of surplus labor and it 0:08:13.000 --> 0:08:17.760 drives a broader process of economic complexification, density and urbanization. 0:08:18.080 --> 0:08:20.480 That means that you get these economic cores that then 0:08:20.560 --> 0:08:23.320 create richer citizens. And this is sort of a classic 0:08:23.480 --> 0:08:25.880 just so story about the American economy. People will talk 0:08:25.920 --> 0:08:28.800 about Ford and the model t that once you have 0:08:29.160 --> 0:08:32.320 sort of well paid industrial workers, they can suddenly become 0:08:32.360 --> 0:08:35.160 the consumers of the services, they have a need for housing, 0:08:35.320 --> 0:08:37.800 they move into cities, and that this drives the process 0:08:37.800 --> 0:08:41.280 of economic growth going forward. So there's something about manufacturing 0:08:41.360 --> 0:08:44.599 as being a path through to more complex forms of 0:08:44.640 --> 0:08:47.600 economic activity. The other thing is that it has more 0:08:47.679 --> 0:08:51.440 to do really with global tradeable goods than just manufacturing specifically. 0:08:51.720 --> 0:08:54.560 There's the idea of things that world trade consists of 0:08:54.880 --> 0:08:59.120 both durable manufactured goods but also high value added services 0:08:59.200 --> 0:09:02.240 like finance, consulting, technology, the sorts of things that the 0:09:02.320 --> 0:09:05.320 US economy is based on today, and actually getting to 0:09:05.360 --> 0:09:09.400 that stage requires participation in competitive global markets and becoming 0:09:09.480 --> 0:09:12.520 genuinely competitive on those markets. And one thing that has 0:09:12.600 --> 0:09:15.120 driven a lot of the sort of booms and busts 0:09:15.120 --> 0:09:18.440 of development in the past has been overly manufacturing focused 0:09:18.440 --> 0:09:21.800 policy that basically uses tariffs and autarchy to try to 0:09:21.880 --> 0:09:26.319 raise the manufacturing share domestically without becoming authentically globally competitive. 0:09:26.520 --> 0:09:29.360 And so what you get are these uncompetitive sort of 0:09:29.400 --> 0:09:31.720 lost industrial sectors, and these are sort of the global 0:09:31.760 --> 0:09:33.840 rust belts all over the world. These places have de 0:09:33.880 --> 0:09:37.079 industrialized because the industry itself was not globally competitive. 0:09:37.800 --> 0:09:40.360 As you have these kind of stylized facts from I mean, 0:09:40.440 --> 0:09:43.719 Roderick Nicholas Caldor before him, and then you feel kind 0:09:43.720 --> 0:09:47.800 of at the sort of empirical historical experience of countries 0:09:47.840 --> 0:09:49.560 that have moved, you know, in one or the other 0:09:49.600 --> 0:09:54.280 from porterage. Basically almost all of them either have had 0:09:54.400 --> 0:09:57.520 a manufacturing share of employment. You know, at a certain level, 0:09:57.640 --> 0:09:59.959 you know, people say eighteen to twenty sometimes of high 0:10:00.080 --> 0:10:02.720 or sometimes a bit lower for an extended period of time, 0:10:02.880 --> 0:10:05.040 and then they've kind of transitioned from that, usually into 0:10:05.160 --> 0:10:08.480 some sort of high wage service economy, or you know, 0:10:08.679 --> 0:10:11.000 more rarely they've been kind of like Norway or Saudi 0:10:11.000 --> 0:10:12.839 Arabia or something like that, where they've been kind of 0:10:12.880 --> 0:10:16.679 blessed by a huge excess of natural resources. Of course, 0:10:16.800 --> 0:10:19.120 that model, you know, it's a lot of failures, you know, 0:10:19.120 --> 0:10:21.920 in Gola, Iraq, et cetera, and it's kind of a 0:10:22.000 --> 0:10:22.920 much riskier bed. 0:10:23.760 --> 0:10:26.280 Well, I was going to ask, and again Joe kind 0:10:26.280 --> 0:10:29.080 of alluded to this idea that you know, we do 0:10:29.160 --> 0:10:31.240 want to bring manufacturing back to the US, or at 0:10:31.280 --> 0:10:33.439 least that's a line that gets trotted out quite a lot. 0:10:33.480 --> 0:10:36.920 But at the same time, you know, manufacturing in some respects, 0:10:36.960 --> 0:10:40.000 maybe people view it as old fashions. So why couldn't 0:10:40.320 --> 0:10:43.360 a developing country or an emerging economy, why couldn't they 0:10:43.400 --> 0:10:47.319 just leap frog from manufacturing into more of a service's 0:10:47.920 --> 0:10:50.800 oriented economy. And I know some places, I guess India 0:10:50.880 --> 0:10:52.439 springs to mind have kind. 0:10:52.280 --> 0:10:57.240 Of India Philippines, I mean Rwanda. 0:10:56.679 --> 0:10:58.600 Right right, But you know, I think there's two sides 0:10:58.640 --> 0:11:01.320 of that story that are really important to address. You know. 0:11:01.360 --> 0:11:04.000 One is this idea that you just brought up that Okay, 0:11:04.000 --> 0:11:06.640 we want to bring the manufacturing share back in the US, 0:11:06.640 --> 0:11:08.840 that we want to start manufacturing here again. But the 0:11:08.880 --> 0:11:11.160 basic model and you actually saw just the other day 0:11:11.360 --> 0:11:13.840 Donald Trump saying that as president he would essentially start 0:11:13.840 --> 0:11:16.839 a global trade war and require an end to trade 0:11:16.840 --> 0:11:19.280 with China to do that for years, Well, I mean 0:11:19.480 --> 0:11:22.640 a massive escalation a world war trade, right, and this 0:11:22.720 --> 0:11:26.120 would actually be the absolute worst thing for the developing world. 0:11:26.160 --> 0:11:28.160 You know, there's a real question of are we simply 0:11:28.200 --> 0:11:31.280 going to use regressive tariffs to try to raise the 0:11:31.280 --> 0:11:33.640 amount of manufacturing that happens in the US if it's 0:11:33.720 --> 0:11:36.960 not globally competitive, if it's not actually cutting edge, and 0:11:37.000 --> 0:11:39.960 if what that does in general is lower global productivity 0:11:39.960 --> 0:11:41.760 and actually lower growth overall. 0:11:41.960 --> 0:11:42.720 You know, if you look at. 0:11:42.600 --> 0:11:45.920 Places in Africa, officials will say we don't want less globalization, 0:11:46.000 --> 0:11:48.840 we want more. We need more globalization. The question is 0:11:48.840 --> 0:11:51.720 on what terms is that globalization can happen. But the 0:11:51.720 --> 0:11:53.559 other side of the story, which is to say, can 0:11:53.600 --> 0:11:56.040 you just skip to services. Yeah, and this has been 0:11:56.080 --> 0:11:58.400 I think one of the possible narratives in the twenty 0:11:58.400 --> 0:12:00.640 first century that India is going to become an IT 0:12:01.040 --> 0:12:01.840 power instead. 0:12:02.120 --> 0:12:03.480 But the reality is that. 0:12:03.679 --> 0:12:07.120 Since two thousand, ninety percent of the growth in service 0:12:07.200 --> 0:12:09.880 jobs in the US have been sorry in India, have 0:12:09.960 --> 0:12:12.760 been in the informal sector, not in IT or high 0:12:12.800 --> 0:12:15.640 value added services. But what that means is basically people 0:12:15.679 --> 0:12:17.600 working as doing odd jobs. 0:12:18.320 --> 0:12:20.720 So basically that like when you look at kind of 0:12:20.760 --> 0:12:24.880 the reality of service work in these poor economies India, Rwanda, 0:12:24.920 --> 0:12:27.560 et cetera, most of it is not the sort of 0:12:27.840 --> 0:12:30.880 high value added stuff like it. Most of it is 0:12:30.960 --> 0:12:33.120 stuff that you see kind of ubiquitous if you go 0:12:33.200 --> 0:12:36.480 to like a poor world city, so you know, random jobbers, 0:12:36.840 --> 0:12:40.400 you know, domestic workers, fruit peddlers, stuff like that. But 0:12:40.480 --> 0:12:43.360 that's kind of the reality of you know, service work 0:12:43.360 --> 0:12:44.079 in the poor world. 