Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: Hello and welcome to another episode of the Odd Lots Podcast.
Speaker 3: I'm Joe Wisenthal and I'm Tracy Alloway.
Speaker 4: I have a.
Speaker 2: Personal question for you this time. All right, do you
Speaker 2: think of yourself as like a member of the global elite?
Speaker 3: Like are you? Do you consider yourself elite?
Speaker 5: I probably should in some ways, because I think a
Speaker 5: lot of people would say someone who grew up in
Speaker 5: different countries, went to international schools, went to I guess
Speaker 5: a high profile university now works in the liberal media,
Speaker 5: as people would say, would be like a classic elite.
Speaker 5: But does anyone ever actually think of themselves as the elite?
Speaker 1: Now?
Speaker 2: I try to, you know that it could maintains journalistic unbiased.
Speaker 2: And I would say, look, Jared, Tracy, they are clearly
Speaker 2: among the elite. They have good jobs at a Fortune
Speaker 2: five hundred company. They are among the most well educated
Speaker 2: demographic to ever exist in history. We get to work
Speaker 2: in a nice air condition of office, et cetera. On
Speaker 2: the other hand, you know, I could say, like, look,
Speaker 2: that's nice. The real elite are big tech CEOs, et cetera.
Speaker 5: But I look, I think everything's relative.
Speaker 2: I'm we're an elite, I think objectively speaking, but I
Speaker 2: also think I've been I was thinking about this. There's
Speaker 2: really three big things that I think are like if
Speaker 2: we think about the second the rest of our lives
Speaker 2: or et cetera, Like three really big things that would
Speaker 2: like cause me to have sort of like.
Speaker 3: Elite status anxiety go on.
Speaker 2: Well, one of them is AI because we don't know
Speaker 2: what it's going to mean for our literal jobs or
Speaker 2: the companies we work for, et cetera. That's a really
Speaker 2: big one. Domestic politics. I think, like you know, I
Speaker 2: think we're living in the United States, domestic politics feel
Speaker 2: like they continue to go off the rails in various
Speaker 2: ways that could impact a lot of things. And then
Speaker 2: I think, unfortunately, maybe I'll change this one day. I
Speaker 2: don't speak Madron, and if all of the interesting markets,
Speaker 2: finance news, if that becomes like the center of economic
Speaker 2: activity in like some really big way people talk about
Speaker 2: the China shock that they mostly are talking about sort
Speaker 2: of rustbelt manufacturing, there's like a China shock for like
Speaker 2: sort of service level financial services, et cetera. I don't think,
Speaker 2: like you know, I don't think I would have as
Speaker 2: much to contribute in that world.
Speaker 5: You won't need to learn Mandarin, Joe. You can just
Speaker 5: just use AI.
Speaker 3: You know, have you seen the AI translator gadgets I have?
Speaker 5: Yeah, some of them are really good.
Speaker 2: Yeah yeah, And like you had these things, there's two
Speaker 2: sides of a screen and you're just talking then for
Speaker 2: the other person.
Speaker 1: Yeah.
Speaker 2: But setting that aside, I don't know how well that
Speaker 2: would work on the podcast or video medium.
Speaker 5: I gotta say I still watch ninety Day Fiance now
Speaker 5: no Go Americans dating and marrying foreigners from abroad, and
Speaker 5: there are a lot of translation apps on that show,
Speaker 5: many of which go very very wrong.
Speaker 2: So anyway, anyway, on this last point though, I think,
Speaker 2: like we know that probably start certainly with like the
Speaker 2: first Trump administration, sort of like US, China attention has
Speaker 2: been sort of on this linear increase. It probably accelerated
Speaker 2: during COVID, and it's clearly spread beyond the US. It
Speaker 2: just gets seems to get more intense by the week,
Speaker 2: including in Europe, where I think China anxiety the loss
Speaker 2: of like industrial competitiveness has now really become top of mind, right, and.
Speaker 5: It's even broader than China. I mean, we've spoken about
Speaker 5: it on the show but it seems like there's a
Speaker 5: real nationalism to economics nowadays. Because of the pandemic, because
Speaker 5: of the war in Iran now and various other disruptions
Speaker 5: that we've seen, governments are really focused on building up
Speaker 5: their own supply chains, building up their own manufacturing bases,
Speaker 5: their own critical resources, and all of that. So everyone
Speaker 5: seems to be trying to bring things in house, which
Speaker 5: at the moment largely means taking things away from Asia.
Speaker 2: Yeah, that would be the goal, right, they want to
Speaker 2: replace these things.
Speaker 3: Anyway, I think, as you know, forty, I'm about to
Speaker 3: turn forty six.
Speaker 2: So maybe if I'm lucky about halfway through my life,
Speaker 2: I would say the first half of my life I
Speaker 2: have benefited a lot from the certain order of things,
Speaker 2: And when I look around the landscape, I would say,
Speaker 2: I am not so sure that the order from which
Speaker 2: I've enjoyed many fruits and privileges is going to be
Speaker 2: as durable in the second half.
Speaker 3: Sure, got sare okay, So.
Speaker 2: We should talk about what were these fruits and privileges
Speaker 2: that we enjoyed, and perhaps what would a new sort
Speaker 2: of order in which some of these arrangements from which
Speaker 2: we've benefited, If they change.
Speaker 3: What could some of this look like in the future.
Speaker 3: All right, well, I'm very.
Speaker 2: Excited to say we really do have the perfect guest,
Speaker 2: someone we wanted to talk to for a long time,
Speaker 2: someone whose work is right in.
Speaker 3: The heart of this.
Speaker 2: We're going to be speaking with Franco Milanovitch. He's a
Speaker 2: research professor at the Graduate Center at CUNY, the City
Speaker 2: University of New York, and he is also the author
Speaker 2: of a new book came out this year, The Great
Speaker 2: Global Transformation to the United States, China and Remaking of
Speaker 2: the World Economic Order. Professor Milanovitch, thank you so much
Speaker 2: for coming on.
Speaker 4: Thank you very much for having me, it said, it's
Speaker 4: a pleasure.
Speaker 2: What was the goal going into this new book. Well,
Speaker 2: I write a new book right now.
Speaker 5: You know.
Speaker 6: In to some extent when I finished the book, I
Speaker 6: thought the goal was basically to write and to write
Speaker 6: an autobiography.
Speaker 3: Okay, that could.
Speaker 6: Sound strange because there is very little love that book.
Speaker 6: But I covered the period from nineteen seventy four. Actually,
Speaker 6: I started the book in nineteen seventy four with the
Speaker 6: new international Economic Order and then how it failed and
Speaker 6: how then jonipolar moment came, and how the United States
Speaker 6: was not only the most public country economically, politically, militarily,
Speaker 6: but also ideologically. And how that order, which you might
Speaker 6: call near liberal globalization, is now expiring. And when I think,
Speaker 6: actually my entire life, I remember each of these four orders,
Speaker 6: and I'm now present at the birth of what they
Speaker 6: called national market liberalism, which I think, as you were
Speaker 6: saying before, is a new economic order where lots of
Speaker 6: activities would be brought back home and where external economic
Speaker 6: policies would be essentially mercantilistic and not free trade.
Speaker 5: Why do you call it national economic liberalism?
Speaker 6: I call it because I was thinking, actually if you
Speaker 6: define liberalism in the most general sense, or take also neoliberalism,
Speaker 6: which would not be very different. You have on domestic side,
Speaker 6: you have policies which are liberal policy is economically everybody
Speaker 6: knows that, you know, free pricing, competitions on. You have
Speaker 6: social policies which are about affirmative action egalitarianism in terms
Speaker 6: of personal identity. And then internationally you have policies on
Speaker 6: free trade, low tariffs, movement of capital, labor and goods.
Speaker 4: And so on.
Speaker 6: And finally you have an aspirational policy about the movement
Speaker 6: of the other factor of production labor that has never
Speaker 6: really happened, but aspirationally you can say, ideologically it is there.
Speaker 6: What is happening now is that we take this entire
Speaker 6: international part, chop it off and say, wait, these rules
Speaker 6: do not apply anymore. What applies now is essentially national
Speaker 6: sort of amercantilist policy. It's a policy of you know,
Speaker 6: bagger day lahbor to some extent, but certainly zero sum
Speaker 6: game or even a negative some game.
