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Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.

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Speaker 2: Hello and welcome to another episode of the All Bots podcast.

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Speaker 2: I'm Tracy Alloway.

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Speaker 3: And I'm Joe Wisenthal.

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Speaker 2: Joe, you did international relations at university, didn't you.

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Speaker 4: Yeah. I did.

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Speaker 3: I don't remember any of it actually, technically at University

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Speaker 3: of Texas, the major was called government, which was sort

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Speaker 3: of polysci international relations. I don't remember any of it

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Speaker 3: at a good time. But yeah, anyway, yes, it is.

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Speaker 2: All a blur for me as well.

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Speaker 3: Just to be clear, it's not because I was like

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Speaker 3: partying like crazy. I didn't have much fun in college,

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Speaker 3: you know. It's just one of those sort of liberal

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Speaker 3: arts degrees that you remember a few ideas from and.

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Speaker 1: Then you move on.

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Speaker 3: Okay, Well, I don't want to make it seem like

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Speaker 3: I was like, oh, it's all a blue to me,

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Speaker 3: because it's such a no. It's just I wasn't a

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Speaker 3: great student, Okay.

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Speaker 2: Well, to be fair, I feel like one of the

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Speaker 2: things about international relations is that I don't know about you,

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Speaker 2: but I feel like I didn't learn very much. I

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Speaker 2: basically learned how to write essays and arguments, and I

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Speaker 2: don't feel like I actually internalized a lot of what's

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Speaker 2: going on in the world. That said, I remember in

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Speaker 2: my first year there was one book that was on

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Speaker 2: our reading list, and it kind of blew my mind.

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Speaker 2: At the time.

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Speaker 5: I was like, whoa.

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Speaker 2: So it was Globalization and It's Discontents by Joseph Stiglitz.

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Speaker 2: Do you remember that one.

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Speaker 3: I did not read it at the time. I probably

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Speaker 3: should have. I think that came out in early two thousand,

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Speaker 3: two thousand and two. It looks like according to Wikipedia,

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Speaker 3: and it feels very ahead of its time because now

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Speaker 3: this is just such a pervasive theme.

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Speaker 2: It does. And the thing that kind of blew my

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Speaker 2: mind about it was, you know, I had done a

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Speaker 2: little bit of international relations at my high school in Tokyo.

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Speaker 2: They have, of course, but most of it felt very history.

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Speaker 2: It was like, you know, World War One happened, and

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Speaker 2: then World War two happen, and then all these international

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Speaker 2: institutions got set up, and here are all their various

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Speaker 2: names and acronyms. But Globalization and Its Discontents was the

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Speaker 2: first time I had read an actual, like critical study

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Speaker 2: of some of these institutions, and I thought it was

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Speaker 2: so good. I was like, oh, hey, like these weren't

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Speaker 2: inevitable by any means, and we can have a discussion

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Speaker 2: over what it is they do and how they should function.

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Speaker 3: Yeah, the lack of inevitability when it comes to policy choices,

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Speaker 3: I think really important people make decisions and things don't

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Speaker 3: necessarily unfold on some path that must have always been

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Speaker 3: the case. Very easy to forget that. And also, you know,

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Speaker 3: all of this stuff is very new and it has

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Speaker 3: none of these things are ancient by any stritch. You

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Speaker 3: could argue none. Nothing has really proven the test of

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Speaker 3: time as of yet. And so the possibility that things

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Speaker 3: could disintegrate, that globalization could go in reverse, that institutions

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Speaker 3: lose credibility, feels like these are we're all open questions

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Speaker 3: to me.

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Speaker 2: Absolutely, So I am very happy to say that today

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Speaker 2: we do, in fact have the perfect guest on all thoughts.

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Speaker 2: We are going to be speaking with Professor Joseph Stickletz.

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Speaker 2: He is, of course a Nobel Prize winning economist, the

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Speaker 2: author of Globalization and It's Discontents, and he has a

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Speaker 2: new book out now as well. It is called The

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Speaker 2: Road to Freedom, Economics and the Good Society. So Professor Stickltz,

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Speaker 2: thank you so much for coming on all thoughts go

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Speaker 2: ahad to be here. So I have to say your

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Speaker 2: book actually featured in one of my most annoying and

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Speaker 2: overconfident international relations essays of all time, where I wrote

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Speaker 2: that Stiglitz made a fair criticism of international institutions, but

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Speaker 2: he should have gone even further. Maybe in the outro,

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Speaker 2: I'll spare you this professor, but maybe in the outro

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Speaker 2: I'll read some of it to the other Joe here.

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Speaker 3: To my co host, looking forward to that.

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Speaker 2: Yeah, But one of the reasons we wanted to have

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Speaker 2: you on the show was not necessarily because of the

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Speaker 2: new book, although it looks really interesting, but you also

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Speaker 2: just published a working paper over at the Federal Reserve,

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Speaker 2: and it's called our Supply Networks Efficiently Resilient. How did

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Speaker 2: that get on your radar?

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Speaker 4: All went through the pandemic and the post pandemic inflation,

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Speaker 4: and a lot of the problems in the pandemic and

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Speaker 4: after the pandemic were about supply chains. Car companies couldn't

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Speaker 4: get chips, a lot of people couldn't get one thing

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Speaker 4: or another. There was a shortage of women, feminine products, divers,

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Speaker 4: all kinds of things, the baby formula, and in many

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Speaker 4: of the cases people said, well, I couldn't produce it

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Speaker 4: because somebody else couldn't supply me with what I needed.

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Speaker 4: And they said, well I couldn't do it because what

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Speaker 4: I was supposed to get was from somebody else. And

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Speaker 4: that brought me back to work I had done earlier

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Speaker 4: on the question of how interdependent we are in our economy,

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Speaker 4: and we saw it in the financial system. I did

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Speaker 4: a lot of work on financial interdependence. Went do you

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Speaker 4: remember when Layman Brothers went down? It looked like that.

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Speaker 4: That looked like that whole banking system was going to

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Speaker 4: go down. We were all very interdependent. And the question

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Speaker 4: then was was this a one off or was there

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Speaker 4: something systematically wrong, systemically wrong with the way our economy

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Speaker 4: was organized that led firms to make decisions that led

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Speaker 4: the economy to be insufficiently resilient. And going back to

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Speaker 4: the book Galization Discontexts, one of my discontents with that

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Speaker 4: book was I didn't give the view my views about

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Speaker 4: what could be done. And I wrote a sequel called

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Speaker 4: Making Glorization Work, and in that sequel I discussed some

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Speaker 4: aspects of this issue. I pointed out that Germany had

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Speaker 4: become excessively dependent on Russian gas and you know it.

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Speaker 4: Maybe the President Bush looked in the eyes of Bouten

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Speaker 4: and said he's somebody I can trust. A lot of

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Speaker 4: other people looked at his eyes and came to other conclusions.

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Speaker 4: And whether you did or not trust Bouten, it was

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Speaker 4: a risk, and putting all your eggs in that basket

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Speaker 4: was just a mistake. So the question was that I

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Speaker 4: wanted to pose bark generally, was our markets efficiently resilient?

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Speaker 3: So when it comes to I mean, the pandemic hit,

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Speaker 3: everyone sort of woke up to the fragility of our

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Speaker 3: supply chains and experienced shortages of various things for probably

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Speaker 3: for many people, least in rich Western cones for the

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Speaker 3: first time in their lives. And so then we say, okay,

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Speaker 3: we want to have more buffers and more inventories, more

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Speaker 3: resilient supply chain. That being said, this type of shock

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Speaker 3: seems to I don't know, you could say once in

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Speaker 3: a century type of thing. And there is an argument

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Speaker 3: to be made perhaps that companies should not be designing

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Speaker 3: systems or you know, you're over optimizing or you're going

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Speaker 3: to be overly inefficient if you're thinking about once in

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Speaker 3: a century type of shocks. But In your paper you

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Speaker 3: talk about how some of the lessons from the pandemic

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Speaker 3: are generalizable to non crisis times as well. So can

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Speaker 3: you explain a little bit this sort of theoretical argument

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Speaker 3: that you make that it's not just about these megashocks,

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Speaker 3: but that a persistent feature across the economy is this

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Speaker 3: under investment in supply chain resilience.

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Speaker 4: That's right. I mean, it's basically that firms don't think

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Speaker 4: about the consequences of underinvesting in capacity for others. They

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Speaker 4: may take the price distributions as given, but their independent

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Speaker 4: actions actually change the price distributions, and they change them

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Speaker 4: in ways that basically they're free writing on others. But

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Speaker 4: when they all are free riding on others on the

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Speaker 4: fact that somebody will have built that capacity, there's a

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Speaker 4: problem of under capacity. So that would, in a nutshell,

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Speaker 4: is the argument that if each firm says, well, if

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Speaker 4: I need it, I can always get it from somebody else,

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Speaker 4: and they all go around doing that, in the end

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Speaker 4: there won't be enough capacity. Capacity is like a public

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Speaker 4: good that we all benefit from, and there's a general

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Speaker 4: proposition in economics that there will be under investments with goods.