0:12:44.280 --> 0:12:47.080 It's low value added, it doesn't catalyze a process of 0:12:47.120 --> 0:12:49.560 economic growth and development. And just to get that fact right, 0:12:49.559 --> 0:12:53.360 it's ninety percent of jobs created in India since liberalization 0:12:53.440 --> 0:12:55.640 in nineteen ninety one have been in the informal sector 0:12:55.720 --> 0:12:58.000 rather than in IT and in general those are also 0:12:58.080 --> 0:13:00.960 not internationally traded and don't have to be nationally competitive, 0:13:01.120 --> 0:13:03.160 meaning that they're trapped in a low productivity space. 0:13:03.280 --> 0:13:06.040 It's funny you mentioned I hadn't thought about it in years, 0:13:06.080 --> 0:13:08.880 these like global rust belts. Like when I was a kid, 0:13:08.920 --> 0:13:11.719 I lived in Malaysia for a year and there was 0:13:11.920 --> 0:13:15.200 like a local car company, the Proton Saga was like 0:13:15.240 --> 0:13:18.000 this manufacturer in Malaysian car and I don't think I've 0:13:18.040 --> 0:13:22.920 ever heard of one being sold internationally. And now I'm 0:13:22.960 --> 0:13:25.120 like really curious. I'm imagining their fate. 0:13:25.360 --> 0:13:29.040 Yeah, yeah, particularly No, that's the thing. That's the thing. 0:13:29.080 --> 0:13:31.520 It's like, when we think of the industrialization, we tend 0:13:31.520 --> 0:13:34.280 to think of basically an American or European phenomenon, you know, 0:13:34.320 --> 0:13:37.600 the North of France, the American Midwest, et cetera. But really, 0:13:37.679 --> 0:13:40.760 I mean, outside of East Asia, you had a lot 0:13:40.840 --> 0:13:44.880 of economies, I mean Brazil, Iran, India to a lestric extent, 0:13:44.960 --> 0:13:50.480 that had a quite high degree of industrialization. And since 0:13:50.559 --> 0:13:53.840 the nineteen seventies nineteen eighties, you know, manufacturing has fallen 0:13:53.840 --> 0:13:57.880 as a share of employment, services have risen, Agriculture has 0:13:57.920 --> 0:14:01.440 also fallen. You've had this kind of glolobal premature, you know, 0:14:01.480 --> 0:14:06.440 global denestrialization, at a lower rate of manufacturing employment and 0:14:06.520 --> 0:14:08.440 at a lower rate of per caba GDP than you're 0:14:08.520 --> 0:14:09.920 kind of quote unquote supposed to have. 0:14:27.080 --> 0:14:29.720 You mentioned the sort of like what was the birds? 0:14:31.040 --> 0:14:34.560 Why birds and flight metaphor, so, why isn't the process happening? 0:14:34.640 --> 0:14:37.000 It's like everyone's talking about, Okay, labor costs and China 0:14:37.080 --> 0:14:40.280 have definitely gone up over the years, and so the 0:14:40.400 --> 0:14:43.600 labor arbitrage element of China, you would assume that there 0:14:43.640 --> 0:14:47.520 are then other markets where they're less productive but significantly 0:14:47.960 --> 0:14:51.000 cheaper labor. Why isn't that model extending out? Like where 0:14:51.040 --> 0:14:51.800 is it breaking down? 0:14:51.920 --> 0:14:52.760 Yeah? Absolutely? 0:14:52.920 --> 0:14:54.720 I mean, as we said before, and this is one 0:14:54.760 --> 0:14:57.120 thing about the quantitative measures that can really mislead you. 0:14:57.400 --> 0:14:59.720 It's not an automatic process, you know. I think something 0:14:59.760 --> 0:15:02.440 about that story makes its theme natural automatic part of 0:15:02.440 --> 0:15:04.800 the world. But if you go back to nineteen eighty three, 0:15:04.960 --> 0:15:08.720 there's a fascinating World Bank report about China, basically post 0:15:08.960 --> 0:15:11.600 Mao era China, and you would think there would not 0:15:11.600 --> 0:15:14.520 be a lot of reason for optimism after the Great Famine, 0:15:14.560 --> 0:15:18.400 after the Cultural Revolution, extraordinary levels of political dysfunction. But 0:15:18.440 --> 0:15:21.120 one of the interesting things is that China actually had 0:15:21.160 --> 0:15:25.800 surprisingly good social development metrics. It had surprisingly good primary education, 0:15:25.880 --> 0:15:28.560 which they invested in heavily. It had surprisingly good health 0:15:28.560 --> 0:15:31.640 outcomes and life expectancy. And so even though it was 0:15:31.800 --> 0:15:34.200 pretty much exactly as poor as India at the time, 0:15:34.400 --> 0:15:37.560 it actually had far better social development metrics, and in 0:15:37.600 --> 0:15:40.880 certain ways it's been revealed that it had more functional institutions. 0:15:41.200 --> 0:15:44.160 So in the time since then, obviously China has exploded, 0:15:44.160 --> 0:15:46.240 in India has not, even though they were starting from 0:15:46.280 --> 0:15:48.680 the same baseline in the early eighties. One of the 0:15:48.680 --> 0:15:51.000 interesting things about this it kind of shows that there 0:15:51.040 --> 0:15:55.320 are these real pre market structural questions about human capital. 0:15:55.560 --> 0:15:58.280 Basically how educated are people, how literate are they, But 0:15:58.320 --> 0:16:00.480 also these skills that we don't think about. You know, 0:16:00.480 --> 0:16:03.280 people sometimes say, well, there's no such thing as unskilled labor, 0:16:03.600 --> 0:16:06.040 and there is something about manufacturing where there's a lot 0:16:06.040 --> 0:16:08.600 of tacit skills that you pick up. It's not necessarily 0:16:08.680 --> 0:16:11.280 that you have a formal education. But for example, i 0:16:11.320 --> 0:16:13.240 mean since two thousand and eight, this is just in 0:16:13.280 --> 0:16:16.280 the financial times, Apple has trained twenty three million workers 0:16:16.520 --> 0:16:18.600 at their facilities and plants. You know, those are people 0:16:18.640 --> 0:16:21.880 with skills and it forms what sometimes people call an 0:16:21.920 --> 0:16:25.800 industrial ecology. It's an entire universe of people with skills, 0:16:25.800 --> 0:16:30.240 of firms with specialized roles, and that altogether allows you 0:16:30.280 --> 0:16:32.960 to take on higher value added products. But if you 0:16:33.000 --> 0:16:34.720 look at the countries that are sort of next in 0:16:34.760 --> 0:16:38.240 line today, Latin America, India, Brazil, they don't have very 0:16:38.240 --> 0:16:41.120 good social development metrics. They're still really lacking when it 0:16:41.120 --> 0:16:44.600 comes to primary education, hygiene, health. Places like India have 0:16:44.640 --> 0:16:49.640 invested huge amounts in tertiary education in the its in colleges, 0:16:49.760 --> 0:16:52.440 but not in primary education, which is still lacking and 0:16:52.520 --> 0:16:55.720 really regionally differential. So those kinds of things mean that 0:16:55.760 --> 0:16:58.520 some of the basic human and social prerequisites, as well 0:16:58.520 --> 0:17:02.320 as the institutional ones and and corruption really prevent either 0:17:02.360 --> 0:17:04.880 good policy making or simply having the sort of human 0:17:04.960 --> 0:17:08.200 capital necessary to do manufacturing it in a meaningful way. 0:17:09.040 --> 0:17:11.080 And so the one place where you really have seen 0:17:11.119 --> 0:17:13.520 a sort of strong, you know, flying geese dynamic is 0:17:13.560 --> 0:17:16.760 definitely Southeast Asia. I mean, you know, people call Vietnam, 0:17:16.840 --> 0:17:19.760 you know, China's China, and Vietnam kind of has followed 0:17:19.760 --> 0:17:21.480 a sort of Chinese model. You see this in a 0:17:21.520 --> 0:17:24.960 lot of post comunist states. Basically they get good social 0:17:25.320 --> 0:17:27.720 you know, good kind of health outcomes, good education outcomes 0:17:27.840 --> 0:17:30.159 before entering the market, and so they're kind of like 0:17:30.240 --> 0:17:32.880 very well suited. Obviously they have you know, people who 0:17:33.000 --> 0:17:37.080 are quite healthy, quite educated, but also very poor. So 0:17:37.119 --> 0:17:39.040 when they enter the global economy, they are kind of 0:17:39.040 --> 0:17:42.200 the ideal factory workers. But then, yeah, you look at 0:17:42.280 --> 0:17:44.439 India a lot of stuff, so in Africa you just 0:17:44.440 --> 0:17:45.400 don't have that dynamic. 