1 00:00:00,160 --> 00:00:02,640 Speaker 1: We've removed our menus. We do have the art and 2 00:00:02,720 --> 00:00:06,120 Speaker 1: of using paper menus. This wholeful lines the current menus 3 00:00:06,160 --> 00:00:08,720 Speaker 1: that we've always used because they are laminated and they're 4 00:00:08,920 --> 00:00:12,319 Speaker 1: very easily sanitized right after our customer uses them. And 5 00:00:12,360 --> 00:00:15,320 Speaker 1: also to use the digital artsis on their home, they 6 00:00:15,320 --> 00:00:17,599 Speaker 1: can just scan a QR code and have the menu 7 00:00:17,680 --> 00:00:24,960 Speaker 1: pap right up for another Hello, and welcome to Stephanomics, 8 00:00:24,960 --> 00:00:27,880 Speaker 1: the podcast that brings the global economy to you. And 9 00:00:27,960 --> 00:00:31,560 Speaker 1: this week we're in a waffle House in Brookhaven, Georgia. 10 00:00:32,120 --> 00:00:36,320 Speaker 1: What you just heard was company spokeswoman Neary Boss explaining 11 00:00:36,320 --> 00:00:40,160 Speaker 1: how they're going to make waffle eating a socially distant activity. 12 00:00:40,760 --> 00:00:44,040 Speaker 1: And the past week, the state governor of Georgia, Brian Kemp, 13 00:00:44,280 --> 00:00:48,800 Speaker 1: has given restaurants like waffle House the green light to reopen. Also, 14 00:00:48,920 --> 00:00:53,760 Speaker 1: tattoo parlors and Jim's. Federal health officials thought it was 15 00:00:53,800 --> 00:00:57,319 Speaker 1: too soon, so did the mayor of Atlanta, so did 16 00:00:57,360 --> 00:01:01,000 Speaker 1: President Trump. But the governor ignored all of them and 17 00:01:01,040 --> 00:01:05,320 Speaker 1: went ahead with the reopening. He's not the only policymaker 18 00:01:05,319 --> 00:01:09,080 Speaker 1: to ignore expert advice. Since the COVID crisis hit, we've 19 00:01:09,120 --> 00:01:11,360 Speaker 1: seen quite a lot of governments try to ban the 20 00:01:11,400 --> 00:01:15,679 Speaker 1: export of food or key medical supplies, for example, despite 21 00:01:15,720 --> 00:01:19,080 Speaker 1: official advice to keep trade flowing and borders open. In 22 00:01:19,120 --> 00:01:21,440 Speaker 1: a little while, i'll talk to the economist Richard Baldwin 23 00:01:21,840 --> 00:01:25,520 Speaker 1: about economic nationalism in a crisis and whether it ever 24 00:01:25,640 --> 00:01:28,320 Speaker 1: makes sense. Keep listening if you want to find out 25 00:01:28,360 --> 00:01:31,919 Speaker 1: the answer and how it all relates to Alexander the Great. 26 00:01:32,800 --> 00:01:35,600 Speaker 1: But first I want to hear more about those waffles. 27 00:01:36,120 --> 00:01:40,680 Speaker 1: Mike Sasso is Bloomberg Real Economy reporter based in Atlanta, 28 00:01:41,080 --> 00:01:46,880 Speaker 1: and he's gone to see for himself. So it turns 29 00:01:46,880 --> 00:01:50,560 Speaker 1: out you're at the cutting edge of the reopening of America. 30 00:01:50,760 --> 00:01:53,440 Speaker 1: Tell us about what's opened up in Georgia the last 31 00:01:53,480 --> 00:01:55,560 Speaker 1: few days and what people think about it. Sure, the 32 00:01:55,920 --> 00:02:00,720 Speaker 1: Governor of Georgia controversially came up with a opening plan 33 00:02:00,800 --> 00:02:03,680 Speaker 1: for the state of Georgia in which he allowed some 34 00:02:03,960 --> 00:02:09,080 Speaker 1: tattoo parlors, nail salons, gymnasiums, and barbershops to open up 35 00:02:09,200 --> 00:02:12,400 Speaker 1: last Friday, and then he was going to be allowed 36 00:02:12,440 --> 00:02:18,040 Speaker 1: for some restaurants in movie theaters actually to open up Monday. Now, 37 00:02:18,120 --> 00:02:21,840 Speaker 1: you went to a waffle house, which I know is 38 00:02:22,320 --> 00:02:24,880 Speaker 1: is pretty popular in some quarters. It's a great place 39 00:02:24,919 --> 00:02:29,080 Speaker 1: to go late night after a show. Tell me what 40 00:02:29,120 --> 00:02:31,280 Speaker 1: it was like with with the people there. Did you 41 00:02:31,280 --> 00:02:35,520 Speaker 1: have a waffle I I didn't. It was a there 42 00:02:35,520 --> 00:02:38,160 Speaker 1: were not many people there actually over there. I was 43 00:02:38,200 --> 00:02:41,560 Speaker 1: there for you know, perhaps about an hour Monday morning, 44 00:02:41,600 --> 00:02:44,560 Speaker 1: and they had they had just opened a couple hours 45 00:02:44,639 --> 00:02:47,720 Speaker 1: earlier than that, um and when I was there, there 46 00:02:47,720 --> 00:02:52,120 Speaker 1: were maybe three people who wandered in and getting take 47 00:02:52,160 --> 00:02:56,360 Speaker 1: out orders. There was nobody actually at the restaurants sitting 48 00:02:56,400 --> 00:02:59,200 Speaker 1: down and eating. Now, some of that, to be sure, 49 00:02:59,280 --> 00:03:01,560 Speaker 1: may have there was. It was quite a scene where 50 00:03:02,320 --> 00:03:05,079 Speaker 1: where it was quite a number of local and national 51 00:03:05,200 --> 00:03:09,600 Speaker 1: media there to document people as they wandered in. So 52 00:03:09,720 --> 00:03:12,600 Speaker 1: it's it's possible that some people would just camera shy 53 00:03:12,720 --> 00:03:16,240 Speaker 1: and stayed away. I did venture out to another waffle 54 00:03:16,240 --> 00:03:20,239 Speaker 1: house that was not the scene of such a media frenzy, 55 00:03:20,360 --> 00:03:23,520 Speaker 1: and there were about two people sitting at the counter. 