Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2: Hello and welcome to another episode of the odd Locks podcast.
Speaker 3: I'm Joe Wisenthal and I'm Tracy Alloway.
Speaker 2: Tracy, you know, we obviously talk a lot on the
Speaker 2: show about US industrial policy and these various investments we're
Speaker 2: making in things like chips, clean energy, batteries, and so forth.
Speaker 2: Did you see there were some actually good news on
Speaker 2: the chips front recently?
Speaker 4: Oh? What was that?
Speaker 2: The new fab that TSMC is building in Arizona is
Speaker 2: getting as good yields as their existing fabs in Taiwan,
Speaker 2: at least in theory. It looks like Americans are capable
Speaker 2: of building as well as anyone else in the world,
Speaker 2: at least in theory.
Speaker 3: That is fab Joe, Oh, that's fabulus less fab productivity news.
Speaker 2: Have I told you, by the way, since you joked
Speaker 2: about that, I really think fab apostrophe less, like fab
Speaker 2: less semiconductor would be a really good name.
Speaker 3: For Oh yeah, I think I think you've pitched that
Speaker 3: fabless so far. I agree with you that'd be good.
Speaker 2: But okay, so sitting aside that one plant, which hasn't
Speaker 2: actually opened yet, I believe I think that it's scheduled
Speaker 2: to open in twenty twenty five. Setting aside good signs
Speaker 2: of positive yields there, like, I remain anxious about whether
Speaker 2: any of this is going to ultimately work, or whether
Speaker 2: we're going to have a lot of billions and billion
Speaker 2: dollars spend and either unproductive plants or plants producing stuff
Speaker 2: that there really isn't in demand market for. Like, if
Speaker 2: it all turned out to be a waste of tens
Speaker 2: and tens of billions of dollars, let's just say, I
Speaker 2: wouldn't be shocked.
Speaker 3: Well, I don't think you're alone in your concern. I
Speaker 3: think there is a wider recognition nowadays that there are
Speaker 3: areas of the economy or certain businesses that might be
Speaker 3: strategically important where not enough capital is flowing into through
Speaker 3: the private market, and so maybe the government wants to
Speaker 3: do something to build up those industries. It feels like
Speaker 3: in general there is more of a recognition or perhaps
Speaker 3: acceptance of that idea. But as you say, there remains
Speaker 3: some very very big questions about the specific design of
Speaker 3: industrial policy and the idea of well, you know, maybe
Speaker 3: there's good and bad industrial policy. Maybe if you throw
Speaker 3: money at a particular industry through subsidies or whatever. Then
Speaker 3: all you're doing is building up over capacity that eventually
Speaker 3: is not going to be able to compete on the
Speaker 3: global stage. And I think those are very valid critiques,
Speaker 3: and we have seen a number of examples throughout history
Speaker 3: of industrial policy that hasn't quite worked out as intended totally.
Speaker 2: And you know, I think there's a few other dimensions
Speaker 2: here that I think are important. So one is when
Speaker 2: we talk about industrial policy throughout history or development strategy
Speaker 2: for a lot of countries, it's like a a lot
Speaker 2: of it has failed. Countries have tried to industrialize or
Speaker 2: rise to some level where they have competitive manufactured goods
Speaker 2: without working out. Two is the fact that one thing
Speaker 2: that's unique is we're not a poor country, and we're
Speaker 2: not a country that's like trying to rise per se
Speaker 2: in the development ladder. So a lot of theory of
Speaker 2: industrial policy is sort of talking about countries, many of
Speaker 2: them in East Asia that have succeeded or others that
Speaker 2: have failed. But those were countries that were when they
Speaker 2: started quite poor relative to us, and we're rich, and
Speaker 2: a lot of our anxiety is about specific sectors rather
Speaker 2: than the sort of wealth of the economy. As a whole,
Speaker 2: So there is a lot to dive into on them.
Speaker 3: Well, the other difference that comes up a lot is
Speaker 3: political systems. Yes, right, so we're a democracy and a
Speaker 3: lot of countries that have to some extent successfully democratized.
Speaker 3: You often hear the argument that they were only able
Speaker 3: to do it because they either had a command economy,
Speaker 3: or perhaps they had authoritarian leaning regimes and things like that.
Speaker 3: So I think the design of industrial policy, its success
Speaker 3: its failure, is definitely a worthy topic totally.
Speaker 2: Well, there's a lot to dive in on who we
Speaker 2: should get right into it. We really do have the
Speaker 2: perfect guest today. We're going to be speaking with Vivig Chibber.
Speaker 2: He is a sociology professor at NYU and he's written
Speaker 2: a lot on development and industrial policy, among many other things.
Speaker 2: So thank you so much for coming in, Thanks.
Speaker 4: For having me.
Speaker 2: Why don't we start with what I guess would be
Speaker 2: a definitional question that I'm not sure if we've ever
Speaker 2: actually asked anyone on the show, but what is industrial policy?
Speaker 2: We talk about it all the time, and I realized,
Speaker 2: like I actually don't know what that term means.
Speaker 4: Yeah, it's actually an important question because a lot of
Speaker 4: times when people are debating industrial policy, they assimilated into
Speaker 4: a wider set of phenomena, a wider set of state actions,
Speaker 4: which really makes it hard to have a kind of
Speaker 4: a productive discussion around it. So industrial policy is a
Speaker 4: particular kind of state intervenetion in the economy. That means
Speaker 4: you can have forms of state intervention. States are involved
Speaker 4: in economies all the time. They affect its sectoral balance,
Speaker 4: they affect its place in the global economy, the effect
Speaker 4: trade flows without necessarily, however, being forms of industrial policy.
Speaker 4: So industrial policy is a specific sort of state intervention,
Speaker 4: and it shouldn't be confused with state intervention per se. Okay,
Speaker 4: all right, so what's specific about it? I mean, there
Speaker 4: isn't a kind of a consensus, a universal consensus around
Speaker 4: what we mean when we use the term, but by
Speaker 4: and large what people mean by it, and they're sort
Speaker 4: of an agreement, is that when states intervened to bolster
Speaker 4: particular sectors of the manufacturing base of the economy rather
Speaker 4: than affecting the general structure, the general the proportion between
Speaker 4: manufacturing and agriculture and such things. So the term goes
Speaker 4: when you're selecting winners, when you say that sector or
Speaker 4: that plant or that area of manufacturing should be supported
Speaker 4: and change. Therefore the balance of investment flows from one
Speaker 4: sector to the other.