0:17:45.600 --> 0:17:48.399 Yeah, So this kind of leads into something else that 0:17:48.440 --> 0:17:50.480 I wanted to ask you, which is, if you think 0:17:50.680 --> 0:17:53.240 of China as a sort of folkrum for a lot 0:17:53.280 --> 0:17:56.640 of global development or global progress, and if you think 0:17:56.680 --> 0:18:00.880 of China as sort of driving this commodities super cycle 0:18:01.119 --> 0:18:04.920 and maybe driving some of the commodities demand in other countries, 0:18:05.400 --> 0:18:10.119 what happens as Chinese growth presumably starts to slow. 0:18:10.960 --> 0:18:14.840 So basically, yeah, you have like from roughly nineteen eighty 0:18:14.840 --> 0:18:17.040 four to two thousand and seven, you have this incredible 0:18:17.119 --> 0:18:20.040 period of Chinese growth, and then you have this, Yeah, 0:18:20.080 --> 0:18:23.120 it kind of as even though kind of a lot 0:18:23.160 --> 0:18:27.119 of poor countries in Latin America, South Asia, et cetera, 0:18:27.600 --> 0:18:30.400 even as they're de industrializing, even as kind of their 0:18:30.440 --> 0:18:33.439 own destrial economies are beginning to Faulter, they're kind of 0:18:33.480 --> 0:18:37.679 boosted by yes, strong Chinese demand for commodities, which kind 0:18:37.720 --> 0:18:40.640 of does sort of lead to this process of decomplexification. 0:18:40.800 --> 0:18:42.560 I mean, you see that in Brazil, a lot of 0:18:42.640 --> 0:18:45.920 Latin America, a lot of a lot of countries kind 0:18:45.920 --> 0:18:49.240 of at that level of income. But then around you know, 0:18:49.359 --> 0:18:52.520 kind of the late two thousands, Chinese growth starts to 0:18:52.720 --> 0:18:55.000 taper off a little bit. And then after twenty fourteen 0:18:55.119 --> 0:18:57.399 is where you have like a real, real decline. And 0:18:57.440 --> 0:18:59.480 when you see that, you kind of see, like you know, 0:18:59.520 --> 0:19:02.440 the commodity supercycle turns and you see that's kind of 0:19:02.480 --> 0:19:04.600 the the negative side. It's sort of boom bust dynamic, 0:19:04.720 --> 0:19:08.840 where twenty fourteen twenty fifteen you see huge crises in 0:19:08.960 --> 0:19:11.919 all the sort of commodity dependent economies. I mean, Nigeria 0:19:12.000 --> 0:19:15.920 and Iraq they were totally dependent on oil exports. Oil 0:19:15.920 --> 0:19:21.280 prices collapsed. They have these huge, like really destructive insurgencies. Brazil, Venezuela, 0:19:21.520 --> 0:19:24.480 they have these, you know, huge periods of political crisis, 0:19:24.920 --> 0:19:26.560 and so you have this kind of like you know, 0:19:26.600 --> 0:19:29.879 when you're totally dependent on one sort of engine of 0:19:30.000 --> 0:19:33.080 global growth, you know, through the demand for commodities. What 0:19:33.119 --> 0:19:35.680 you risk is that when inevitably that growth kind of 0:19:35.720 --> 0:19:37.719 starts to taper off, you have you know, everything kind 0:19:37.720 --> 0:19:39.520 of falls apart right right right. 0:19:39.560 --> 0:19:42.360 And you know, in November of last year, the World 0:19:42.440 --> 0:19:45.000 Bank actually put out a report basically talking about the 0:19:45.040 --> 0:19:48.320 crisis facing development, and they were thinking also about the 0:19:48.359 --> 0:19:51.800 wake of the coronavirus crisis and the coronavirus recession, but 0:19:51.880 --> 0:19:54.920 also something that people have called a poly crisis, a 0:19:55.040 --> 0:19:59.960 sort of multi sided global crisis where different issues global health, climate, chain, 0:20:00.280 --> 0:20:03.639 climactic shifts and demographic shifts feed into each other and 0:20:03.720 --> 0:20:07.040 accelerate each other, and all of those would certainly make 0:20:07.119 --> 0:20:10.360 a more and more pessimistic case, particularly if you see 0:20:10.359 --> 0:20:12.520 a slowdown and increasing sliding in Chinese growth or a 0:20:12.640 --> 0:20:15.320 Chinese economic lost decade like we saw in Japan in 0:20:15.359 --> 0:20:15.920 the nineties. 0:20:16.080 --> 0:20:19.080 Well, you know, the other big thing that's happening right 0:20:19.119 --> 0:20:22.359 now is rich countries. But the US in particular is 0:20:22.359 --> 0:20:25.520 in a major hiking cycle and trying to fight inflation. 0:20:25.640 --> 0:20:28.040 And one of the things that and again I sort 0:20:28.040 --> 0:20:29.520 of keep going back to some of the things that 0:20:29.600 --> 0:20:33.240 Victor Schwetz talked about, but he is like very critical 0:20:33.880 --> 0:20:37.040 of this sort of like vulgar legacy, yes, and what 0:20:37.080 --> 0:20:39.080 it did to the entire world. You know, there's sort 0:20:39.080 --> 0:20:40.760 of like a world of debt, as he said, and 0:20:40.760 --> 0:20:43.280 all like it's sort of like the original sin is 0:20:43.320 --> 0:20:45.679 like the vulgar shock on what it did. And so 0:20:46.000 --> 0:20:50.960 in the like broader story of em development. From your perspective, 0:20:51.320 --> 0:20:55.280 how big of a deal historically is that that since 0:20:55.320 --> 0:20:58.120 we're going to trying to understand analogies that vulgar. 0:20:57.800 --> 0:21:00.560 Preio, No, that's it's the core core thing is that 0:21:01.000 --> 0:21:03.280 you know, we kind of offer something with a periodization 0:21:03.640 --> 0:21:06.840 of growth in kind of the poor world where from 0:21:06.960 --> 0:21:08.960 you know, roughly nineteen fifty ninety eight, you have this 0:21:09.040 --> 0:21:11.720 kind of golden age where a lot of countries that 0:21:11.840 --> 0:21:14.600 you know, you wouldn't think of today as powerhouse as 0:21:14.640 --> 0:21:17.080 a growth success stories. You know, places like the Ivory 0:21:17.119 --> 0:21:20.600 Coast were growing at a huge, huge rate, the every coast. 0:21:20.600 --> 0:21:22.879 Actually they called it the Ivorian Miracle. It had some 0:21:22.960 --> 0:21:24.200 most depressive growth. 0:21:24.000 --> 0:21:25.560 You know, And at a White House speech in nineteen 0:21:25.600 --> 0:21:28.960 sixty seven, LBG actually said to those Cassandras who question 0:21:29.000 --> 0:21:32.000 global development, I say, look at the Ivory Coast, which 0:21:32.000 --> 0:21:34.320 today has I think a smaller economy than it is. 0:21:34.400 --> 0:21:37.520 Right, actually the every coast yeah, median income is lower 0:21:37.560 --> 0:21:40.439 today than it was when the World Bank started recording income. 0:21:40.640 --> 0:21:43.880 But then basically, like nineteen eighty, vulgar is a key, 0:21:43.960 --> 0:21:47.840 key part of it. The commodity supercycle turns, you know, 0:21:47.880 --> 0:21:52.639 commodity prices fall quite precipitously and that means huge, huge 0:21:52.640 --> 0:21:55.360 crisis across the developing world. It leads to this kind 0:21:55.359 --> 0:21:58.600 of cycle of debt crises. And then the nineteen eighties 0:21:58.640 --> 0:22:01.680 you really have to understand, you know, in the US 0:22:01.760 --> 0:22:04.920 Europe it kind of has this sort of cultural legacy 0:22:04.920 --> 0:22:08.639 of like strong economic growth, but the nineteen eighties and 0:22:08.680 --> 0:22:10.680 then kind of bleeding into the nineteen nineties was this 0:22:10.880 --> 0:22:14.480 huge period of you know, the sort of mass stragedy 0:22:14.680 --> 0:22:19.600 where you have economic collapse in Latin America, Africa, South Asia, 0:22:19.720 --> 0:22:22.840 Middle East, and then that sort of leads to social 0:22:22.880 --> 0:22:26.480 and political crisis and you have these civil wars, huge 0:22:26.520 --> 0:22:29.080 I mean huge bloodshed. And you know, people don't really 0:22:29.119 --> 0:22:31.760 think of these sort of eighties nineties period as a 0:22:31.840 --> 0:22:34.920 sort of mass you know, economic and then social political tragedy, 0:22:34.920 --> 0:22:35.520 but it really was. 0:22:35.880 --> 0:22:38.880 And it's worth just saying that monetary policy affects these 0:22:38.880 --> 0:22:40.200 countries everywhere. 