Speaker 4: It's entirely different.
Speaker 6: But domestically, I really see the administrations like Trump, Macron
Speaker 6: and others. I see them as essentially continuing with neoliberal
Speaker 6: policies domestically. So that's what I think. Actually, that's why
Speaker 6: I wented this new term. That was the kind of
Speaker 6: national liberalism. So it's not and do more precise national
Speaker 6: liberalism on the market side, not necessarily on the social
Speaker 6: side domestically.
Speaker 2: It's interesting you say something interesting in the beginning of
Speaker 2: your book where you talk about, you know, going back
Speaker 2: to the middle of the twentieth century, or maybe in
Speaker 2: the immediate wake of the Great Depression, to stabilize capitalism,
Speaker 2: we adopted sort of like the government got involved, we
Speaker 2: got we took in a little dose of socialism and
Speaker 2: that saved capitalism. And then you sort of kind of
Speaker 2: a joke you talk about like, okay, well the goal
Speaker 2: was maybe to you know, the sort of like post
Speaker 2: World War two era saved socialism and various by injecting
Speaker 2: some market element. And then there's like this in Yang
Speaker 2: effect that you sort of see where it's like two
Speaker 2: different systems adopt some element of each other in theory
Speaker 2: or that could have gone the way as a way
Speaker 2: of like bringing about stability.
Speaker 6: Well, that wasn't my idea. Actually I was brounk in
Speaker 6: that sense because I actually I in the very beginning
Speaker 6: of the book, as you know, in the introduction, I
Speaker 6: bring up my first book was published in nineteen eighty nine,
Speaker 6: and actually in the very first sentence of the book
Speaker 6: I mentioned it I ran into Jeff Sachs and David Lipton,
Speaker 6: whom I knew from work on Poland, and so I
Speaker 6: told them, well, I've got this book. And actually I
Speaker 6: gave the book to Jeff Sachs as a present. I
Speaker 6: found it in the bookstore, and then he said, okay,
Speaker 6: you have to write something. And I said to Jeff
Speaker 6: Sechs was trying to save socialism and Jeff kind of
Speaker 6: looks at me. He says, what are you talking about?
Speaker 6: And I remember these words exactly. He says, I'm trying
Speaker 6: to bury socialism, and I said, oh, why wait, And
Speaker 6: that's what I actually understood.
Speaker 4: The misunderstanding.
Speaker 6: For me, the introduction of market principles and market measures
Speaker 6: and privitization to some extent was exactly the same by analogy,
Speaker 6: what Caines did to save capitalism form Great Depression. You
Speaker 6: inject thoses of socialism in order to preserve the capitalist framework.
Speaker 6: So I thought the same would happen nineteen eighty nine.
Speaker 6: My big mistake. But I just wanted to mention that
Speaker 6: because I think it's a nice anecdote that actually we
Speaker 6: saw the same thing, but that saw them into different ways.
Speaker 2: But arguably that is a characterization of what did happen
Speaker 2: in China, particularly after Mile right. So I give this
Speaker 2: communist country, still communist, but clearly a country that has
Speaker 2: embraced I don't know about capitalism, but markets for sure
Speaker 2: in a very big way, maybe even better than us.
Speaker 4: No, I mean definitely.
Speaker 6: You can actually then translate what they said and said, well,
Speaker 6: maybe I was right, because I really meant China, but
Speaker 6: I did not in those days. I really meant Eastern
Speaker 6: Europe and the Soviet Union. China is of course a
Speaker 6: very special case, and of course I'm sure we'll talk
Speaker 6: more about China, but it is an example that again,
Speaker 6: fifteen years ago, nobody expected what has happened. And if
Speaker 6: people tell me they did expect, I just go back
Speaker 6: to what they wrote, and they caught Nobel prize, you know,
Speaker 6: prizes for writing that China would never technologically developed ten
Speaker 6: years ago, and then we see now the reality, which
Speaker 6: is entirely different.
Speaker 5: By the way, I'm going to get you to sign
Speaker 5: my copy of the book in the hopes that it
Speaker 5: makes it into the preface of your next piece of
Speaker 5: work anecdote. Yeah, okay, with a place like China, I'm
Speaker 5: glad you brought this up, because there's this weird tension
Speaker 5: in the way people talk about it as both an
Speaker 5: economic and security threat. You know, China is going to
Speaker 5: compete with us and it's going to get everything, et cetera,
Speaker 5: and then talk about it as a relatively weak country.
Speaker 5: In some ways, people still talk about it sometimes as
Speaker 5: a developing country or even you know, ten or twenty
Speaker 5: years ago, people would talk about the poor farmers. You
Speaker 5: hear less about that nowadays. How how would you explain
Speaker 5: like that the dual way that people tend to think
Speaker 5: and talk about China in terms of its threat to
Speaker 5: the West.
Speaker 6: Let me start first by rephrasing your question, because once
Speaker 6: you start speaking of the threat to somebody, then we
Speaker 6: are really no longer in economics as we studied it.
Speaker 6: We are now exactly in that world of merchantilistic into
Speaker 6: their national competition. And you know, it has actually sort
Speaker 6: of moved into our thinking without us even realizing. We
Speaker 6: give you an an anecdotables once on the show with
Speaker 6: very famous economists. I will not mention the name, and
Speaker 6: of course the topic was topic was China. And then
Speaker 6: he you know, we're talking about the general things about
Speaker 6: you know, wages, exports, import something like very general. We're
Speaker 6: actually general economic principles should apply. And then he suddenly says, no, no,
Speaker 6: but for us, the United States, it is bad. And
Speaker 6: I was thinking, wait, you're not in the government. I understand.
Speaker 6: I would understand if you were in a treasury. Yes,
Speaker 6: of course this is your duty to look up to
Speaker 6: the United States. But you, as a general economist, you
Speaker 6: have to think about whether it is good for the
Speaker 6: world or not.
Speaker 4: I think relative.
Speaker 6: But since we are now in this new world, what
Speaker 6: do I think about China. First of all, I have
Speaker 6: to tell you that, for example, what you see in China,
Speaker 6: actually it happened to me like a week ago. People
Speaker 6: are very much surprised when you tell them you're now
Speaker 6: a rich country. I mean when I say, okay, by
Speaker 6: the World Bank definition, Actually this is the real conversation.
Speaker 6: You are the upper middle class income country. And they
Speaker 6: are kind of surprised. And there was a woman who
Speaker 6: tells me, you know, I submitted a publication for the
Speaker 6: U and US Journal and I paid I think fifty
Speaker 6: dollars as a developing country. And they right back to
Speaker 6: me and say, no, you are now classified as advanced
Speaker 6: country and you have to pay one hundred dollars for
Speaker 6: the submission fee. But you know, this stuff is still
Speaker 6: very much present in China. I think Chinese do not
Speaker 6: see themselves by and large as a rich country. They
Speaker 6: speak of this as you know, officially moderately prosperous society.
Speaker 6: And I think it's a correct denomination, if you will.
Speaker 6: China is not France, it's not tally, it doesn't have
Speaker 6: the income level. But on the other hand, as you
Speaker 6: actually implied, technologically, it is at the level which is
Speaker 6: actually only similar to the United States, And that is
Speaker 6: that duality that we observe. You know, maybe the villages
Speaker 6: I have not been there, but I know that actually
Speaker 6: they are villages whare below two dollars per day. You know,
Speaker 6: we are absolute public in line. And on the other hand,
Speaker 6: we have them as a leader of the artificial intelligence
Speaker 6: so par You.
Speaker 2: Know, I think for a long time people of the
Speaker 2: West like didn't think about China.
Speaker 3: I mean maybe like people in the.
Speaker 2: Treasury or whatever, or in a few they didn't think
Speaker 2: about China very much. It feels to me like one
Speaker 2: of the remarkable things about the last ten years, and
Speaker 2: it literally has been ten years, has the whole West
Speaker 2: and the Western political economic unit. So it's like governments
Speaker 2: in Europe and obviously the US, and then as you
Speaker 2: say in your book, you might also as part of
Speaker 2: this Western political bloc might even incline to include like
Speaker 2: Korea in Japan. Has you travel around you were recently
Speaker 2: in Paris. Has everyone essentially come around in some level
Speaker 2: to where Trump was in twenty sixteen.