Speaker 3: When you think about successful industrial policy, give us some
Speaker 3: examples of a particular country or economy that comes to mind.
Speaker 4: The kind of the universally accepted examples are Japan, South Korea, Taiwan,
Speaker 4: and interestingly, in Europe among people who study European political economy, France,
Speaker 4: from say the early years after Second World War into
Speaker 4: the late sixties is another example that people take up
Speaker 4: as successful industrial policy.
Speaker 2: Say more about what that looks like. So we look
Speaker 2: back at some of these East Asian countries or France,
Speaker 2: where we say, okay, they did successful industrial policy. I mean,
Speaker 2: I'm sure we could talk for hours and hours just
Speaker 2: about any one of these specifics. But when you say,
Speaker 2: or when people generally say, this is what success looks like,
Speaker 2: give us the contours.
Speaker 4: All right. So industrial policy, if you know a little
Speaker 4: bit of economics, it's kind of a step away from
Speaker 4: and an explicit repudiation of what's called comparative advantage. So
Speaker 4: traditional economic theories said what country should do is not
Speaker 4: what they do better than other people. It's what they
Speaker 4: do best in the range of activities that they can manage.
Speaker 4: So you may be not very good at producing textiles
Speaker 4: if you have Korea compared to say Japan. But if
Speaker 4: producing textiles is the best you can do, then you
Speaker 4: produce the textiles, right. And how do you find out
Speaker 4: what you're best at, Well, you let the market tell you.
Speaker 4: You let the market tell you, and you discovered that
Speaker 4: by opening up your economy and see where rational investors
Speaker 4: are taking their money. Because they want to make profits,
Speaker 4: they'll take the money wherever they think they can do
Speaker 4: best with that money. All right. So the idea then
Speaker 4: was countries will choose those specializations in which they have
Speaker 4: the factor endowment. That makes sense. So if you're a
Speaker 4: country that's poor means you got not very much capital,
Speaker 4: but you've got a lot of people, You've got a
Speaker 4: lot of land, so you specialize with those factors that
Speaker 4: you have a lot of, which is land and people.
Speaker 4: What does that mean concretely, it means poor country shirts
Speaker 4: specialize in labor intensive industries or agriculture. Now, from the
Speaker 4: standpoint of the poor countries, they looked at this and
Speaker 4: they said, well, that means basically we're being asked to
Speaker 4: lock ourselves into the least productive, least profitable, and those
Speaker 4: sectors that are the least propitious for growth, because agriculture
Speaker 4: doesn't generate high growth, nor does labor intensive industry. So
Speaker 4: they said, essentially, what this looks like is a rationalization
Speaker 4: for rich countries to hoard and keep to themselves all
Speaker 4: the best sectors, and we get the scraps.
Speaker 3: So commodities exploitations exactly.
Speaker 4: Commodity exploitation, oil, cheap clothes, corn wheat, that sort of thing,
Speaker 4: And that's what was associated with being poor in the
Speaker 4: global economy. All right, so what do you do? Starting
Speaker 4: in the nineteen forties, what some countries started doing was
Speaker 4: to say, we're going to try to move up the
Speaker 4: value chain. Instead of just making cheap shirts, cheap shoes,
Speaker 4: leather goods, what we're going to try to do is
Speaker 4: move into high end consumer goods automobiles, even capital goods
Speaker 4: like steel, heavy chemical. But how do you do that?
Speaker 4: The thing is, in those economies, if you try to
Speaker 4: move into auto and you're a private investor, you'll get
Speaker 4: clawbird because you don't know how to do it. You
Speaker 4: don't know how to make a car. Ford's making them
Speaker 4: GM's making them, and they're making them a lot better
Speaker 4: than you. If you try to make your stupid little
Speaker 4: cars and you throw them to the global economy and
Speaker 4: no one's going to buy them, and if you try
Speaker 4: to do it by first producing them for your domestic market,
Speaker 4: why would consumers buy your cars when they can get
Speaker 4: top of the line GM cars. We're talking about the
Speaker 4: nineteen fifties, yeaes, the US auto economy dominates everything. So
Speaker 4: they said, if we're gonna do this, we need to
Speaker 4: do two things. First of all, we need to open
Speaker 4: up a space in the domestic economy for our own
Speaker 4: manufacturing firms by protecting them. That's teriffs. We'd protect them
Speaker 4: so that foreign goods become more expensive and therefore our
Speaker 4: goods have some breathing space, because when you start making
Speaker 4: a good for the first time, it's going to cost
Speaker 4: a little bit more to the consumer. Second thing we
Speaker 4: do is as governments, we make it attractive for investors
Speaker 4: to move into these lines because they're high risk. So
Speaker 4: what East Asian countries started to do was they did
Speaker 4: this twofold thing where they had what's called import substitution,
Speaker 4: which means you're trying to substitute for imports your domestic goods.
Speaker 4: That means tariffs and protection. And then you try to
Speaker 4: plow money and incentives to domestic producers to promise them
Speaker 4: essentially you won't take a loss. And now what you've
Speaker 4: got is countries instead of just specializing in cheap clothes
Speaker 4: and shoes and things like that, they start producing more
Speaker 4: high end goods. And these are goods that produce more profits,
Speaker 4: have higher rates of growth, and propel that country into
Speaker 4: the ranks of first middle income countries and then later
Speaker 4: high income countries on the back of a dynamic and
Speaker 4: high end manufacturing sector. That's basically what it amounts to.
Speaker 3: So how do you And I alluded to this in
Speaker 3: the intro, but I think a traditional critic of industrial
Speaker 3: policy is that by subsidizing certain industries and maybe encouraging
Speaker 3: capital to pour into them, you perhaps sacrifice competitiveness in
Speaker 3: one way or another. And so the worry is that, well,
Speaker 3: when the subsidies eventually end, or when companies are asked
Speaker 3: to stand on their own two feet and compete with
Speaker 3: global juggernauts so forward or whoever, they won't be able
Speaker 3: to do that. How do you balance I guess the
Speaker 3: need for discipline with the desire for successful industrial policy.
