Speaker 1: Mhm.
Speaker 1: You're listening to Kobe time, a podcast series on markets
Speaker 1: and economies from DBS group research. I'm tomorrow. Big chief economist,
Speaker 1: Welcome to our 66th episode.
Speaker 1: I first saw Danny Quah in action as a sharp
Speaker 1: and rigorous professor at the London School of Economics Way
Speaker 1: Back in 1993.
Speaker 1: Well through various career advancement since then, Professor Quan now
Speaker 1: is the leak gushing professor in economics and dean at
Speaker 1: the lee Kwan Yew School of Public Policy, which resides
Speaker 1: in the National University of Singapore
Speaker 1: these days. His research focuses on inequality, income mobility, international
Speaker 1: systems of Trade and Finance and war order among superpowers.
Speaker 1: Professor who is also a commissioner on the Spence Stiglitz
Speaker 1: Commission on Global Economic transformation and serves on the executive
Speaker 1: committee of the International Economic Association or I. E. A.
Speaker 1: He is also at the advisory board of LSE ideas
Speaker 1: is an in the imminent advisory council of the UNDP
Speaker 1: Bureau of Asia for Asia pacific and the World Economic
Speaker 1: Forum's Global Future Council for Geopolitics. Professor Danica, Welcome to
Speaker 1: Kobe time.
Speaker 2: Hello, how are you
Speaker 1: Create? It's been a long time coming. I'm so pleased
Speaker 1: that we have you on Kofi time today uh squad
Speaker 1: if I may, let's begin with the immediate juncture the
Speaker 1: global economy and the pandemic. A few of your thoughts
Speaker 1: please on how 2022 is shaping up.
Speaker 2: Okay first it's a great honor to be part of
Speaker 2: your code. But yeah, you know, I followed the series
Speaker 2: and I'm glad that I managed to start in and
Speaker 2: number 66. Actually, it's great fun. Um
Speaker 2: Thinking about the global economy or the regional economy for 2022,
Speaker 2: I think that we are still at a point where
Speaker 2: we might be described as a situation of tentative
Speaker 2: contingency.
Speaker 2: There's lots of uncertainties, the stages that we've got to
Speaker 2: look like there might be bright ways ahead, but there's
Speaker 2: still a long way to go before we're out of
Speaker 2: the woods.
Speaker 2: I think if I had to put my finger on
Speaker 2: three on a number of things or any number of things,
Speaker 2: I would say three things that are gonna matter that
Speaker 2: we need to watch.
Speaker 2: The first of these
Speaker 2: is great power rivalry
Speaker 2: china and the United States
Speaker 2: Russia entering the free in europe,
Speaker 2: the european union continuing to settle in as a global
Speaker 2: force to be reckoned with. Great power rivalry
Speaker 2: hugely impactful for our part of the world, where so
Speaker 2: much of our livelihood, so much of our well being
Speaker 2: hinges
Speaker 2: on a stable international system, on international system with rules
Speaker 2: that benefit our economy. So first thing great power rivalry
Speaker 2: for us to look at and that
Speaker 2: as you and I and all, all your listeners know
Speaker 2: is in a state of turmoil. Every now and then
Speaker 2: we see a bright spot but still lots of things unsettled.
Speaker 2: So that's the first part
Speaker 2: of the tentative contingency.
Speaker 2: The second I might say is the pandemic
Speaker 2: after vaccines came online.
Speaker 2: The world looked like it was also in a good place.
Speaker 2: There was a clear trajectory forwards.
Speaker 2: We were hit then by delta and now the only
Speaker 2: grown white variants.
Speaker 2: It's not at all clear
Speaker 2: where we're gonna go with this because the evidence is
Speaker 2: not in yet on how the vaccines will manage relative
Speaker 2: to the omicron variant. And the only crown variant itself,
Speaker 2: it's not clear yet
Speaker 2: its impact on the things that matter serious illness, mortality.
Speaker 2: I see you take uptick
Speaker 2: hospital bed
Speaker 2: usage. None of these things is yet clear. But we
Speaker 2: do know it is a highly infectious variant and it's
Speaker 2: already in many, many parts of the world.
Speaker 2: And I suppose the last of the three legs that
Speaker 2: I am keeping an eye on as we look ahead
Speaker 2: to 2022
Speaker 2: is what's happening to trade. The globalization system.
Speaker 2: No,
Speaker 2: The 1990s that you were just harking back to a
Speaker 2: and I think myself to with great nostalgia and fondness
Speaker 2: Running into the 2000s was a period of
Speaker 2: rising hyper globalization.
Speaker 2: The ideal there was that very soon we could see
Speaker 2: for all of us
Speaker 2: that anything
Speaker 2: me anywhere
Speaker 2: on the planet
Speaker 2: would be available to everyone everywhere else on earth.
Speaker 2: There was an exciting time to be alive to think
Speaker 2: about how ideas, goods and services would disseminate across the world,
Speaker 2: bringing prosperity to everyone on the planet.
Speaker 2: We're not in that situation. Now,
Speaker 2: Trade might be described as an attenuated trade Yes. Access
Speaker 2: abated by
Speaker 2: great power rivalry shaken by pandemic, but long before this,
Speaker 2: there were forces in play that would profoundly change the
Speaker 2: way we view trade among others.
Speaker 2: The impact of trade on the distribution of well being
Speaker 2: within all of our societies.
Speaker 2: The impact of train as it continued to change in
Speaker 2: character from a situation where,
Speaker 2: you know, pretty much everything
Speaker 2: that you wanted to buy, you could see your new
Speaker 2: way it was made
Speaker 2: in one place on earth and from there it was
Speaker 2: then consumed everywhere else. Now there's practically nothing that's made
Speaker 2: in one single place. International trade is mostly about minimizing
Speaker 2: inventory holdings and maximizing the flow of value in intermediate
Speaker 2: inputs
Speaker 2: across our planet. The great
Speaker 2: evolution of the global supply chain and pandemic
Speaker 2: fears of populism and nationalism and great power rivalry of
Speaker 2: all conspiring
Speaker 2: to make us worry about whether this system of globalized
Speaker 2: production and exchange can be sustained
Speaker 2: and where we go from here with that system we
Speaker 2: don't really know yet. So I come back to these
Speaker 2: three great forces, great power rivalry,
Speaker 2: pandemic
Speaker 2: and the new nature of a can you waited trade
Speaker 2: that we don't have a really good handle on.