56 00:03:24,120 --> 00:03:27,520 Speaker 1: There was another man enjoying some coffee and unfurling a 57 00:03:27,560 --> 00:03:30,560 Speaker 1: newspaper at a booth. You know, certainly not a ton 58 00:03:30,639 --> 00:03:34,560 Speaker 1: of people. I did speak with one gentleman. He had 59 00:03:34,639 --> 00:03:38,240 Speaker 1: kind of left the kids in the suv while he 60 00:03:38,360 --> 00:03:41,400 Speaker 1: ran in to pick up his takeout order. He believes 61 00:03:41,400 --> 00:03:44,240 Speaker 1: that within a week or two he and his his 62 00:03:44,280 --> 00:03:47,240 Speaker 1: whole family of four kids and a wife would probably 63 00:03:47,280 --> 00:03:51,320 Speaker 1: venture in for dine in service. And I I think 64 00:03:51,360 --> 00:03:53,680 Speaker 1: that's probably what you're going to see here in Georgia, 65 00:03:54,400 --> 00:03:58,040 Speaker 1: as over time people are going to start getting bolder, 66 00:03:58,480 --> 00:04:02,000 Speaker 1: just like this gentleman was in. They'll start with perhaps 67 00:04:02,000 --> 00:04:05,000 Speaker 1: a takeout order than perhaps in a few days or 68 00:04:05,040 --> 00:04:07,320 Speaker 1: a week, I think you'll see them start to venture in. 69 00:04:08,160 --> 00:04:11,240 Speaker 1: And we are starting to see a surprising number of 70 00:04:11,320 --> 00:04:16,320 Speaker 1: restaurants like waffle House, Um out Back Steakhouse, another huge 71 00:04:16,400 --> 00:04:20,880 Speaker 1: American chain, is opening its units in Georgia as well. 72 00:04:20,960 --> 00:04:24,640 Speaker 1: And so while you've seen some opposition amongst sort of 73 00:04:24,680 --> 00:04:28,880 Speaker 1: prominent high end restaurants in Atlanta, some of these more 74 00:04:28,920 --> 00:04:35,320 Speaker 1: mainstream outlets have opened and are going full full bore. Well, Mike, 75 00:04:35,400 --> 00:04:37,760 Speaker 1: I hadn't thought about the added risk to your health 76 00:04:37,839 --> 00:04:41,440 Speaker 1: and social distancing of having large numbers of reporters all 77 00:04:41,440 --> 00:04:43,680 Speaker 1: around you as you try and order your your waffle. 78 00:04:43,720 --> 00:04:46,520 Speaker 1: That's a whole extra hazard for all these people. But 79 00:04:46,800 --> 00:04:48,800 Speaker 1: I mean, we'll talk a bit about the politics of 80 00:04:48,839 --> 00:04:51,440 Speaker 1: it in a minute, but it is I know the 81 00:04:51,440 --> 00:04:56,000 Speaker 1: conversation you had with the representative from the waffle House, 82 00:04:56,040 --> 00:04:58,919 Speaker 1: which is this big national chain. You know they're taking 83 00:04:58,920 --> 00:05:02,159 Speaker 1: it pretty seriously in terms of the steps they have 84 00:05:02,320 --> 00:05:04,520 Speaker 1: to take to make this safe. I guess it'd be 85 00:05:04,600 --> 00:05:06,760 Speaker 1: nice to hear that conversation you had with her now 86 00:05:07,640 --> 00:05:11,719 Speaker 1: run through the steps that you've taken again too. Okay, 87 00:05:12,000 --> 00:05:14,719 Speaker 1: about six weeks ago, when we were limited take out only, 88 00:05:14,960 --> 00:05:17,800 Speaker 1: we all and and social distancing had been recommended. We 89 00:05:17,839 --> 00:05:22,120 Speaker 1: took those steps to heart. We actually had locations in 90 00:05:22,200 --> 00:05:25,320 Speaker 1: the store on the floor, located where customers could come 91 00:05:25,320 --> 00:05:27,760 Speaker 1: in and stand. They were very respectful of that. When 92 00:05:27,760 --> 00:05:30,000 Speaker 1: they came into place, their warders wait for their food. 93 00:05:30,320 --> 00:05:32,359 Speaker 1: If they needed to wait outside, we had six ft 94 00:05:32,360 --> 00:05:34,600 Speaker 1: of distance outside, a couple of chairs outside on our 95 00:05:34,600 --> 00:05:37,760 Speaker 1: front porch. We also took our condiments off at that 96 00:05:37,800 --> 00:05:40,720 Speaker 1: time six weeks ago, off of the tables, so we've 97 00:05:40,800 --> 00:05:43,560 Speaker 1: kept that as well. And of course our associates are 98 00:05:43,600 --> 00:05:46,720 Speaker 1: wearing their masks. As a restaurant, we've always had food 99 00:05:46,760 --> 00:05:49,719 Speaker 1: safety protocols that we've had to follow in place. That 100 00:05:49,800 --> 00:05:54,160 Speaker 1: includes regular hand washing. Folks have been really respectful of that. 101 00:05:54,640 --> 00:05:57,359 Speaker 1: Employees are probably bound to be a little bit nervous 102 00:05:57,400 --> 00:06:01,560 Speaker 1: about plumbing contact where customers. How did you treat the employees? 103 00:06:01,560 --> 00:06:04,599 Speaker 1: Were they able to say, no, I'm not ready to 104 00:06:04,640 --> 00:06:06,240 Speaker 1: come in yet. How did you treat that with him? 105 00:06:06,279 --> 00:06:08,520 Speaker 1: Of course, we're not asking anyone to come in who 106 00:06:08,520 --> 00:06:11,200 Speaker 1: wasn't ready or comfortable in the covering U they weren't 107 00:06:11,200 --> 00:06:13,480 Speaker 1: ready to come in, We went and talked to to 108 00:06:13,800 --> 00:06:16,240 Speaker 1: associates who were ready and willing and able. Most of 109 00:06:16,240 --> 00:06:19,040 Speaker 1: these folks have been with us already. In the six weeks. 