Speaker 4: Well, there's the general principle of what you are to do,
Speaker 4: and then there's the tricky part of can you actually
Speaker 4: do it. So the problem, as you're saying, is that
Speaker 4: you hit it on the head. The problem is this,
Speaker 4: it's built into the model that there's a strong tendency
Speaker 4: towards failure. Now where does this come from. Remember, what
Speaker 4: you're trying to do is figure out a way of
Speaker 4: making your economy more dynamic, more productive, so that you
Speaker 4: can move up in the global hierarchy of nations. Okay,
Speaker 4: all right, So you're doing that by essentially insulating your
Speaker 4: domestic producers from competition and giving them lots of free money. Now,
Speaker 4: this in some ways takes away what is best about
Speaker 4: the market, right, because why do capitalists, why do firms
Speaker 4: worry about productivity? Is that if they don't worry about productivity,
Speaker 4: they're going to go under. Well what is it that
Speaker 4: punishes them. What's the instrument that punishes them if they
Speaker 4: forget about productivity? It's market competition. If you don't play
Speaker 4: the best game you can, you're going to be out
Speaker 4: of the game pretty soon because others are going to outcompete,
Speaker 4: you out sell you. Now, what import substitution industrial policy does,
Speaker 4: in principle is take away that competitive mechanism and substitute
Speaker 4: government oversight for that stuff. Now, the danger there is
Speaker 4: that you're essentially giving people monopolies. They're giving them monopoly
Speaker 4: over certain sectors, insulating them from competition, and you're giving
Speaker 4: them free profits. When they have free profits, why are
Speaker 4: they going to innovate? They have no direct incentive to innovate.
Speaker 4: So there were two possibilities. One is you deploy industrial
Speaker 4: policy and these artificial monopolies, and you end up getting
Speaker 4: a fat cat industrial sector that's gobbling up national resources
Speaker 4: but not delivering a lot in terms of productivity and growth.
Speaker 4: The second possibility is that you give them these free profits,
Speaker 4: but then you also figure out some way to crack
Speaker 4: the whip so that they're forced they're compelled to use
Speaker 4: those profits productively. Now, a lot of countries try everybody
Speaker 4: knew this. This isn't rocket science. Everybody knows every economist knows
Speaker 4: monopolies are bad for growth. So what happened in spite
Speaker 4: of the fact that they knew it in a lot
Speaker 4: of these countries, the monopolies did in fact, lead to
Speaker 4: a lot of low productivity, sloppy, flabby firms that are
Speaker 4: living high off the hog but not doing much with it.
Speaker 4: India was one, Brazil was another. Then there were countries
Speaker 4: where you actually had more abject failures, like the Philippines.
Speaker 4: But then there was a small subset of countries like
Speaker 4: these East Asia ones where they do the same thing
Speaker 4: with monopolies and tariffs and subsidies, but you don't get
Speaker 4: the same outcome. The question is why, and the reason
Speaker 4: is they managed to compliment the subsidies with some kind
Speaker 4: of enforced competitive pressures. Well, how do they do that?
Speaker 4: What they did was to say, Okay, we'll give you
Speaker 4: these subsidies. We'll give you protective from foreign competition at home.
Speaker 4: But in order to keep getting the subsidies year after year,
Speaker 4: investment cycle after investment cycle, you need to show us
Speaker 4: that you're using it productively. How do you show that.
Speaker 4: We want to see you succeed in export markets. Take
Speaker 4: this money, invest it and now don't just produce your
Speaker 4: Hyundai or your Kia for the home markets. We want
Speaker 4: to see you in the toyotas. For the home market,
Speaker 4: we want to see you selling it in the us
Speaker 4: in Europe, which are really really competitive. Either you innovator,
Speaker 4: you die in those areas. So now you had an
Speaker 4: unambiguous metric by which you could say whether or not
Speaker 4: you're succeeding in picking these winners and whether or not
Speaker 4: they're in fact winners. And it turned out some of
Speaker 4: them failed, but others succeeded.
Speaker 2: The intuitions of what you say sound incredibly obvious and clear.
Speaker 2: I get the idea of, like, okay, you need to
Speaker 2: clear some space in the domestic market so that companies
Speaker 2: have a chance to get off the ground and breathe
Speaker 2: that giving companies free money is only going to accomplish
Speaker 2: your goals if companies use the money to invest and
Speaker 2: improve their productivity and innovate, et cetera. And that the
Speaker 2: test for whether they're improving and innovating and creating competitive
Speaker 2: products are those foreign markets in which the local country
Speaker 2: has no control and therefore you're just on your own
Speaker 2: and you're free competing against the forwards and et cetera
Speaker 2: of the world. A. Why didn't every country go down
Speaker 2: that route? And sort of what has to happen I
Speaker 2: guess politically such that the capitalists who build these factories
Speaker 2: accept that premise and don't just sort of try to
Speaker 2: scroll away the money without ever having competed internationally.
Speaker 4: Yeah, perfect questions, and the answer to both is actually
Speaker 4: the same answer. Okay, The dilemma was essentially a political dilemma,
Speaker 4: not a technical one, and not an economic one. And
Speaker 4: this is where the critics of import substitution kind of
Speaker 4: kept scratching their heads and saying, look, we know that
Speaker 4: the answer to how to make this a successful policy
Speaker 4: is to discipline these firms that are getting all this money,
Speaker 4: to discipline them with competitive pressures. So the best way
Speaker 4: to do that is through export promotion. And by the
Speaker 4: late sixties early seventies, you saw the World Bank, the IMF,
Speaker 4: all both of what's called the Bretton Woods institutions, but
Speaker 4: also the Economic Commission on Latin America, which was the
Speaker 4: godfather of import substitution, and also the planning agencies in
Speaker 4: the Global South, all saying we need to promote exports
Speaker 4: in our economies to push these guys into competitive regions.
Speaker 4: But it only happened in two or three countries. In
Speaker 4: country after country after country, you found them hanging on
Speaker 4: to the subsidies, and the general import substitution long after
Speaker 4: everyone realized, look, we've reached about as far as we
Speaker 4: can go with the subsidy side. Now we need to
Speaker 4: push these guys into competition. Long after they understood that,
Speaker 4: they stuck with a self defeating policy. Question is why,
Speaker 4: and the answer is political. It's basically exists. What all
Speaker 4: the economists assumed was a government and a state that's
Speaker 4: essentially free to do and powerful enough to do whatever
Speaker 4: it wants to tell firms to do whatever it wants
Speaker 4: them to do, and they're going to step into line.