Speaker 2: So that's where I see 2022 and and the years
Speaker 2: to come.
Speaker 1: So it seems like you see a convergence between the
Speaker 1: long term structural changes and the very near term. There
Speaker 1: isn't that much of a difference between these two now
Speaker 1: and more.
Speaker 2: Absolutely. I think that is now, you know, the art
Speaker 2: going forward is a seamless narrative. One thing is going
Speaker 2: to lead to another and the things that are very
Speaker 2: far out
Speaker 2: Where, you know, our leaders, where our governments where international
Speaker 2: system sees as a convergence point way out in the future.
Speaker 2: They will have impacted in for 2022.
Speaker 1: Right uh protocol. I was traveling last week and was
Speaker 1: in the in a discussion and a large companies boardroom
Speaker 1: and they were outside advisers were speaking and some of
Speaker 1: their view, I mean, mostly Western observers. However, the view
Speaker 1: is that if things progress the way they are, the
Speaker 1: way the dominant are falling, it will inevitably lead to war.
Speaker 1: And therefore we need course corrections because we can let
Speaker 1: the status quo, sort of, you know,
Speaker 1: take us to that unfortunate or you know, very, very
Speaker 1: undesirable situation. I want to talk to you about some
Speaker 1: of your recent writings uh and I know that you
Speaker 1: are very concerned about
Speaker 1: worker welfare inequality among the haves and between the haves
Speaker 1: and the have nots and so on. Um and so
Speaker 1: I want to start with the one narrow area which
Speaker 1: is sort of
Speaker 1: the
Speaker 1: The the rights and the privileges enjoyed or not by
Speaker 1: workers in the gig economy. So this trend began well
Speaker 1: before the pandemic, but of course has accelerated substantially since
Speaker 1: then in the us we keep hearing about the great resignation,
Speaker 1: but I think what we don't appreciate is that some
Speaker 1: of the great resignation is manifesting into people leaving formal
Speaker 1: 9-5 jobs into becoming
Speaker 1: a contractor for amazon or just doing things out of
Speaker 1: home operating in the economy. So you are the vice
Speaker 1: chair of a committee in Singapore, tasked to look into
Speaker 1: the protections for Cape workers here. So, your thoughts on
Speaker 1: this place.
Speaker 2: Okay. Um, thank you. Let's dive into that. But if
Speaker 2: I may, can I just take take a minute to
Speaker 2: reflect on on what you described as the views of
Speaker 2: many Western observers.
Speaker 2: The war is inevitable. There's there's been this this hypothesis
Speaker 2: that the world is in the so called facilities trap,
Speaker 2: that the international system that we've had for seven decades,
Speaker 2: if not longer is not capable of managing with the
Speaker 2: rise of a new superpower
Speaker 2: china.
Speaker 2: And that the incumbent hegemony of the United States for
Speaker 2: whatever reason, structural reasons or reasons of bragging rights or
Speaker 2: reasons of actual inability to just to deal with the
Speaker 2: competition or really out of the feeling of benevolence towards
Speaker 2: the rest of the world, keep the world safe as
Speaker 2: it were,
Speaker 2: needs to take on this rising challenges the
Speaker 2: whole slew of narratives on this. I think that is
Speaker 2: quite important that, you know, even as the West worries
Speaker 2: about this inevitable drive towards war,
Speaker 2: we have to you and I and and all of
Speaker 2: all of the listeners to your program and everyone around us.
Speaker 2: We need to realize that
Speaker 2: actually
Speaker 2: 80% of the world
Speaker 2: lives in neither the United States nor china,
Speaker 2: the overwhelming majority of the world stands outside
Speaker 2: the competition between number one and number two. If indeed,
Speaker 2: that's all it is a great power rivalries between number
Speaker 2: one and number two.
Speaker 2: And somehow this 80% of the world, which is the
Speaker 2: democratic majority, we are the ones who need to have
Speaker 2: the legitimate say on how the international system evolves.
Speaker 2: We need to convince the great powers
Speaker 2: That heading into heading into a one on one competition
Speaker 2: that will lead to violent conflagration is not good for
Speaker 2: them and it's terrible for the world. It has no
Speaker 2: legitimacy for the rest of us who are just watching
Speaker 2: the 80% of us who are the great democratic majority
Speaker 2: and how that
Speaker 2: needs to unpack is something that I'm sure will occupy
Speaker 2: our conversation for a long time. So I could probably
Speaker 2: take a whole other topic, Let's correct you the word
Speaker 2: you wanted to to ask me about which is the
Speaker 2: gig workers,
Speaker 2: the gig economy on the platform workers. And like you said,
Speaker 2: I'm lucky enough to to serve the nation on this committee.
Speaker 2: To look at the well being of the platform workers,
Speaker 2: the platform workers advisory committee
Speaker 2: constituted under the Ministry of manpower.
Speaker 2: And it seems like
Speaker 2: is it very special isn't very complicated. I'd like to
Speaker 2: remember the following.
Speaker 2: We the will has always had
Speaker 2: in different parts, a gig economy side to it. Well
Speaker 2: as therefore always had platform workers who work in the
Speaker 2: gig economy.
Speaker 2: Uh And it's simply the case that today
Speaker 2: technology, information technology, data networks algorithms have all brought us
Speaker 2: to a point where there will be more and more
Speaker 2: of us involved in the gig economy, involved in in
Speaker 2: platform working. So the issues that we're trying to deal
Speaker 2: with in this committee,
Speaker 2: although for now they reflect on a relatively small part
Speaker 2: of the Singapore workforce, they reflect on a much larger
Speaker 2: portion of the global economy's labor force and I suspect
Speaker 2: will become more and more important for all of us.