0:22:40.240 --> 0:22:40.840 In every way. 0:22:41.080 --> 0:22:44.080 It weakens global demand and demand from the developed world, 0:22:44.119 --> 0:22:46.160 but it also means that their debt servicing and costs 0:22:46.160 --> 0:22:48.159 are higher. It means that it's a lot harder for 0:22:48.200 --> 0:22:51.040 them to get new debt issued. It means that there's 0:22:51.119 --> 0:22:55.040 potentially greater financial instability. It also means and from their perspective, 0:22:55.240 --> 0:22:57.680 this is one of the really big problems that when 0:22:57.680 --> 0:23:00.880 it comes to the global commodity supercycle and global commodity 0:23:00.920 --> 0:23:03.760 prices that they might reverse and even going into the nineties, 0:23:03.800 --> 0:23:06.840 prior to China's growth really taking off, globalization, the first 0:23:06.880 --> 0:23:10.560 waves of globalization actually brought agricultural prices down all over 0:23:10.560 --> 0:23:12.919 the world, and a lot of the early anti globalization 0:23:13.040 --> 0:23:16.000 movement came from farmers in Latin America and the poor 0:23:16.040 --> 0:23:19.040 world who were really brutally affected by the liberalization of 0:23:19.080 --> 0:23:22.080 prices and the sort of first waves of globalization, especially 0:23:22.080 --> 0:23:22.840 in agriculture. 0:23:23.160 --> 0:23:24.919 I know it's not the point, but it's kind of funny, 0:23:25.040 --> 0:23:26.840 like that you put out on in the article that 0:23:26.960 --> 0:23:29.119 Cassandra is right, and so it's funny. It feels like 0:23:29.160 --> 0:23:32.080 you should never criticize and call your mood as Cassandras. 0:23:32.080 --> 0:23:33.960 You're telling them that they're going to be the ones who. 0:23:33.840 --> 0:23:39.000 Have right, Cassandra will always eventually be Actually, just on 0:23:39.040 --> 0:23:41.840 that note, I mean, one of the themes that we 0:23:41.880 --> 0:23:43.680 talk a lot about now and others talk a lot 0:23:43.680 --> 0:23:46.840 about now is this idea of a multipolar world. And 0:23:47.000 --> 0:23:49.639 you know, speaking of monetary policy, yes, the rest of 0:23:49.680 --> 0:23:52.960 the world is deeply tied to the fate of US 0:23:53.080 --> 0:23:56.520 policy vis the dollar and things like that. But if 0:23:56.560 --> 0:24:00.240 we are moving towards more of a fractured globe both 0:24:00.320 --> 0:24:02.679 financial system and you know, that's a big if, and 0:24:02.720 --> 0:24:05.320 I realize there's a massive debate over it. But if, 0:24:05.359 --> 0:24:09.120 for instance, there's more room for China or maybe Russia 0:24:09.160 --> 0:24:13.680 to develop this new maybe bricks contingent, what does that 0:24:13.760 --> 0:24:17.840 mean for global development? Is that a bigger opportunity or 0:24:18.200 --> 0:24:20.760 are we just sort of reviving the same problems. 0:24:20.800 --> 0:24:22.680 Well, you know, I want to be very careful that 0:24:22.920 --> 0:24:26.040 not necessarily wading into the entire debate, but talking about 0:24:26.080 --> 0:24:28.159 the present, if you look at the developing world, they 0:24:28.200 --> 0:24:29.040 say decoupling. 0:24:29.320 --> 0:24:30.080 What decoupling? 0:24:30.400 --> 0:24:31.520 You know, you see a lot of this in Latin 0:24:31.560 --> 0:24:33.399 America and you see it as well with their position 0:24:33.440 --> 0:24:35.879 on the war in Ukraine. A lot of these countries say, listen, 0:24:36.080 --> 0:24:38.159 what matters to us is still development, and what we 0:24:38.200 --> 0:24:40.679 need for development is a robust global economy, and is 0:24:40.680 --> 0:24:43.120 the structure of global trade that we built in the nineties. 0:24:43.359 --> 0:24:45.960 You know, obviously they'd like globalization on different terms, but 0:24:46.040 --> 0:24:49.040 they definitely don't want a world of autarchic trade blocks. 0:24:49.400 --> 0:24:51.360 And this is one thing that the US I think 0:24:51.400 --> 0:24:53.399 threatens to do at this point in time, which is, 0:24:53.720 --> 0:24:55.480 you know, you see it in the things that Trump 0:24:55.520 --> 0:24:57.199 is saying right now that there is a sort of 0:24:57.240 --> 0:25:01.000 vision of an autarcic, closed American economy of trade blocks. 0:25:01.200 --> 0:25:03.360 That's not really good for anyone, but it certainly isn't 0:25:03.400 --> 0:25:05.640 good for these developing world countries. 0:25:05.840 --> 0:25:06.040 You know. 0:25:06.080 --> 0:25:07.840 The other side of it with respect to a new 0:25:07.960 --> 0:25:11.120 global system, obviously, there was a lot of hot air 0:25:11.160 --> 0:25:13.720 about Chinese investment in Africa and the developing world in 0:25:13.720 --> 0:25:16.159 the last ten years, the built in Road initiative and 0:25:16.240 --> 0:25:19.200 all of the infrastructure development. But one of the big 0:25:19.280 --> 0:25:22.120 question marks here one is how much of that investment 0:25:22.119 --> 0:25:25.000 actually failed. I think that trapped to homacy is a 0:25:25.040 --> 0:25:28.400 really fawed framework because the reality is nobody wants ports 0:25:28.440 --> 0:25:31.359 and bridges in economies that are broken and that aren't 0:25:31.359 --> 0:25:33.399 being used. You don't want to port if there's not 0:25:33.480 --> 0:25:35.840 trade going through it. You would rather that they pay 0:25:35.840 --> 0:25:39.000 off their debts. You don't necessarily want the infrastructure in 0:25:39.080 --> 0:25:41.960 countries that can actually utilize it well. But one thing 0:25:41.960 --> 0:25:43.760 about Builton Road, not only has it led to a 0:25:43.800 --> 0:25:46.560 cutoff in Chinese investment, but we're not seeing investment from 0:25:46.600 --> 0:25:48.840 certainly not from states in the rich world. And this 0:25:48.920 --> 0:25:50.560 is I think one of the real crises right now 0:25:50.600 --> 0:25:53.280 with respect to climate change. You know, all of these 0:25:53.280 --> 0:25:56.320 developing countries face a real paradox, which is that as 0:25:56.359 --> 0:25:59.520 part of industrializing you need electricity and energy. And the 0:25:59.560 --> 0:26:02.440 story behind that has been coal. Coal and oil and 0:26:02.520 --> 0:26:05.639 to some extent natural gas have driven the industrialization of 0:26:05.680 --> 0:26:07.960 the world. When you go back to the first industrialized 0:26:07.960 --> 0:26:10.760 places on Earth in the Rare Valley in Britain, in 0:26:10.880 --> 0:26:13.520 parts of Pennsylvania, they're the places where the coal fields were. 0:26:13.600 --> 0:26:13.800 Right. 