Speaker 4: But the fact is, in any modern industrial capitalist economy,
Speaker 4: these firms who you're trying to push into exports are
Speaker 4: also the people with the most political power, the most
Speaker 4: political influence. They have the lobbyists, they have all the money,
Speaker 4: They fund elections, and they run the economy. So here's
Speaker 4: the trap you were in. You gave them a bunch
Speaker 4: bunch of free money, and now you're asking to give
Speaker 4: up that free money and go into essentially shark infested
Speaker 4: waters and country after country. What most of them said was, ah,
Speaker 4: we're not going to do it. Actually, we like it
Speaker 4: just the way it is. And since we fund all
Speaker 4: the politicians, whoever gets into power We're going to make
Speaker 4: sure they keep plowing this money towards US. Now, in
Speaker 4: the countries where that didn't happen, Korea, Taiwan, Japan, why
Speaker 4: did it not happen. Some very very special circumstances allowed
Speaker 4: them to get into the shark infested waters in a
Speaker 4: way that was safe. So I'll give you the example
Speaker 4: of Korea. Korea switches to a heavy reliance on exports
Speaker 4: in the mid to late sixties, why does it do that? Essentially,
Speaker 4: what happened was it entered into these partnerships with Japanese
Speaker 4: firms who already had a foothold in the highly competitive
Speaker 4: and thereby dangerous American market, foothold in what in the
Speaker 4: lower end manufacturing exports sectors, exports for Japan, imports for
Speaker 4: the United States, where they had established sales networks, banking facilities.
Speaker 4: They knew the market, they knew they had customer relations,
Speaker 4: and what Japan wanted to do is essentially move out
Speaker 4: of these lines into more high end lines of high
Speaker 4: end consumer products and capital goods. So what they said was, actually,
Speaker 4: we don't have to give up all the contacts and
Speaker 4: all the money we're making in these low end lines.
Speaker 4: As we can do is have joint ventures with Korean firms.
Speaker 4: They come in, we shepherd them into selling shirts and
Speaker 4: shoes and all this. And the way we make money
Speaker 4: is we give them the bank loans that enables them
Speaker 4: to open up the factories in Korea that produce this stuff.
Speaker 4: So now we're making money in the higher end goods
Speaker 4: that we're entering in the United States for the first time,
Speaker 4: but in the lower end sectors we switch from selling
Speaker 4: products to selling loans, and that way, the Korean firms
Speaker 4: take advantage of our sales networks, overcome a lot of
Speaker 4: the entry barriers, and they're good on the loans that
Speaker 4: were given them, and now we've got money coming from
Speaker 4: two ends instead of one. Now the thing is take
Speaker 4: country like India. India had partnerships with British and American firms,
Speaker 4: just like Korea has partnerships with Japanese firms. The difference
Speaker 4: is the British and American firms explicitly forbade their Indian
Speaker 4: partners in India to sell in export markets because they
Speaker 4: wanted to keep them for themselves. Ah So, now whereas
Speaker 4: Korea is getting a free entry into these deadly competitive
Speaker 4: markets through the good fortune Essentially, it's just good fortune
Speaker 4: of having had Japanese partner Indians.
Speaker 2: There's a fundamentally different DEVI of Japanese in the US partner.
Speaker 2: When the US is the market you're going.
Speaker 4: It's a historical accident. Korea happened to be in the
Speaker 4: Japanese economic sphere of influence.
Speaker 3: Yea.
Speaker 4: Now, I should say one thing, there is this myth
Speaker 4: out there that because of the Cold War, because the
Speaker 4: United States favored Korea and favored it, essentially opened the
Speaker 4: doors to them and allowed them entry into these markets.
Speaker 4: And that's really not true because again, when you're entering
Speaker 4: these markets, you're displacing American firms. Why would American firms
Speaker 4: let their congressmen just open up the doors to their
Speaker 4: competitors and they didn't. What I found when I did
Speaker 4: the research was every time the Koreans succeeded in some
Speaker 4: part of the country, the firms from that part of
Speaker 4: the country got their representatives to put up tariff barriers
Speaker 4: keeping those Korean firms out. What the Koreans did that
Speaker 4: was really amazing was they kept switching from one line
Speaker 4: to the other. So if you're you know, textiles is
Speaker 4: a hierarchical sector, so if they put up barriers on
Speaker 4: the lowest end of textiles, you move up the value chain.
Speaker 3: Into he's swinging from tree to tree.
Speaker 4: Yeah, exactly. So it wasn't the Cold War, It wasn't
Speaker 4: America handing these country free markets. I mean, they would
Speaker 4: have done that with India in the fifties and sixties.
Speaker 4: India was the golden child of American foreign policy because
Speaker 4: they wanted it to be a example against China. They
Speaker 4: couldn't do it. These countries succeeded not because the US
Speaker 4: opened up their markets tomb but because they had the
Speaker 4: wherewithal to get over American tariffs.
Speaker 3: Since you brought up India, I feel I need to
Speaker 3: perhaps preface this question with a caveat, which is everything
Speaker 3: I know about Indian industrial policy came from the Bollywood
Speaker 3: film The Guru, where I think Abhishek Bachchan plays like
Speaker 3: a polyester manufacturer that becomes a business tycoon. And everything
Speaker 3: I know about Indian infrastructure comes from Suedes with Sharak Khan.
Speaker 3: And everything I know about cricket comes from Lagan. Anyway,
Speaker 3: that was good, thank you.
Speaker 4: So essentially you just advertised three Indian movies.
Speaker 3: Yes, but they're all excellent. But one thing I was
Speaker 3: wondering is, Okay, the temptation is to just play in
Speaker 3: your domestic market because it's easier, you're protected that way.
Speaker 3: I guess what I'm wondering is does the size of
Speaker 3: the domestic market or the makeup of the domestic market
Speaker 3: matter here, because if I also think about a thing
Speaker 3: that ties together Taiwan, Japan, and Korea, it's that at
Speaker 3: those times they were relatively small markets and not as
Speaker 3: wealthy as they are now. Certainly, definitely South Korea was
Speaker 3: pretty poor in that time period. So I guess is
Speaker 3: the temptation perhaps to look outside and maybe do more
Speaker 3: exports if your own domestic market is smaller or more limited.
Speaker 3: Maybe China is the exception here.
Speaker 4: Yes and no. It's a really good question. And on
Speaker 4: this too, I think the people have misunderstood the dynamics
Speaker 4: of what was going on, So the size of the
Speaker 4: domestic market can play can play a role. But two
Speaker 4: points here. The first is don't confuse the size of
Speaker 4: the market with the size of the population. So people
Speaker 4: often think India has a huge market, but that's because
Speaker 4: it has a lot of people, but they're extremely poor people.
Speaker 4: So take England population of what fifty million or something.
Speaker 4: I think that's what one twentieth the size of the
Speaker 4: Indian population. But the market is what fifteen twenty times bigger.