Speaker 6: Yes, I think basically that's the case, you know, and
Speaker 6: that actually, if I go back to my book chapter one,
Speaker 6: it is structured on two levels. We talked so far
Speaker 6: about the level, the first level, which is country's GDPs
Speaker 6: and countries importances, and of course China then suddenly starts
Speaker 6: playing a very important role there. But there is another level, which,
Speaker 6: of course, thanks to the world that I've done for
Speaker 6: thirty years on global income distribution, I also observe, and
Speaker 6: that second level is personal income level. What happens with
Speaker 6: the rise of Asia and China in particular is for
Speaker 6: the first time in two last centuries, you have lower
Speaker 6: parts of Western income distributions sliding down in global order.
Speaker 6: So if you are bottom decile in Italy, okay, you're
Speaker 6: not reached by Italian standards, but you know you're okay.
Speaker 6: In the world level, you're at the seventies percent all
Speaker 6: of the world thirty years ago. Well now you're at
Speaker 6: the fifty fifth percent. In other words, if Italy had
Speaker 6: qualified for the World Cup, that Italian would not have
Speaker 6: the money to come to watch Italy, but the money
Speaker 6: thirty years ago to come to watch Italy. So you know,
Speaker 6: there is this loss of economic position of individuals in
Speaker 6: Western countries so you know that the China thing plays
Speaker 6: on two levels. It plays at the level us rest
Speaker 6: of China or European Union, which is an abstract level
Speaker 6: of state versus state, but it plays at the level
Speaker 6: you against the Chinese guy. Yeah, and that I think
Speaker 6: is there. Actually, that's what I tried to bring in
Speaker 6: the book, these two levels, and I think it's important
Speaker 6: to have them in mind.
Speaker 5: I like the idea of measuring wealth in ability to
Speaker 5: watch World Cup games.
Speaker 4: It's internationally priced good, you know.
Speaker 5: Yeah, just going back to the idea of national market
Speaker 5: liberalism and pressing on the point you just made. I mean,
Speaker 5: the response to or the back against globalization in your
Speaker 5: description has been I guess, tearing down the liberal aspect
Speaker 5: of the international economy and international trade and not domestically.
Speaker 5: So domestically you still preserve, you know, large parts of capitalism.
Speaker 5: It didn't have to go that way, right, You could
Speaker 5: have had domestic changes in terms of income redistribution and
Speaker 5: things like that. Why do you think so much of
Speaker 5: it was just focused on the international order rather than domestically.
Speaker 6: You know, I don't know, but let me try to
Speaker 6: answer that question. You know, I'm very often asked, probably
Speaker 6: you would have asked if I don't bring it up first.
Speaker 6: That was the elephant chart.
Speaker 4: The elephant chart.
Speaker 3: Yeah, the great elephant chart.
Speaker 5: I was going to ask if you're annoyed every time
Speaker 5: anyone mentions the elephant chart.
Speaker 6: I'm actually part of it, but pill I have to
Speaker 6: use it, you know, the elephant chart with the show.
Speaker 6: Really the bottom line is okay, middle classes, so the
Speaker 6: West have not been doing well. Growth three to one
Speaker 6: percent random per capita not very well. The top of
Speaker 6: the Western distributions are doing very well, you know under
Speaker 6: Clinton especially, you know, three percent and more. And then
Speaker 6: of course China is doing very well. So you are
Speaker 6: sitting there, you are a government of the United States.
Speaker 6: Let's say you have two possible options. You have, Okay,
Speaker 6: we go for policies that would actually tax the rich,
Speaker 6: that would transfer the money, that would do I don't know,
Speaker 6: serious start of risk, killing of labor, public education because
Speaker 6: I come from public education, public education rather than private,
Speaker 6: get rid of all these fancy schools that are being
Speaker 6: bankrolled by billionaires and do a serious effort. Or you say, oh, look,
Speaker 6: China is like screwing us, so let's go after China.
Speaker 6: China is really benefiting because they are stealing property rights
Speaker 6: and they're doing this or that, and eventually the decision
Speaker 6: was made why it was made like that, but maybe
Speaker 6: politically it was more pragmatic or whatever. And I think
Speaker 6: that Trump twenty sixteen for me is the watershed here
Speaker 6: because many of the policies that Trump then imposed and
Speaker 6: regarding China that continued under Biden. They were done in
Speaker 6: a more maybe intelligent way, but basically they continued, and
Speaker 6: I think that was the change. And then after that
Speaker 6: we really have an acceleration in these policies. But you
Speaker 6: have a very good question. Maybe for political scientists, I
Speaker 6: don't know. It could have gone the other way. I
Speaker 6: totally agree it would have gone into more social democratic
Speaker 6: capitalism rather to go into this nationalist liberalist Yes.
Speaker 2: Yeah, because this is something I think about a lot,
Speaker 2: which is like, let's say we were like take back
Speaker 2: rewind the clock toll, like nineteen eighty nine or nineteen
Speaker 2: ninety two, and I always think to myself, like, I
Speaker 2: was nine years old nineteen eighty nine, so I didn't
Speaker 2: think about these things. But I always think to myself,
Speaker 2: like if I had been to say, like in my
Speaker 2: early in my career, in my twenties. In those years,
Speaker 2: I'd be like, oh, it's obvious, like liberalism or neoliberalism,
Speaker 2: one of those two. It's just like, it's clearly, it's
Speaker 2: clearly the way of the future. It's clearly supure. It's
Speaker 2: proof even itself in the decisive test against like which
Speaker 2: was the better model against the Soviet Union. Even to
Speaker 2: this day, I actually find it pretty remarkable the degree
Speaker 2: to which China held the line in that decade when
Speaker 2: everything was pointing to It's like, the question is settled,
Speaker 2: we know what's the better system. And now, of course
Speaker 2: we have lots of people questioning all the systems. But
Speaker 2: it's sort of remarkable to me that in the nineties specifically,
Speaker 2: you had like one country that not only didn't just
Speaker 2: sort of like embrace you know, re elections, et cetera,
Speaker 2: Like it didn't even ever seem to be to come
Speaker 2: particularly close.
Speaker 6: Well, I often think of the nineties. I was older
Speaker 6: than you and then, and I was then in Washington
Speaker 6: and working for the World Bank. You know, the neoliberal
Speaker 6: ideology was so omnipresent and it was actually common sensical.
Speaker 6: So it's like you are now if you were to
Speaker 6: now argue like, okay, this is not to world. This
Speaker 6: is actually still well, we all see that it's not actual,
Speaker 6: so it was very common sensical, and you believe that
Speaker 6: whoever would actually say something against that, it's like either
Speaker 6: like uneducated or crazy or some of the mixture of
Speaker 6: the two, because it has indeed had actually total ideological hegemony,
Speaker 6: total ideology.
Speaker 4: Hegemeny.
Speaker 6: I was not happy, but I was not happy for
Speaker 6: other reasons which have to do with my life and
Speaker 6: other things.
Speaker 4: And actually recently I found an.
Speaker 6: Article, long article that was then published, I think in
Speaker 6: the Monthly Review, which question into its very early nineteen
Speaker 6: ninety nine. But you know, it was an unusual article,
Speaker 6: and I think we all took it as as a
Speaker 6: common sense that it is an ideology that would be
Speaker 6: now come to China.
Speaker 4: Very briefly, China played it very low. Then they did
Speaker 4: not actually they were like a sleeper.
Speaker 6: They were not disturbing things at all. And then of
Speaker 6: course many people in America now I think, some self
Speaker 6: serving they say, oh, we really did not bother with
Speaker 6: China because we thought China would evolve the way that
Speaker 6: South Korea did and Taiwan, it would become richer, it
Speaker 6: would become our partner then they would democrat dies and
Speaker 6: they will become like like another United States, and it
Speaker 6: would be everything fine.
Speaker 4: Whether they really believe that.
Speaker 6: Or not, I don't know, but China was not at
Speaker 6: the center of attention that it actually became over the
Speaker 6: last ten years. There is no doubt about it. People
Speaker 6: implicitly believed, I think, or wanted to believe that China
Speaker 6: would become a quote unquote normal capitalist, liberal country.