110 00:06:19,440 --> 00:06:22,640 Speaker 1: We tried to keep on as many associates as possible working. 111 00:06:23,279 --> 00:06:25,200 Speaker 1: But if someone said does hey, I'm I just don't 112 00:06:25,240 --> 00:06:27,760 Speaker 1: feel safe or I don't feel comfortable or whatever the reason, 113 00:06:27,800 --> 00:06:31,040 Speaker 1: maybe maybe childcare because the daycarees are closed schools or 114 00:06:31,080 --> 00:06:34,160 Speaker 1: closed that they needed to stay home. So we said 115 00:06:34,200 --> 00:06:36,560 Speaker 1: that's fine. Could they keep their jobs or how would 116 00:06:36,560 --> 00:06:38,760 Speaker 1: you treat their jobs if they didn't want to come 117 00:06:38,800 --> 00:06:42,280 Speaker 1: in yet. Well, we furloughed several people, over a thousand 118 00:06:42,480 --> 00:06:45,480 Speaker 1: UH managers. We furlowed three hundred and fifty folks from 119 00:06:45,520 --> 00:06:48,080 Speaker 1: our support team, which includes the corporate office and those 120 00:06:48,120 --> 00:06:50,800 Speaker 1: who worked in the field. And so we haven't at 121 00:06:50,800 --> 00:06:54,480 Speaker 1: this point brought back furloughed folks yet, but these were 122 00:06:54,520 --> 00:06:58,720 Speaker 1: individuals either were working very few hours for us already. 123 00:06:59,360 --> 00:07:01,320 Speaker 1: If in the opera two, you maybe have a few 124 00:07:01,320 --> 00:07:04,520 Speaker 1: more hours. We're hoping that with this limited dine in 125 00:07:04,720 --> 00:07:07,719 Speaker 1: service option that we will see the kind of response 126 00:07:07,760 --> 00:07:10,280 Speaker 1: from the customers that will allow us to bring more 127 00:07:10,320 --> 00:07:13,400 Speaker 1: associates back to work, more shifts that can be open 128 00:07:13,960 --> 00:07:17,480 Speaker 1: throughout the day. This doesn't seem like a lot of people. 129 00:07:17,520 --> 00:07:20,200 Speaker 1: I didn't see anyone in there dining in. You maybe 130 00:07:20,200 --> 00:07:22,000 Speaker 1: you saw a couple take out? Is that how it's 131 00:07:22,000 --> 00:07:24,520 Speaker 1: going so far? When I came on this morning at 132 00:07:24,520 --> 00:07:26,800 Speaker 1: about seven fifty this morning, there was a gentleman sitting 133 00:07:26,800 --> 00:07:29,600 Speaker 1: at the high counter enjoying his meal. He finished and 134 00:07:29,640 --> 00:07:32,200 Speaker 1: he left. We had two more people come in, sit 135 00:07:32,240 --> 00:07:34,320 Speaker 1: down and enjoy their meals, but most of it has 136 00:07:34,360 --> 00:07:36,280 Speaker 1: been take out, as it has been for the past 137 00:07:36,360 --> 00:07:38,960 Speaker 1: six weeks. We weren't expecting that we were going to 138 00:07:39,040 --> 00:07:43,240 Speaker 1: be overwhelmed with customer demand. Customer demand right away. We 139 00:07:43,360 --> 00:07:45,520 Speaker 1: know it's gonna take some time. We're just hoping that 140 00:07:45,600 --> 00:07:48,880 Speaker 1: people goes, especially those who come in and they've seen 141 00:07:49,080 --> 00:07:51,240 Speaker 1: they've been coming in and getting take out, that maybe 142 00:07:51,280 --> 00:07:53,480 Speaker 1: instead of eating in their cars or taking it all 143 00:07:53,520 --> 00:07:55,920 Speaker 1: the way back home. We're taking into their job, or 144 00:07:55,960 --> 00:07:57,920 Speaker 1: take a few more minutes to sit down and enjoy 145 00:07:58,120 --> 00:08:00,840 Speaker 1: a hot meal. And just last question, and uh, take 146 00:08:00,920 --> 00:08:03,640 Speaker 1: me through the deliberations of all why they chose to 147 00:08:03,720 --> 00:08:06,000 Speaker 1: reopen what well went what we're what was in the 148 00:08:06,080 --> 00:08:09,960 Speaker 1: decision making process. Well, like I said, we've always been open. 149 00:08:10,280 --> 00:08:14,840 Speaker 1: We've only unfortunately had the closed seven hundred stores nationwide. Uh, temporarily, 150 00:08:15,000 --> 00:08:18,240 Speaker 1: We hope the decision is very simple. There are two 151 00:08:18,280 --> 00:08:21,640 Speaker 1: sides to this equation. One is the very real public 152 00:08:21,640 --> 00:08:24,239 Speaker 1: health crisis of the virus and how it's affected people. 153 00:08:24,760 --> 00:08:28,080 Speaker 1: The other half is the brewing public health crisis that 154 00:08:28,280 --> 00:08:30,840 Speaker 1: is coming because of people who are unable to earn 155 00:08:30,840 --> 00:08:34,199 Speaker 1: a living, the despair that comes from that, the inability 156 00:08:34,360 --> 00:08:37,040 Speaker 1: to take care of the obligations that don't stop. So 157 00:08:37,160 --> 00:08:39,520 Speaker 1: we really want to be there for our associates to 158 00:08:39,559 --> 00:08:41,960 Speaker 1: allow those who want work, who are able to work, 159 00:08:42,000 --> 00:08:51,600 Speaker 1: to come back to work. Mike, it's striking because we 160 00:08:51,679 --> 00:08:56,480 Speaker 1: spoke last week to Sharon chen Uh, the bureau chief 161 00:08:56,679 --> 00:09:00,679 Speaker 1: in Beijing, about her time in Wuhan, and it was 162 