Speaker 2: You know, there's actually
Speaker 2: In the early 20th century
Speaker 2: paul, Erdos sh
Speaker 2: Is one of was one of the world's greatest mathematicians
Speaker 2: worked in the 20th century. And and I don't know
Speaker 2: if you remember this from your days at LSE he
Speaker 2: had no permanent home, he had no permanent contract with
Speaker 2: any university. He would travel around the world living out
Speaker 2: of a suitcase working to solve mathematical problems with collaborators everywhere.
Speaker 2: He went around the planet.
Speaker 2: He wrote over 1500 mathematical papers. Still a record.
Speaker 2: He was a gig worker.
Speaker 2: He was using a gig economy that worked around the
Speaker 2: production of mathematics that could be chopped up into chunks
Speaker 2: solving mathematical theorems, proving mathematical theorems everywhere he went.
Speaker 2: And what we see today is that information technology, data
Speaker 2: networks
Speaker 2: algorithms have made that kind of work
Speaker 2: both available
Speaker 2: and indeed necessary for many of us around the world.
Speaker 2: So where is shown up now? Uh, the platform workers
Speaker 2: that this this committee is looking at, which are
Speaker 2: right hailing drivers,
Speaker 2: taxi drivers, delivery workers,
Speaker 2: but included in platform workers in the gig economy. Also,
Speaker 2: software engineers and designers who seek not a permanent contract
Speaker 2: with google, but who want to be like Paula dash
Speaker 2: traveled the world, lived out of a suitcase, pop up
Speaker 2: their notebook, solve a problem. They to our platform workers,
Speaker 2: music teachers in Singapore,
Speaker 2: we're taking on gigs in different places for temporary for
Speaker 2: for short, for short time periods are also
Speaker 2: platform workers in the gig economy. The reason that this
Speaker 2: committee and the Ministry of Manpower is concerned about,
Speaker 2: about this
Speaker 2: is that
Speaker 2: the workers that were looking at
Speaker 2: uh, on the lower wage end of the income spectrum,
Speaker 2: software designers, engineers make a lot of money, many of
Speaker 2: them doesn't bother the rest of society that they're traveling
Speaker 2: or living out of a suitcase for the platform workers
Speaker 2: that we're looking at again, delivery writers, write hailing taxi drivers,
Speaker 2: delivery writers,
Speaker 2: these workers
Speaker 2: loki
Speaker 2: They're below the 20th percentile of the Singapore workforce and
Speaker 2: we need to think about their long term well being by,
Speaker 2: we I mean, they
Speaker 2: uh, you know, concerned social observers and the platforms themselves,
Speaker 2: the companies themselves because
Speaker 2: that these workers
Speaker 2: do okay in the long run
Speaker 2: is important for the sustainability
Speaker 2: of the platforms and ultimately for the well being of
Speaker 2: the Singapore consumer for everybody involved in this, this new
Speaker 2: ever expanding gig economy. So, to come around to how
Speaker 2: we began,
Speaker 2: I said that, you know, although it seems like this
Speaker 2: is something terribly new and exciting, it is terribly new
Speaker 2: and exciting
Speaker 2: its roots, the fundamentals were thinking about it our longstanding,
Speaker 2: they go all the way back to when academics travel
Speaker 2: the world solving problems we can think about is like,
Speaker 2: it's like a Marie condo decluttering
Speaker 2: of our production process. Instead of having like you and
Speaker 2: me books on our shelves, sitting in one place, working
Speaker 2: on problems, we declutter, we get rid of all of this,
Speaker 2: we focus on essentials and we become platform workers in
Speaker 2: the gig economy, you in a very lucrative financial service industry,
Speaker 2: being the much lesser paid epidemics
Speaker 2: and then all the way through to delivery writers, uh
Speaker 2: and and taxi drivers. So that's the, that's the set
Speaker 2: of issues. You're looking at the well being of all
Speaker 2: of us who are involved in this decluttering of the
Speaker 2: production process and the well being includes
Speaker 2: retirement. Now, what happens now with platform workers, once you
Speaker 2: if you and I decided to leave our workplace
Speaker 2: and worked in a platform working kind of way,
Speaker 2: you and I will no longer be considered employees,
Speaker 2: we would be workers, but we don't employees now for economists,
Speaker 2: that distinction doesn't make any sense in our models, we
Speaker 2: use these terms interchangeably, but in the law in and
Speaker 2: in reality workers are one category and employees
Speaker 2: attract
Speaker 2: coverage and protection under the Employment Act
Speaker 2: variants of that in Singapore and elsewhere in the world.
Speaker 2: And the Employment Act
Speaker 2: looked at
Speaker 2: retirement benefits, health care, housing, the protection bargaining power, the
Speaker 2: stress and fragility of work.
Speaker 2: The things that, as economists, we would say the long
Speaker 2: term
Speaker 2: president value considerations that everyone should be mindful of
Speaker 2: and the worry is that in the gig economy platform
Speaker 2: workers were daily on the run from, you know, from
Speaker 2: on on food delivery or goods delivery or going from
Speaker 2: one taxi right to another. Haven't had the space to
Speaker 2: think about their long term, longer run welfare
Speaker 2: considerations.
Speaker 2: And so this committee attempts to solve that problem of
Speaker 2: externality of where people haven't had time to think about
Speaker 2: these issues will have long run implications for the well
Speaker 2: being
Speaker 2: of themselves,
Speaker 2: but also the platforms they work for and for the
Speaker 2: customers that all the rest of society is
Speaker 1: indeed. Uh, the fiscal nerd in me wants to ask
Speaker 1: some follow up questions to that Professor Quad. So we
Speaker 1: are used to paying income taxes in the area we
Speaker 1: reside because the activity we do there seems to be
Speaker 1: economically linked to that geography,
Speaker 1: but my son who is eight years old and takes
Speaker 1: quoting lessons from a service provider in India.
Speaker 1: Uh, this gentleman, we don't know where in India he lives,
Speaker 1: but he's a friend of my son. Now they meet
Speaker 1: each other on zoom twice a week. They share a
Speaker 1: screen and he learned scratch uh uh, through the scratch platform.