Speaker 4: So what matters is your income, your national income, not
Speaker 4: so much your national population. So in that sense, the
Speaker 4: Indian market is actually quite small in the fifties and
Speaker 4: sixties and seventies, and can't really explain why the firms
Speaker 4: continued to point their investments towards that market rather than
Speaker 4: export markets, because there actually wasn't a whole lot you
Speaker 4: could sell there. So the assumption is often made that
Speaker 4: Korea and Taiwan move outward because they have small markets. Well,
Speaker 4: countries in Central America have tiny, little markets. They never
Speaker 4: moved outward. Haiti has almost no market, and it didn't
Speaker 4: move outward. The thing is, it all comes down to
Speaker 4: not what's rational to do, but who's got the power.
Speaker 4: And even in these small countries with the small markets,
Speaker 4: since businesses had all the political influence, they kept their
Speaker 4: governments wedded to this free money much longer than they
Speaker 4: ought to have.
Speaker 2: I want to clarify something because you're talking, and this
Speaker 2: is a really important point, which is the political dynamics
Speaker 2: within the country and essentially the ability of the government
Speaker 2: to discipline the capitalist class via export conditions, upon subsidies
Speaker 2: or gifts or so forth. But at the same time,
Speaker 2: you've also said that the difference between say a Korea
Speaker 2: and India is just sort of the luck and coincidence
Speaker 2: of Korea's proximity to Japan's sphere of influence in the
Speaker 2: historical legacy of India's relationship with the UK, and also
Speaker 2: kind of the US in the Cold War, which does
Speaker 2: not necessarily sound like a difference to me. That is
Speaker 2: about the role of the capitalist class within society. So
Speaker 2: can you explain that a little bit further? What was
Speaker 2: the difference politically in Korea versus say, in India, and
Speaker 2: then in India specifically, how does it look when the
Speaker 2: domestic capitalists or the domestic titans of industry are able
Speaker 2: to subvert the attempts at discipline.
Speaker 4: Right now, again a very good question. You're right that
Speaker 4: it's putting all the burden on the historical accident of
Speaker 4: which country advance country you partner up with, seems to
Speaker 4: take the politics out of it, But it doesn't in
Speaker 4: the following reason, if we bring in another set of cases,
Speaker 4: you see that merely having these foreign partners isn't enough,
Speaker 4: which is Southeast Asia. So Korea and Taiwan fall into
Speaker 4: Japan's you could say, economic orbit, but so do Thailand
Speaker 4: and Malaysia, because the Japanese historically had dominated both Northeast
Speaker 4: and Southeast Asia. Now Malaysia and Thailand also start out
Speaker 4: with import substitution and all this sort of stuff, and
Speaker 4: they also have access to Japanese firms and Japanese know
Speaker 4: how technology and all that, but they're never able to
Speaker 4: make the same kind of movement upwards that Korea and
Speaker 4: Taiwan do. And was that It's because in those countries,
Speaker 4: while there was the opportunity to hazard these very competitive
Speaker 4: foreign markets, it was still a bit of a risk
Speaker 4: compared to the protected domestic markets, and the capitalists there
Speaker 4: were able to overwhelm and squelch the government's efforts to
Speaker 4: kind of prod them outward, Whereas in Korea and Taiwan,
Speaker 4: what happened was there was a kind of irreducible absolute
Speaker 4: achievement of building a government, building a state that had
Speaker 4: the wherewithal and the power and the internal solidity to
Speaker 4: negotiate effectively with their domestic business class. Now what happens
Speaker 4: in India is that the business class essentially overwhelms the state,
Speaker 4: so that when the government is saying to them, let's
Speaker 4: try to at least build towards regional markets, if not
Speaker 4: the American market, the European market, if not the American market,
Speaker 4: they're unable to do so, and they're unable to have
Speaker 4: the internal coherence that makes government assistance even attractive to
Speaker 4: these capitalists. These businesses make their calculations and they say
Speaker 4: that for the time being, for the foreseeable future, we're
Speaker 4: going to stick with this domestic market, and the government
Speaker 4: just doesn't have the power to say no, to overwhelm
Speaker 4: them because they have too much of the influence.
Speaker 3: Could you talk a little bit more about how actual
Speaker 3: capital and investment fits into your framework, because thinking back
Speaker 3: to your definition of industrial policy, in order for this
Speaker 3: to work, you have to have the ability to direct
Speaker 3: capital to industries or businesses that you deem to be
Speaker 3: desirable for one reason or another. But you also have
Speaker 3: to have the capital to actually direct and move, and
Speaker 3: that capital presumably has to be somewhat competitively priced, I
Speaker 3: would imagine. So how do capital costs and availability kind
Speaker 3: of fit into your framework?
Speaker 4: Their essential component of import substitution, and this is not
Speaker 4: pretty generically known. One of the big obstacles to industrialization
Speaker 4: in these poor countries is what's called the cost of capital,
Speaker 4: which is they have to try to raise money in
Speaker 4: a country where banking is really really underdeveloped, which means
Speaker 4: loans are very expensive, which means it's another hurdle to
Speaker 4: be competitive in global markets. So this is something that
Speaker 4: started actually in nineteenth century. I think Germany's the pioneer,
Speaker 4: but then Russia follows soon after. Russia, before the Revolution,
Speaker 4: governments understood that banking and cost of capital is a
Speaker 4: huge obstacle, so they developed investment banks. These are state
Speaker 4: owned and state directed investment banks, and the fundamental activity
Speaker 4: of all these banks was to provide artificially low and
Speaker 4: cheap credit to local firms to lower their entry barriers
Speaker 4: into these competitive markets. So that carried over right from
Speaker 4: the eighteen eighties into the nineteen seventies and eighties. All
Speaker 4: these countries had nationalized banking systems, the main function of
Speaker 4: which was to collect large pools of domestic savings and
Speaker 4: then bundle them up and funnel them towards investors.
Speaker 2: I want to talk a little bit about the present
Speaker 2: day in the US, which is sort of where we
Speaker 2: began our conversation. We talk about the Chips Act and
Speaker 2: the Inflatial Reduction Active so forth. What would you describe
Speaker 2: as just sort of the general basics of what the
Speaker 2: US is trying to accomplish and how different is it
Speaker 2: or how similar is it to what many poorer countries
Speaker 2: have tried to do, you know, for maybe close to
Speaker 2: one hundred years.
Speaker 4: What it's trying to do is I think industrial policy.