Speaker 5: I mean, since we're talking about a normal capitalist, liberal country.
Speaker 3: One of the quotes.
Speaker 5: One of the things about China is you always hear
Speaker 5: that the government is trying to boost consumption, right, reduce savings,
Speaker 5: boost consumption, and they seem to struggle with it. And
Speaker 5: so I'm curious how you square you know, the growth
Speaker 5: of the middle class in China and the idea that actually,
Speaker 5: you know, by certain standards, they're pretty wealthy now with
Speaker 5: that reluctance to spend.
Speaker 4: You know, that's a very complicated question.
Speaker 6: And I'm not a micro economist, but I had only
Speaker 6: a couple of days ago the discussion on Twitter and
Speaker 6: a substace on that. First are the effects. The fact
Speaker 6: is actually china consumption to GDP ratio is very low.
Speaker 6: It's like about forty forty five percent. US is seventy percent,
Speaker 6: India is fifty percent, so clearly it should be a
Speaker 6: ten percentage points higher. People of course argue that there
Speaker 6: is compressional wages, and of course that state owned enterprises
Speaker 6: then have large retained profits. Now, the good use of
Speaker 6: these retained profits by the state essentially is they can
Speaker 6: actually use enormous amounts of money to direct to certain
Speaker 6: activities for example, railroad construction, or artificial intelligence or actually
Speaker 6: what people don't mention, but China has really done very
Speaker 6: well in space exploration as well, and you know this
Speaker 6: is not like no money at all. And I think
Speaker 6: the next one would be air production with the airplanes,
Speaker 6: which they already have started but they have not broken.
Speaker 6: So and you can use that money also to have
Speaker 6: political economic influence in Africa and elsewhere. So I think
Speaker 6: there is a political economy reason why China needs to
Speaker 6: have the polit from the point of view of the government,
Speaker 6: these large amounts of money. And I think it's easier
Speaker 6: to have this so called wage compression or actually lack
Speaker 6: of sufficient growth of wages if your wages still grow
Speaker 6: by three or four five percent per year. Now, if
Speaker 6: your wages were zero, then it's harder to have a compression.
Speaker 6: But if you have five percent, fine. In past maybe
Speaker 6: you had eight percent, but five percent is good enough.
Speaker 6: So I think there is a political economy reason behind
Speaker 6: that in China.
Speaker 4: So I'm not.
Speaker 6: Quite sure if they really what they say, they really
Speaker 6: would like to accomplish that they cannot because yes, for example,
Speaker 6: they could increase social transfer significantly and people will spend
Speaker 6: that money lots of saving. I think it's not untrue
Speaker 6: is doing China to the fact that actually, particularly in
Speaker 6: the rural areas, you don't have social protection.
Speaker 2: Just real quickly going back to the question of like
Speaker 2: how did China not get swept up in the neo
Speaker 2: liberal consensus that was like so hegemonic in the nineteen nineties.
Speaker 2: The other thing that you observe in your book is
Speaker 2: that even earlier in the century it never got particularly
Speaker 2: interested in like the nonline movement or the so called
Speaker 2: third world countries, et cetera. Is it just have a
Speaker 2: history of not being particularly interested in the flavors of
Speaker 2: the month outside of its ports.
Speaker 6: I actually think the Chinese isolation is country cultural, and
Speaker 6: you know, people talk about the US being isolations and
Speaker 6: all that, and of course there is a trend of
Speaker 6: politics in the US which is basically meant to control
Speaker 6: of the Western hemisphere. So it's not really totally isolation.
Speaker 6: It's it, but at least not get entanglements in Europe.
Speaker 6: But China, I think culturally, and I actually recently discussed
Speaker 6: that with some friends, like you know, the fact is
Speaker 6: that they're like all Chinese economies, all Chinese authors essentially
Speaker 6: riots about China. And my publisher in China says to me,
Speaker 6: I had several books, three books I think published in China,
Speaker 6: and he says to me, look, we are actually very
Speaker 6: happy with your books. We saw that no, probably several
Speaker 6: I maybe I'm not't knowing about much, several thousand copies
Speaker 6: because he says, you know, Chinese audience, they don't want
Speaker 6: to read anything which is not about China. So it's
Speaker 6: hard to sell things that are not talking about China. US, yes,
Speaker 6: because now they see this competition, but the rest of
Speaker 6: the world not that much. So I think there is
Speaker 6: a certain ideological thing which might go really back centuries
Speaker 6: that you know, China thought itself the center of the
Speaker 6: universe and middle kingdom.
Speaker 4: It's a middle kingdom.
Speaker 6: And everybody comes to the Middle Kingdom and they just
Speaker 6: you know, do kautao and say, well, you guys are great,
Speaker 6: and maybe betray the giraffe for a little bit.
Speaker 4: Of porcelain and then you go home.
Speaker 6: So I think that that ideology, I mean under there
Speaker 6: is still presence of that, and I think that limits
Speaker 6: China's influence of terms of soft power, because if you
Speaker 6: don't want to study others and to write books about
Speaker 6: them and to actually try to fashion what they think
Speaker 6: about themselves, you're not going to have soft power. Maybe
Speaker 6: you just finally give an example. Sure, I read recently
Speaker 6: Richard Pipes. He was a famous historian of the Soviet Union.
Speaker 6: When he went to the Soviet Union in eighty nine,
Speaker 6: he was not published before in under communist regime. He
Speaker 6: was agreed to there by accident read that somewhere like
Speaker 6: a greatest historian in the history and all that, because
Speaker 6: his books were so influential in influencing Russians see their
Speaker 6: own history.
Speaker 4: So that's what I meant.
Speaker 6: When you're interested in other countries, so you have to
Speaker 6: have somebody and not only one person, but you have
Speaker 6: lots of people who would write about other countries and
Speaker 6: influence what other countries think about themselves. And so long
Speaker 6: as China does not have that its own self power
Speaker 6: I think will be limited.
Speaker 5: You have a chapter in the book about the elites,
Speaker 5: about Joe and me. In it, you invent a new word.
Speaker 5: My Greek is not very good, but homo ploutio.
Speaker 4: Yes, that's correct, homo plautio.
Speaker 5: And this is the idea that in America, certainly, like
Speaker 5: the wealthy happened getting increasingly rich both through actual labor
Speaker 5: income how much they're being paid to do their jobs,
Speaker 5: as well as capital income, so dividends or whatever. And
Speaker 5: this is something new according to you. So I'm really curious,
Speaker 5: like how do you explain the rise of homo plutia?
Speaker 5: And I always think, you know, if you think about
Speaker 5: someone who's making a lot of money from both labor
Speaker 5: and capitalism, you've got to talk about Elon Musk, right, like.
Speaker 6: He's yeah, yeah, I mean, because the book deals with
Speaker 6: the top ten percent of Americans, so this is not
Speaker 6: a small group, you know. It's like we're talking about
Speaker 6: we take this is all empirical. We take like top
Speaker 6: ten percent, which is you know, thirty million people approximately,
Speaker 6: And what you find there is that there is an
Speaker 6: increasing percentage of people who are in that top ten percent,
Speaker 6: who are also in the top ten percent by income
Speaker 6: from property cash income from property, and top ten percent
Speaker 6: by income from labor from your job.
Speaker 4: And that is new and now actually there are more studies.
Speaker 6: This is early on, but now there are people a
Speaker 6: start and exploring whether it existed in nineteen thirties and
Speaker 6: twenties soon. But think of the nineteenth century capitalism. You
Speaker 6: had big guys like JP Morgan or millions of address,
Speaker 6: you know, millions, hundreds, But they were not laborers technically,
Speaker 6: you know, they made money through entrepreneurship and sort of
Speaker 6: corporate management of the company. Their income was income from corporations,
Speaker 6: income from capital. But here now we have a significant
Speaker 6: upper middle class that is rich in both ways. And
Speaker 6: I think it's I mean, you're probably here all belong
Speaker 6: to that group. And what is interesting then that's actually
Speaker 6: what they use is that in the book Now I
Speaker 6: use the Daniel Markowitz's.
Speaker 4: Work on meritocracy a lot. That class is very.