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Speaker 2: Here is something I always wanted to ask a Nobel

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Speaker 2: Prize winning economist, but when you're modeling something like firm

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Speaker 2: behavior and the tendency to over or underinvest, how do

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Speaker 2: you actually go about doing that?

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Speaker 4: That's a very good question. The way we do that

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Speaker 4: is complex.

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Speaker 2: We like complexity on this show in detail Feel Free.

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Speaker 4: So the basic idea is you apothesized a world in

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Speaker 4: which you have somebody sitting up there coordinating various activities,

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Speaker 4: looking at saying, Okay, I know there's going to be shocks.

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Speaker 4: I want to make sure I don't want to overinvest,

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Speaker 4: as you say, you don't want to build capacity for

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Speaker 4: once in a thousand year, but I'm willing to pay

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Speaker 4: something because some big shocks are really going to have

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Speaker 4: very very negative consequence. And so I can solve for

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Speaker 4: the level of capacity that is desirable for the shocks,

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Speaker 4: given a reasonable assumptions about how big different shocks are

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Speaker 4: going to occur, with what probabilities, And then I ask

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Speaker 4: will decentralize markets? Each firm maximizing its own profits lead

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Speaker 4: to the same solution that somebody trying to coordinate it all.

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Speaker 4: The basis of a modern market economy is decentralization. Each

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Speaker 4: firm goes ahead and does a thing. And Adam Smith

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Speaker 4: had this idea that individuals in the pursuit of their

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Speaker 4: own self interest lead, as if by an invisible hand,

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Speaker 4: to the well being of society. That concept is really

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Speaker 4: fundamental to economic reasoning, and Adam Smith didn't actually test

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Speaker 4: whether it was true. He just asserted it. And what

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Speaker 4: we can do with modern, more complicated models is to say, well,

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Speaker 4: in these more complicated situations where you have these shocks,

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Speaker 4: you are responding to the shocks. The lack of coordination

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Speaker 4: lead to a problem, And the answer is yes. And

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Speaker 4: that's where the free riding comes in. And that's why

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Speaker 4: the way we model it, we compare what a decentralized

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Speaker 4: outcome would look like worth one where say somebody is

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Speaker 4: aware of the need for greater resilience than each individual would.

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Speaker 4: Let me give you one example where this has played

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Speaker 4: out in an important way. We have a lot of

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Speaker 4: capacity and oil and gas, but we have to draw

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Speaker 4: on the oil reserve that the government has created to

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Speaker 4: help stabilize it. Even more so, we as a country

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Speaker 4: have realized that the markets are not the solution by themselves,

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Speaker 4: and have put a lot of oil into these strategic

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Speaker 4: reserves which we would take out when there's a shock

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Speaker 4: where we need it, and we then when times are normal,

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Speaker 4: we will refill it. So that illustrates the other extreme

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Speaker 4: that our economy went to, where you can see where

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Speaker 4: it was not resilient enough, is we had just in

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Speaker 4: time inventories. I don't know if you remember that idea,

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Speaker 4: and it was the idea that it was more efficient

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Speaker 4: to wait till you need it apart or you needed

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Speaker 4: then you call it up and so I'd send it over. Well,

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Speaker 4: it saved on inventory costs, but it assumed that everything

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Speaker 4: in the logistic network was working. Parts were working, ships

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Speaker 4: were working. And of course we've had a number of

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Speaker 4: events that show well that's not true. We've had wars

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Speaker 4: like in the Middle East, and we had the pandemic

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Speaker 4: where there were logistical nightmares and just in time. Those

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Speaker 4: companies that relied on just in time inventories were in

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Speaker 4: big trouble, showing that our and with big consequences for

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Speaker 4: our economy. Our economy wasn't resilient and we experienced inflation

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Speaker 4: as a consequence of that. That was a social cost

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Speaker 4: that individual firms didn't take into account when they were

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Speaker 4: making those calculations, but.

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Speaker 2: On just in time, you can argue that the economy

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Speaker 2: or society as a whole suffered because of those decisions

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Speaker 2: that tendency to be as efficient as possible. But a

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Speaker 2: lot of the individual companies were rewarded by shareholders or

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Speaker 2: profits for being as efficient and just in time as

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Speaker 2: they could possibly be. And I guess there's that tension

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Speaker 2: between individual rewards for being extremely streamlined versus negative externalities

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Speaker 2: for the whole of the economy and society. How do

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Speaker 2: you square those two things. You talk about it in

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Speaker 2: the paper.

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Speaker 4: You're precisely on point there that this is the tension

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Speaker 4: that what is rational for the individual maximizing or firm

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Speaker 4: maximizing its profits, is not efficient for society. There's another

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Speaker 4: aspect of that that I should emphasize that markets are

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Speaker 4: often excessively short term. So you say they're maximized seeing

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Speaker 4: their profits, they're not really maximizing long term profits. A

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Speaker 4: lot of that just in time was maximizing short term profits,

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Speaker 4: and then when you can't produce, you lose a lot

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Speaker 4: of profits, and they didn't take that fully into account.

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Speaker 4: Part of the reason for this is we don't really

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Speaker 4: have good prices for risk. You know, there's a lot

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Speaker 4: of discussion today about one of the reasons why we

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Speaker 4: have too much pollution, too much carbon climate changes, that

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Speaker 4: we don't charge for carbon emissions or other forms of pollution,

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Speaker 4: so there isn't a price associated with certain negative externalities

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Speaker 4: or the pollution is one, and there's not a price

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Speaker 4: associated with or a reward with risk. So the firms

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Speaker 4: that don't really just in time aren't rewarded for their

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Speaker 4: avoidings of the risk, and particularly if the stock market

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Speaker 4: is too short term, figuring out what to do about

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Speaker 4: that is really difficult. One of the things is to

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Speaker 4: try to encourage firms to take more long term decisions

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Speaker 4: and rewarding more long term behavior. Taxes affect that. The

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Speaker 4: fact that you can get if you get more favorable

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Speaker 4: treatment on capital gains, if exceled long term, can encourage

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Speaker 4: people to hold on to investments long term, and that

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Speaker 4: will encourage more long term thinking as most of the

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Speaker 4: short term thinking that's being so dominant and so much

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Speaker 4: of the market economy.

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Speaker 3: You know, one of the criticisms obviously of a sort

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Speaker 3: of taking a view of what the ideal distribution of

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Speaker 3: outcomes or the ideal supply chain from the perspective of

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Speaker 3: a planner is planners don't know everything, and planners get

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Speaker 3: things wrong. And you mentioned, you know, the strategic Petroleum Reserve,

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Speaker 3: and of course oil is an input into almost every

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Speaker 3: aspect of the economy, and so yeah, it kind of

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Speaker 3: makes sense for the government to have this buffer stock

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Speaker 3: of oil. How do you systematize the identification of these areas,

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Speaker 3: because presumably the government is not going to have an

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Speaker 3: spr equivalent of literally every product that exists, But how

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Speaker 3: would you go about thinking identifying the key areas in which,

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Speaker 3: through some policy measure, we want to encourage the build

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Speaker 3: up of greater inventories, less reliance on just in time

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Speaker 3: and so forth.

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Speaker 4: We first point out, you're absolutely right that this is

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Speaker 4: a systemic problem, and that's why it began by emphasizing

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Speaker 4: encouraging long term thinking, for instance, by using the tax

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Speaker 4: system to encourage long term holding on shares, so that

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Speaker 4: the people who hold their shares aren't just trying to

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Speaker 4: think about how I make a buck today, but what's

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Speaker 4: going to be good for the company over the next ten,

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Speaker 4: ten years, fifteen, twenty years. So that's part of getting

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Speaker 4: better risk taking systemically built it into the system balancing

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Speaker 4: the costs and the benefits. There's another way that is

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Speaker 4: important is changing corporate governance. One of my colleagues at

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Speaker 4: Columbia pushing an idea called loyalty shares, where if you

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Speaker 4: hold your shares longer, you get proportionally more votes, so

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Speaker 4: that it says in the governance of corporations, those who

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Speaker 4: have are long term investors should have more saying what

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Speaker 4: the firm does, rather than the guy who comes in

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Speaker 4: the day trader or even the short term trader is

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Speaker 4: trying to make an arbitrage profit. Now, on the specific

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Speaker 4: question of how do you identify particularly strategic sectors, one

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Speaker 4: way you do that is, again this is a little

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Speaker 4: bit complex, but you have a matrix that shows how

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Speaker 4: various inputs go into each output of the economy. It's

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Speaker 4: called an input output matrix. And in an input output matrix,

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Speaker 4: you can identify where a perturbation, where a shock might

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Speaker 4: ripple more through the system. Example would be some final

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Speaker 4: products that are used by consumers are not an input

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Speaker 4: anywhere else in the system, and the problem in those

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Speaker 4: industries is of no consequence for the system. Oil is

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Speaker 4: obviously very consequential. Basic primary goods tend to be consequential.