0:26:14.160 --> 0:26:16.920 The story is, though, you know, India is on the 0:26:16.920 --> 0:26:19.840 front lines of climate change. So every incremental amount more 0:26:19.840 --> 0:26:22.959 coal it burns in order to industrialize it may suffer 0:26:23.040 --> 0:26:25.240 back in the form of worse floods and droughts and 0:26:25.640 --> 0:26:28.560 extreme heat in the future. So what they need is 0:26:28.680 --> 0:26:30.880 a development path that does involve a kind of leap 0:26:30.880 --> 0:26:34.679 frogging over fossil fuels. And what that requires is infrastructure 0:26:34.680 --> 0:26:37.399 of global finance that simply hasn't been there. You know, 0:26:37.480 --> 0:26:40.520 the rich world really hasn't even met its state level 0:26:40.520 --> 0:26:43.440 commitments of around one hundred billion dollars and they're saying, well, 0:26:43.600 --> 0:26:46.400 private finance will step in and do it. But what 0:26:46.440 --> 0:26:50.040 that actually requires is this de risking process where you 0:26:50.119 --> 0:26:53.080 need developing world countries to essentially take on the risks 0:26:53.240 --> 0:26:55.679 for global investors because they say, no, no, it's too 0:26:55.760 --> 0:26:58.359 risky for us right now. You essentially have to be 0:26:58.560 --> 0:27:00.840 the ones holding the bag if you want our money 0:27:00.880 --> 0:27:03.160 in the first place, which means that these countries face 0:27:03.200 --> 0:27:05.280 really a sort of devil's bargain to get the money 0:27:05.320 --> 0:27:07.280 that they need in order to build green energy in 0:27:07.320 --> 0:27:09.240 the first place. And what I think you're seeing the 0:27:09.240 --> 0:27:12.919 status quo is places like the Congo, loosening restrictions on 0:27:12.960 --> 0:27:15.640 coal mining and sort of international agreements that have kept 0:27:15.760 --> 0:27:17.840 coal and oil in the ground are starting to be 0:27:17.880 --> 0:27:20.720 torn up when energy prices go up, and unless there's 0:27:20.760 --> 0:27:23.439 a real answer to that from the international community and 0:27:23.480 --> 0:27:26.240 an answer to obviously the failures of Belton Road in 0:27:26.240 --> 0:27:28.760 the last ten years, but a real program of state 0:27:28.880 --> 0:27:31.600 level investment, you know, you really won't see the money 0:27:31.640 --> 0:27:33.680 you need for green development and leapfrogging. 0:27:34.000 --> 0:27:37.399 Can I ask a sort of Devil's advocate question, because, 0:27:37.440 --> 0:27:40.760 as you point out, like the last thing that a 0:27:40.840 --> 0:27:43.520 lot of these poor economies need is for the rich 0:27:43.560 --> 0:27:46.440 economies to go into autarchy mode. But we just spent 0:27:46.480 --> 0:27:49.880 the first twenty minutes of this conversation talking about how 0:27:49.960 --> 0:27:55.320 this status quo wasn't working or wasn't actually contributing to 0:27:55.520 --> 0:27:58.639 a sort of steady wealth advance, So like, is there 0:27:58.680 --> 0:28:00.399 a different model? I mean, and it's not just the 0:28:00.400 --> 0:28:02.880 poorer countries. I mean Europe is complaining too about our 0:28:02.920 --> 0:28:06.720 trade policies here, particularly with the Inflation Reduction Act. But like, 0:28:06.960 --> 0:28:11.800 why necessarily fear this sort of inward turn if the 0:28:11.840 --> 0:28:14.800 sort of outward turn was not actually delivering on growing 0:28:14.840 --> 0:28:16.560 wealth for so much as the world, And could there 0:28:16.560 --> 0:28:17.280 be a different path? 0:28:17.359 --> 0:28:19.440 Yeah, I mean, I think there are different paths in 0:28:19.520 --> 0:28:22.639 terms of policy, But the hard parts are politics, you know, 0:28:22.800 --> 0:28:27.359 domestic political economy and international geopolitics. And what that means 0:28:27.440 --> 0:28:31.359 is that rebalancing domestically in China, for example, rebalancing to 0:28:31.440 --> 0:28:35.200 a larger household share of income, more domestic consumption, potentially 0:28:35.240 --> 0:28:38.120 a more balanced form of growth, or on the other hand, 0:28:38.360 --> 0:28:41.400 more balanced infrastructure investment in places like India where it's 0:28:41.440 --> 0:28:44.280 been heavily driven by these very top heavy firms that 0:28:44.320 --> 0:28:47.200 have bad construction practices, have cronyistic deals. 0:28:46.920 --> 0:28:47.400 With the state. 0:28:47.720 --> 0:28:50.880 Corruption, these are political problems. They're political problems in the 0:28:50.960 --> 0:28:52.920 US too, by the way. I mean, you talk about 0:28:52.920 --> 0:28:54.720 this as a developed country, but it's very difficult to 0:28:54.760 --> 0:28:58.080 build new housing or transit or infrastructure. And our infrastructure 0:28:58.120 --> 0:29:00.640 is certainly not first rate or cutting hedges in any sense. 0:29:00.880 --> 0:29:03.480 So the technology is there, I mean, we have cutting 0:29:03.520 --> 0:29:07.240 edge infrastructure, we have you know, renewable energy, but getting 0:29:07.240 --> 0:29:10.400 the financing for it and creating political deals that allow 0:29:10.480 --> 0:29:12.840 you to build it domestically in a way that doesn't 0:29:12.920 --> 0:29:14.800 end up croneistic or inefficient. 0:29:15.120 --> 0:29:16.360 That's a lot of the hard part. 0:29:16.600 --> 0:29:18.720 The other thing is, you know, in terms of the 0:29:18.800 --> 0:29:22.400 last twenty thirty years not working the answer. We tried 0:29:22.400 --> 0:29:24.200 a different answer before that, and there was an era 0:29:24.280 --> 0:29:26.320 of modernization where there were a lot of tariffs, and 0:29:26.360 --> 0:29:28.560 there was a lot of domestic infant industry protection. You 0:29:28.640 --> 0:29:31.360 talked about Malaysian car companies, you know, that really was 0:29:31.400 --> 0:29:33.720 its own era. The problem there is until you have 0:29:33.800 --> 0:29:37.400 strong institutions that can actually practice export discipline, as in 0:29:37.440 --> 0:29:40.280 your companies are actually competitive on the world market, all 0:29:40.320 --> 0:29:43.880 that you get is cronyism and domestic inefficiency. You know, 0:29:43.960 --> 0:29:45.840 there's a sort of story about this that South Korea, 0:29:45.880 --> 0:29:49.440 it's not that it produces automobiles, it produces Hyundai and Samsung. 0:29:49.640 --> 0:29:51.840 You know, it has brands that have that are high 0:29:51.840 --> 0:29:54.440 on could value chain cultural exports brands. 0:29:54.480 --> 0:29:55.960 I mean, it came up right. 0:29:56.040 --> 0:29:58.560 There's no solution other than to build a competitive and 0:29:58.680 --> 0:30:02.080 robust economy that's competitive in world markets. I mean there's 0:30:02.080 --> 0:30:04.280 sort of no shortcuts. That's the hard part, and there 0:30:04.320 --> 0:30:05.840 are a lot of political bearriers to that. And there's 0:30:05.840 --> 0:30:08.920 also certainly too little state level investment, both in rich 0:30:08.920 --> 0:30:10.960 countries but also between countries in general. 0:30:11.480 --> 0:30:13.920 So just on that note, this might be a slightly 0:30:14.080 --> 0:30:17.720 unfair question, but I completely agree that politics is the 0:30:17.800 --> 0:30:20.239 constraint here and the barrier here, and we see that, 0:30:20.280 --> 0:30:23.000 for instance, in China, quite a lot there is a 0:30:23.080 --> 0:30:25.880 recognition within China that they should be aiming for a 0:30:25.920 --> 0:30:28.880 more balanced economy. But then what tends to happen is 0:30:28.880 --> 0:30:32.840 that when growth slows to a sort of troublesome level, politically, 0:30:32.960 --> 0:30:35.560 they start to roll back some of the rebalancing act, 0:30:35.600 --> 0:30:37.560 and you know, they open the flood gates of credit. 0:30:37.840 --> 0:30:42.200 Everything goes back into housing and unproductive sectors of the economy. 0:30:42.760 --> 0:30:43.440 So how do you. 0:30:43.440 --> 0:30:48.520 Actually get past those political barriers and constraints, right? 