Speaker 1: He learns quoting from him.
Speaker 1: The gentleman is providing a service for Singapore. We pay
Speaker 1: him but his earning is in India.
Speaker 1: So is it the responsibility of the government of India
Speaker 1: to charge income tax or as a service provider to
Speaker 1: activity in Singapore. Should there be a way of Singapore
Speaker 1: and government to take a pie? A piece of that pie,
Speaker 1: which is I think impossible in today's day and age.
Speaker 1: But that's sort of challenges we have coming
Speaker 2: Absolutely. You know,
Speaker 2: when we were learning economics, we thought it was complicated
Speaker 2: enough
Speaker 2: to remember the difference between gross national product and gross
Speaker 2: domestic product because you know, was it, was it earnings
Speaker 2: owned by citizens or was it learning by earnings and
Speaker 2: by residents? Where exactly does that transaction occur? That
Speaker 2: Help know that stood us in good stead for decades.
Speaker 2: This distinction between GNP or GDP within the last 10 years,
Speaker 2: the movement of transactions and services into cyberspace
Speaker 2: where there is no physical location to speak of has
Speaker 2: compounded these complications many times over.
Speaker 2: And I think, you know, we, we all need to
Speaker 2: be fiscal nerds. We all need to think about where
Speaker 2: these tax considerations go because ultimately they are what drive
Speaker 2: the way in which our, our policy makers and our
Speaker 2: leaders look after our well being to take care of
Speaker 2: the externalities and the
Speaker 2: the public goods that all our societies will still need.
Speaker 2: It's going to be hugely important. And I hope that,
Speaker 2: you know, the work on platform workers, uh it's small,
Speaker 2: is focused on just a small part of labels for now,
Speaker 2: but we'll give us insights into these larger, more, more,
Speaker 2: more consequential considerations as the global economy continues to evolve. Absolutely,
Speaker 2: I am talking with you
Speaker 1: and earlier this year, we saw after a very long time,
Speaker 1: one tangible progress in global taxation in the form of
Speaker 1: the minimum
Speaker 1: corporate income tax and lots of countries which frankly, I
Speaker 1: thought it was unthinkable that would sign up did sign
Speaker 1: up on this initiative. Does it give you a glimmer
Speaker 1: of hope that we could have more progress at the
Speaker 1: multilateral level of taxation of gig workers?
Speaker 2: It is a glimmer of hope, because on many other
Speaker 2: multilateral considerations, we have been abysmal getting any kind of
Speaker 2: cooperation collaboration, the global pandemic, global climate crisis, international terrorism,
Speaker 2: uh you know,
Speaker 2: Yeah.
Speaker 2: The way in which
Speaker 2: very well off people are able to manipulate the international
Speaker 2: financial system in a way, so that many of them
Speaker 2: end up paying less tax than the poorer uh fellows
Speaker 2: in whichever society they live in all of these are
Speaker 2: hugely important. The corporation part of it is one
Speaker 2: relatively easy win. But I hope we're gonna we're gonna
Speaker 2: need to do a lot more in terms of keeping
Speaker 2: the global economy together.
Speaker 1: I want to switch gear to really, you know, excellent
Speaker 1: piece of opinion editorial piece you wrote for a Singaporean
Speaker 1: newspaper recently. It was entitled Building Back Better with trampolines.
Speaker 1: I want to talk about the trampoline metaphor later. Um
Speaker 1: but in the very beginning you portray a post pandemic
Speaker 1: world that is a need
Speaker 1: for resilience and social cohesion.
Speaker 1: Words that you know economists didn't talk a lot about
Speaker 1: in the past but you know now you're bringing them
Speaker 1: into the core of discussions and thoughts that economists must have.
Speaker 1: So let's unpack those two words start with resilience.
Speaker 1: Um Is it the same as a robust society that
Speaker 1: has internal financial buffer support for the poor? Or do
Speaker 1: you have something bigger than that in mind?
Speaker 2: Okay. I think financial buffers, support systems for the poor
Speaker 2: all those are steps in the right direction.
Speaker 2: Um and Brazilians could be viewed as one natural end
Speaker 2: point as we continue this.
Speaker 2: But the important distinction to be made here is that
Speaker 2: sometimes when they are conventionally or historically implemented
Speaker 2: financial buffers, support systems for the poor are viewed as
Speaker 2: ways to to simply strengthen society.
Speaker 2: And there's an interesting difference conceptually and I think for
Speaker 2: formulating policy in terms of strengthening society and making society
Speaker 2: more resilient now in english
Speaker 2: uh in most sort of natural language and verbal language.
Speaker 2: He's not clear clear what that means what the distinction is.
Speaker 2: But the visual metaphor might help we strengthen social systems
Speaker 2: when we make them
Speaker 2: like an oak tree
Speaker 2: we make them like a redwood
Speaker 2: tree that is strong
Speaker 2: and is able to
Speaker 2: do keep upright even against strong winds.
Speaker 2: An oak tree
Speaker 2: that is a strong system.
Speaker 2: If we're building financial performance and support systems for the
Speaker 2: poor because we want to try and mix this again,
Speaker 2: oak tree then what we're doing is strengthening
Speaker 2: the system,
Speaker 2: resilience is not about an oak tree,
Speaker 2: it's about bamboo
Speaker 2: or is about willow trees,
Speaker 2: structures that are soft
Speaker 2: and pliable and bend with the wind.
Speaker 2: Why is it important to have this well? And oak
Speaker 2: tree does well against the kinds of forces that historically
Speaker 2: we have seen.
Speaker 2: Yeah the known knowns
Speaker 2: they are the things that we can imagine happening. We
Speaker 2: can build a crease sufficiently strong against them. If we
Speaker 2: build financial buffers,
Speaker 2: support systems for the poor against the kinds of risks
Speaker 2: that we can imagine. Even even black swan kind of
Speaker 2: risk if you can imagine and describe it then we're
Speaker 2: making system stronger.