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Speaker 4: Steel aluminum logistics we were talking about. You have to

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Speaker 4: think of not only about goods, but services. If you

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Speaker 4: can't move from one place another. Trucking airlines are very

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Speaker 4: They go into absolutely every industry because every industry has

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Speaker 4: goods moving from one place to another. So if you

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Speaker 4: have an interruption in those industries, you have real consequences.

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Speaker 4: Now there are further questions you then need to ask.

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Speaker 4: Some of these you don't have to worry about. They're

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Speaker 4: pretty steady, but some of them are more vulnerable. So

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Speaker 4: you would not only look at what I've first talked

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Speaker 4: about is sort of a centrality, how important are the

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Speaker 4: functioning of the economic system, but also you have to

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Speaker 4: also then look to some notion of vulnerability, the nature

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Speaker 4: of the shocks they face, the reliability of those particular places,

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Speaker 4: and your choice then is to either get a reliable

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Speaker 4: supplier or to create strategic reserves.

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Speaker 2: One of the reasons we wanted to talk to you

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Speaker 2: about this is because a lot of your work focuses

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Speaker 2: on the social benefits of different economic systems and analyzing

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Speaker 2: the relationship between the two. But how do you build

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Speaker 2: political consensus for something like this. You know you're talking

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Speaker 2: about maybe additional subsidies for incorporating additional capacity, or some

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Speaker 2: sort of tax benefit, things like that. How do you

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Speaker 2: get people on board for these types of ideas well.

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Speaker 4: Part of the answer to that is specific events have

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Speaker 4: a way of bringing certain things home. You know, when

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Speaker 4: I began my research in certain areas is often motivated

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Speaker 4: by a particular event that happening someplace in the world.

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Speaker 4: But for instance, I saw a lot of supply chain

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Speaker 4: problems when I was Chief Economist of the World Bank

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Speaker 4: working on the East Asia crisis, and we think of

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Speaker 4: it often as a financial crisis, but it was also

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Speaker 4: an early version of a supply chain crisis, and that's

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Speaker 4: what really started me thinking about that, it'd say almost

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Speaker 4: thirty years now, thinking about how to model that, how

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Speaker 4: to ascertain how do you think about those kinds of interdependencies,

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Speaker 4: and also at the financial interdependencies, and I wrote a

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Speaker 4: lot about those financial interdependencies, the fragilities of the Danish

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Speaker 4: very little on the financial side. People didn't pay much

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Speaker 4: attention to it until two thousand and eight and Layman

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Speaker 4: Brothers went on and an event like that brings it

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Speaker 4: to the public attention. And now Congress passed a law

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Speaker 4: trying to create agencies that look at systemic financial interdependence. Well,

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Speaker 4: the pandemic has had the same thing on the real side,

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Speaker 4: on supply chain resilience and economic resilience more generally. So

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Speaker 4: the answer to your question is, as long as it's remote,

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Speaker 4: as long as it's happening somewhere else, long way away,

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Speaker 4: it's very hard to get attention. But the work that

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Speaker 4: we do gives it means that we're better prepared when

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Speaker 4: those events happen, like the pandemic, like the inflation that

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Speaker 4: followed the pandemic, and the war, the Ukrainian War. People

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Speaker 4: then politicians wake up and say, you know, we got

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Speaker 4: to do something about this, and then we get the

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Speaker 4: Science and Chips Act. If we get legislation moving us

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Speaker 4: along this way and analytic whork gets more attention.

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Speaker 3: You sort of anticipated my next question. But when you

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Speaker 3: look at the Chips Act, which subsidizes domestic production domestic

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Speaker 3: research of various sorts, or when you look at the

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Speaker 3: Inflation Reduction Act, which tries to do a lot of

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Speaker 3: that except on the energy side, how closely do these

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Speaker 3: pieces of legislation dovetail or align with your vision of

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Speaker 3: what resilience planning would look like. And you know, one

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Speaker 3: of the criticisms is, you know, it's all carrot and

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Speaker 3: no sticks, that there's a lot of subsidies, et cetera,

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Speaker 3: but there's no sort of disciplining of capital, so to speak.

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Speaker 3: Like when you think about your latest paper and what

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Speaker 3: the optimal policy solutions, how close are we and what

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Speaker 3: are some of Are there any drawbacks to how we

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Speaker 3: went about those two big pieces of legislation.

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Speaker 4: They were important pieces of legislation because they put this

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Speaker 4: topic on the agenda. They began moving the country in

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Speaker 4: the right direction. You know, there's an old joke about

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Speaker 4: you don't want to see how sausage is made and

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Speaker 4: what goes into it. What we get out of our

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Speaker 4: political machines sometimes is not ideal. It's not what I

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Speaker 4: would have written. But if you ask me, is it

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Speaker 4: better than nothing? I say, it's way better than nothing.

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Speaker 4: These were major achievements in a context of a politically

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Speaker 4: fraught world where it's hard to get anything done. So

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Speaker 4: let me begin by saying that they were really important

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Speaker 4: pieces of legislation. They moved us a lot in the

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Speaker 4: right direction of greater resilients. It would be tragic if

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Speaker 4: we hadn't done that. No, I don't think they are

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Speaker 4: the ideal mix of carot and stick. You know, I

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Speaker 4: talked before about more fundamental changes in our structure of

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Speaker 4: our economy to encourage more long term thinking, like changings

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Speaker 4: in corporate governance and changes in our tax legislation. I

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Speaker 4: think that would you know, those are more fundamental things

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Speaker 4: that we need to do, but I would have put

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Speaker 4: more weight on science. I you know, it disturbs me

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Speaker 4: that we are subsidizing a company like Intel after it

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Speaker 4: paid out tens of billions to shareholders. It could have

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Speaker 4: taken that money and invested it. You know, it didn't

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Speaker 4: need public money if it hadn't sent all that money

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Speaker 4: back to their shareholders. So it disturbs me that when

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Speaker 4: they make profits they are privatized. We're taxing them at

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Speaker 4: very low rates, and one of the presidential candidates wants

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Speaker 4: to lower the rates still further. All those things disturb me.

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Speaker 4: But do I want the country to be exposed to

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Speaker 4: a short ease of chips in the future. If Eving's

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Speaker 4: unfold in a way that we can all imagine but

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Speaker 4: hope won't happen, I think it would be criminal not

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Speaker 4: to put the country in a position where it's better

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Speaker 4: prepared to handle that kind of a crisis.

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Speaker 2: Just on this note, there's another tension that seems to

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Speaker 2: arise from I guess, more active industrial policy of recent

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Speaker 2: years and also the green transition. I guess there's an

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Speaker 2: issue where maybe one country is trying to do the

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Speaker 2: right thing for its economy and its population by, for example,

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Speaker 2: encouraging more electric vehicles, but then that ends up having

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Speaker 2: negative consequences for other countries. For instance, you know the

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Speaker 2: people in Chile who maybe have to mine the copper

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Speaker 2: that goes into the batteries for evs. How do you

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Speaker 2: solve that particular tension?

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Speaker 4: Again, a very interesting tension to me, and this go back.

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Speaker 4: Let me relate this to the previous question. When we

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Speaker 4: think about the environment and the green transition there, I

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Speaker 4: think we should be using more of the stick with

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Speaker 4: the carrot. That is to say, we should have a

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Speaker 4: carbon price. When you pollute, you impose costs in others.

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Speaker 4: It's just like any other cost you impose on others.

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Speaker 4: You should be the price. And that's why I'm a

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Speaker 4: strong advocate of a carbon price. It's not the only

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Speaker 4: instrument I think we need regulations. I think we need

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Speaker 4: public investment, but a carbon price is important. Well, the

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Speaker 4: same thing is true in our countries that are mining

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Speaker 4: the lithium. They need to have environmental taxes and environmental

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Speaker 4: regulations to make sure that the fallout, that negative consequences

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Speaker 4: are very limited, and that they're fully compensated for those

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Speaker 4: negative consequences, and that all should be built into the

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Speaker 4: price of our electric vehicles, our evs. We shouldn't be

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Speaker 4: imposing costs and others. We should take that total costs

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Speaker 4: on board. It's part of the cost of travel, part

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Speaker 4: of the cost of having a car. So, to me,

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Speaker 4: the right way to do it, and I think the

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Speaker 4: honest and the moral way to do it is to

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Speaker 4: make sure that there are environmental taxes and regulations all

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Speaker 4: the way along.

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Speaker 3: I haven't read yours. Well, I didn't read the first

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00:30:10,960 --> 00:30:13,280
Speaker 3: one either, apologize, but I will. But I haven't read

437
00:30:13,280 --> 00:30:16,640
Speaker 3: the second one Making globalization work, So I don't know

438
00:30:16,720 --> 00:30:18,760
Speaker 3: the full contours of the argument. But you know, one

439
00:30:18,800 --> 00:30:22,320
Speaker 3: of these sort of concerns among some of the US

440
00:30:22,520 --> 00:30:27,920
Speaker 3: reindustrialization initiatives right now is that they have this deglobalizing effect.