Speaker 6: Specific because in one hand it is rich capitalist quote unquote,
Speaker 6: they really defend private property. In the past, when people
Speaker 6: spoke of the professional in Nigilia class, I thought this
Speaker 6: would be people who run state owned companies or private companies.
Speaker 4: I use James Burnham.
Speaker 6: You know you were saying the capitalists will be dead
Speaker 6: because managers would run companies regardless, so they would be
Speaker 6: in charge. And secondly, these people, because they have high
Speaker 6: labor incomes and they went to fancay schools, they believe
Speaker 6: they deserve it. And that means that the meritocracy, protection
Speaker 6: of private property, large capitalists, and hard working ethos is combined.
Speaker 6: And I would venture to say this is a new
Speaker 6: combination in history of capitalists have class.
Speaker 5: I were really hurd You call it folksy elites, right.
Speaker 6: I'm sorry, folks eli the fox elites because they love
Speaker 6: to be foxy. It's actually it's an interesting thing. I mean,
Speaker 6: I think social sociologically, if you look at the elite
Speaker 6: that you were seeing, the Jane Austen and so on,
Speaker 6: they actually wanted to show their earlier. What you find
Speaker 6: in American elite, and I spent some time around that
Speaker 6: elite is that they really want to show that they're
Speaker 6: not an elite. They do give you signals that they are,
Speaker 6: but they do it in a fairly discreet way, and
Speaker 6: they like many of the things to actually to be
Speaker 6: very foxy, you know, may they mistake.
Speaker 3: You know I do it.
Speaker 2: I say, like, oh, I went to a public university,
Speaker 2: the University of Texas. It's just a state school which
Speaker 2: happens to be one of the best schools of the
Speaker 2: nation and incredibly wealthy. But that is how I do that, folks.
Speaker 2: The elite move by reminding I'm just.
Speaker 3: A product of public education.
Speaker 4: So of course they like to mention that they work hard,
Speaker 4: which is true.
Speaker 6: Actually if you look at the number of hours of
Speaker 6: work in the US, it's actually increasing with wage per hour.
Speaker 6: So they do work a lot. So they work a lot.
Speaker 6: They studied by the lot. They feel they deserve it.
Speaker 6: They have the capital incomes, and they transmit all these
Speaker 6: advantages to their children that they believe actually children deserve that.
Speaker 6: But the problem is it was what Marcowitz says. The
Speaker 6: problem is that then actually does create in sort of
Speaker 6: an elite that has a self perception that it deserves that,
Speaker 6: and that is to some extent really unpregnably elite because
Speaker 6: you cannot get rid of them because they have a
Speaker 6: hard capital income. Since stock market goes down, they would
Speaker 6: actually have labor income.
Speaker 2: Very they don't deserve it. They're very spoiled. They didn't
Speaker 2: do anything to deserve the lifestyle that they have. And
Speaker 2: it's so, I that's the one.
Speaker 6: You say that because you want to be foxy elite,
Speaker 6: you know, you.
Speaker 2: Don't actually like just getting all personal a little bit
Speaker 2: just like No, it bothers.
Speaker 6: Me a little bit because it's like they have all
Speaker 6: these but they still do it because you're not going
Speaker 6: to go to work against your kids, No, nobody does.
Speaker 4: So I mean this is a I mean, this is
Speaker 4: a very good elite as the elites go, but it
Speaker 4: is an elite.
Speaker 2: Nevertheless, going back to China, when we people people talk
Speaker 2: about China, they were humans. So we always do this,
Speaker 2: We reach for historical analogies. Right, Maybe the story is
Speaker 2: that it's kind of like Japan. Maybe the story is
Speaker 2: that it's kind of like the US after World War Two,
Speaker 2: and you pull different strands from it, et cetera. But
Speaker 2: I think more and more people are saying, now, this
Speaker 2: is a new thing, this extraordinary concentration of so much
Speaker 2: production in one country. Specifically it is novel and the
Speaker 2: numbers setting us at the qualitative differences. You have some
Speaker 2: distinct metrics, including like just the sheer like population level,
Speaker 2: like wealth compounding gains over the last several decades. Is
Speaker 2: it really just a sort of like a new phenomenon
Speaker 2: that we don't have good analogies for. And can you
Speaker 2: like talk about like just the scale of what we
Speaker 2: call the rise of China?
Speaker 6: Well, the scale, I can talk about the scale. I mean,
Speaker 6: I really, I don't know. I'm wary of analogists. I
Speaker 6: don't know if there is like analogy with Japan as well.
Speaker 6: There is a knowledge of the Soviet you know days anology,
Speaker 6: but the US actually the analogy even with the with
Speaker 6: English with industrial relation because the growth going back just
Speaker 6: what I'm moment on the elites, the growth we actually
Speaker 6: did the same thing. I did this with the Caultors,
Speaker 6: actually Chinese cults. We did five percent top of Chinese
Speaker 6: urban population.
Speaker 4: And this is their elite.
Speaker 6: And what you see in that elite nineteen eighty eight
Speaker 6: were the first eight to begin, is that two thirds,
Speaker 6: broadly two thirds of the income of the elite comes
Speaker 6: from state owned enterprises, government jobs, and jobs in the
Speaker 6: Communist Party. Okay, well, go to day to twenty eighteen,
Speaker 6: and now we have data for twenty twenty three.
Speaker 4: Is the reversal.
Speaker 6: Two thirds of total income from the elite in the
Speaker 6: elite for the elite comes from private sector jobs, professional
Speaker 6: jobs in private companies, and one third from state owned enterprises,
Speaker 6: Communist Party and government. So that was why I made
Speaker 6: the comparison with the UK, because the number of so
Speaker 6: called you can call it capitalists, and they are called
Speaker 6: actually in Chinese official terminology, they are called individual.
Speaker 4: Owners and larger owners, not capitalists but owners.
Speaker 6: Okay, when we look at the data that we're done,
Speaker 6: Bob Balen, English Gunmic historian for the growth of the
Speaker 6: capitalist class in England between sixteen and eighty eight, and
Speaker 6: I suppose nineteen hundred we see exactly the same thing.
Speaker 6: But over one hundred and fifty years there is more capitalists.
Speaker 6: You know, there were a small numbers at the beginning,
Speaker 6: then they became much larger number and their relative income
Speaker 6: compared to our landlords originally was much lower and then
Speaker 6: starts catching up. So what I called that extensive and
Speaker 6: intensive increase of capitalists. And in China it took forty
Speaker 6: years for that and in UK took one hundred and fifty.
Speaker 6: So the change in China is just at the level
Speaker 6: that we have not historically seen. So in that sense,
Speaker 6: I totally agree with you. It is something that in
Speaker 6: terms of size of the population and the speed, we
Speaker 6: do not have an equivalent case.
Speaker 5: I mean, there are risks that come with the rise
Speaker 5: of the sort of national market liberalism. And you talk
Speaker 5: about the potential for great power conflicts, for war, basically
Speaker 5: for more income inequality, plutocracy, all that stuff. Can you
Speaker 5: envision Is there any scenario where you get like a
Speaker 5: relatively good equilibrium harmony from the Yeah, like, I mean,
Speaker 5: could this type of market liberalism live in peace with itself?
Speaker 1: I guess.