Speaker 2: The idea of resilience is too
Speaker 2: say yes let's make some strong when we can but
Speaker 2: we should pay attention to unknown unknowns, things that we
Speaker 2: can't even imagine things that could be potentially overwhelming
Speaker 2: called the covid pandemic set on the boundary between unknown
Speaker 2: unknowns and unknown unknown because we we've had pandemics in
Speaker 2: the past. We didn't know how devastating would be, Who
Speaker 2: knew that for over two years we will be sitting
Speaker 2: speaking like this on to having our entire world transform.
Speaker 2: I think that would have been very difficult for people
Speaker 2: to imagine this.
Speaker 2: We can put on the boundary of an unknown unknown.
Speaker 2: So we build a system that was resilient against this
Speaker 2: like a willow
Speaker 2: or bamboo
Speaker 2: shoot that can bend with this force and then in
Speaker 2: a resilient way bounce back.
Speaker 2: Is this bouncing back? That is the critical difference between
Speaker 2: simply building strong robust systems
Speaker 2: and building systems of resilience.
Speaker 2: So you had referred to trampoline as a valuable metaphor
Speaker 2: for this. Indeed contrast strong table made of hardwood
Speaker 2: versus a trampoline, the hardwood will stand up against most
Speaker 2: things we want to put on it. But at some
Speaker 2: point you could see that the force will hit it
Speaker 2: and it would creak and crumble. Trampoline
Speaker 2: absorbs the force and bounces back.
Speaker 2: The more the systems that we can build that are
Speaker 2: like trampolines, the more resilient with our society's b
Speaker 2: in a nutshell. That's that's kind of how I would
Speaker 2: think about how
Speaker 2: uh it is different from the systems that we have
Speaker 2: traditionally built
Speaker 2: and and to give credit where credit is due. Many
Speaker 2: people have talked about resilience and in a way as
Speaker 2: you saw the commentary that I wrote was a riff
Speaker 2: and take off
Speaker 2: on something that a brilliant economists at Princeton Marcus Bruno
Speaker 2: meier had written, He's written a whole book on the
Speaker 2: resilient society.
Speaker 2: I took parts of what he had written and expanded
Speaker 2: on them. Um he mentions trampoline, a lot of ideas
Speaker 2: about resilience, his, but he doesn't develop more the trampoline metaphor.
Speaker 2: And I've tried I've tried to do that.
Speaker 2: Yeah, sorry, go ahead.
Speaker 2: Well, I was going to turn to social cohesion because
Speaker 2: you had mentioned that I'm happy to wait if you
Speaker 2: want to come back to it. After we we talked
Speaker 2: a little bit more about resilience. Well,
Speaker 1: I was just struck by your redwood versus bamboo tree metaphor.
Speaker 1: A few weeks ago, I was traveling at a different
Speaker 1: part of the world. I was in California and the
Speaker 1: great
Speaker 1: Mirror woods in northern California, which has these great redwood trees.
Speaker 2: And and to your
Speaker 1: point that very strong institutions or structures of nature uh
Speaker 2: over time
Speaker 1: have a track record of dealing with past shocks by
Speaker 1: survival bias. They are the ones that are standing, but
Speaker 1: that does not guarantee that the next bout of climate
Speaker 1: change that is affecting northern California substantially
Speaker 1: is going to keep these 1000 year old trees intact
Speaker 1: because the soil erosion that you're seeing in that area
Speaker 1: of northern California and the plethora of forest fires now
Speaker 1: are making the nature specialist over there very worried that
Speaker 1: these trees which have survived through basically the entire history
Speaker 1: of the United States and more
Speaker 1: may not survive the next 100 years or 200 years.
Speaker 1: So to your point that you can't just say that
Speaker 1: Something has worked for the last 23, 400 years means
Speaker 1: that it's going to last forever. That's just a survival bias.
Speaker 1: That doesn't mean that it's going to be lasting in
Speaker 1: the future.
Speaker 2: That's an excellent, excellent metaphor. Uh dinosaurs would be another
Speaker 2: example
Speaker 2: 650 million years ago. There was one group, one species
Speaker 2: that that rule the earth. They had done so for
Speaker 2: millions of years. They were the most powerful beings, the dinosaurs.
Speaker 2: And there were little rats that scurried around beneath their
Speaker 2: field who didn't, that didn't amount to very much in
Speaker 2: the order of things,
Speaker 2: But 650 million years ago and unknown unknown did hit
Speaker 2: our planet. And it's the little mice animals, they have
Speaker 2: survived and became you and me. The theory of evolution
Speaker 2: is one that says that, you know, it is this,
Speaker 2: it's not necessarily the strongest
Speaker 2: they have emerged. Whether through design or through survival bias,
Speaker 2: it is those that have the resilience to continue to
Speaker 2: hold together against the shocks that are historically unprecedented.
Speaker 1: So would you say when the government of Singapore sets
Speaker 1: out a plan for the rest of the century in
Speaker 1: terms of dealing with rising sea levels and and creating
Speaker 1: seawalls and that's not going to be something that
Speaker 1: you and I will be around to see it. It
Speaker 1: is for our grandchildren, their grandchildren. So on, that is
Speaker 1: one of those resilience building exercises.
Speaker 2: Absolutely. I mean the government, you know, just as you know,
Speaker 2: there's a lot of looking back and looking forward uh
Speaker 2: scans horizons and it constructs scenarios and
Speaker 2: so the best that anyone can imagine any human mind
Speaker 2: can imagine it does try to to do exactly as
Speaker 2: you say, look forward to the circumstances that are emerging.
Speaker 2: But we will always need to be constantly on the
Speaker 2: watch
Speaker 2: for new things that we will need to adapt to.
Speaker 2: Having a plan means that we will sometimes need to
Speaker 2: deviate from that plan
Speaker 2: when you are No, no, no. It's actually uh changes
Speaker 1: right. I want to talk about social question a second,
Speaker 1: but maybe this question will bridge us in that direction.