Speaker 4: It's definitely trying to do industrial policy in that the
Speaker 4: key to industrial policy is you're not letting the market
Speaker 4: on its own decide where investment is flowing. You're trying
Speaker 4: to manipulate the flow of investment. Now, what the US
Speaker 4: is doing is saying private investors on their own are
Speaker 4: not going into chip manufacturer to the extent that they should,
Speaker 4: and they're not going into electro vehicles to the extent
Speaker 4: that they should. So we're going to make it more
Speaker 4: attractive to them. That's the subsidies component of it. And
Speaker 4: so you could say they're essentially what's called picking winners. Yeah,
Speaker 4: they've targeted a certain sector that they want to see grow,
Speaker 4: and they're doing what they can to make it more attractive.
Speaker 4: So that's industrial policy, and in that respect it is
Speaker 4: like what the poor countries tried to do. It is
Speaker 4: also like what the poor countries try to do in
Speaker 4: one other respect, which is they're trying to do it
Speaker 4: with a state that's not very well equipped at the
Speaker 4: outset to actually undertake such policies. Now, what do we
Speaker 4: mean by that? When India and Korea, or Mexico and
Speaker 4: Brazil started their post war industrial policies, they started it
Speaker 4: with a government that was good at doing certain things.
Speaker 4: And what it was good at doing was raising taxes
Speaker 4: to some extent, providing tariffs to some extent, and policing
Speaker 4: and some kind of credit. What it could not very
Speaker 4: well do was have an institutionalized relationship with leading firms,
Speaker 4: monitored their activities, and then imposed some kind of discipline
Speaker 4: on them to make sure that the money they were
Speaker 4: getting was being used productively. They didn't have any of
Speaker 4: those things, so they had to build it up. So
Speaker 4: but the fifties to the seventies was a period of
Speaker 4: what in social science we call state building, which is
Speaker 4: essentially these countries once they decided they wanted to have
Speaker 4: planning an industrial policy had to pull themselves up by
Speaker 4: their political bootstraps, as it were, create the administrative wherewithal
Speaker 4: the bureaucratic capacity to effectively ate, deploy resources, be negotiate
Speaker 4: with firms and see hold them accountable. The US is
Speaker 4: like those countries in that outside of defense, the American
Speaker 4: government really doesn't have a lot of what we call
Speaker 4: administrative capacity state capacity. So it knows how to raise money,
Speaker 4: It even knows how to earmark that money for certain sectors,
Speaker 4: it is not yet fully equipped to get that money
Speaker 4: to the sectors, to then make sure that it's being
Speaker 4: used the way they want them to, and then to
Speaker 4: hold those sectors accountable. And if you know, I mean,
Speaker 4: I think this is pretty well understood. Now two years after,
Speaker 4: two and a half years after the Act was passed,
Speaker 4: a lot of the money just still sitting there. It
Speaker 4: hasn't really gotten to the firm that were being targeted. Why.
Speaker 4: It's because what's called the absorptive capacity of all these
Speaker 4: monies has not really been built up. Now. It's different
Speaker 4: from the LDCs and these under developed countries in one respect,
Speaker 4: which is that it is a country that's already developed.
Speaker 4: As you said in the beginning of this program, and
Speaker 4: because it's already developed, what you're doing is not trying
Speaker 4: to create sectors out of whole cloth the way Korea
Speaker 4: and Brazil did. There is already a chips manufacturing sector
Speaker 4: in this country. There is already ev manufacturing. So what
Speaker 4: you're doing, you're not trying to get industrialists drag them
Speaker 4: kicking and screaming into new sectors. They're already kind of
Speaker 4: inclined tours to go into those sectors. You're simply trying
Speaker 4: to accelerate the flow of investment rather than redirect it altogether.
Speaker 4: So that means that the heavy lifting isn't quite as
Speaker 4: daunting as it was in these less developed countries. But
Speaker 4: there's no getting around the fact that even though it's
Speaker 4: less daunting, you still need to have a government that's
Speaker 4: equipped to undertake these tasks and not simply to announce them,
Speaker 4: and that gap hasn't yet been filled.
Speaker 3: Is the comparative advantage haha of US industrial policy, though,
Speaker 3: going back to the domestic market point the size of
Speaker 3: its own market, because I mean, the US is the
Speaker 3: biggest market in the world. So even if the US
Speaker 3: government can't make the US semiconductor globally competitive, they can
Speaker 3: structure the business so that it is domestically very attractive
Speaker 3: and maybe that's enough. You know, again, the biggest market
Speaker 3: in the world, so why not just do that?
Speaker 4: Yeah, you know, it's interesting you mentioned China. This is
Speaker 4: where I think you can take lessons from China. China
Speaker 4: has also been now involved in industrial policy for close
Speaker 4: to twenty years. And now this sounds surprising because China's
Speaker 4: must be planned economy, So what do you mean that
Speaker 4: it's only twenty years. What happened after Miles death was
Speaker 4: that the pope planning apparatus and system in China kind
Speaker 4: of fell apart for about fifteen or eighteen years. And
Speaker 4: it's surprising. Even when I started reading up on this
Speaker 4: even I was surprised to learn it's really in the
Speaker 4: early two thousands that it gets going again. Now, what
Speaker 4: they did is something that's akin to what you're saying,
Speaker 4: which is, of course they did promote exports up and down,
Speaker 4: but they also did something else, which is, after about
Speaker 4: twenty ten, they really started emphasizing the domestic market. And
Speaker 4: what they've been doing in the past six or eight
Speaker 4: years once they've targeted the highest end markets for themselves
Speaker 4: information technology and AI and such things. What they're doing
Speaker 4: is they're basically using government finances as kind of venture capital,
Speaker 4: and they direct the state bureaucrats to give cheap loans
Speaker 4: to a fairly large number of firms, and then they
Speaker 4: kind of wait and see who survives in domestic competition.
Speaker 4: So they let firms start up. Some of them is
Speaker 4: through the venture capital, some of these firms are doing
Speaker 4: it on their own, and then they essentially see, all right,
Speaker 4: who are the top three, because how can they do that?
Speaker 4: The domestic market has grown to the point where it's
Speaker 4: intensely competitive, so you see who who is winning the
Speaker 4: domestic battle. Then you essentially catch them in their infancy
Speaker 4: and you say, we're going to bet on these guys.
Speaker 4: It's different from what the earlier generation of poor countries
Speaker 4: did where they actually created these firms from whole cloth
Speaker 4: and they hope that they would play by the rules.