Speaker 6: Okay, let me put the other had now, the optimistic
Speaker 6: had you know, the chapter two in the book deals
Speaker 6: with precisely that question. That was question that I think
Speaker 6: is really so relevant. It says, what did the economies
Speaker 6: of political sciences think about the relationship between openness slash
Speaker 6: globalization and war on peace? And then you have people
Speaker 6: from Montesquieu who actually believe that trade leads to immediately
Speaker 6: to peace because we are both trying to actually sell
Speaker 6: our goods. We have to be nice to each other
Speaker 6: and stuff like that. I remember that, And of course
Speaker 6: the other extreme is John Hobson with the imperial is
Speaker 6: we in nineteen oh two, and then Rosa Luxembourg and
Speaker 6: Lending who actually and Shuan Pater who believe that when
Speaker 6: you have large powers, they fight for markets. Companies fight
Speaker 6: for markets, but because they need markets control of the
Speaker 6: labor force in foreign countries and elsewhere, they basically take
Speaker 6: the state to play that military role that they need,
Speaker 6: which is actually what we see today is basically large
Speaker 6: scale companies need the support of the state if they
Speaker 6: want really to do jobs elsewhere. And that was really
Speaker 6: sort of a negative, more belligerent sort of variant of
Speaker 6: that view. But if I want to be optimistic, I think,
Speaker 6: I mean, let's go concretely to the questions today. If
Speaker 6: we could top and find cease fire and a solution
Speaker 6: of the war in Ukraine and Russia, in the Middle East,
Speaker 6: Iran and the United States and Israel, I think that
Speaker 6: we would then at least eliminate the possibility of a
Speaker 6: huge war, which then, of course, if you have a
Speaker 6: huge war, all the chips are off, you know, you
Speaker 6: have no idea what will happen. But at least then
Speaker 6: we could start, I think, redesigning economic system, as people
Speaker 6: have said, a new Breton Woods and having a solution
Speaker 6: where actually China would have greater influence, and not only China,
Speaker 6: India as well. Europe definitely much less because Europe has
Speaker 6: the influence in these organizations that reflect the ninety forty
Speaker 6: five when you know, obviously Europe was basically still colonial
Speaker 6: powers and countries like Indonesia, Brazil and so on. So
Speaker 6: that would be optimistic scenario. Stop the words and renegotiate
Speaker 6: international economic relations.
Speaker 3: You were in Paris recently.
Speaker 2: How are Europeans leads? How are they living with themselves
Speaker 2: having come around to Trump's view on China. They must
Speaker 2: drive them crazy, right, They must create this terrible psychic
Speaker 2: toll on them to have to agree with Donald Trump
Speaker 2: on something. But you hear it all the time from mergsmccrown,
Speaker 2: et cetera.
Speaker 3: How are they digest?
Speaker 6: I don't think it was that hard because Germany definitely
Speaker 6: has been affected by China in electric vehicles.
Speaker 4: Yeah, no, no, clear, So it was clear.
Speaker 6: I mean they side now with Trump because they do
Speaker 6: have similar problems than I. No, I don't know, you
Speaker 6: know the well, I don't really know European elites, but
Speaker 6: you know what I find strange about Europe, I'm not
Speaker 6: very optimistic on Europe for many reasons. But you know
Speaker 6: what this find strange is that Europe really needed in
Speaker 6: order to need actually in order to prosper to elements.
Speaker 6: It first needs cheap energy, which was really fueling European
Speaker 6: growth in the last forty years fifty years. But then
Speaker 6: they decided, because of the war with Russia and Ukraine,
Speaker 6: to just cut off Russian energy and to buy much
Speaker 6: more expensive American art. Just say, well, that's kind of bizarre,
Speaker 6: but okay, let's do it. Then it's also the continent
Speaker 6: with the decline in population, and the only way to
Speaker 6: stop the decline in population is to have immigration. But
Speaker 6: then they say, and it's an increasing now they don't
Speaker 6: want immigration at all. You have maybe Spain, it is
Speaker 6: an outlier. It is in favor of immigration, but nobody
Speaker 6: else does. If you look at Nordic countries, they.
Speaker 3: Have don't let them immigrations, They don't let them in.
Speaker 4: Yeah.
Speaker 3: No, in Spain they're liberal towards Latin American, yes.
Speaker 4: But they're libertal immigration in general.
Speaker 6: And actually Sanchez's government is totally at odds with everybody
Speaker 6: else on that on immigration, and so they need people,
Speaker 6: but they don't want people they need cheap energy, but
Speaker 6: they decided to cut off the energy, and then China
Speaker 6: shock comes, especially to Germany, so they are in I think,
Speaker 6: different situation, and in such a situation they have found
Speaker 6: some sympathy for Trump, but there may be some feint
Speaker 6: sympathy as well because they treat I think actually many
Speaker 6: people treat Trump like a tiger in a cage. You're
Speaker 6: with the tiger there and you just want to survive
Speaker 6: until the tiger is gone, you know. So you just
Speaker 6: placed the tiger and say, okay, you know, you big tiger,
Speaker 6: you are great, but you don't really believe that. So
Speaker 6: there is that part as well.
Speaker 5: I think i'd say more about your recent trip to China,
Speaker 5: and I assume you met some Chinese elites over there
Speaker 5: and talk to them.
Speaker 6: It was really about economic history, and it was super
Speaker 6: interesting because the conferences that I went to there are
Speaker 6: in three different Beijing, Shanghai, and then also one in
Speaker 6: a smaller city, Gangship Province, which is in the south,
Speaker 6: very sort of tropical. We talked about the Great Divergence
Speaker 6: and that was why that was a topic which very
Speaker 6: popular among historians. Why is that the industry evolution took
Speaker 6: place in England and not in China. If you look
Speaker 6: at seventeen fifteen, the two countries are a similar level
Speaker 6: of development. China is big, has many technological innovations. They
Speaker 6: have a book of technological innovations over two thousand years
Speaker 6: and so on. So the story of the conference was
Speaker 6: about that. But then because of my book is merely
Speaker 6: now the great convergence of China. Then of course that
Speaker 6: was interesting because it is to some extent a pounddown
Speaker 6: of what happened before. And it is interesting to speak
Speaker 6: obviously to many people. These are people at universities and
Speaker 6: so on. As I was saying before, many people have
Speaker 6: a little bit of a disbelief that they are the
Speaker 6: rich country.
Speaker 4: I was going to ask, do you.
Speaker 5: Get any pushback on the convergence thesis or not? Really?
Speaker 6: Not really, But for example, what I did get is
Speaker 6: that when I was given that presentation for a while
Speaker 6: in China, I talked about global inequality, and I say,
Speaker 6: between nineteen ninety and actually until probably until several years ago,
Speaker 6: China was a sort of automatic reducer to global inequality
Speaker 6: because it's a big country, it was still actively poor,
Speaker 6: and they grow faster, and global inequality goes down and
Speaker 6: then I say, but that's no longer the case today.
Speaker 6: Chinese high growth is slightly inequality increasing at the world level,
Speaker 6: because China then becomes further apart from poor countries like Sudan, Ethiopia,
Speaker 6: Congo and so on, gets closer to the US. But
Speaker 6: the first element is stronger than the second. So when
Speaker 6: I say to them that was interesting young people, especially
Speaker 6: when I say to them Chinese growth today is globally
Speaker 6: inequality increasing, they almost took it like it's an insult.
Speaker 6: So you're telling us we should not grow. I said, no, guys,
Speaker 6: this isn't arithmetical thing. It is simply that your country
Speaker 6: has become too rich now. Arithmetically, if you grow at
Speaker 6: eight percent, it's going to increase global inequality. Maybe you
Speaker 6: should distribute within China, but I'm not talking about that much.
Speaker 6: But what we find it interesting is that people are
Speaker 6: still really, as I was saying before, they have little
Speaker 6: bit of a problem getting adjusted to the fact that
Speaker 6: they are now not a very rich country, but they
Speaker 6: have joined the club around the club of the rich countries.
Speaker 2: Do you think that this China anxiety that's so prevalent
Speaker 2: in the US, Europe, maybe Japan and Korea, et cetera.
Speaker 2: Do you think it will spread further and become a
Speaker 2: thing in the actual poorer parts of the world, who
Speaker 2: presumably have industrial ambitions of their own. I mean, Brazil
Speaker 2: has a planemaker, they presumably the Komak is going to
Speaker 2: compete with embra air, et cetera.
Speaker 3: Like could China find.
Speaker 2: Itself in a situation in which there was recently a
Speaker 2: story Malaysia specifically limiting the number of imports of low.
Speaker 3: End Chinese EV's Like.
Speaker 2: Could what, okay, it started in the US with Trump
Speaker 2: spread to Europe over the last several years, could have
Speaker 2: spread further?
Speaker 4: It could?
Speaker 6: But you know, let me just say that's actually what
Speaker 6: one of my book is good. This is national market liberal. Yeah,
Speaker 6: it's actually a liberal It's a limit to the national market.
Speaker 6: So we really now totally think in terms like what
Speaker 6: are we doing? Is Malaysia to stop these goods? Is
Speaker 6: Brazil going to stop other goods? There was recently an
Speaker 6: article I think in Foreign Affairs by Subramanian and another culture,
Speaker 6: mostly from the Indians Indian perspective, but essentially saying, if
Speaker 6: China is better in high end manufacturing and middle and
Speaker 6: level manufacturing, then countries that would normally go into middle
Speaker 6: level manufacturing actually would be also spaced out by China.