441
00:30:28,160 --> 00:30:31,080
Speaker 3: Part of it is, of course, by design, the US

442
00:30:31,200 --> 00:30:35,080
Speaker 3: wants to be less dependent perhaps on Taiwan or China

443
00:30:35,160 --> 00:30:38,520
Speaker 3: for certain things in high tech. But it also creates tensions,

444
00:30:38,600 --> 00:30:42,280
Speaker 3: you know, with European friends and allies about things like

445
00:30:42,320 --> 00:30:45,720
Speaker 3: subsidizing autos, and there have been complaints from there.

446
00:30:46,200 --> 00:30:46,400
Speaker 4: You know.

447
00:30:46,720 --> 00:30:51,880
Speaker 3: Is there a tension between sort of good globalization, harmonious globalization,

448
00:30:52,560 --> 00:30:57,000
Speaker 3: and attempts at resilience which almost by definition would I

449
00:30:57,120 --> 00:31:00,960
Speaker 3: think have this sort of inward facing effect and withdrawing

450
00:31:01,000 --> 00:31:02,360
Speaker 3: from the rest of the world a little bit.

451
00:31:03,560 --> 00:31:08,600
Speaker 4: There's a technition. Part of the problem is that the

452
00:31:08,600 --> 00:31:16,920
Speaker 4: International Economic Architecture, the WTO was created in a time

453
00:31:17,040 --> 00:31:22,400
Speaker 4: in which a certain set of economic ideas, sometimes called neoliberalism, predominated,

454
00:31:23,160 --> 00:31:29,719
Speaker 4: and it didn't take into account so many things. It

455
00:31:29,760 --> 00:31:32,840
Speaker 4: was actually a very flaw theory. One of the things

456
00:31:32,840 --> 00:31:36,040
Speaker 4: that didn't take into account is risk. It didn't take

457
00:31:36,080 --> 00:31:41,320
Speaker 4: into account what I call we call endogenous technology, that

458
00:31:42,160 --> 00:31:47,680
Speaker 4: we can actually change, invest in and create new techno technologies.

459
00:31:48,440 --> 00:31:54,680
Speaker 4: So it circumscribed industrial policy, and that meant that developing

460
00:31:54,720 --> 00:31:58,240
Speaker 4: countries had a harder time catching up with the developed countries.

461
00:31:58,760 --> 00:32:03,160
Speaker 4: Many of the developing countries view the architecture the WTO

462
00:32:03,360 --> 00:32:07,160
Speaker 4: is a way of keeping them down. There's an influential

463
00:32:07,160 --> 00:32:10,240
Speaker 4: book called Kicking Away the Ladder. You know, the US

464
00:32:10,240 --> 00:32:14,680
Speaker 4: and had grown by taking ideas from Europe, and now

465
00:32:14,680 --> 00:32:16,920
Speaker 4: that we are where we are, we want to take

466
00:32:16,960 --> 00:32:20,120
Speaker 4: away the ability of others to catch up, including through

467
00:32:20,120 --> 00:32:23,240
Speaker 4: industrial policies. Well, we're in a new world now where

468
00:32:23,480 --> 00:32:27,240
Speaker 4: the US is after forty years of telling everybody not

469
00:32:27,360 --> 00:32:30,440
Speaker 4: to engage industrial policy, is now saying yeah, we're going

470
00:32:30,480 --> 00:32:34,040
Speaker 4: to do it too. But the developing countries can't do

471
00:32:34,160 --> 00:32:38,920
Speaker 4: it on scale. And so what I've been advocating is

472
00:32:38,960 --> 00:32:44,360
Speaker 4: that we still have to keep the principles that we're

473
00:32:44,800 --> 00:32:48,239
Speaker 4: there in the forming of the trade rules, which is

474
00:32:48,280 --> 00:32:52,200
Speaker 4: trying to keep a level playing field. And the question

475
00:32:52,320 --> 00:32:55,760
Speaker 4: is how how do you keep a level playing field?

476
00:32:56,160 --> 00:32:59,400
Speaker 4: It's very hard, But one of the ways you do

477
00:32:59,480 --> 00:33:06,680
Speaker 4: that is sharing technology, particularly for protecting the environment. So

478
00:33:07,760 --> 00:33:11,680
Speaker 4: if US developed a new tech, green technology through industrial

479
00:33:11,720 --> 00:33:15,240
Speaker 4: policy and gave it a competitive advantage over other countries,

480
00:33:15,760 --> 00:33:18,000
Speaker 4: I should share some of that knowledge, at least with

481
00:33:18,320 --> 00:33:22,760
Speaker 4: the developing countries to keep a more level playing fielder.

482
00:33:22,840 --> 00:33:25,360
Speaker 4: Otherwise we're back in the law of the jungle.

483
00:33:27,080 --> 00:33:29,560
Speaker 2: One of the other things I wanted to ask you, again,

484
00:33:29,720 --> 00:33:33,880
Speaker 2: as someone whose work often dwells on the social benefits

485
00:33:33,920 --> 00:33:38,480
Speaker 2: of particular economic systems, how should we measure the success

486
00:33:38,920 --> 00:33:41,680
Speaker 2: of a particular economy, Because one of the things you

487
00:33:41,720 --> 00:33:46,080
Speaker 2: often hear is like, Okay, well, USGDP has been doing

488
00:33:46,080 --> 00:33:49,960
Speaker 2: phenomenally well in recent years, at least relative to other countries.

489
00:33:50,000 --> 00:33:54,040
Speaker 2: But on the other hand, we're dealing with a decreasing

490
00:33:54,280 --> 00:33:57,920
Speaker 2: life expectancy and things like that. And one of the

491
00:33:57,960 --> 00:34:00,360
Speaker 2: reasons I asked this question is because I got off

492
00:34:00,360 --> 00:34:03,280
Speaker 2: the phone with my mom yesterday and she's embarking on

493
00:34:03,360 --> 00:34:07,680
Speaker 2: her annual six week holiday as someone who's employed in

494
00:34:07,920 --> 00:34:11,799
Speaker 2: continental Europe, and that sounds nice. That's not something that

495
00:34:12,200 --> 00:34:15,600
Speaker 2: US workers have. So how should we be measuring what

496
00:34:15,640 --> 00:34:18,240
Speaker 2: an economy should be doing for people?

497
00:34:18,880 --> 00:34:21,000
Speaker 4: I try you asked that because that's a question. I've

498
00:34:21,000 --> 00:34:24,040
Speaker 4: done a lot of research. I did a book called

499
00:34:24,560 --> 00:34:29,200
Speaker 4: Mismeasuring Our Lives. Why GDP doesn't add up? Where I

500
00:34:29,239 --> 00:34:32,319
Speaker 4: tried with a group of I was a chair of

501
00:34:32,600 --> 00:34:36,400
Speaker 4: a co chair of an international commission on the Measurement

502
00:34:36,440 --> 00:34:42,440
Speaker 4: of Economic Performance in Social Progress, and our commission concluded

503
00:34:42,560 --> 00:34:45,680
Speaker 4: very strongly the GDP was not a good measure well being.

504
00:34:45,719 --> 00:34:49,200
Speaker 4: It was a measure market output, but that's not the

505
00:34:49,239 --> 00:34:53,480
Speaker 4: same as well being. We delineated ways in which there

506
00:34:53,520 --> 00:34:58,800
Speaker 4: were major deficiencies. We advocated that there's not a single

507
00:34:58,880 --> 00:35:03,720
Speaker 4: measure that could cap sure anything as complex as ourselves

508
00:35:03,760 --> 00:35:07,640
Speaker 4: are what makes us well off or our society. But

509
00:35:08,480 --> 00:35:12,600
Speaker 4: we should have a dashboard, and you've named several of

510
00:35:12,640 --> 00:35:16,920
Speaker 4: the things. Obviously we want material consumption as part of it,

511
00:35:17,440 --> 00:35:21,640
Speaker 4: what we call GDP, but health is another. In terms

512
00:35:21,640 --> 00:35:27,160
Speaker 4: of health, the US has a lower life expectancy than

513
00:35:27,440 --> 00:35:31,800
Speaker 4: in almost any other advanced country, and one that's lower

514
00:35:31,840 --> 00:35:34,440
Speaker 4: today than it was a number of years ago, in

515
00:35:34,480 --> 00:35:36,680
Speaker 4: spite of the fact that we're doing the best research

516
00:35:36,880 --> 00:35:40,960
Speaker 4: in this area. We value our leisure, as you say,

517
00:35:41,000 --> 00:35:46,480
Speaker 4: European really value their leisure. We value security. That's why

518
00:35:46,520 --> 00:35:51,640
Speaker 4: we have social security. One of the things that we

519
00:35:51,840 --> 00:35:56,480
Speaker 4: clearly have gotten wrong in many cases is we say, oh,

520
00:35:56,800 --> 00:36:00,279
Speaker 4: be more efficient for the economy, get our GDP if

521
00:36:00,280 --> 00:36:03,279
Speaker 4: we kept back on social security. Well, if you kept

522
00:36:03,280 --> 00:36:07,520
Speaker 4: back on social security, you make people more anxious, more uncertain.