00:09:00,800 --> 00:09:04,679 Speaker 1: quite a different story that the businesses were opened up, 163 00:09:05,360 --> 00:09:07,640 Speaker 1: but really no one was going into the restaurants, and 164 00:09:07,640 --> 00:09:10,760 Speaker 1: they didn't seem to be a great desire to go 165 00:09:10,840 --> 00:09:14,920 Speaker 1: out and consume. I wonder if that's just the very 166 00:09:14,960 --> 00:09:18,920 Speaker 1: different experience that Wuhan had or is it almost a 167 00:09:18,960 --> 00:09:23,760 Speaker 1: cultural difference that people, maybe particularly in Georgia, do feel 168 00:09:23,760 --> 00:09:25,960 Speaker 1: a bit more libertarian, a bit more determined to go 169 00:09:26,000 --> 00:09:29,880 Speaker 1: out and exercise their freedoms. How do you think that 170 00:09:29,880 --> 00:09:34,240 Speaker 1: that the politics of exiting lockdown is going to work 171 00:09:34,559 --> 00:09:38,120 Speaker 1: in in your state? Yeah, I I do. I do. 172 00:09:38,240 --> 00:09:43,400 Speaker 1: There's an interesting political component to all this. More libertarian 173 00:09:43,520 --> 00:09:46,760 Speaker 1: in conservative minded folks are being a little bit more 174 00:09:48,480 --> 00:09:51,120 Speaker 1: willing to get out and explore and get out of 175 00:09:51,120 --> 00:09:54,200 Speaker 1: the house and frequent some of these businesses. We certainly 176 00:09:54,240 --> 00:09:57,600 Speaker 1: saw that when I visited Cartersville, Georgia, a small town 177 00:09:58,280 --> 00:10:00,920 Speaker 1: up or North Georgia, it tends to be more conservative. 178 00:10:01,320 --> 00:10:05,600 Speaker 1: Those folks wondered what the fuss was all about, uh, 179 00:10:05,640 --> 00:10:08,600 Speaker 1: and they were eager to get out here. In Atlanta, 180 00:10:08,920 --> 00:10:11,960 Speaker 1: which is a little bit more liberal, there is a 181 00:10:12,040 --> 00:10:15,960 Speaker 1: sense of of more caution. So there are certain you know, 182 00:10:16,080 --> 00:10:19,000 Speaker 1: certainly range of opinions. I think one of the more 183 00:10:19,040 --> 00:10:23,120 Speaker 1: interesting things that I've found is there's an element of 184 00:10:23,200 --> 00:10:26,679 Speaker 1: competition here that I think will weigh on business owners 185 00:10:27,240 --> 00:10:29,679 Speaker 1: I did hear from. I have heard from businesses that 186 00:10:30,120 --> 00:10:34,160 Speaker 1: didn't want to open up this quickly, but they're seeing 187 00:10:34,200 --> 00:10:38,840 Speaker 1: their competing businesses open and so they're being sort of 188 00:10:38,840 --> 00:10:42,240 Speaker 1: forced to open. I heard that from a gym owner 189 00:10:43,000 --> 00:10:46,640 Speaker 1: um in Cartersville, Georgia, who wanted to wait another couple 190 00:10:46,640 --> 00:10:51,040 Speaker 1: of weeks. However, competing gym's were starting to open, and 191 00:10:51,080 --> 00:10:55,240 Speaker 1: so he had to open. And in fact, interestingly, he's 192 00:10:55,240 --> 00:11:00,400 Speaker 1: actually done fairly well by opening. He was shocked learned 193 00:11:00,440 --> 00:11:04,600 Speaker 1: that he had picked up thirteen additional fitness center customers 194 00:11:04,920 --> 00:11:09,079 Speaker 1: who were defecting from a gym that didn't open this 195 00:11:09,240 --> 00:11:13,199 Speaker 1: past Friday. So there are people who want to get 196 00:11:13,240 --> 00:11:16,400 Speaker 1: out in Those people may be voting with their pocketbooks 197 00:11:16,440 --> 00:11:20,600 Speaker 1: in some case by helping those businesses that choose to 198 00:11:20,600 --> 00:11:23,520 Speaker 1: to open earlier. And I do have to worry a 199 00:11:23,600 --> 00:11:26,480 Speaker 1: little bit about that competition. You talked about the national 200 00:11:26,600 --> 00:11:30,080 Speaker 1: restaurant chains maybe a little bit easier for them to 201 00:11:30,400 --> 00:11:34,320 Speaker 1: establish careful protocols and get hold of all of the 202 00:11:34,360 --> 00:11:40,719 Speaker 1: protective equipment for their employees than these small time restaurants 203 00:11:41,040 --> 00:11:43,000 Speaker 1: who will feel they have to open up because the 204 00:11:43,040 --> 00:11:45,440 Speaker 1: big guys have opened up. So you have to wonder 205 00:11:46,080 --> 00:11:48,920 Speaker 1: what the what the implications will be. And also I 206 00:11:48,960 --> 00:11:53,840 Speaker 1: guess the what's the what's the threshold at which people 207 00:11:53,840 --> 00:11:56,520 Speaker 1: start to change their mind if it looks like the 208 00:11:56,760 --> 00:12:00,840 Speaker 1: coronavirus is not under control in the state, I guess 209 00:12:00,840 --> 00:12:03,120 Speaker 1: there'd be two different sets of opinion on that as well. 210 00:12:03,240 --> 00:12:07,240 Speaker 1: Might Yeah, to to your point about a lack of 211 00:12:07,520 --> 00:12:11,360 Speaker 1: protective equipment. You know, one of the gym owner that 212 00:12:11,440 --> 00:12:14,880 Speaker 1: I mentioned in Cartersville that sort of felt forced to 213 00:12:15,000 --> 00:12:19,000 Speaker 1: open before he wanted to, he admitted at the end 214 00:12:19,040 --> 00:12:21,800 Speaker 1: of my call with him that they are already running 215 00:12:21,880 --> 00:12:27,360 