Speaker 6: But then I really have problem with that argument because
Speaker 6: you're thinking, well, we are all cavetting here because China
Speaker 6: is too efficient and too good. That doesn't make sense.
Speaker 6: If China is efficient and too good and producing x
Speaker 6: y and z, let them be producing x y and z.
Speaker 6: Why do we complain about this?
Speaker 3: Well, okay, I have a thought why we might want
Speaker 3: to complain about this? So clearly, we.
Speaker 2: All enjoy every day the benefits of efficient Chinese production,
Speaker 2: and we have affordable computers and affordable phones and lots
Speaker 2: of other things and inexpensive toys, et cetera. One reason
Speaker 2: we might not love that is that if you can't
Speaker 2: build a car, if you can't build like, you can't
Speaker 2: build a tank. Ultimately, right the dual use technologies, you
Speaker 2: lose the manufacturing muscle, and you lose that manufacturing muscle
Speaker 2: for commercial goods, and then you no longer have the
Speaker 2: muscle for military. And if you can't do that, as
Speaker 2: Alexander Hamilton said, you don't have sovereignty as a nation.
Speaker 2: This is like, you know, great, we all love these benefits.
Speaker 2: I love cheap things as much as anyone. But like this,
Speaker 2: when I think about the world order, if no country
Speaker 2: can like actually protect itself militarily because they've lost, that
Speaker 2: has become totally hollowed out, isn't that a reason to
Speaker 2: be anxious?
Speaker 4: No, no, there is a reason.
Speaker 6: But then you go to chapter two and you say, well,
Speaker 6: I agree with Hobson, Landing and Rosa Luxembourg. Openness is war.
Speaker 6: That means basically we cannot have ideologically and openness that
Speaker 6: is actually open without thinking about golf. And I think
Speaker 6: it's legitimate stuff because of course conflict has been with
Speaker 6: us for so long. But that is the question of
Speaker 6: what we started that with your belief and my own belief,
Speaker 6: and I think your belief in the nineteen nineties that
Speaker 6: all these contradictions are gone, that there was neo liberalism
Speaker 6: but it's ruling everything. There will be no conflict, that
Speaker 6: we don't have to think about that And if somebody
Speaker 6: produces X, Y, and Z, that's excellent and so on.
Speaker 5: Joe and I both did international relations degrees in the
Speaker 5: early two thousands school we are well aware of the
Speaker 5: society and.
Speaker 6: That actually I agree with the real world is such
Speaker 6: as you described it, But that simply means that the
Speaker 6: world that we believed in nineteen ninety was not the
Speaker 6: real world. That is a fantasy one. Yeah, and that
Speaker 6: means that that ideology which underpinned fantasy world was a
Speaker 6: fantasy ideology. So I understand from the point of view
Speaker 6: of military technology and all of that that, of course
Speaker 6: countries cannot simply particularly large big powers small countries.
Speaker 4: It doesn't really matter.
Speaker 6: For big powers, it doesn't matter because then if big
Speaker 6: powers need helicopters and they cannot produce helicopters because they
Speaker 6: don't have any industrial capacity, yes they're not going to
Speaker 6: have helicopters, and that would be as we see now
Speaker 6: with drones and so on. So I agree from the
Speaker 6: point of view of national security, yes, one has to
Speaker 6: be not concerned about China because I hate China bashing,
Speaker 6: but to be concerned about other countries in general, you know,
Speaker 6: because everybody who is your ally might not become your
Speaker 6: ally tomorrow.
Speaker 4: You never know.
Speaker 6: So in that sense, yes, I agree with Alexander Hamilton.
Speaker 6: But as I said, then we're really in a different
Speaker 6: world from the world of unimpeded free trade, where basically
Speaker 6: you don't believe that you know, significant military considerations. I
Speaker 6: would not say zero, but not significant.
Speaker 5: Most of your work famously focuses on inequality and distributional
Speaker 5: effects and that sort of thing. When you look at
Speaker 5: the tools of you know, again this national market liberalism,
Speaker 5: we think about sanctions or you know, tariffs, obviously industrial policy,
Speaker 5: things like that. Do you have a preferred tool that
Speaker 5: would come with some distributional benefits rather than just you know,
Speaker 5: like shuffling rents between countries.
Speaker 6: When it comes to global income inequality, and I've been
Speaker 6: working on that, as you know for many years. The
Speaker 6: irononic stuff about that is when if you want to
Speaker 6: reduce global income inequality between individuals, you really have to
Speaker 6: worry about growth because the best way to reduce, and
Speaker 6: particularly the only way at the global level, is high
Speaker 6: growth rates of poor countries. And that's why Africa in
Speaker 6: that point of view, and that's what we were selling
Speaker 6: to Chinese students when they were surprised that Chinese no
Speaker 6: longer I say to them, the key point now is
Speaker 6: India's growth, and especially Africa, because Africa, you have five
Speaker 6: large countries. One hundred million people are actually two hundred
Speaker 6: and twenties is Nigeria, but other is about one hundred million.
Speaker 6: So we are talking there about these five or six
Speaker 6: countries with the one billion people and growing the only
Speaker 6: part of the world which is going a two percent
Speaker 6: annually in terms of population. So that really is going
Speaker 6: to define twenty first century. Are we going to have
Speaker 6: reduction in global inequality or not? If Africa doesn't catch up,
Speaker 6: we will have another increase in global inequality. So when
Speaker 6: it comes to global inequality, you really have to worry
Speaker 6: about growth. When it comes to inequality with the nation state,
Speaker 6: then of course the situation is different. You have a
Speaker 6: host of policies that are quite well known. You know,
Speaker 6: education I think is crucially important in my opinion. And
Speaker 6: you know, I'm not a huge fan of slapping a
Speaker 6: tax on anything. You know, some people immediately just want
Speaker 6: to tax everything. But I do actually believe that there
Speaker 6: is a case for taxing extraordinary wealth. And I've called
Speaker 6: it in my Sep Stuck, I called it a pedagogical tax.
Speaker 4: And I tell you why.
Speaker 6: It is pedagogical because you have to tell people with
Speaker 6: extraordinary wealth, you are not going to rule us. I
Speaker 6: don't care how many billions you have, You're not going
Speaker 6: to rule us. And in order for you not to
Speaker 6: be able to rule us, I'm going to have an
Speaker 6: extortionary tax on you every year, and it is a
Speaker 6: pedagogical tax. That's what zuopoint is actually calling for. That
Speaker 6: Picqutti is calling for even stronger tax. I don't really
Speaker 6: have a view where it should be two twenty percent
Speaker 6: of that, but I think that should be a pedagogical text.
Speaker 3: There's one line in your book I didn't really like
Speaker 3: or I didn't get it that.
Speaker 4: Maybe more lines didn't I didn't maybe I didn't get it.
Speaker 3: I didn't like it.
Speaker 4: There are many things when.
Speaker 2: Says it is in this context that we should look
Speaker 2: at the politics of Donald Trump, Jesion ping In, Vladimir Putin.
Speaker 2: Their policies try to stem or control the rise to
Speaker 2: complete economic and political dominance of the money elites.
Speaker 3: This strikes me.
Speaker 2: With Trump in particular, is a thing i'd see post
Speaker 2: liberals like to say on Twitter, and they fantasize that
Speaker 2: he's sort of like secretly, I don't know, secretly heterodox
Speaker 2: economics or something like that. When I look at the
Speaker 2: actual administration, I see a administration that is very orthodox.
Speaker 3: When it comes to tax cuts on the ridge, I.
Speaker 2: See an administration that has invited big business leaders into
Speaker 2: the operations of government at a degree that's sort of unparalleled.
Speaker 2: In what sense is it defensible to put Trump in
Speaker 2: this category?