523
00:36:08,280 --> 00:36:10,480
Speaker 4: So what if GDP goes up a little bit, if

524
00:36:10,520 --> 00:36:14,360
Speaker 4: people are worried about what's going to happen in the

525
00:36:14,440 --> 00:36:17,560
Speaker 4: last third of their lives. You know, that's depending why

526
00:36:17,640 --> 00:36:21,080
Speaker 4: some poul foolish as they used to say. So to me,

527
00:36:22,000 --> 00:36:25,480
Speaker 4: well being is really what we ought to be focusing on.

528
00:36:25,960 --> 00:36:29,000
Speaker 4: There are a number of groups that have attempted to

529
00:36:29,080 --> 00:36:35,760
Speaker 4: measure in various ways well being, and interestingly, the United States,

530
00:36:35,800 --> 00:36:40,440
Speaker 4: while we are close to the top on GDP per capital,

531
00:36:41,080 --> 00:36:43,759
Speaker 4: are not at the top anywhere near the top on

532
00:36:43,960 --> 00:36:47,760
Speaker 4: well being in almost any of these studies.

533
00:36:48,960 --> 00:36:52,680
Speaker 3: So we're recording this July first, Jesse. Yesterday there was

534
00:36:52,880 --> 00:36:56,560
Speaker 3: an election in France in which the Nationalist party or

535
00:36:56,560 --> 00:36:59,360
Speaker 3: the right wing party did really well. There seems to

536
00:36:59,400 --> 00:37:02,320
Speaker 3: be this trend and you could say, with Brexit and

537
00:37:02,520 --> 00:37:05,320
Speaker 3: Trump and you know, various things going around the world

538
00:37:05,480 --> 00:37:12,240
Speaker 3: of countries voters specifically seeming to reject internationalism, free trade,

539
00:37:12,280 --> 00:37:14,200
Speaker 3: whatever you want to call it, in various flavors. And

540
00:37:14,239 --> 00:37:17,440
Speaker 3: I'm sure there are numerous causes, and we could debate

541
00:37:17,480 --> 00:37:21,040
Speaker 3: that for our cultural whatever. Well, what do you see

542
00:37:21,080 --> 00:37:23,839
Speaker 3: happening when you look at these things, is it has

543
00:37:23,880 --> 00:37:27,120
Speaker 3: there been a failure of governments and rich countries to

544
00:37:27,160 --> 00:37:31,040
Speaker 3: deliver the benefits of economic growth to citizens, Like when

545
00:37:31,080 --> 00:37:33,520
Speaker 3: you look at this and the sort of rejections of

546
00:37:33,719 --> 00:37:35,400
Speaker 3: some of the last forty to fifty years, What do

547
00:37:35,400 --> 00:37:37,840
Speaker 3: you see happening very much?

548
00:37:38,080 --> 00:37:43,600
Speaker 4: I think the dominant economic framework of the last forty years,

549
00:37:43,640 --> 00:37:48,760
Speaker 4: which is neoliberalism. You have left neoliberalism and right neoliberalism,

550
00:37:48,800 --> 00:37:54,520
Speaker 4: but it was basically neoliberalism. It failed. GDP didn't even

551
00:37:54,600 --> 00:37:58,160
Speaker 4: grow faster. It grew more slowly. After nineteen eighty when

552
00:37:58,200 --> 00:38:03,239
Speaker 4: it became the dominant doctrine, growth was slower. Most of

553
00:38:03,280 --> 00:38:05,600
Speaker 4: the growth that did occur went to the very top.

554
00:38:05,680 --> 00:38:09,160
Speaker 4: There was morning security, less well being, as we've been

555
00:38:09,360 --> 00:38:17,680
Speaker 4: talking about it, and there's a mini rebellion going on. Unfortunately,

556
00:38:18,719 --> 00:38:24,920
Speaker 4: it's a rebellion that is grounded in anger but not analysis.

557
00:38:25,880 --> 00:38:32,120
Speaker 4: So the easy answer why things haven't done gone well

558
00:38:32,560 --> 00:38:38,480
Speaker 4: is others. Americans might complain about unfair trade agreements. We

559
00:38:38,600 --> 00:38:42,320
Speaker 4: hadn't signed those unfair trade agreements, if we weren't paying

560
00:38:42,800 --> 00:38:46,399
Speaker 4: more than our fair share, if we didn't have those immigrants.

561
00:38:47,040 --> 00:38:50,760
Speaker 4: And it plays out in different ways in different countries,

562
00:38:50,800 --> 00:38:55,560
Speaker 4: but it's basically the same blame others rather than looking

563
00:38:55,600 --> 00:39:01,959
Speaker 4: inward and say, you know, we didn't get our economic philosophy,

564
00:39:02,040 --> 00:39:06,040
Speaker 4: our economics right. And that's really one of the central

565
00:39:06,080 --> 00:39:10,400
Speaker 4: messages of my new book, The Road to Freedom. The

566
00:39:12,400 --> 00:39:17,839
Speaker 4: right wing people like Hayek and Friedman said that if

567
00:39:17,840 --> 00:39:23,680
Speaker 4: you only had unfettered markets, forget about negative externalities, forget

568
00:39:23,760 --> 00:39:28,520
Speaker 4: about positive externalities, everything works out fine. The market is,

569
00:39:29,160 --> 00:39:33,000
Speaker 4: you know, worship at the market. Everybody's going to be

570
00:39:33,000 --> 00:39:36,359
Speaker 4: better off, growth will be higher, trickle down economics will

571
00:39:36,400 --> 00:39:40,280
Speaker 4: make sure everybody will be the same. We were duped

572
00:39:40,520 --> 00:39:45,920
Speaker 4: by a failed economic philosophy. And what makes me, you

573
00:39:46,000 --> 00:39:50,319
Speaker 4: might say, almost angry about this thing is that at

574
00:39:50,360 --> 00:39:54,800
Speaker 4: the time it went into ascendency, to say with Reagan

575
00:39:55,320 --> 00:40:01,800
Speaker 4: in nineteen eighty, we'd already proven that those ideas were wrong.

576
00:40:02,960 --> 00:40:08,040
Speaker 4: We had already shown, we talked to earlier today about

577
00:40:08,520 --> 00:40:14,520
Speaker 4: how economists analyze the economy. We've shown that unfedered markets

578
00:40:14,680 --> 00:40:19,720
Speaker 4: do not deliver on societal well being. And we explained why,

579
00:40:20,600 --> 00:40:23,600
Speaker 4: and they ignored all that. Now we have forty years

580
00:40:23,640 --> 00:40:27,680
Speaker 4: of evidence of seeing why that extra what I try

581
00:40:27,719 --> 00:40:30,760
Speaker 4: to write about it in this book, The Road to Freedom.

582
00:40:31,400 --> 00:40:38,080
Speaker 4: They thought this free enterprise would lead to not only

583
00:40:38,280 --> 00:40:44,680
Speaker 4: more efficient markets, but also to political freedom. But the

584
00:40:44,719 --> 00:40:50,000
Speaker 4: growth of authoritarianism is seen most in places where there's

585
00:40:50,040 --> 00:40:54,040
Speaker 4: not too much government but too little government, and where

586
00:40:54,080 --> 00:41:01,680
Speaker 4: government hasn't done enough. So my claim is it was neoliberalism.

587
00:41:02,360 --> 00:41:07,200
Speaker 4: It wasn't really freeing as it claimed was going, was

588
00:41:07,200 --> 00:41:09,520
Speaker 4: bringing us exact in the wrong direction.

589
00:41:10,520 --> 00:41:12,680
Speaker 2: It strikes me, though, that we're kind of living in

590
00:41:12,719 --> 00:41:17,560
Speaker 2: a time where analysis doesn't matter that much, and it

591
00:41:17,640 --> 00:41:21,239
Speaker 2: seems like rhetoric has a much bigger impact, at least

592
00:41:21,280 --> 00:41:24,279
Speaker 2: when it comes to some of the economic themes of

593
00:41:25,000 --> 00:41:29,680
Speaker 2: recent years. So it feels very sort of nihilistic to

594
00:41:29,760 --> 00:41:33,040
Speaker 2: ask this question. But for instance, when you write a

595
00:41:33,160 --> 00:41:36,319
Speaker 2: letter with a bunch of other Nobel Prize winning economists

596
00:41:36,360 --> 00:41:42,799
Speaker 2: criticizing Trump's proposed economic agenda, doesn't matter at all, Like

597
00:41:42,960 --> 00:41:45,560
Speaker 2: do we think that the people who will vote for

598
00:41:45,680 --> 00:41:50,520
Speaker 2: Trump are going to listen to Nobel Prize winning economists?