0:30:48.800 --> 0:30:51.960 I mean when you look historically countries that have successfully 0:30:51.960 --> 0:30:54.680 done it, I mean China, South Korea, Japan are three 0:30:54.680 --> 0:30:57.600 of the most famous. You need sort of a hegemonic 0:30:57.680 --> 0:31:01.120 state of sort of you know, elite reformers basically, and 0:31:01.200 --> 0:31:04.080 a lot of the time when you have in I 0:31:04.080 --> 0:31:07.200 mean some soun Africa, South Asia is instead a sort 0:31:07.200 --> 0:31:10.200 of hegemony of a sort of a rentier class that 0:31:10.240 --> 0:31:12.320 have no real sort of developmental interest. 0:31:12.520 --> 0:31:14.120 Yeah, well, I was gonna say, I mean, it kind 0:31:14.120 --> 0:31:17.400 of feels like that we're in like Klein pedest trade 0:31:17.400 --> 0:31:21.640 wars are class wars territory here where I mean the 0:31:21.680 --> 0:31:24.400 people saying like, no, don't roll back globalization, don't do 0:31:24.480 --> 0:31:29.280 autarchy are presumably that slice of the elite, the rentier 0:31:29.320 --> 0:31:32.520 class within these poor countries that have done and probably 0:31:32.560 --> 0:31:36.200 many of them have accumulated extraordinary wealth even while their 0:31:36.560 --> 0:31:40.480 economies have stagnated. But again, like I mean, Devil's advocate, 0:31:40.560 --> 0:31:42.440 could it be that if you sort of like break 0:31:42.440 --> 0:31:46.400 that globalization model, then that, you know, becomes a forcing 0:31:46.440 --> 0:31:48.240 mechanism for domestic political. 0:31:47.960 --> 0:31:50.320 Change, right right, Well, it's you know, I think I 0:31:50.320 --> 0:31:52.240 think clin Pats, I think they'd probably be among the 0:31:52.280 --> 0:31:55.920 first to say they know it's difficult, that struggling with it. 0:31:55.920 --> 0:31:58.880 It isn't certainly true though, that domestic and global imbalances 0:31:58.920 --> 0:32:02.000 are related, and that domestic inequality which has also been 0:32:02.080 --> 0:32:04.120 the condition of growth in the last thirty forty years, Right, 0:32:04.120 --> 0:32:06.960 It's been huge amounts of domestic inequality and relatively weak 0:32:07.000 --> 0:32:09.160 investment in social programs. I mean, a lot of the 0:32:09.200 --> 0:32:11.640 improvements in health outcomes at the bottom end have been 0:32:11.680 --> 0:32:14.160 from international aid and charity in the worst off parts 0:32:14.160 --> 0:32:17.800 of the world, not from strong state led social development programs. 0:32:18.080 --> 0:32:20.320 But I think the other side of this is, with 0:32:20.360 --> 0:32:22.960 respect to how difficult it is to do this rebalancing, 0:32:23.040 --> 0:32:25.280 that you really do need a sort of developmental coalition. 0:32:25.680 --> 0:32:27.760 You need one that sort of recognized the interests and 0:32:27.760 --> 0:32:29.920 you talked to you know, there's different interests, different groups 0:32:29.920 --> 0:32:32.960 are going to have necessarily different interests internally politically. 0:32:33.520 --> 0:32:36.640 Yeah, and you know, like a core question for us 0:32:36.800 --> 0:32:39.160 is how do you strengthen the state in very poor 0:32:39.200 --> 0:32:41.840 countries because the reality of the last few decades is 0:32:41.880 --> 0:32:43.440 that a lot of countries that kind of used to 0:32:43.480 --> 0:32:47.040 have functional regimes, even if kind of corrupt. You know, 0:32:47.080 --> 0:32:48.840 a lot of issues that used to have kind of 0:32:48.840 --> 0:32:51.560 functional governments no longer have that. I mean, Haiti, a 0:32:51.560 --> 0:32:54.000 lot of countries in the Sahel and Africa. You know, 0:32:54.240 --> 0:32:57.560 it is a core thing is like you cannot do 0:32:57.600 --> 0:32:59.600 any of this if the state does not have you know, 0:32:59.720 --> 0:33:01.240 mono and violent stuff like that. 0:33:02.000 --> 0:33:05.200 Yeah, and there has been this decline in decomplexification as 0:33:05.240 --> 0:33:07.160 well that we talked about that I think is one 0:33:07.160 --> 0:33:11.200 of the problems in the more sophisticated institutions. And then 0:33:11.200 --> 0:33:13.480 the last thing that I would say is that this 0:33:13.560 --> 0:33:15.800 idea that we can just crash out of the current system. 0:33:16.080 --> 0:33:18.080 We did try this in the nineteen twenties and thirties, 0:33:18.280 --> 0:33:20.560 and it was the Great Depression. The Great Depression was 0:33:20.760 --> 0:33:23.480 very much linked to a breakdown of the international monetary order, 0:33:23.600 --> 0:33:25.880 as people like Perry Merling have talked about, and a 0:33:25.880 --> 0:33:29.360 breakdown of global trade. So but it was also driven 0:33:29.440 --> 0:33:33.520 by pretty robust and dynamic political coalitionis in rising powers 0:33:33.560 --> 0:33:36.240 all over the world, including rising fascist powers, that had 0:33:36.240 --> 0:33:38.360 an idea which was that we're going to crash out 0:33:38.360 --> 0:33:40.600 of the global system and build something different. So I 0:33:40.640 --> 0:33:43.120 think it is really a cautionary tale to say, well, 0:33:43.160 --> 0:33:45.360 we can merely go it alone, whereas what I think 0:33:45.400 --> 0:33:47.520 the hope is is a new type of global order 0:33:47.640 --> 0:33:55.160 that we participate in collectively. 0:34:06.360 --> 0:34:09.320 So the name of your article was the long slow 0:34:09.440 --> 0:34:12.440 death of global development. And of course when we think 0:34:12.520 --> 0:34:16.080 and talk about global development, there is a huge sort 0:34:16.080 --> 0:34:20.840 of industry around development or you know, academia slash whole 0:34:20.880 --> 0:34:25.479 collection of global institutions, you know, places like the World Bank, 0:34:25.560 --> 0:34:28.840 the International Monetary Fund, things like that. To what extent 0:34:28.880 --> 0:34:35.080 do you think that ecosystem is grasping the crux of 0:34:35.120 --> 0:34:37.799 this problem and adapting to it. 0:34:38.160 --> 0:34:41.080 I mean, I think basically the irony is that they're 0:34:41.120 --> 0:34:44.239 still very powerful. If you look at very poor countries, 0:34:44.280 --> 0:34:48.439 like a lot of government functions are basically exported to them, 0:34:48.480 --> 0:34:50.759 to the aid industry to people like that. And yet 0:34:50.920 --> 0:34:53.160 poor countries today are just you know, even though their 0:34:53.160 --> 0:34:56.239 incomes tend to be higher, they are structurally in a 0:34:56.239 --> 0:34:58.040 worse position than they were a few decades ago. They 0:34:58.080 --> 0:35:00.560 are in a worse position for a sort of industrial 0:35:00.600 --> 0:35:04.160 take off, Like they are much worse position to eventually 0:35:04.200 --> 0:35:07.640 become you know, wealthy or even kind of middle income whatever. 0:35:08.520 --> 0:35:11.560 And so yeah, I think that they kind of and 0:35:11.600 --> 0:35:13.759 sometimes they'll admit this themselves, that they don't really have 0:35:13.800 --> 0:35:17.040 an answer, that they're kind of grasping at straws. You know, 0:35:17.080 --> 0:35:20.239 there have been real improvements i mean in health outcomes, 0:35:20.560 --> 0:35:23.080 in educational outcomes, and that's very encouraging because that does 0:35:23.160 --> 0:35:25.320 kind of set the stage for like, you know, long term, 0:35:25.680 --> 0:35:26.520 long term growth. 