Speaker 1: low of sanitizer and wipes to wipe down the equipment. Certainly, 216 00:12:27,360 --> 00:12:29,920 Speaker 1: there are a lot of people watching Georgia and a 217 00:12:29,920 --> 00:12:33,120 Speaker 1: lot of people who are opponents of the governor's move 218 00:12:33,200 --> 00:12:37,080 Speaker 1: And if it turns out that the COVID nineteen cases 219 00:12:37,160 --> 00:12:40,760 Speaker 1: spike here, as some people think, the governor will be 220 00:12:40,840 --> 00:12:45,559 Speaker 1: under tremendous pressure and this could be a a real 221 00:12:45,679 --> 00:12:49,720 Speaker 1: challenge for him when it comes re election time. Well, 222 00:12:49,720 --> 00:12:51,480 Speaker 1: and I bet the people who go to the gym 223 00:12:52,000 --> 00:12:54,600 Speaker 1: probably think they're already very fit and that will protect them. 224 00:12:54,640 --> 00:12:56,800 Speaker 1: But we know that's not necessarily the case. Okay, I 225 00:12:56,800 --> 00:13:00,400 Speaker 1: guess my only question, which is more frivolous, is what 226 00:13:00,800 --> 00:13:03,640 Speaker 1: restaurant opening would actually get you ordering some food if 227 00:13:03,640 --> 00:13:06,480 Speaker 1: you didn't get a waffle at the waffle house? What 228 00:13:06,480 --> 00:13:08,640 Speaker 1: what will you what will you want to order when 229 00:13:08,640 --> 00:13:13,839 Speaker 1: it opens up? What? Interestingly, Atlanta is a is a 230 00:13:13,960 --> 00:13:18,920 Speaker 1: very diverse community. We have in the suburb where I live. 231 00:13:19,000 --> 00:13:24,280 Speaker 1: It's sort of the Duluth Lawrenceville, Georgia area northeast of Atlanta. 232 00:13:24,320 --> 00:13:28,240 Speaker 1: They have a large Korean population, and I happen to 233 00:13:28,320 --> 00:13:31,720 Speaker 1: have My favorite restaurant is a Korean taco place that's 234 00:13:31,760 --> 00:13:35,240 Speaker 1: in Duluth, Georgia. And so if and when I've not 235 00:13:35,360 --> 00:13:37,720 Speaker 1: been by that restaurant, but if and when it opens 236 00:13:37,720 --> 00:13:41,000 Speaker 1: the dine end service, I will be frequenting the Korean 237 00:13:41,040 --> 00:13:44,800 Speaker 1: Taco place. And I went I saw you there, we 238 00:13:44,840 --> 00:13:47,120 Speaker 1: went out for a meal at the end of last year. 239 00:13:47,120 --> 00:13:49,840 Speaker 1: You didn't take me there next time you have? Yeah, Okay, 240 00:13:49,880 --> 00:14:03,319 Speaker 1: thanks very much, Mike Sassa. So I'm delighted to welcome 241 00:14:03,360 --> 00:14:08,040 Speaker 1: back to Stephanomics Professor Richard Baldwin, Professor of International Economics 242 00:14:08,040 --> 00:14:12,280 Speaker 1: at the Graduate Institute of International and Development Studies in Geneva. 243 00:14:13,040 --> 00:14:17,640 Speaker 1: Richards just co edited with Simon Everett a book for 244 00:14:17,720 --> 00:14:20,600 Speaker 1: the European think tank, the Center for Economic Policy Research, 245 00:14:21,000 --> 00:14:25,080 Speaker 1: which is called COVID nineteen and Trade Policy. Why turning 246 00:14:25,080 --> 00:14:29,360 Speaker 1: inward won't work. Richard, we have had a lot of 247 00:14:29,400 --> 00:14:35,160 Speaker 1: talk on this program and generally about countries turning inward 248 00:14:35,640 --> 00:14:39,120 Speaker 1: in response to this crisis, and maybe companies wanting to 249 00:14:39,200 --> 00:14:43,920 Speaker 1: be less global um and maybe be more self sufficient 250 00:14:44,600 --> 00:14:48,720 Speaker 1: in key ways reduced their reliance on China. But we've 251 00:14:48,760 --> 00:14:51,920 Speaker 1: also seen some very short term, sort of knee jerk 252 00:14:52,000 --> 00:14:54,680 Speaker 1: reactions by countries just in the last month or two 253 00:14:54,720 --> 00:14:59,520 Speaker 1: trying to safeguard their supplies of key medical equipment and food. 254 00:14:59,560 --> 00:15:01,480 Speaker 1: So I see. You know, Russia has tried to limit 255 00:15:01,520 --> 00:15:06,600 Speaker 1: its exports of grain, for example, Vietnam put limits at 256 00:15:06,680 --> 00:15:09,760 Speaker 1: least for a while on its export of rice. You know, 257 00:15:10,000 --> 00:15:13,040 Speaker 1: when we hear about these things, they it sounds selfish, 258 00:15:13,280 --> 00:15:16,880 Speaker 1: doesn't sound very kind of civic spirited when governments do this. 259 00:15:16,960 --> 00:15:19,000 Speaker 1: But I think a lot of people will instinctively have 260 00:15:19,120 --> 00:15:23,800 Speaker 1: more sympathy with policymakers doing that at a time of crisis. 261 00:15:23,960 --> 00:15:26,880 Speaker 1: When people are really worried about, for example, getting that 262 00:15:27,560 --> 00:15:31,520 Speaker 1: personal protective equipment. But you think it's it's just as 263 00:15:31,560 --> 00:15:34,440 Speaker 1: misguided in times of crisis as it is in normal times. 