Speaker 1: It is one thing to talk about the importance of
Speaker 1: preparing for these unknown unknowns and and having systems of
Speaker 1: buffer in place that are not just about dealing with
Speaker 1: shocks of the past but trucks that may come.
Speaker 1: Um, but
Speaker 1: you need a really forward thinking society, not a society
Speaker 1: where
Speaker 1: every four or five years you have rather contentious elections,
Speaker 1: lot of society where there is a lot of strife
Speaker 1: over race and ethnicity and left of center
Speaker 1: political beliefs and the right of center political beliefs. So,
Speaker 1: so how do societies that are of democratic by nature
Speaker 1: but are not necessarily capable of forming very long term
Speaker 1: planning horizons
Speaker 1: survives the test of resilience.
Speaker 2: Well, one thing that I remember from my time
Speaker 2: in the United Kingdom
Speaker 2: was how in government or in parliament,
Speaker 2: that would be a debate between whoever the government was
Speaker 2: and the opposition
Speaker 2: by the opposition.
Speaker 2: When it did things right,
Speaker 2: always referred to itself
Speaker 2: as her majesty's loyal opposition
Speaker 2: was an opposition, not against the nation, not against society
Speaker 2: was for the nation and society,
Speaker 2: but I was trying to make sure the best ideas
Speaker 2: emerged from debate with whichever party was in government at
Speaker 2: that time.
Speaker 2: Now, that's that's the, you know, that that for me
Speaker 2: is uh
Speaker 2: uh it's a singular moment of when
Speaker 2: all different people come together realized that although they're arguing
Speaker 2: quite heatedly, there's a greater goal that they're trying to
Speaker 2: move towards.
Speaker 2: Unfortunately,
Speaker 2: in many democratic societies, and in many non democratic societies,
Speaker 2: that vision is not always helped. It's not always clearly communicate.
Speaker 2: We're lucky that in Singapore we do have a consistent
Speaker 2: narrative of where the nation is going and then people
Speaker 2: can rally around that
Speaker 2: in Britain the story that I just told,
Speaker 2: although royalty is is, you know, it's a figurehead, royalty
Speaker 2: has no powers to speak of. But it does provide
Speaker 2: that kind of rallying point around which people feel the
Speaker 2: nation needs to organize itself
Speaker 2: and I think all human societies need that human nature
Speaker 2: is such that
Speaker 2: how many economists, young economists, we we we we subscribe
Speaker 2: to the idea that human nature is at the end
Speaker 2: of it all, ultimately self seeking. It is purposeful, but
Speaker 2: it's self seeking
Speaker 2: and the job of government. The job of political leadership
Speaker 2: is to see how to align that self seeking nature
Speaker 2: with the greater good.
Speaker 2: Some societies do it successfully and well, other societies don't,
Speaker 2: and it's not always the most obvious societies that that
Speaker 2: do it well,
Speaker 2: uh you know, if I may, you know, I I
Speaker 2: can turn this maybe to a little bit of discussion
Speaker 2: about social cohesion, because social cohesion is a natural freezing.
Speaker 2: That comes into the conversation here.
Speaker 2: There are many observers to say, I've only read a
Speaker 2: socially cohesive society, then of course, individual incentives would be
Speaker 2: aligned with the greater good. I don't think it's as transparent,
Speaker 2: I think social cohesion is building something deeper,
Speaker 2: that just the obvious manifestation that everybody uh seems to
Speaker 2: be aligned in the right way.
Speaker 2: Casino,
Speaker 2: about 100 years ago, when social scientists started talking about
Speaker 2: social cohesion, and like you say, it was an economist
Speaker 2: with sociologists and others, and one of their key hypothesis
Speaker 2: was that the way he had social cohesion, which is,
Speaker 2: you know, really about the good things from groups in
Speaker 2: society coming together,
Speaker 2: there being a sense of community and belonging people helping
Speaker 2: one another. Well, the early viewings of sociology was that, well,
Speaker 2: you got that
Speaker 2: by making sure society
Speaker 2: was all alike,
Speaker 2: society was homogeneous. Everybody
Speaker 2: looked the same.
Speaker 2: And that's how,
Speaker 2: in the early sociological perspective,
Speaker 2: That's how you got societies to be cohesive by making
Speaker 2: all members of society as much like each other as
Speaker 2: you could and you and I know that in the
Speaker 2: modern world of the 21st century, that's a disaster.
Speaker 2: Societies are now cohesive
Speaker 2: when instead
Speaker 2: we respect diversity and difference,
Speaker 2: that people are different with different skills, they look different,
Speaker 2: they speak different is by bringing all of this together
Speaker 2: than we get
Speaker 2: the bamboo shoe. The strong resilient societies that can adapt
Speaker 2: to unknown unknowns
Speaker 2: and social cohesion as a phrasing as an idea itself
Speaker 2: continues to evolve.
Speaker 2: But what you and I might say is it's clear
Speaker 2: what we need is to go back to the fundamentals
Speaker 2: where
Speaker 2: people feel that they belong. People feel that they can
Speaker 2: help one another
Speaker 2: and the way to do that is by building an
Speaker 2: environment building institutions where
Speaker 2: We Trust one Another.
Speaker 2: But there's a there's a difficulty here as well because
Speaker 2: trust is an important part of social cohesion.
Speaker 2: But trust is not stable
Speaker 2: in economics language, trust is not a stable equilibrium. It's
Speaker 2: not incentive compatible. If we try to build a situation
Speaker 2: of trust and we found ourselves in like a
Speaker 2: the prisoner's dilemma type situation or a situation that allow
Speaker 2: me to free. Right then that you trust me to
Speaker 2: do the right thing makes you do the right thing
Speaker 2: and that's wonderful.
Speaker 2: But when we are all doing the right thing,
Speaker 2: I will still see i as a member of this group,
Speaker 2: we'll still see gain by deviating from it.