0:35:26.600 --> 0:35:28.719 Yeah, and some of the good trends have been I 0:35:28.760 --> 0:35:31.239 think the end to a certain post two thousand and 0:35:31.280 --> 0:35:34.359 eight Ryan Hardrokoff obsession with the debt level, this sort 0:35:34.400 --> 0:35:37.880 of most austerity focused initiatives of the last ten to 0:35:37.880 --> 0:35:39.799 twenty years. I think a lot of that has died, 0:35:39.800 --> 0:35:42.520 which is good. The hard part is, yeah, politics, you know, 0:35:42.600 --> 0:35:45.680 even when development scholars I think grasp this stuff, there's 0:35:45.680 --> 0:35:47.840 not a ton that can be done from just the 0:35:47.960 --> 0:35:51.440 UN or development agencies, and you need political forcing functions 0:35:51.760 --> 0:35:54.520 internal to the domestic politics of the rich world, one 0:35:54.560 --> 0:35:57.880 of which will inevitably be migration and global refugee flows. 0:35:58.120 --> 0:36:02.000 Can we talk a little bit about commodity exporters that 0:36:02.080 --> 0:36:05.239 aren't doing completely terribly and you know, I'm thinking of 0:36:05.320 --> 0:36:08.160 like Indonesia. You know, I don't think it's like having 0:36:08.160 --> 0:36:10.440 an incredible boom, but I also don't get the impression 0:36:10.480 --> 0:36:13.640 it's like massively backsliding. They seem to be doing interesting 0:36:13.760 --> 0:36:16.320 things policy wise in terms of like, oh, if you 0:36:16.360 --> 0:36:18.839 want to mine our nickel, you have to refine it 0:36:18.880 --> 0:36:21.719 domestically so that our domestic you know that we sort 0:36:21.719 --> 0:36:25.120 of have a knowledge transfer move up the value chain. Chile, 0:36:25.360 --> 0:36:28.799 I think similar stories like that, Like Okay, maybe like 0:36:29.120 --> 0:36:31.759 not as rich as maybe some of hope twenty years ago, 0:36:31.840 --> 0:36:35.080 but like it seems to have made some progress. It 0:36:35.160 --> 0:36:37.279 seems like there are parts of the story that are 0:36:37.320 --> 0:36:40.320 not all bad, or maybe countries figuring out a way 0:36:40.640 --> 0:36:43.560 to move up the value chain from the commodity side. 0:36:43.680 --> 0:36:46.880 Indonesia and like, yeah, a lot of Southeast Asia, Indonesia 0:36:47.040 --> 0:36:49.520 is definitely kind of globally outside of China. The most 0:36:49.560 --> 0:36:53.160 positive picture what Indonesia is doing now. I mean they're 0:36:53.280 --> 0:36:57.359 taking a very conscious sort of industrial policy, and you know, 0:36:57.400 --> 0:37:00.480 Indonesia in terms of demographics is quite well situation for 0:37:00.920 --> 0:37:03.440 quite significant economic growth and not just kind of the 0:37:03.440 --> 0:37:06.440 empty growth that's sort of a lot of a lot 0:37:06.440 --> 0:37:08.680 of commodity exporters have, but kind of a real dura 0:37:08.840 --> 0:37:10.080 higher quality. Yeah. 0:37:09.800 --> 0:37:12.040 Yeah, And I think you got the idea exactly, which 0:37:12.080 --> 0:37:15.120 is that you need reinvestment. You need to capture that surplus, 0:37:15.120 --> 0:37:17.280 and you need to drive it into making the economy 0:37:17.320 --> 0:37:19.960 more complex, but also into social development. And I think 0:37:19.960 --> 0:37:22.640 that's actually the hard part. In Indonesia and elsewhere. You 0:37:22.719 --> 0:37:26.439 need a developmental coalition that is also not just self 0:37:26.440 --> 0:37:29.359 interested business elites, right, because one thing you really need 0:37:29.400 --> 0:37:32.000 is social development, and that does entail a large degree 0:37:32.000 --> 0:37:36.120 of redistribution. You need social programs that develop the educational 0:37:36.360 --> 0:37:39.520 health basis for the economy, and that can supercharge what 0:37:39.600 --> 0:37:42.680 sometimes people call sort of an industrious revolution, where people 0:37:42.760 --> 0:37:46.439 essentially become better workers, have better habits, and all those 0:37:46.480 --> 0:37:49.560 things actually drive the productivity of their labor and allow 0:37:49.600 --> 0:37:51.279 them to integrate in the world economy better. You know, 0:37:51.320 --> 0:37:54.680 things also like thermal load from climate change. Really hot 0:37:54.719 --> 0:37:57.520 places on Earth are actually harder to work, and so 0:37:57.560 --> 0:37:59.759 people are lower productivity. So even if their labor costs 0:37:59.760 --> 0:38:02.480 are lower, the cost of hiring an additional worker and 0:38:02.520 --> 0:38:05.800 the actual productivity of that labor is not necessarily the highest. 0:38:05.920 --> 0:38:08.080 And so that's kind of the question mark. Right, Maybe 0:38:08.080 --> 0:38:11.240 you can have industrial investment, maybe you can have industrial policy, 0:38:11.320 --> 0:38:14.120 but if you don't make basic investments in your population, 0:38:14.480 --> 0:38:16.040 and this is I think the question for a country 0:38:16.080 --> 0:38:18.320 like Indonesia, you're not really going to be able to 0:38:18.320 --> 0:38:19.399 make it higher up the value chain. 0:38:19.480 --> 0:38:22.040 And with Indonesia you have kind of the looming sort 0:38:22.040 --> 0:38:25.400 of ecological question because yeah, climate wise, you're going to 0:38:25.440 --> 0:38:28.360 have a huge number of days with lethal heat in 0:38:28.360 --> 0:38:31.080 Indonesia by you know, twenty fifty, then later on twenty 0:38:31.080 --> 0:38:35.480 one hundred, and that will be a destabilizing factor. Even 0:38:35.600 --> 0:38:38.320 if you know, Jacobi is like doing you know, interesting 0:38:38.400 --> 0:38:39.480 industrial policy things. 0:38:39.560 --> 0:38:43.360 Yeah, just to try to end this on a happier note, 0:38:43.480 --> 0:38:45.279 can you give us an example of a place where 0:38:45.320 --> 0:38:48.600 you think, you know, the development policy is probably like 0:38:48.920 --> 0:38:53.319 close to an ideal or a positive example of where 0:38:53.320 --> 0:38:54.120 we want to get to. 0:38:54.400 --> 0:38:56.719 I think, yeah, I mean, Vietnam outside of China is 0:38:56.760 --> 0:39:00.239 probably the single most encouraging story. You know, before before 0:39:00.280 --> 0:39:04.239 they industrialized, really you've had very serious sort of investment 0:39:04.360 --> 0:39:08.680 in health and education outcomes kind of on a mass basis. 0:39:09.040 --> 0:39:11.759 And then when they did move into industry, and you 0:39:11.800 --> 0:39:14.000 see this as early as like the late nineties or 0:39:14.000 --> 0:39:17.600 two thousands, who's always in very high value added stuff. 0:39:17.920 --> 0:39:20.560 Their industrial X sports were always kind of had a 0:39:20.640 --> 0:39:25.440 very large share of high tech electronics stuff. And so Vietnam, 0:39:25.480 --> 0:39:28.120 even though per capita GDP remains quite low in terms 0:39:28.160 --> 0:39:30.680 of life expectancy, does very very well. And if you 0:39:30.719 --> 0:39:33.239 go to like Vietnam, you know, we're big believers that 0:39:33.280 --> 0:39:35.320 if you want to really understand development picture in a country, 0:39:35.320 --> 0:39:38.040 you actually have to go there experience it, you know, 0:39:38.080 --> 0:39:41.560 see what life is actually like. Apart apart from the statistics, 0:39:41.840 --> 0:39:45.600 Vietnam is an extremely peaceful, safe country. Even though per 0:39:45.600 --> 0:39:47.960 capitae GDP remains quite low. Isn't a very good trajector. 