264 00:15:34,480 --> 00:15:38,520 Speaker 1: Why is that, Well, the basic problem is that we 265 00:15:38,560 --> 00:15:42,160 Speaker 1: live in the twenty one century where to make almost 266 00:15:42,200 --> 00:15:45,640 Speaker 1: anything you have to import products. So, just to take 267 00:15:45,880 --> 00:15:51,360 Speaker 1: an example, respirator mass use inputs from a number of countries, 268 00:15:51,880 --> 00:15:57,200 Speaker 1: and so blocking exports of the mask, which may trigger retaliation, 269 00:15:57,640 --> 00:16:01,120 Speaker 1: can come up the whole supply chain, therefore make it 270 00:16:01,280 --> 00:16:06,200 Speaker 1: harder for everybody to make masks anywhere. The way manufacturing 271 00:16:06,200 --> 00:16:09,520 Speaker 1: works today, it is globalized, and we can't change that. 272 00:16:09,640 --> 00:16:13,280 Speaker 1: During the COVID crisis, there are factories all around the world, 273 00:16:13,360 --> 00:16:19,720 Speaker 1: including in China, and blocking exports of American mass for example, 274 00:16:20,560 --> 00:16:26,480 Speaker 1: risk retaliation which will essentially build walls in the global factory. 275 00:16:26,520 --> 00:16:31,640 Speaker 1: So trying to keep more products at home to boost 276 00:16:31,800 --> 00:16:36,400 Speaker 1: local availability is actually hindering the world's ability to produce 277 00:16:36,440 --> 00:16:39,920 Speaker 1: this good. And if the retaliations go far enough, then 278 00:16:39,960 --> 00:16:44,720 Speaker 1: we'll have a real disaster, like where everybody's banning exports 279 00:16:44,720 --> 00:16:47,080 Speaker 1: and that makes it hard for anybody to make anything. 280 00:16:47,440 --> 00:16:49,520 Speaker 1: So that's the real danger is that this thing con 281 00:16:49,560 --> 00:16:52,560 Speaker 1: spire out of control. Yeah, and I natued in then 282 00:16:52,600 --> 00:16:55,400 Speaker 1: the forward to your your ebook of Golden Brown, the 283 00:16:55,400 --> 00:16:58,400 Speaker 1: former Prime Minister makes exactly that point, makes the reference 284 00:16:58,440 --> 00:17:01,240 Speaker 1: back to the twenties and and fears, and you make 285 00:17:01,280 --> 00:17:03,360 Speaker 1: the interdependence point. And I have to say I wasn't 286 00:17:03,360 --> 00:17:05,639 Speaker 1: aware of this. So the US is heavily dependent on 287 00:17:05,680 --> 00:17:09,359 Speaker 1: the imports of personal protective equipment, but also is a 288 00:17:09,400 --> 00:17:12,800 Speaker 1: major exporter and even an exports to China. So if 289 00:17:12,840 --> 00:17:16,840 Speaker 1: you're you can't you can't necessarily unpick this. I mean food. 290 00:17:16,920 --> 00:17:18,640 Speaker 1: You know, we've talked a bit about the medical side. 291 00:17:18,680 --> 00:17:22,080 Speaker 1: Food is the other thing that quite a few countries 292 00:17:22,119 --> 00:17:25,840 Speaker 1: have reached to try and limit exports. You know, the 293 00:17:25,840 --> 00:17:28,000 Speaker 1: opposite of what we often see when we see these 294 00:17:28,080 --> 00:17:31,359 Speaker 1: kind of competitive situations in trade, where actually you're trying 295 00:17:31,359 --> 00:17:34,600 Speaker 1: to maximize your exports and minimize your imports. We've had 296 00:17:35,520 --> 00:17:37,639 Speaker 1: the opposite here. People are trying to keep hold of 297 00:17:37,640 --> 00:17:41,359 Speaker 1: their imports, but stop those exports of of key of food. 298 00:17:41,800 --> 00:17:44,719 Speaker 1: You can see the logic of it when something like Russia, 299 00:17:44,880 --> 00:17:47,880 Speaker 1: somebody like Russia tries to make sure that they can 300 00:17:47,920 --> 00:17:52,480 Speaker 1: hold onto their grain supplies. But what's the implication in practice. Well, so, 301 00:17:53,119 --> 00:17:55,199 Speaker 1: just to give you a little classical reference, you may 302 00:17:55,320 --> 00:17:58,639 Speaker 1: enjoy Alexander the Great, right before he went off to 303 00:17:58,680 --> 00:18:02,000 Speaker 1: conquer the world, he forbid the exports of all food 304 00:18:02,080 --> 00:18:04,800 Speaker 1: from Greece exactly because he wanted to keep the food 305 00:18:04,840 --> 00:18:08,879 Speaker 1: prices low in grease and therefore keep the population happy. 306 00:18:09,320 --> 00:18:11,800 Speaker 1: Now we live in a different world than Alexander the Great. 307 00:18:12,400 --> 00:18:16,640 Speaker 1: The last time this happened was in two thousand and six. 308 00:18:16,680 --> 00:18:20,560 Speaker 1: Two thousand and seven, there was a round of export 309 00:18:20,720 --> 00:18:24,480 Speaker 1: restraints on food and the price of food rises. Now, 310 00:18:24,520 --> 00:18:28,040 Speaker 1: once the price of food rises, nations will be worried 311 00:18:28,119 --> 00:18:31,240 Speaker 1: about shortage of food, and so they very often start 312 00:18:31,280 --> 00:18:34,159 Speaker 1: buying to build up stocks at that time. So therefore 313 00:18:34,240 --> 00:18:38,200 Speaker 1: the prices rise more, and to protect the local markets, 314 00:18:38,240 --> 00:18:41,920 Speaker 1: more exporters block off the exports. And so this this 315 00:18:42,080 --> 00:18:45,760 Speaker 1: round can lead to very high, very rising prices, as 316 00:18:45,760 --> 00:18:48,480 Speaker 1: it did in two thousand and seven, And although the 317 00:18:48,840 --> 00:18:51,520 Speaker 1: people are blocking the exports, you can understand it. As 318 00:18:51,520 --> 00:18:54,520 Speaker 1: you said, it keeps the price lower than it would otherwise. 