Speaker 2: I will try and do something different. I will free
Speaker 2: ride on all the good things that the rest of
Speaker 2: society is doing. If society rely only on trust to
Speaker 2: build social cohesion,
Speaker 2: it is not a stable outcome
Speaker 2: instead. What we have to do is to build institutions
Speaker 2: so that
Speaker 2: everybody continues to see again to themselves
Speaker 2: from playing the game, that is the society's game. So
Speaker 2: what we need to do is we need to
Speaker 2: make sure that the poor, the weak and vulnerable, the
Speaker 2: deprived continue to gain,
Speaker 2: why they're sticking with the rest of society
Speaker 2: and they will not
Speaker 2: if they think the corporations businesses, the rich element, society
Speaker 2: permanently exclude them,
Speaker 2: no matter how much the poor trust the rich.
Speaker 2: If the rich permanently exclude the poor from ever being
Speaker 2: able to become rich to be able to do the
Speaker 2: same kinds of things that the rich do, that, society
Speaker 2: is not going to be stable in social cohesion.
Speaker 2: Well, what we need to do is that we need
Speaker 2: to build systems
Speaker 2: so that the lower strata of the income distribution
Speaker 2: can continue to receive continuing improvement in their well being.
Speaker 2: They must feel that society continues to have space for them.
Speaker 2: They must feel the society continues to be inclusive
Speaker 2: and that will align.
Speaker 2: I was thinking no matter how racially ethnically physically diverse,
Speaker 2: we are none of that matters
Speaker 2: because individual self gain will align with the social good
Speaker 2: provided that we can build these systems
Speaker 2: probably we can build systems with great social mobility, Social mobility.
Speaker 2: I feel it's the key
Speaker 2: to having social cohesion.
Speaker 2: It's not not just mouthing words like trust, cooperation.
Speaker 2: What we want is that people actually see the game
Speaker 2: to themselves of being in the society of helping one another.
Speaker 2: That they see that by lifting those around them, they
Speaker 2: raised themselves.
Speaker 2: That is the critical thing for social cohesion.
Speaker 1: So you would rather look at a database that looks
Speaker 1: at absolute gains as opposed to relative gains.
Speaker 2: Absolutely. I fear that when we fall into a language
Speaker 2: of relative gains, that is simply
Speaker 2: the word we use
Speaker 2: to be the word we use in polite society
Speaker 2: for forcing society to a zero sum game. See if
Speaker 2: you and I are in a situation where I am
Speaker 2: constantly concerned about whether I've gained relative to you.
Speaker 2: The only way I can gain relative to you is
Speaker 2: if you lose relative to me, even if both of
Speaker 2: us are becoming richer,
Speaker 2: it is a zero sum game. And once we get
Speaker 2: locked into a zero sum game,
Speaker 2: you know, there is no compromise,
Speaker 2: There's no alignment of incentives. Everything that each of us
Speaker 2: does
Speaker 2: is a slight against the other.
Speaker 2: Everything that we do, no matter how helpful
Speaker 2: to you yourself, to your neighbors, to everybody around you.
Speaker 2: Anything that helps you
Speaker 2: becomes a damage to me. That's the nature of the
Speaker 2: zero sum game that I feel we construct when we
Speaker 2: say relative gains. And so while it sounds nice to
Speaker 2: some policymakers to say, oh, we can't let, even if
Speaker 2: the poor become richer, we can't let, can't let the
Speaker 2: rich become relatively too much richer.
Speaker 2: They are binding themselves. They're closing themselves into a zero
Speaker 2: sum game from which no good
Speaker 2: can emerge. My worry also is at the very largest level.
Speaker 2: The game of geopolitical rivalry has been shoehorned into a
Speaker 2: zero sum game. Nothing that china does that benefits its
Speaker 2: people or its neighbors can be viewed as beneficial now
Speaker 2: By the # one incumbent Hegeman who've used any such
Speaker 2: game as being a relative loss to itself.
Speaker 2: It's a zero sum game. And it's a very dangerous
Speaker 2: position that for some reason humanity finds itself wanting to
Speaker 2: construct more and more of
Speaker 2: their natural situations where the world is not a zero
Speaker 2: sum game. But we talk ourselves into it. We talk
Speaker 2: ourselves into worrying that, you know, we are not as
Speaker 2: well off because there are people who are richer than
Speaker 2: us who are becoming richer, becoming even richer and therefore
Speaker 2: that's a relative loss to us, even though we ourselves
Speaker 2: 10 years ago,
Speaker 2: could not afford
Speaker 2: the smart phones, the Internet, the enjoyment of netflix of
Speaker 2: so many things that we previously could not even imagine.
Speaker 2: But we tell ourselves this is not as good because
Speaker 2: somebody else has something even better and that's a very
Speaker 2: dangerous
Speaker 2: game. We play with ourselves, ultimately is not good for humanity.
Speaker 1: Absolutely. Um Professor Cole you've been very generous with your time.
Speaker 1: I want to ask you one final question. Before you know,
Speaker 1: we we conclude this podcast. So you you talked about
Speaker 1: Marcus Byrne Meyer's book, Brazilian society lessons from the pandemic
Speaker 1: and you talked about the sort of ways to build
Speaker 1: societies that are resilient and socially cohesive at the same time.
Speaker 1: Um China
Speaker 1: in addition to being pushed around by the whole great
Speaker 1: for rivalry is also basically the
Speaker 1: the the, you know, the team of Asia for the
Speaker 1: next century or beyond. I mean, there it is, you
Speaker 1: loom on top of us for better for good for
Speaker 1: the rest of our lives and our Children's lives.
Speaker 1: So what is your sense of china in its sort
Speaker 1: of quest for resilience and social conditions?
Speaker 2: Yeah, we'll see. Okay. First thought on china, is that
Speaker 2: unlike all the rest of the world, it has chosen
Speaker 2: to pursue a zero covid strategy,
Speaker 2: right? It is it is intent on stepping out any
Speaker 2: sign of the of the pandemic re emerging
Speaker 2: in China is going through great pains, great cost to
Speaker 2: its economy and its people to do that.
Speaker 2: If I were to point to one thing among some
Speaker 2: others that we can talk about.
Speaker 2: It's not clear that that's going to be a resilient strategy.