599
00:41:50,560 --> 00:41:54,279
Speaker 2: And does the you know, accuracy or the strength of

600
00:41:54,360 --> 00:41:56,320
Speaker 2: your argument here actually matter?

601
00:41:57,680 --> 00:42:01,520
Speaker 4: It was with some people, and I hope with increasingly

602
00:42:01,880 --> 00:42:05,960
Speaker 4: more people, but certainly with some people. The you know,

603
00:42:06,040 --> 00:42:09,920
Speaker 4: the debate in that particular context, as a resion is

604
00:42:10,440 --> 00:42:13,279
Speaker 4: who's going to be better for the economy? Who was

605
00:42:13,360 --> 00:42:16,200
Speaker 4: better for the economy. Some of this is just facts,

606
00:42:16,200 --> 00:42:20,439
Speaker 4: looking at what happened to wages. But what really people

607
00:42:20,560 --> 00:42:22,839
Speaker 4: care about is what's going to happen in the next

608
00:42:22,840 --> 00:42:27,360
Speaker 4: four years. And you take the kind of model of

609
00:42:27,400 --> 00:42:34,640
Speaker 4: the economy and broad consensus among you know, Arnobel Price

610
00:42:34,719 --> 00:42:38,839
Speaker 4: community that you know, Trump has a He doesn't have

611
00:42:38,920 --> 00:42:42,359
Speaker 4: a model. I mean, that's not what he does, but

612
00:42:42,400 --> 00:42:45,120
Speaker 4: it's a zero some view of the world that is

613
00:42:45,239 --> 00:42:49,200
Speaker 4: somebody else gags. I lose very different from the way

614
00:42:49,640 --> 00:42:54,160
Speaker 4: economists analyze the complexity of our economy, and we look

615
00:42:54,200 --> 00:42:58,439
Speaker 4: at what he proposes and say it's really not good

616
00:42:58,480 --> 00:43:02,680
Speaker 4: for the economy in any and so the answer is

617
00:43:03,840 --> 00:43:08,279
Speaker 4: I hope it affects some people. Some of the undecided

618
00:43:08,360 --> 00:43:13,600
Speaker 4: voters will say, you know, there's something to what these

619
00:43:13,640 --> 00:43:18,680
Speaker 4: Nobel Prize winners have said that should make them worry

620
00:43:18,680 --> 00:43:20,440
Speaker 4: about another Trump preceding.

621
00:43:20,040 --> 00:43:22,960
Speaker 3: See, I just have one last quick question, but I

622
00:43:23,000 --> 00:43:25,239
Speaker 3: want to follow up on something you said earlier. I

623
00:43:25,280 --> 00:43:28,440
Speaker 3: had never heard that there was a supply chain element

624
00:43:28,560 --> 00:43:31,759
Speaker 3: to the Asian financial crisis, and I thought that was interesting,

625
00:43:31,840 --> 00:43:34,240
Speaker 3: And since you're here, what was that element?

626
00:43:34,800 --> 00:43:37,879
Speaker 4: What was the element? There was that many firms went

627
00:43:37,960 --> 00:43:42,799
Speaker 4: bankrupt because they could not get credit, and the financial

628
00:43:42,840 --> 00:43:50,040
Speaker 4: system collapsed, firms couldn't get credit, they collapsed, and then

629
00:43:50,680 --> 00:43:55,520
Speaker 4: the firms that they were either suppliers for or buyers

630
00:43:55,560 --> 00:44:01,239
Speaker 4: of collapsed, And so you add a real sign bankruptcy

631
00:44:01,760 --> 00:44:07,480
Speaker 4: cascade that corresponded to the financial crisis that got all

632
00:44:07,520 --> 00:44:15,520
Speaker 4: the attention. And so it was interesting about at one

633
00:44:15,560 --> 00:44:18,719
Speaker 4: point almost half the firms in a couple of the

634
00:44:18,760 --> 00:44:22,319
Speaker 4: countries were in the state of bankruptcy. They couldn't pay

635
00:44:22,400 --> 00:44:27,440
Speaker 4: what they owed. The whole economy throws, so that was

636
00:44:27,480 --> 00:44:31,600
Speaker 4: an extreme version of a supply chamber meltdown.

637
00:44:32,160 --> 00:44:34,560
Speaker 2: I have one more question, and it's actually following up

638
00:44:34,680 --> 00:44:38,720
Speaker 2: on a previous interview that you did with Tyler Cowen

639
00:44:38,920 --> 00:44:42,279
Speaker 2: that came out recently, But he asked you about the

640
00:44:42,400 --> 00:44:46,560
Speaker 2: Yimbi movement. So this idea of making it easier for

641
00:44:46,680 --> 00:44:52,480
Speaker 2: people to build in certain areas, maybe deregulation, deregulating some

642
00:44:52,600 --> 00:44:56,840
Speaker 2: zoning stuff like that, somewhat surprisingly to a lot of people.

643
00:44:56,880 --> 00:45:00,000
Speaker 2: I think you came out and said that you weren't

644
00:45:00,239 --> 00:45:03,439
Speaker 2: a fan of yimbiism, and I think some people were

645
00:45:03,480 --> 00:45:07,239
Speaker 2: confused because your new book is very much about the

646
00:45:07,320 --> 00:45:12,080
Speaker 2: idea that one person's freedom can create negative outcomes or

647
00:45:12,120 --> 00:45:16,480
Speaker 2: externalities for other people's freedoms. So, you know, the obvious

648
00:45:16,560 --> 00:45:20,520
Speaker 2: example of that is maybe something like guns in America,

649
00:45:20,560 --> 00:45:23,520
Speaker 2: where one person's freedom to run around with an assault

650
00:45:23,640 --> 00:45:28,560
Speaker 2: rifle creates dangers for the people around them. But going

651
00:45:28,640 --> 00:45:32,160
Speaker 2: back to the building aspect, is it possible that one

652
00:45:32,160 --> 00:45:36,319
Speaker 2: person's freedom to live in a low density area impinges

653
00:45:36,400 --> 00:45:40,080
Speaker 2: on other people's freedom to have access to affordable housing?

654
00:45:40,120 --> 00:45:42,880
Speaker 2: How do you square those two things?

655
00:45:42,960 --> 00:45:47,919
Speaker 4: Very much? I mean, zoning is all about trading off freedoms, absolutely,

656
00:45:48,360 --> 00:45:52,880
Speaker 4: so I'm a very big committed to zoning. And maybe

657
00:45:52,920 --> 00:45:56,800
Speaker 4: I may may have misunderstood the question, but the point

658
00:45:56,960 --> 00:45:59,640
Speaker 4: that I would make is that one has to very

659
00:45:59,680 --> 00:46:06,239
Speaker 4: carefully balance the consequences to each of the groups that

660
00:46:06,280 --> 00:46:09,680
Speaker 4: are going to be affected, and that's something has to

661
00:46:09,680 --> 00:46:13,239
Speaker 4: be done at a local level. I can't tell you, you know,

662
00:46:13,840 --> 00:46:19,760
Speaker 4: In general, I think there are environmental benefits of social

663
00:46:19,840 --> 00:46:23,759
Speaker 4: benefits of higher density. Other people prefer lower density, but

664
00:46:24,320 --> 00:46:30,200
Speaker 4: those density decisions interact. Low density means people have to

665
00:46:30,239 --> 00:46:35,160
Speaker 4: transport more so. Finally, I think it's important as part

666
00:46:35,200 --> 00:46:38,880
Speaker 4: of our whole community structure that we have green spaces

667
00:46:39,480 --> 00:46:43,920
Speaker 4: and how you mix those various needs green spaces low density.

668
00:46:44,000 --> 00:46:48,000
Speaker 4: High density is something that one has to be very

669
00:46:48,040 --> 00:46:52,200
Speaker 4: conscious of how one person's freedom affects the other person's

670
00:46:52,920 --> 00:46:55,799
Speaker 4: on freedom as well. So you're absolutely right, that is

671
00:46:55,840 --> 00:46:59,680
Speaker 4: the framework that I want this to be talked to about.

672
00:47:00,880 --> 00:47:04,200
Speaker 4: I didn't think there was any simple answer, any panacea

673
00:47:04,280 --> 00:47:07,799
Speaker 4: in answering it. It really depends on this particular community.

674
00:47:08,960 --> 00:47:12,600
Speaker 2: And then one more very broad question as we come

675
00:47:12,680 --> 00:47:17,080
Speaker 2: to the close of this discussion, but over time, is

676
00:47:17,120 --> 00:47:22,399
Speaker 2: there anything that has really surprised you about the behavior

677
00:47:22,880 --> 00:47:27,040
Speaker 2: of corporations or the people operating them, like some big

678
00:47:27,080 --> 00:47:31,600
Speaker 2: realization that you have now versus say, when you first

679
00:47:31,640 --> 00:47:35,279
Speaker 2: embarked on studying economics many decades ago.