319 00:18:54,960 --> 00:18:57,520 Speaker 1: It's really a disaster for the developing world and poor 320 00:18:57,560 --> 00:19:00,159 Speaker 1: people in general. So it's a kind of a for 321 00:19:00,280 --> 00:19:05,160 Speaker 1: tat thing. That's triggering um behaviors which could be avoided 322 00:19:05,200 --> 00:19:09,159 Speaker 1: with cooperation. I like to draw an analogy with what 323 00:19:09,280 --> 00:19:12,800 Speaker 1: happened with toilet paper early on in this crisis. So 324 00:19:12,880 --> 00:19:16,480 Speaker 1: there is absolutely no shortage of toilet paper in the world, 325 00:19:16,960 --> 00:19:19,120 Speaker 1: but when people thought that there might be a shortage 326 00:19:19,119 --> 00:19:21,520 Speaker 1: of toilet paper, they all decided to stock up at home, 327 00:19:21,920 --> 00:19:24,200 Speaker 1: And because there is not enough toilet paper in the 328 00:19:24,240 --> 00:19:26,479 Speaker 1: world for everybody to have a three weeks supply at 329 00:19:26,520 --> 00:19:29,040 Speaker 1: home at least in the short rue, there was a 330 00:19:29,080 --> 00:19:32,000 Speaker 1: shortage of toilet paper, and a similar sort of thing 331 00:19:32,040 --> 00:19:35,800 Speaker 1: can happen with food. The f a O shows that 332 00:19:35,840 --> 00:19:39,639 Speaker 1: the stocks to consumption ratios are perfectly fine in the 333 00:19:39,680 --> 00:19:43,200 Speaker 1: major grains worldwide. There is no shortage of food right now. 334 00:19:43,520 --> 00:19:46,600 Speaker 1: But if every nation decides to accumulate a two months 335 00:19:46,640 --> 00:19:49,880 Speaker 1: supply because they're afraid the food exporters are going to ban, 336 00:19:50,320 --> 00:19:52,720 Speaker 1: then there will be a shortage of food, and the 337 00:19:52,760 --> 00:19:55,479 Speaker 1: prices will go up and more exporters will ban it. 338 00:19:55,720 --> 00:19:59,040 Speaker 1: So we get into this bad balance, this bad kind 339 00:19:59,040 --> 00:20:03,720 Speaker 1: of outcomes situation where the export bands of food go up, 340 00:20:03,840 --> 00:20:07,160 Speaker 1: which make people panic and want to buy more food, 341 00:20:07,200 --> 00:20:09,680 Speaker 1: which then makes it more expensive. Which then makes more 342 00:20:09,680 --> 00:20:12,359 Speaker 1: people put on the export ban. So it's really a 343 00:20:12,440 --> 00:20:15,520 Speaker 1: kind of lack of coordination. And we saw that last 344 00:20:15,520 --> 00:20:18,320 Speaker 1: in two thousand and six, two thousand and seven, right 345 00:20:18,359 --> 00:20:21,040 Speaker 1: before the global crisis. It was completely unrelated to the 346 00:20:21,080 --> 00:20:28,600 Speaker 1: global crisis. But that's the last time it happened. Finally, 347 00:20:28,640 --> 00:20:30,640 Speaker 1: I think it's just a couple more questions. But that 348 00:20:31,080 --> 00:20:35,160 Speaker 1: you described what would be, in some sense the nightmare scenario. 349 00:20:35,240 --> 00:20:37,679 Speaker 1: You get into that big collective action problem where a 350 00:20:37,720 --> 00:20:42,119 Speaker 1: few export restrictions here and there have spiraled into a 351 00:20:42,200 --> 00:20:46,440 Speaker 1: complete closure of global supply chains. You know, a lot 352 00:20:46,480 --> 00:20:50,560 Speaker 1: of governments and certainly international organizations like the International Monetary 353 00:20:50,560 --> 00:20:53,880 Speaker 1: Fund have been quite aware of this coming into this crisis. 354 00:20:53,880 --> 00:20:58,520 Speaker 1: They've seen governments, some perhaps um succumbing to this instinct 355 00:20:58,600 --> 00:21:01,359 Speaker 1: or risk of succumbing to the instinct. And I've seen 356 00:21:01,400 --> 00:21:03,800 Speaker 1: groups of countries, even in the last week or so, 357 00:21:04,000 --> 00:21:07,919 Speaker 1: come together to sign declarations that they're not going to 358 00:21:07,960 --> 00:21:10,879 Speaker 1: have these kind of export restrictions, especially on food and 359 00:21:11,000 --> 00:21:15,400 Speaker 1: medical supplies. So would you say, right now that we 360 00:21:15,480 --> 00:21:18,200 Speaker 1: have that we are really heading down that road, or 361 00:21:18,280 --> 00:21:20,920 Speaker 1: do you think so far we've managed to stop that 362 00:21:21,000 --> 00:21:24,919 Speaker 1: kind of downward spiral. No, I think we are in 363 00:21:24,920 --> 00:21:27,840 Speaker 1: the danger of the spiraling out of control. So, as 364 00:21:27,880 --> 00:21:31,520 Speaker 1: you pointed out, there are sensible people around the world 365 00:21:32,040 --> 00:21:35,400 Speaker 1: who understand that what goes around comes around, and when 366 00:21:35,440 --> 00:21:39,080 Speaker 1: you start putting on export bands, other people will retaliate. 367 00:21:39,560 --> 00:21:43,199 Speaker 1: So the countries that you were talking about were signing 368 00:21:43,320 --> 00:21:46,560 Speaker 1: led lad By New Zealand and others who agreed not 369 00:21:46,680 --> 00:21:51,439 Speaker 1: to restrict exports of food that did not include Russia, 370 00:21:51,480 --> 00:21:54,639 Speaker 1: for example, did not include the United States in a 371 00:21:54,880 --> 00:21:57,560 Speaker 1: in a binding way. And I think the problem is 372 00:21:57,640 --> 00:22:01,879 Speaker 1: is we have an American resident who has very strong 373 00:22:02,000 --> 00:22:06,199 Speaker 1: instincts to close off the border whenever he can. He 374 00:22:06,280 --> 00:22:09,800 Speaker 1: does not understand the whole point about international supply chains. 