Speaker 6: It's a very good cutching because it raises also the
Speaker 6: issue that I address, and by talking about national market liberalism,
Speaker 6: I actually put Trump in a category of people domestically
Speaker 6: that pursuisson continues and actually in some sense deepens the
Speaker 6: policies of near liberalism domestically. But what they wanted to
Speaker 6: say here, maybe it was not clear, but what they
Speaker 6: wanted to say is they came to power on the
Speaker 6: basis of support that was that came from parts of
Speaker 6: the population that were resentful about the people who the
Speaker 6: winners of the near liberal globalization for the US. I
Speaker 6: don't need to expand on all that picture for Trump.
Speaker 6: It has been studied, you know, in extent, so much
Speaker 6: more than I know. But the fact is the seventy
Speaker 6: seven million people actually voted for him, and I think
Speaker 6: essentially voted because they were unhappy with what they have seen.
Speaker 6: They were expecting much more, they got much less. So
Speaker 6: I think in that sense he fashioned himself as somebody
Speaker 6: who is fighting the elites.
Speaker 4: Of course, in reality is not. Actually he is not
Speaker 4: only part of the elite.
Speaker 6: He has, as you said, brought them all in, and
Speaker 6: he does follow very conservative policies when it comes to taxes. Actually,
Speaker 6: of course taxing capital less than labor, taxing top less,
Speaker 6: I mean not less, but actually not increasing the tax
Speaker 6: rates and so on.
Speaker 4: So I agree.
Speaker 6: So what I wanted to say there, maybe it was
Speaker 6: not clear the reasons for them coming to power was
Speaker 6: that the significant section of the population was unhappy with
Speaker 6: neo liberal globalization. And I think in the case interesting
Speaker 6: case is she Jinpin for me putting as well, but
Speaker 6: Shijin Pin. But the's interesting is I think he came
Speaker 6: because and he actually explicitly said that he doesn't want
Speaker 6: rich people to enter the decision making bodies of the
Speaker 6: companist part. It's the pedagogical point, you yeah, pedagogical he
Speaker 6: says to the rich people, as China historically had the
Speaker 6: case merchants, Yes, you get rich, do extremely well, but
Speaker 6: don't come here and tell us what we should be doing.
Speaker 6: We decide and you get rich. And I think actually
Speaker 6: under Jiang Zemin he had this policy of the three represents,
Speaker 6: which ideologically justified the influence of the rich people in
Speaker 6: the Communist Party, and I think it's very clear that
Speaker 6: with the hijipin there is a purge of such people
Speaker 6: out so they can be still rich. I heard the story,
Speaker 6: maybe it's apocryphal. You guys must know that, probably much
Speaker 6: better than I. But I was told when Jackma was
Speaker 6: told that he's not going to have his IPO, the
Speaker 6: phone call was made by the mid level official in
Speaker 6: the Ministry of Finance, and things don't happen by accident
Speaker 6: in China.
Speaker 4: That was a message.
Speaker 6: You don't treat with the minister of your treat with
Speaker 6: the mid level official.
Speaker 4: That's your level.
Speaker 2: Bronco Milanovich, thank you so much for coming on the podcast.
Speaker 2: Very fun conversation. Really appreciate you taking your time.
Speaker 4: Well, thank you very much for inviting me. It was
Speaker 4: really fun.
Speaker 6: Actually, I'll love these conversations that they're actually unscripted, and.
Speaker 4: Yeah, that's how I'd like to do it.
Speaker 3: Let's just, you know, just a little tour around the world.
Speaker 3: But no, that was great, Thank you so much.
Speaker 2: Up until prepping for this episode, I'd just like totally
Speaker 2: forgotten about the elephant chart and how that was like, man,
Speaker 2: that must have been in a million slide presentations in
Speaker 2: like twenty fifteen and twenty fourteen, et cetera.
Speaker 5: Joe, Yes, can I be in the room when you
Speaker 5: tell your children that they're not getting an inheritance because
Speaker 5: you need to prove your folks see credentials.
Speaker 2: Well, I assume they, you know, fortune to have a
Speaker 2: little bit leftover that they will get some inheritance. But
Speaker 2: my daughter recently, like I don't know if it's like
Speaker 2: from the TV show or a friend, I don't know.
Speaker 2: She learned the term trust fund recently and she she's like, oh,
Speaker 2: do I get a trust fund? And I was like,
Speaker 2: absolutely not, that's not something in your future. And then
Speaker 2: she was like disappointed, and I was like, no, no,
Speaker 2: Like you have to understand, no, even if no one.
Speaker 3: Respects those this is why you don't want money. Yeah,
Speaker 3: it's like, no, no, no one.
Speaker 2: Respects those people, et cetera. So she is learning about
Speaker 2: the world of you know, so far, I've told her
Speaker 2: she'll inherit something. I hope I have a little cash
Speaker 2: left over, She'll not be getting a trust fund.
Speaker 5: Anyway. That was a fascinating conversation. Yeah, and I do
Speaker 5: think this is like the big story of our time.
Speaker 5: The source of like turning away from globalization and bringing
Speaker 5: everything more inwards. I do think it's it's very interesting
Speaker 5: and perhaps telling that so much of the policy, you know,
Speaker 5: we're talking about people who are upset because they're not
Speaker 5: getting as wealthy as they once could have been basically,
Speaker 5: And I think it's interesting and telling that the policy
Speaker 5: solutions to that are all very much focused outward, things
Speaker 5: like terroiffs and things like that, rather than anything focused domestically.
Speaker 5: So domestically you still get market liberalism.
Speaker 2: Yeah, no, I think that's interesting. You know, I remember,
Speaker 2: like again going back to the twenty tens, and I was,
Speaker 2: you know, you see that elephant chart. What the elephant
Speaker 2: chart showed was that like on a global scale, the
Speaker 2: new middle class was coming from Asia, right, China, Asia
Speaker 2: in general more broadly, which he talks about in the book.
Speaker 2: But on the flip side, it's like, Okay, so some
Speaker 2: person who's sort of like in the middle of Italy, right,
Speaker 2: like they're pretty wealthy by global standards, if their status
Speaker 2: in the globe goes down because suddenly a lot more
Speaker 2: people are wealthy in China and Korea, Vietnam, etc.
Speaker 3: I'm like, I don't really see how that hurts them, right.
Speaker 2: It was interes Like the World Cup ticket example, is
Speaker 2: sort of a symptom of this phenomenon.
Speaker 3: There aren't that many things.
Speaker 2: That are like the World Cup where the existence of
Speaker 2: wealthy people elsewhere actually diminishes your relative you know, you
Speaker 2: do see a few things like this, like the you know,
Speaker 2: people observe that, like the Disney vacation is not as
Speaker 2: available to like a median household the way it would
Speaker 2: have been in the seventies or eighties because they're just
Speaker 2: like so many more people.
Speaker 5: Who like Right, it's also a competitive is competitive in
Speaker 5: the same way as the World Cup.
Speaker 2: I am also a little bit skeptical of the sort
Speaker 2: of basic economics claim that, say, the rise of Donald Trump,
Speaker 2: or the success I would say electorally of Donald Trump
Speaker 2: is about this like aggrieved. There is like this sort
Speaker 2: of like, of course, there's this anti elite maybe anti
Speaker 2: liberal elite tinge to it. But another big part of
Speaker 2: it his success in twenty sixteen was build the wall, right,
Speaker 2: which is like a very different thing. It's about keeping
Speaker 2: other people out. There's very little to do with sort
Speaker 2: of like you know, the sort of like success of
Speaker 2: wealthy people in the United States.
Speaker 5: You're not building a wall to keep out Mexican transformers.
Speaker 2: It was a huge part of the success in twenty sixteen,
Speaker 2: and I would say twenty twenty four with sort of
Speaker 2: the perception or the sort of liberal border policies of
Speaker 2: the Biden administration. So I think like it's very people
Speaker 2: like to say, Oh, it's like there's this middle class
Speaker 2: that they look at the elite. No, A big part
Speaker 2: of Trump's success specifically clearly has to do with immigration,
Speaker 2: which is a different story and receive cultural change rather
Speaker 2: than inequities of capitalism or whatever.
Speaker 5: All right, shall we leave it there?
Speaker 3: Sure, let's leave it there.
Speaker 5: This has been another episode of the All Thoughts podcast.
Speaker 5: I'm Tracy Alloway. You can follow me at Tracy Alloway.
Speaker 2: And I'm Joe Wisenthal. You can follow me at the Stalwart.
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