Speaker 2: Living with covid is something that seems to be much
Speaker 2: more in the nature of the okay, we'll let the
Speaker 2: shock hit and we will bounce back from them. So
Speaker 2: among all the other things that china does this Covid thing,
Speaker 2: it seems to be going in a completely different direction,
Speaker 2: putting that to one side, it has internal challenges to
Speaker 2: deal with
Speaker 2: are
Speaker 2: like all the rest of the world. It needs to
Speaker 2: be mindful of its carbon footprint
Speaker 2: in terms of annual emissions. It is now the world's largest,
Speaker 2: uh, simply by sheer size, even though in total emissions,
Speaker 2: the United States is still well ahead.
Speaker 2: But internally is facing this challenge between part of the
Speaker 2: country wanting to continue development
Speaker 2: in a carbon intensive way and part of the country
Speaker 2: which is already rich seeing the benefits of blue skies,
Speaker 2: clean environment and pushing for zero carbon strategy. So China
Speaker 2: is having to deal with an internal
Speaker 2: Conflict over the, over the global climate crisis that many
Speaker 2: of us don't fully get into. Because many of us
Speaker 2: feel that, you know, a nation sets down his line
Speaker 2: in the sand. This is what it's gonna do on
Speaker 2: the 1.5°C
Speaker 2: achievement. And then it's either yes or no. But China
Speaker 2: is so large that society is having to face all
Speaker 2: these internal dissension is having to deal with corruption, something
Speaker 2: that's profoundly
Speaker 2: a fundamental to its history and the history of many
Speaker 2: of our asian uh, nations is having to deal with
Speaker 2: this in a very in a very consequential way is
Speaker 2: having to deal with uh
Speaker 2: challenges internally that it feels the rest of the world
Speaker 2: and pounces on as human rights violations.
Speaker 2: And it doesn't completely understand why at this critical time
Speaker 2: in human history,
Speaker 2: global climate crisis pandemic, uh you know, so many challenges
Speaker 2: that we're having to deal with on the environment or
Speaker 2: natural resources,
Speaker 2: while all the rest of the world in Western society
Speaker 2: is jumping on it for its human rights violation, which
Speaker 2: it says, it says come and see what's actually going
Speaker 2: on here is completely different from what you think. So.
Speaker 2: So there's a lot of uh there's a lot of
Speaker 2: texture and color in this conversation
Speaker 2: in Asia, we have a
Speaker 2: we have long held the view that
Speaker 2: for our economic progress dealing with china trading with it,
Speaker 2: hooking our wagon as it were onto the spectacular growth
Speaker 2: that the chinese economy continues to see is a good
Speaker 2: way forwards for us. In Asean alone, we've still got
Speaker 2: scores of millions of people living in extreme poverty, for
Speaker 2: whom trade is a very reliable way to be lifted
Speaker 2: out of the state of deprivation.
Speaker 2: And and in ASia and china trade needs to continue
Speaker 2: to be a large part of our
Speaker 2: of our growth story.
Speaker 2: The west has gone mad on this is concerned about
Speaker 2: all the kinds of issues.
Speaker 2: So in terms of resilience that we're going to build
Speaker 2: in Asia, the choices that we're going to have to
Speaker 2: make will come down to our own thinking about
Speaker 2: uh our economic future,
Speaker 2: our understanding, our own understanding of what our set of
Speaker 2: value systems is not subscribing to either America or the
Speaker 2: West or china's but developing our own narrative or values
Speaker 2: and then seeing a way forward that navigates between
Speaker 2: a security that the West sometimes offers. Not always
Speaker 2: economic prosperity that trade will continue to deliver. And a
Speaker 2: narrative for ourselves that says, you know, this is our
Speaker 2: set of values. This is the way that we work
Speaker 2: towards and this is not Western values. It's not values
Speaker 2: with chinese characteristic. It's our own set of values. And
Speaker 2: this is the way we're going to navigate the world. Now,
Speaker 2: If we're allowed to do that, it's not clear that
Speaker 2: we will because if the world becomes zero sum between
Speaker 2: the two great powers, there's very little room for navigation here.
Speaker 2: But if we're allowed to do that, it seems to
Speaker 2: me that that is the sensible way ahead for all
Speaker 2: the 80% of us not living in the US or China.
Speaker 2: In fact, even for the United States and China.
Speaker 2: So I hope that this would be an alignment of
Speaker 2: individual incentives and the greater good. But my worry is
Speaker 2: that the world too easily wants to build zero sum
Speaker 2: games around practically every issue it narrates
Speaker 2: so in a very tricky state of tentative contingency going ahead.
Speaker 1: I like that phrase very much protocol when I leave
Speaker 1: the U. S. Borders and cross over into Mexico. I
Speaker 1: immediately sensed a major decline in per capita income. Then
Speaker 1: once you pass Mexico and started exploring the other countries
Speaker 1: in Central Asia, you can't even believe that you're just
Speaker 1: you know, 500 miles away from the United States. So
Speaker 1: despite the incredible prosperity and gains in the U. S.
Speaker 1: Over the last
Speaker 1: 75 years or so, the positive spillover for its neighboring
Speaker 1: nations has been extremely limited. Whereas you know, you go
Speaker 1: to Vietnam today, you already see the positive spillover of
Speaker 1: being proximate to China through a mix of good governance
Speaker 1: but also taking advantage of the Chinese tailwind and and
Speaker 1: hopefully we will see more in the Asian region as
Speaker 1: opposed to the contrast that we see in Central Asia.
Speaker 2: Absolutely,
Speaker 2: absolutely.
Speaker 1: It's been fantastic having you on the podcast. Kwaje thank
Speaker 1: you so much for your insights.
Speaker 2: Thank you very much and look forward to seeing you
Speaker 2: again
Speaker 1: by all means. I would also like to thank our
Speaker 1: listeners Kobe time was produced by martin Tuckey daisy Sharma
Speaker 1: and violently provided additional assistance. It is for information only
Speaker 1: and does not represent any trade recommendations. All 66 episodes
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Speaker 1: a great Day.