Speaker 4: China lets them do the sink or swim for a
Speaker 4: few years, and then when firms have built up a
Speaker 4: certain degree of competence shown that they're capable of managing
Speaker 4: the market, they start plying money into them, and then
Speaker 4: they throw them out into the export markets where they're
Speaker 4: actually killing it.
Speaker 3: Right now.
Speaker 4: They're killing it so much that that's behind the American
Speaker 4: drive to protect themselves. That's why you won't see a
Speaker 4: Chinese EV because I think they would just clabber all
Speaker 4: the American evs, so you protect them. Something like that
Speaker 4: is certainly possible for the American firms, as you're saying,
Speaker 4: which is you take the ones that are genuinely competitive
Speaker 4: in American markets. Now, the thing about that is, I
Speaker 4: think it would make more sense for the American state
Speaker 4: to not keep the Chinese out. You let them in,
Speaker 4: and then you essentially bring the export market home. Instead
Speaker 4: of pushing American firms out into the export market. You
Speaker 4: bring the important to the US, and then when you
Speaker 4: see where your firms are weak, when you see where
Speaker 4: they need help, then you do target in interventions, and
Speaker 4: that way you make sure that they cannot simply take
Speaker 4: the money and run, which is what happened in so
Speaker 4: many other countries.
Speaker 2: Okay, so this is a really important point, which is
Speaker 2: that if the market discipline is a really important part
Speaker 2: of successful industrial policy. You know, American firms get the
Speaker 2: majority of their sales from the United States. There may
Speaker 2: not be you know, there are probably some but non
Speaker 2: gigantic export opportunities for them in your view two questions
Speaker 2: is like, one, so the idea would be, okay, bring
Speaker 2: the global market to the United States by it letting in.
Speaker 2: And then b when you look at the US political system,
Speaker 2: setting even aside the bureaucratic infrastructure, do you think that
Speaker 2: we have an arrangement that allows for essentially capital discipline
Speaker 2: that are disciplining the business class.
Speaker 4: Okay. There are two elements of this question. One is
Speaker 4: that the US of the democracy and these countries weren't
Speaker 4: earlier on. And the second is that does it have
Speaker 4: the kind of internal coherence to the government, just like
Speaker 4: with the Cold War myth? There is another, I think
Speaker 4: misunderstanding of industrial policy in the early post war decades,
Speaker 4: which is that the countries that succeeded they succeeded because
Speaker 4: they were authoritarian or because they were It's well, so
Speaker 4: the way you want to settle this debate is say, okay,
Speaker 4: let's look out into the world and see which countries,
Speaker 4: by consensus, everyone agrees these countries A used industrial policy
Speaker 4: and B were successful in doing so. Okay, So if
Speaker 4: the argument from authoritarianism is right, there should be a
Speaker 4: pretty high correlation between success in industrial policy and being authoritarian. Right, now,
Speaker 4: what are the cases that are unimpeachable successes? Korea and Taiwan,
Speaker 4: for sure, and those were both in fact authoritarian. But
Speaker 4: the other ones are Japan and France, both of which
Speaker 4: we're democratic. So certainly, in the four cases that everyone
Speaker 4: says are shining examples of successful industrial policy, it's a wash.
Speaker 4: It's two and two. Now I would go even further
Speaker 4: than that. I would say that actually, authoritarianism is the
Speaker 4: obstacle and democracy is an advantage. And here's why. Remember
Speaker 4: what's happening in industrial policy. What's happening is you're taking
Speaker 4: public money, tax money, citizens money, and you're given it
Speaker 4: to people for their private benefits, which is industrialists, right,
Speaker 4: And you're essentially saying to them, we want you to
Speaker 4: use this money in a way that comports to the
Speaker 4: public good and not just the private good. We want
Speaker 4: you to invest it productively, and then everybody gains because
Speaker 4: it's productivity enhancing, right, and there's going to be higher
Speaker 4: growth and comes go up. Everybody gains. So there's a
Speaker 4: public interest in that money being used wisely, all right,
Speaker 4: If there's a public interest in it. In a democracy,
Speaker 4: you can actually mobilize public opinion behind the project to say, look,
Speaker 4: we promise all of you citizenry, higher growth because we're
Speaker 4: going to have this policy of enhancing and improving domestic
Speaker 4: industrial manufacturing capacity. Transparently, you say, we're going to actually
Speaker 4: provide subsidies for national industrial development. But these guys are
Speaker 4: taking your money, and listen, we're going to make sure
Speaker 4: on your behalf, we're going to make sure they use
Speaker 4: it wisely. So the thing that democracy does is a
Speaker 4: democracy gives citizens some kind of power over what's being
Speaker 4: done with their moneies. Okay, what's a dictatorship. A dictatorship
Speaker 4: is a situation where democratic rights have been extinguished. Who
Speaker 4: relies most on democratic rights the rich are the poor.
Speaker 4: It's the poor because the rich always have access to
Speaker 4: what politicians are doing. A dictatorship doesn't give the government
Speaker 4: greater power over the wealthy. It gives the government greater
Speaker 4: power over the poor because the wealthy always have power. So,
Speaker 4: in fact, in a dictatorship, you should see more difficulty
Speaker 4: in disciplining industrialists because now everything happens behind closed doors.
Speaker 4: There's no freedom of the press, there's no freedom of association,
Speaker 4: and essentially the corporate community has unimpeached, unblocked access and
Speaker 4: power over the government. In all dictatorships, businesses run amok.
Speaker 4: It's the citizens who suffer. So in my opinion, the
Speaker 4: US being a democracy is actually helpful if you have
Speaker 4: political parties that are actually sensitive to citizens' views. And
Speaker 4: the truth is right now we live in some kind
Speaker 4: of oligarchic system where both parties are bought and paid
Speaker 4: for by the corporate community. So I would say the
Speaker 4: challenge of the US is making this stuff more democratic,
Speaker 4: not seeing the democracy as a challenge.
Speaker 3: Just to hammer this point home, and this will be
Speaker 3: my last question, but if you could waive a magic
Speaker 3: industrialist policy wand over the US, what would be the
Speaker 3: one thing, specific policy measure that you would change in
Speaker 3: order to make I guess the risks of downsides to
Speaker 3: industrial policy activist industrial policy reduce.
Speaker 4: I think the United States should have an agency dedicated
Speaker 4: to targeting particular sectors and fostering their growth. But it
Speaker 4: should be an agency that is staffed not just by
Speaker 4: bankers and industrialists, but also by representatives of trade unions
Speaker 4: and the people the employees in these firms, because they
Speaker 4: have a direct stake in how well those firms do.