375 00:22:10,080 --> 00:22:12,119 Speaker 1: So I think there is a danger of its spinning 376 00:22:12,160 --> 00:22:15,840 Speaker 1: out of control. Moreover, two of the biggest producers of 377 00:22:15,880 --> 00:22:19,320 Speaker 1: the medical products and now we're talking about a medical 378 00:22:19,320 --> 00:22:24,160 Speaker 1: equipment and and kit it's China and the United States, 379 00:22:24,200 --> 00:22:26,439 Speaker 1: and they have a trade war going on and this 380 00:22:26,600 --> 00:22:29,760 Speaker 1: other this thing could get wrapped up in it. So 381 00:22:30,119 --> 00:22:33,080 Speaker 1: I think it is a real concern. Now, just just 382 00:22:33,160 --> 00:22:35,879 Speaker 1: to sort of reiterate with the problem there is that 383 00:22:36,600 --> 00:22:40,160 Speaker 1: if one country starts putting on bands and the other 384 00:22:40,160 --> 00:22:43,040 Speaker 1: one starts putting on bands. That can mean that the 385 00:22:43,080 --> 00:22:47,679 Speaker 1: availability of medical equipment starts to fall everywhere, and that 386 00:22:47,720 --> 00:22:50,120 Speaker 1: makes more people put on bands to keep at home 387 00:22:50,280 --> 00:22:53,280 Speaker 1: what makes equipment they have. So again it's one of 388 00:22:53,320 --> 00:22:57,200 Speaker 1: these things that tumble out of control. In the nineteen thirties, 389 00:22:57,280 --> 00:23:00,719 Speaker 1: people were countries were trying to shift demand of themselves 390 00:23:00,720 --> 00:23:04,040 Speaker 1: with tariffs, and what happened was with the retaliation is 391 00:23:04,080 --> 00:23:08,199 Speaker 1: they destroyed aggregate demand everywhere. What could happen here is 392 00:23:08,200 --> 00:23:12,159 Speaker 1: that an attempt to keep supply local with export bands, 393 00:23:12,320 --> 00:23:16,160 Speaker 1: everybody ends up destroying the factory uh global value chains 394 00:23:16,160 --> 00:23:19,800 Speaker 1: and supply chains, and they destroy supply everywhere. So there's 395 00:23:19,800 --> 00:23:24,600 Speaker 1: another example on the self defeating export bands that we 396 00:23:24,680 --> 00:23:28,440 Speaker 1: saw when India banned the export of clora quinine, which 397 00:23:28,480 --> 00:23:30,679 Speaker 1: if you remember a few weeks ago, so the President 398 00:23:30,760 --> 00:23:34,040 Speaker 1: United States and even some other people, some doctors, we're 399 00:23:34,080 --> 00:23:38,320 Speaker 1: saying that clora quinine might be a treatment for COVID. 400 00:23:38,720 --> 00:23:42,280 Speaker 1: What happened then was India, who has a lot of people, 401 00:23:42,359 --> 00:23:45,280 Speaker 1: said we're going to ban the export of clora quinine, 402 00:23:45,680 --> 00:23:47,920 Speaker 1: and that lasted for a day or two before they 403 00:23:47,960 --> 00:23:52,280 Speaker 1: realized that they import all the precursors for clora quinine 404 00:23:52,359 --> 00:23:56,400 Speaker 1: from China. So they reversed themselves because they realized an 405 00:23:56,400 --> 00:23:59,560 Speaker 1: export ban that led China to retaliate with an export 406 00:23:59,600 --> 00:24:03,200 Speaker 1: ban would actually mean that they had no chloroquinine domestically. 407 00:24:03,560 --> 00:24:08,040 Speaker 1: And as as what the example of trying to increase 408 00:24:08,119 --> 00:24:12,000 Speaker 1: the availability of a supply by building walls within your 409 00:24:12,040 --> 00:24:14,760 Speaker 1: own factory and it just doesn't work. It's a backfire. 410 00:24:15,840 --> 00:24:18,119 Speaker 1: It might have made sense in the twentieth century, but 411 00:24:18,200 --> 00:24:22,879 Speaker 1: it doesn't make sense in the manufacturing world. First of vision, Bobwin, 412 00:24:22,920 --> 00:24:31,399 Speaker 1: thank you very much, Thank you so thanks for listening 413 00:24:31,400 --> 00:24:34,480 Speaker 1: to Stephanomics, the podcast that takes you from waffles to 414 00:24:34,640 --> 00:24:38,240 Speaker 1: toilet paper via Alexander the Great and the history of 415 00:24:38,280 --> 00:24:41,239 Speaker 1: global trade. We'll be back next week with more on 416 00:24:41,280 --> 00:24:44,240 Speaker 1: how COVID nineteen is turning the world economy upside down. 417 00:24:44,760 --> 00:24:48,200 Speaker 1: But remember you can always find us on the Bloomberg Terminal, website, 418 00:24:48,560 --> 00:24:51,320 Speaker 1: app or wherever you get your podcasts, and for more 419 00:24:51,359 --> 00:24:55,800 Speaker 1: news and analysis from Bloomberg Economics, follow at Economics on Twitter. 420 00:24:56,359 --> 00:24:59,720 Speaker 1: This episode was produced by Magnus Hendrickson, with special thanks 421 00:24:59,760 --> 00:25:03,360 Speaker 1: to my Sasso in Atlanta and Professor Richard Baldwin in Geneva. 422 00:25:04,080 --> 00:25:07,159 Speaker 1: Scott Laman as the executive producer of Stephanomics and the 423 00:25:07,200 --> 00:25:09,840 Speaker 1: head of Bloomberg Podcasts is Francesco Levi.