680
00:47:36,160 --> 00:47:45,479
Speaker 4: Wow. I think what surprised me for a while was

681
00:47:46,200 --> 00:47:52,520
Speaker 4: that so many American CEOs seemed to embrace for a

682
00:47:52,560 --> 00:47:59,040
Speaker 4: while stakeholder capitalism that wasn't just maximizing shareholder value, but

683
00:47:59,160 --> 00:48:05,320
Speaker 4: also caring about the workers, their customers, the community, the environment.

684
00:48:06,000 --> 00:48:09,080
Speaker 4: That was an idea very strong in Europe. But a

685
00:48:09,120 --> 00:48:13,480
Speaker 4: couple of years ago the Business round Table basically most

686
00:48:13,480 --> 00:48:16,200
Speaker 4: of them endorsed this kind of idea. I've been a

687
00:48:16,200 --> 00:48:21,480
Speaker 4: little disappointed that there's in spite of very publicly endorsing it.

688
00:48:21,680 --> 00:48:25,040
Speaker 4: Some of the business leaders have now when they get

689
00:48:25,080 --> 00:48:30,760
Speaker 4: a little criticism from some southern governors about being too woke,

690
00:48:31,360 --> 00:48:35,400
Speaker 4: they've backed off of that commitment to I think a

691
00:48:35,560 --> 00:48:39,000
Speaker 4: broader sense of well being. They are important units in

692
00:48:39,080 --> 00:48:43,719
Speaker 4: our society, and I think they have important responsibilities. The

693
00:48:43,760 --> 00:48:48,960
Speaker 4: CEOs have important responsibilities, not just to match my shareholder value,

694
00:48:49,000 --> 00:48:52,680
Speaker 4: but to look at all these other stakeholders that are

695
00:48:52,680 --> 00:48:53,960
Speaker 4: affected by what they do.

696
00:48:55,280 --> 00:48:58,400
Speaker 2: All right, Professor Stiglitz, thank you so much for coming

697
00:48:58,440 --> 00:49:01,400
Speaker 2: on all thoughts. Really appreciate your time. That was a

698
00:49:01,440 --> 00:49:02,560
Speaker 2: fascinating conversation.

699
00:49:03,719 --> 00:49:17,439
Speaker 5: Well, thank you very much, Joe.

700
00:49:17,440 --> 00:49:19,839
Speaker 2: There was so much to pick out of that conversation.

701
00:49:20,200 --> 00:49:23,719
Speaker 2: So first of all, I know, I asked the other Joe.

702
00:49:25,480 --> 00:49:27,600
Speaker 2: I asked him about, like, how do you build political

703
00:49:27,640 --> 00:49:31,600
Speaker 2: consensus for these types of things? And at first I

704
00:49:31,680 --> 00:49:36,520
Speaker 2: wasn't really satisfied with the response of like, well, things happen,

705
00:49:36,680 --> 00:49:40,480
Speaker 2: because ideally you would start doing this before things happen.

706
00:49:40,960 --> 00:49:43,399
Speaker 2: But on the other hand, now that I'm thinking about

707
00:49:43,440 --> 00:49:47,000
Speaker 2: it more, it is true that there are things that

708
00:49:47,040 --> 00:49:50,279
Speaker 2: are taking place now or being talked about, yeah, that

709
00:49:50,320 --> 00:49:53,760
Speaker 2: would have been considered absolutely radical, just a few years ago,

710
00:49:54,000 --> 00:49:59,200
Speaker 2: before the pandemic, So things like more strategic reserves of

711
00:49:59,360 --> 00:50:04,759
Speaker 2: certain or things like price caps on gas in Europe,

712
00:50:04,800 --> 00:50:09,360
Speaker 2: like that was a totally radical idea before Russia's invasion

713
00:50:09,400 --> 00:50:09,880
Speaker 2: of Ukraine.

714
00:50:10,320 --> 00:50:12,880
Speaker 3: Yeah, and look like Dodd Frank did happen.

715
00:50:13,520 --> 00:50:13,959
Speaker 5: That's true.

716
00:50:14,560 --> 00:50:17,920
Speaker 3: The Chips Act did happen, the Inflation Reduction Act did happen.

717
00:50:18,320 --> 00:50:21,239
Speaker 3: It would be nice if somehow, you know, all of

718
00:50:21,280 --> 00:50:25,719
Speaker 3: these things were done pre crisis, but you know, that's

719
00:50:25,840 --> 00:50:28,799
Speaker 3: much harder. And so maybe you know the process of

720
00:50:28,960 --> 00:50:31,840
Speaker 3: history is something bad happens and then you try to

721
00:50:31,840 --> 00:50:33,759
Speaker 3: rectify it, and you know, I guess that's just how

722
00:50:33,800 --> 00:50:34,319
Speaker 3: history goes.

723
00:50:34,440 --> 00:50:36,600
Speaker 2: Yeah, I guess we have to be satisfied with that

724
00:50:36,719 --> 00:50:41,239
Speaker 2: part of it. I mentioned that essay that I wrote, Yeah,

725
00:50:41,239 --> 00:50:43,040
Speaker 2: you want me to read it to please I don't.

726
00:50:43,080 --> 00:50:46,439
Speaker 2: So I've had the same email account for like years

727
00:50:46,480 --> 00:50:48,560
Speaker 2: and years and years, So I just typed in sticklets

728
00:50:48,680 --> 00:50:52,000
Speaker 2: and I've looked at what that's amazing. And this was

729
00:50:52,080 --> 00:50:55,440
Speaker 2: from my I R. Three oh one class I think

730
00:50:55,520 --> 00:50:59,799
Speaker 2: it was called and undergrad Yeah, yeah, okay, So this

731
00:50:59,880 --> 00:51:03,680
Speaker 2: was at the London School of Economics and basically for

732
00:51:03,719 --> 00:51:06,560
Speaker 2: people who are familiar with British universities. They make you

733
00:51:06,600 --> 00:51:09,120
Speaker 2: write a bunch of essays throughout the year, and then

734
00:51:09,160 --> 00:51:10,760
Speaker 2: at the end of the year you take an exam

735
00:51:10,880 --> 00:51:13,400
Speaker 2: in which you also write essays. But the exam is

736
00:51:13,400 --> 00:51:16,080
Speaker 2: the only thing that matters. None of the stuff that

737
00:51:16,120 --> 00:51:21,000
Speaker 2: you do during the year actually matters. And also the

738
00:51:21,040 --> 00:51:23,359
Speaker 2: secret to getting a good score, this is a pro

739
00:51:23,440 --> 00:51:26,719
Speaker 2: life tip, is just to be as overconfident as possible

740
00:51:26,800 --> 00:51:28,960
Speaker 2: when you're writing these things. So that is exactly what

741
00:51:29,000 --> 00:51:31,719
Speaker 2: I've done here. I've done no empirical research, but I

742
00:51:31,760 --> 00:51:36,000
Speaker 2: have all the answers to theorist college.

743
00:51:35,560 --> 00:51:40,200
Speaker 3: Student having done no empirical research but expressing supreme confidence

744
00:51:40,239 --> 00:51:42,400
Speaker 3: that they have the world figured out. I've never I

745
00:51:42,400 --> 00:51:43,400
Speaker 3: can't even imagine it.

746
00:51:43,600 --> 00:51:46,880
Speaker 2: Yeah, So I'll start with the question for the essay

747
00:51:46,920 --> 00:51:50,640
Speaker 2: was do global economic institutions reflect the interests of a

748
00:51:50,640 --> 00:51:54,319
Speaker 2: global community? And blah blah, blah blah. Further down in

749
00:51:54,360 --> 00:51:56,840
Speaker 2: my intro, this paper will seek to argue that global

750
00:51:56,880 --> 00:52:00,000
Speaker 2: economic institutions do not reflect the interest of a global

751
00:52:00,160 --> 00:52:03,160
Speaker 2: community for two reasons. First, the idea of a global

752
00:52:03,160 --> 00:52:05,759
Speaker 2: community is one that so far exists only in the

753
00:52:05,760 --> 00:52:09,600
Speaker 2: minds and papers of international relations academics and the occasional

754
00:52:09,640 --> 00:52:13,440
Speaker 2: idealistic un bureaucrat. Given the continued gap between rich and

755
00:52:13,480 --> 00:52:16,040
Speaker 2: poor states and the divergent interests which result from such

756
00:52:16,040 --> 00:52:19,520
Speaker 2: a gap, a global community, a concept which implies some

757
00:52:19,600 --> 00:52:23,000
Speaker 2: sort of shared norms and interests, seems far fetched, if

758
00:52:23,000 --> 00:52:26,839
Speaker 2: not impossible. Given this problem of vocabulary. We might get

759
00:52:26,840 --> 00:52:29,719
Speaker 2: to the heart of the question by altering it slightly

760
00:52:30,160 --> 00:52:34,080
Speaker 2: to do global economic institutions reflect the interest of all

761
00:52:34,120 --> 00:52:37,200
Speaker 2: the states in the international system, or perhaps a majority

762
00:52:37,200 --> 00:52:39,960
Speaker 2: of them. This line of reasoning will largely follow the

763
00:52:40,080 --> 00:52:43,200
Speaker 2: arguments made by economists such as Joseph Stickletz, though it

764
00:52:43,239 --> 00:52:46,680
Speaker 2: will go further by blaming the so called embedded liberalism

765
00:52:46,760 --> 00:52:50,880
Speaker 2: which underlines modern economic institutions, for the current bias within them,

766
00:52:51,120 --> 00:52:54,000
Speaker 2: rather than its misapplication. So there we go.