Speaker 4: I think if you harness the energy of the employees
Speaker 4: alongside that of the industrialists, you're going to have a
Speaker 4: dynamism in the sectors because a more engaged class of
Speaker 4: employees is also going to be much more productive and
Speaker 4: will see itself as having a stake in what's happening
Speaker 4: with those investments. One of the downsides right now in
Speaker 4: the United States is that there is such a one
Speaker 4: sidedness to investment decisions that industrialists are able to make
Speaker 4: their profits and make their investments without any regard for
Speaker 4: how private benefits that they're getting from those investments renounced
Speaker 4: to what's called their linkage effects, their wider impact on
Speaker 4: economic growth, and their wider impact on what's happening in
Speaker 4: the rest of the economy. So, if I could waive
Speaker 4: a magic wand, I would make the American state more
Speaker 4: transparent in how it's intervening in the economy, because it's
Speaker 4: always doing it. There's no such thing as a lais
Speaker 4: a fair state, even within the neoliberal era. I would
Speaker 4: make it more transparent, more accountable to both the investors
Speaker 4: and to the workers, because the investors also lose from
Speaker 4: all the sweetheart deals that occur behind the curtain in
Speaker 4: the defense sector make the bidding more competitive. The winners
Speaker 4: ought to then be engaged to work with some sort
Speaker 4: of works councils and trade union partnership with them, and
Speaker 4: it ought to be seen as something that's redounding to
Speaker 4: the collective good and not just on the assumption that
Speaker 4: if you make lots of profits it'll trickle down to
Speaker 4: the rest of the citizens. Because the political crisis that
Speaker 4: we're in right now should be seen as problematic also
Speaker 4: for our economic future. And the political crisis is coming
Speaker 4: from one basic source, which is around eighty percent of
Speaker 4: the people in the United States feel that their government
Speaker 4: and their economy is captured by a narrow elite that's
Speaker 4: unaccountable to them and which is going to lord it
Speaker 4: over them forever. To come out of that, you not
Speaker 4: only have to give them jobs, but you have to
Speaker 4: give them new kinds of jobs where they feel respected, engage,
Speaker 4: and where they feel they have a stake in what's
Speaker 4: going on. If I could wait the magic wand that's
Speaker 4: what I would do.
Speaker 2: Great place to end it right there, Avic, thank you
Speaker 2: so much for coming on the Outlaws.
Speaker 4: That was fascinating and it was my pleasure. Thanks for
Speaker 4: having me.
Speaker 2: Tracy. I really like that conversation. Starting from the last point.
Speaker 2: I do think we sort of many people take it
Speaker 2: for granted that the US political system is an inherent
Speaker 2: hindrance to any sort of planning, And I don't know,
Speaker 2: maybe it is because of the specific pathologies of US
Speaker 2: politics right now or the specific dysfunctions. Maybe it kind
Speaker 2: of is. But I genuinely like the point about how
Speaker 2: democracy at least per se isn't bad given, for example,
Speaker 2: you know, the idea that there is some accountability for
Speaker 2: some of these deals that we're making.
Speaker 3: No, absolutely, I think the emphasis on political systems and
Speaker 3: political capture or regulatory capture is a really good one.
Speaker 3: And as Vivic pointed out, the idea of you know,
Speaker 3: eighty percent of Americans feeling like the economy is overly
Speaker 3: influenced by the elites or somehow captured by the wealthy, that's,
Speaker 3: you know, that's a pretty damning statistic.
Speaker 2: I do think, yeah, to your point, like, I don't
Speaker 2: know what the polling is actually on whether the public
Speaker 2: likes the idea of like EV investments or semiconductor manufacturing,
Speaker 2: et cetera. But I do think that, you know, probably
Speaker 2: to some extent you and I might sort of get
Speaker 2: the case, but the general case about how it genuinely
Speaker 2: redounds to the public benefit that we are picking winners
Speaker 2: in these areas. You know, politicians do talk about jobs
Speaker 2: and it's like, oh, this project created a thousand jobs here,
Speaker 2: et cetera, And it seems like the congressmen and the districts,
Speaker 2: even say Republican congressmen who opposed may have voted against
Speaker 2: the IRA than how you know, the manufacturing that happens
Speaker 2: in their district. So there's some of that, but it
Speaker 2: does seem like the general story of like, Okay, this
Speaker 2: is how we're spending public money and this is what
Speaker 2: we expected to then deliver for the citizens in terms
Speaker 2: of material benefits does not strike me as having been
Speaker 2: particularly well articulated.
Speaker 3: Uh No, I absolutely agree with you. Like I guess
Speaker 3: there's always more that could be done. But if we're
Speaker 3: gonna say, or if the government is going to say
Speaker 3: that industrial policy is more important, clearly the experience of
Speaker 3: the pandemic has exposed certain choke points in the economy
Speaker 3: or certain areas that we deem strategically important that we
Speaker 3: want to build up, then it makes sense to also
Speaker 3: build up the accountability apparatus as well.
Speaker 2: Can I just say one last thing? You know, I
Speaker 2: get a little depressed when we talk about development or
Speaker 2: industrial policy because of you know, there's so few success
Speaker 2: stories that can you know, It's not like there was
Speaker 2: a success story in Korea and then it went on
Speaker 2: and be replicated in twenty other countries in Latin America, Africa,
Speaker 2: you know, Eastern Europe and so forth. There's really only
Speaker 2: a handful, and I don't know. It sort of brings
Speaker 2: me down about the possibility of like generable lessons that
Speaker 2: we can then extrapolate elsewhere, especially given also that for
Speaker 2: all of you know that Korea had a lot of luck,
Speaker 2: as our guest talked about, you know, with respect to
Speaker 2: its relationship with Japan, in Japan wanting to outsource some
Speaker 2: of its lower end production. It seems very difficult and
Speaker 2: you need to get everything right, including the luck component.
Speaker 3: You're right, Joe, K pop is very special.
Speaker 2: That's right, all right.
Speaker 3: Shall we leave it there.
Speaker 2: Let's leave it there.
Speaker 3: This has been another episode of the Audlots podcast. I'm
Speaker 3: Tracy Alloway. You can follow me at Tracy Alloway and.
Speaker 2: I'm Joe Wisenthal. You can follow me at the Stalwart
Speaker 2: and thank you to our guest Vivike Chibber. Follow our
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