0:39:47.960 --> 0:39:49.400 It's just to be a contrariant and to pick a 0:39:49.440 --> 0:39:52.000 different example than David, but also one that's i think 0:39:52.040 --> 0:39:54.520 desperately poor, but in some way shows the power of 0:39:54.560 --> 0:39:57.440 institutions is but Swana. You know, in but Swana, the 0:39:57.800 --> 0:40:02.640 actually functioning, high functioning merit democratic institutions of the state 0:40:02.760 --> 0:40:05.719 and the sort of investment in social development and in 0:40:06.200 --> 0:40:09.799 pretty robust institutional culture I think has given the sort 0:40:09.800 --> 0:40:13.160 of baseline, especially for international investment. And in their problem 0:40:13.400 --> 0:40:16.320 it adds access to capital and finance. It's the ability 0:40:16.440 --> 0:40:19.480 to integrate with global corporations. It's the lack of, for example, 0:40:19.520 --> 0:40:23.000 port access. You know, Vietnam is conveniently situated, it has reports, 0:40:23.239 --> 0:40:25.520 it has a lot of natural endowments that not only 0:40:25.520 --> 0:40:27.200 do a lot of countries in Africa lack, but even 0:40:27.239 --> 0:40:30.640 the really good institutional stories like Botswana or even something 0:40:30.680 --> 0:40:33.080 like Rwanda, they don't really have. And so that's kind 0:40:33.120 --> 0:40:35.560 of the other tragedy here. Even when you get the 0:40:35.560 --> 0:40:38.480 institutional or policy mix right, sometimes you really have burdens 0:40:38.520 --> 0:40:41.759 of geography and sort of deeper structural factors. I mean, 0:40:41.760 --> 0:40:42.919 you're not in the great position either. 0:40:43.040 --> 0:40:45.000 And Botswana, yeah, like a lot of the time you 0:40:45.040 --> 0:40:47.640 have countries that realistically are not going to industrialize. I mean, 0:40:47.680 --> 0:40:51.000 Botswana is landlocked. It has a huge amount of mental 0:40:51.080 --> 0:40:54.759 resources that is basically the entire economy. But that's also 0:40:54.800 --> 0:40:57.040 a core thing is like, if you're going to become 0:40:57.120 --> 0:41:00.000 commodity dependent and a lot of countries are permanently based, 0:41:00.719 --> 0:41:02.040 how can you kind of make the best of that. 0:41:02.920 --> 0:41:07.560 Well, I'm that sort of like I guess moderately, moderately hopeful, 0:41:07.800 --> 0:41:11.440 note that there are some interesting positive cases. Henry and David, 0:41:11.520 --> 0:41:13.320 thank you so much for coming on the podcast, like 0:41:13.400 --> 0:41:15.560 fascinating research and way to think. 0:41:15.400 --> 0:41:15.959 About the world. 0:41:16.120 --> 0:41:17.279 Thank you so much for having us. 0:41:30.840 --> 0:41:31.200 Crazy. 0:41:31.239 --> 0:41:34.239 I thought it was an absolutely fascinating conversation. You know, 0:41:34.320 --> 0:41:39.360 one of the dynamics setting aside, like the growth trajectory trends, 0:41:40.000 --> 0:41:42.799 is this idea of like complexification of the economy as 0:41:42.880 --> 0:41:45.279 its own specific thing. And you know, I always think, 0:41:45.360 --> 0:41:47.640 like you know, in the East Village sometimes I actually 0:41:47.680 --> 0:41:49.040 don't know if it's still there. But at one point 0:41:49.080 --> 0:41:51.920 there was like this Hungarian bookstore, and I was like, 0:41:51.960 --> 0:41:55.360 it's so amazing that like a physical Hungarian bookstore like 0:41:55.400 --> 0:41:57.879 can can exist, but it can in like a rich, 0:41:57.960 --> 0:42:01.479 complex economy like New York City. And this idea that 0:42:01.480 --> 0:42:03.680 that's like a sort of like marker of like development, 0:42:03.680 --> 0:42:05.920 to me, is like a really interesting thing to think 0:42:05.960 --> 0:42:07.080 about with these economies. 0:42:07.400 --> 0:42:11.279 My favorite bookstore emblem of complicated economies in the East 0:42:11.320 --> 0:42:15.080 village is there's a used cookbook store and they only 0:42:15.160 --> 0:42:18.880 sell like vintage and historical cookbooks. 0:42:18.920 --> 0:42:21.239 There's amazing that, like, we can have an economy that 0:42:21.320 --> 0:42:24.680 supports some of the niche things, but beyond that, I mean, 0:42:24.719 --> 0:42:28.759 I did find like that to be like a sobering conversation. Obviously, 0:42:28.960 --> 0:42:31.480 and you know, I always see the charge of like 0:42:31.600 --> 0:42:35.160 line go up, this country is so much richer, et cetera. 0:42:35.640 --> 0:42:37.600 But I do think, like to your point in the 0:42:37.680 --> 0:42:39.640 very beginning, a lot of the is like when you 0:42:40.040 --> 0:42:42.440 sort of like scratch behind the data look a bit, 0:42:42.800 --> 0:42:46.440 or look at how much was simply selling raw commodities 0:42:46.560 --> 0:42:49.200 not high on the value chain to China during this 0:42:49.280 --> 0:42:52.160 like incredible boom, the story looks a bit worse. 0:42:52.640 --> 0:42:54.920 So that's definitely a theme that stood out to me. 0:42:55.000 --> 0:42:56.959 This idea of China. I think, I use the word 0:42:56.960 --> 0:42:59.440 ful crum, but China is a full crew of a 0:42:59.480 --> 0:43:02.920 lot of this economic progress that maybe isn't in an 0:43:02.960 --> 0:43:05.719 ideal form for a lot of economies. And then the 0:43:05.760 --> 0:43:08.520 other thing that really stood out to me was this 0:43:08.760 --> 0:43:13.200 bird's in flight idea that both Henry and David mentioned 0:43:14.000 --> 0:43:16.920 and also this idea that I think historically people have 0:43:17.000 --> 0:43:21.040 always been looking for an economic model to copy, and 0:43:21.080 --> 0:43:24.560 it's like, oh, they see manufacturing works here, so let's 0:43:24.600 --> 0:43:28.239 do manufacturing. Or you know, commodities exports works here, Let's 0:43:28.280 --> 0:43:31.880 do commodities exports the Singapore model. I cannot tell you 0:43:31.960 --> 0:43:34.560 how many countries in the Middle East have tried to 0:43:34.600 --> 0:43:38.680 replicate the Singapore Financial Center model. But like this idea 0:43:38.680 --> 0:43:42.560 that everyone's always looking for an easy sort of copycat solution. 0:43:42.880 --> 0:43:45.200 Yeah, well, you know, the other thing about the birds 0:43:45.239 --> 0:43:49.440 in flight metaphor is that it gives the illusion of 0:43:49.480 --> 0:43:52.920 like physics and science, right, and to their point, like, 0:43:53.000 --> 0:43:56.480 it's not physics, it's choices and it's politics, and there 0:43:56.560 --> 0:43:59.359 is not just like this sort of like natural phenomenon 0:43:59.440 --> 0:44:02.319 where like one hands off to the another, Like it 0:44:02.360 --> 0:44:05.719 may look like that superficially historically, but actually is a 0:44:05.800 --> 0:44:09.280 series of like active choices. And if the political coalition, 0:44:09.400 --> 0:44:13.600 that growth coalition, that social investment coalition, that social investment 0:44:13.640 --> 0:44:16.440 impulse has gone, then what looked like a sort of 0:44:16.440 --> 0:44:18.920 like physical process like is actually not going to show 0:44:19.000 --> 0:44:20.200 up totally. 0:44:20.520 --> 0:44:22.920 I think that's a really interesting point. Shall we leave it. 0:44:22.960 --> 0:44:23.839 Then let's leave it there. 0:44:23.880 --> 0:44:27.320 Okay, this has been another episode of the All Thoughts Podcast. 0:44:27.360 --> 0:44:29.960 I'm Tracy Alloway. You can follow me on Twitter at 0:44:30.000 --> 0:44:30.800 Tracy Alloway. 0:44:30.840 --> 0:44:33.440 And I'm Joe Wisenthal. You can follow me on Twitter 0:44:33.520 --> 0:44:37.000 at The Stalwart. Follow our guests on Twitter Henry Williams 0:44:37.000 --> 0:44:41.400 He's at Humphord and David os He's at David e Ox. 0:44:41.520 --> 0:44:45.560 Follow our producers Carman Rodriguez at Carman Arman and Dash 0:44:45.600 --> 0:44:48.799 Bennett at Dashbock. And check out all of our podcasts 0:44:48.800 --> 0:44:53.000 at Bloomberg under the handle at podcasts and for more 0:44:53.040 --> 0:44:56.360 odd Lags content, go to Bloomberg dot com slash Oddlogs. 0:44:56.440 --> 0:44:59.560 We post transcripts, we blog. We have a newsletter that 0:44:59.600 --> 0:45:03.320 comes out every Friday. Go there sign up. Thanks for listening.