767
00:52:54,280 --> 00:52:57,600
Speaker 3: I knew more than why don't you just publish that

768
00:52:57,719 --> 00:53:00,400
Speaker 3: on the odd Lat's blog. It's like, you know, no

769
00:53:00,400 --> 00:53:02,759
Speaker 3: one reading that would think that we're like this is

770
00:53:02,840 --> 00:53:04,000
Speaker 3: this is very insightful.

771
00:53:05,280 --> 00:53:06,040
Speaker 5: You know, no one.

772
00:53:05,920 --> 00:53:09,680
Speaker 3: Would notice that it's any different than any of the

773
00:53:09,719 --> 00:53:12,080
Speaker 3: other pundits who write all that stuff today in twenty

774
00:53:12,120 --> 00:53:12,600
Speaker 3: twenty four.

775
00:53:12,760 --> 00:53:15,000
Speaker 2: You know, I have a worse one than this, which

776
00:53:15,080 --> 00:53:19,640
Speaker 2: is like a Nietzschean interpretation of international relations, which I

777
00:53:19,640 --> 00:53:22,080
Speaker 2: think was the first I'll say that I ever wrote

778
00:53:22,080 --> 00:53:23,719
Speaker 2: when I was at college, and I think I just

779
00:53:23,880 --> 00:53:26,080
Speaker 2: got really excited about the idea of being able to

780
00:53:26,080 --> 00:53:28,160
Speaker 2: write whatever I want. Basically it sounds great.

781
00:53:28,200 --> 00:53:32,480
Speaker 3: I don't in retrospect like I wish I had taken

782
00:53:33,120 --> 00:53:35,279
Speaker 3: like I did well in college. I did fine, I

783
00:53:35,320 --> 00:53:38,759
Speaker 3: got pretty good grades, but I don't really what I

784
00:53:38,800 --> 00:53:41,440
Speaker 3: don't remember having done is actually thinking like, oh, I

785
00:53:41,480 --> 00:53:44,080
Speaker 3: want to gain like a real deep understanding and come

786
00:53:44,120 --> 00:53:46,600
Speaker 3: out of school with like some knowledge of how the

787
00:53:46,600 --> 00:53:49,600
Speaker 3: world works. I remember like wanting to get good grades.

788
00:53:49,680 --> 00:53:51,520
Speaker 3: But man, I kind of wish I had written some

789
00:53:51,600 --> 00:53:53,160
Speaker 3: essays like that, or maybe I did, but I just

790
00:53:53,200 --> 00:53:55,160
Speaker 3: like don't remember any of them. I'm sure I wrote essays.

791
00:53:55,239 --> 00:53:56,719
Speaker 5: I just have no memory of any of them.

792
00:53:56,760 --> 00:53:57,720
Speaker 2: You didn't keep anything.

793
00:53:58,400 --> 00:54:01,759
Speaker 3: They were probably on some Yahoo I'll admiss that I've

794
00:54:01,800 --> 00:54:04,800
Speaker 3: lost access to by you know, the moment I switched

795
00:54:04,800 --> 00:54:05,320
Speaker 3: to Gmail.

796
00:54:05,440 --> 00:54:08,160
Speaker 2: I mean, I will say, so, we did international political

797
00:54:08,200 --> 00:54:11,000
Speaker 2: economy as part of international relations, and I learned a

798
00:54:11,040 --> 00:54:14,160
Speaker 2: lot from that. But I do regret in hindsight again

799
00:54:14,239 --> 00:54:17,000
Speaker 2: going back to the idea of hindsight being perfect. I

800
00:54:17,000 --> 00:54:20,120
Speaker 2: wish I'd done more economics, but oh well, it was

801
00:54:20,200 --> 00:54:23,400
Speaker 2: a pleasure, I must say, to speak to Professor Stiglitz

802
00:54:23,520 --> 00:54:26,520
Speaker 2: after all these years and basically get to go back

803
00:54:26,560 --> 00:54:29,160
Speaker 2: and ask all the questions that I probably would have

804
00:54:29,160 --> 00:54:30,080
Speaker 2: asked him as a student.

805
00:54:30,200 --> 00:54:30,560
Speaker 5: Totally.

806
00:54:30,640 --> 00:54:33,360
Speaker 3: Also, I want to read a bunch of those books now, Like,

807
00:54:33,440 --> 00:54:36,040
Speaker 3: maybe at some point i'll just do the full Well,

808
00:54:36,040 --> 00:54:38,440
Speaker 3: he's probably written dozens of books, so I doubt I'll

809
00:54:38,440 --> 00:54:40,560
Speaker 3: read all of them, but some of the ones like

810
00:54:40,760 --> 00:54:42,960
Speaker 3: that he described, I really want to read that one

811
00:54:43,000 --> 00:54:47,640
Speaker 3: about the failure of GDP or gdpism and like, because

812
00:54:47,640 --> 00:54:49,719
Speaker 3: we know this is sort of an issue that there

813
00:54:49,800 --> 00:54:53,360
Speaker 3: isn't really one good way to measure the economy, et cetera.

814
00:54:53,719 --> 00:54:55,680
Speaker 3: And I understand in the vague sense, but I'd like

815
00:54:55,719 --> 00:54:58,280
Speaker 3: to read a little bit more of that. Obviously I should.

816
00:54:58,680 --> 00:55:03,160
Speaker 3: Globalization and Discontents sounds like a very timely book for you.

817
00:55:03,160 --> 00:55:06,080
Speaker 2: You know what, I will summarize that one for you. Okay,

818
00:55:06,760 --> 00:55:10,000
Speaker 2: the milk subsidy chapter still lives rent free in my head.

819
00:55:10,000 --> 00:55:13,239
Speaker 2: I'll summarize that for you. You read the follow up on

820
00:55:13,280 --> 00:55:15,839
Speaker 2: how to fix globalization and then you summarize that one

821
00:55:15,880 --> 00:55:16,080
Speaker 2: for me.

822
00:55:16,560 --> 00:55:17,200
Speaker 3: That sounds good.

823
00:55:17,320 --> 00:55:19,640
Speaker 2: Okay, it's the vision of labor, all right. Shall we

824
00:55:19,719 --> 00:55:20,080
Speaker 2: leave it there.

825
00:55:20,120 --> 00:55:20,839
Speaker 5: Let's leave it there.

826
00:55:21,000 --> 00:55:23,719
Speaker 2: This has been another episode of the Odd Loots podcast.

827
00:55:23,760 --> 00:55:26,640
Speaker 2: I'm Tracy Alloway. You can follow me at Tracy Alloway.

828
00:55:26,960 --> 00:55:29,920
Speaker 3: And I'm Joe Wisenthal. You can follow me at the Stalwart.

829
00:55:30,200 --> 00:55:34,000
Speaker 3: Follow Professor Stiglitz. He's at Joseph E. Stiglitz and check

830
00:55:34,000 --> 00:55:36,840
Speaker 3: out his new book, The Road to Freedom, Economics and

831
00:55:36,920 --> 00:55:41,200
Speaker 3: the Good Society. Follow our producers Carman Rodriguez at Carman Ermann,

832
00:55:41,320 --> 00:55:44,760
Speaker 3: Dashel Bennett at Dashbot, and kel Brooks at cal Brooks.

833
00:55:45,080 --> 00:55:47,640
Speaker 3: Thank you to our producer Moses on Them. For more

834
00:55:47,680 --> 00:55:50,680
Speaker 3: odlots content, go to Bloomberg dot com slash od lots,

835
00:55:50,680 --> 00:55:53,600
Speaker 3: where we have transcripts, a blog, and a newsletter and

836
00:55:53,680 --> 00:55:55,759
Speaker 3: you can chat about all of these topics twenty four

837
00:55:55,760 --> 00:55:59,640
Speaker 3: to seven in the discord discord do gg slash od lots.

838
00:56:00,320 --> 00:56:02,759
Speaker 2: If you enjoy all thoughts, If you like it when

839
00:56:02,760 --> 00:56:05,560
Speaker 2: we read our old essays from college on the show,

840
00:56:05,600 --> 00:56:08,080
Speaker 2: then please leave us a positive review on your favorite

841
00:56:08,080 --> 00:56:11,640
Speaker 2: podcast platform. And remember you can listen to all the

842
00:56:11,719 --> 00:56:14,960
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843
00:56:14,960 --> 00:56:18,440
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844
00:56:18,560 --> 00:56:20,960
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845
00:56:21,040 --> 00:56:24,680
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