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Speaker 1: Welcome to COI Time, a podcast series on markets and

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Speaker 1: economists from DBS Group Research. I'm Tu Bei, chief economist,

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Speaker 1: welcoming you to our 153rd episode. Today, we are delighted

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Speaker 1: to have back with us our old friend, Professor Danny Qua,

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Speaker 1: the Kaing Professor in Economics, and also Dean of Lee

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Speaker 1: Kuan Yew School of Public Policy here at National University

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Speaker 1: of Singapore. Uh, Prof Kwa, such a delight to have

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Speaker 1: you back.

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Speaker 2: Thank you, Tamir. It's a great pleasure to be back

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Speaker 2: with you and an honor to get to speak to

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Speaker 2: you again on COI time.

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Speaker 1: Thank you so much. Um, Prwa, there are two major

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Speaker 1: pillars of our conversation today, and both are based on

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Speaker 1: your recent writings. So I'll start with the September 2024, uh,

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Speaker 1: open letter that you had written to the next President

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Speaker 1: of the United States, and the title of the letter

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Speaker 1: was Why America Should Drop Its Obsession with Being number one.

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Speaker 1: Shall we begin by unpacking your message in that letter?

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Speaker 2: Well, uh, thank you. Thank you for the opportunity to

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Speaker 2: speak once again about that letter. Um, it was written,

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Speaker 2: as you, as you know, at a time before we

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Speaker 2: knew who the president was gonna be.

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Speaker 2: So we needed to speak to issues that would continue

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Speaker 2: to endure, not partisan Republican Democrat issues. But the point

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Speaker 2: of the letter was to ask America's leadership.

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Speaker 2: What, what its nation really wants.

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Speaker 2: And what

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Speaker 2: That, uh, that goal means for the rest of the world. So,

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Speaker 2: put another way, does America have a plan? What is

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Speaker 2: your plan, Mr. President?

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Speaker 2: How does the world prepare for the consequences of your plan?

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Speaker 2: What agency do we, the rest of the world?

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Speaker 2: Uh, have as you advance towards your goals. And I

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Speaker 2: phrase this conversation in terms of, as you say, America

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Speaker 2: is wanting to be number one.

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Speaker 2: That particular phrasing connects to popular American culture, uh, even more,

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Speaker 2: I sometimes like to think, than just America being great again.

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Speaker 2: It connects to a number of deep undercurrents in academic

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Speaker 2: and leadership thinking. At the same time it connects to

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Speaker 2: every man and every woman in American football stadiums, waving

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Speaker 2: a big finger saying we're number one.

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Speaker 2: Now, every country, of course, wants to survive.

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Speaker 2: And for the United States, perhaps part of his thinking

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Speaker 2: is that being number one will maximize its chances of survival.

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Speaker 2: But part of what I wanted to convey in my

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Speaker 2: letter was that

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Speaker 2: While that might be a fine goal, not everyone can

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Speaker 2: be number one. In fact, as a matter of logic,

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Speaker 2: everybody in the world except one won't be number one.

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Speaker 2: And lots of people and nations who aren't number one

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Speaker 2: do perfectly well.

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Speaker 2: Nations historically who have been number one, will sometimes stumble,

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Speaker 2: so they are not guaranteed to constantly thrive. Nations who

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Speaker 2: are not number one actually do more than survive. Nations

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Speaker 2: who are not number one among the world's richest countries

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Speaker 2: per capita, of course, richer even than the United States.

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Speaker 2: And many of these nations do a wonderful job, a

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Speaker 2: perfectly good job in all cases, taking care of their people,

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Speaker 2: arguably better than the United States.

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Speaker 2: So my question was, what's with this being number one thing?

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Speaker 2: What's America's plan?

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Speaker 1: Right, you also uh talked about the goals that the

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Speaker 1: US had promoted worldwide in the past, and you had

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Speaker 1: presciently anticipated that those goals are sort of becoming secondary.

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Speaker 1: So let's talk a little bit about

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Speaker 1: In our lifetime, the goals that the US has sort

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Speaker 1: of aspired for and now beginning to sort of, you know.

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Speaker 1: Not look at it in a very convincing manner.

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Speaker 2: Yeah, um, yeah, I know the, you know, the

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Speaker 2: You and I, uh, recognized the time when America had

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Speaker 2: a clear plan, and as you say, it was actually

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Speaker 2: a plan that worked for America, and it worked for

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Speaker 2: the world at the same time.

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Speaker 2: All our interests were aligned.

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Speaker 2: America spoke about.

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Speaker 2: Political convergence, the idea that all nations would become more

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Speaker 2: and more similar in some critical political features. America, you

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Speaker 2: and I are economists. Mer spoke also of economic efficiency,

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Speaker 2: that it would be a good thing not to waste resources,

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Speaker 2: but to make use of what we have. And a

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Speaker 2: third plank of America's plan is this idea about how

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Speaker 2: international trade.

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Speaker 2: It's win-win.

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Speaker 2: In technical language, it's called comparative advantage. With free exchange,

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Speaker 2: everybody wins.

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Speaker 2: The unfortunate thing is none of these three ideas political convergence,

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Speaker 2: economic efficiency, competitive advantage.

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Speaker 2: Seems to have worked out for America. And so the

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Speaker 2: vision that America has for its place in the world.

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Speaker 2: is now changing, and what is changing too, remains to

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Speaker 2: be carved out. But those three wonderful ideas, political convergence,

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Speaker 2: economic efficiency, competitive advantage drove America.

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Speaker 2: And it helped all the rest of us. It helped

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Speaker 2: us because it built a multilateral, open trading, rules-based system.

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Speaker 2: That created a level playing field that all of us

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Speaker 2: could take part in. Singapore, all the nations across Southeast Asia,

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Speaker 2: arguably China itself, we all became part of this vision

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Speaker 2: that America had of a globalized, open, multilateral, rules-based world.

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Speaker 2: And while America might feel

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Speaker 2: That that world does not work for itself.

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Speaker 2: The paradoxes, it gifted the rest of the world a

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Speaker 2: wonderful system that worked for us.

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Speaker 2: And America forgot.

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Speaker 2: That competitive advantage, win-win means that when we win,

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Speaker 2: America can also win in having access to cheaper goods

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Speaker 2: and services, and having, taking, being able to take advantage

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Speaker 2: of this wonderful variety of goods that the rest of

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Speaker 2: the world produces for America at affordable prices. America has

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Speaker 2: lost the idea of competitive advantage and replaced it.

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Speaker 2: With an idea of a zero-sum world.

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Speaker 2: Where the rest of us, if we win, somehow, somewhere,

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Speaker 2: America must have lost something.

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Speaker 2: That America is being ripped off. The paradox.

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Speaker 2: is that this is the system that America built. It

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Speaker 2: was a system that came out of academic thinking, practical

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Speaker 2: business experience. It came out of a political vision that

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Speaker 2: would help the world move to a better place.

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Speaker 2: This is America's world. America's decided it doesn't work for

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Speaker 2: America anymore.

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Speaker 2: I think that is the, the great paradox that we're

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Speaker 2: working through as America recalibrates what its journey forwards needs

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Speaker 2: to be.

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Speaker 1: A pro quo, when we say it hasn't worked out

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Speaker 1: for the US, we're talking about an economy that is

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Speaker 1: uh the richest on a per capita basis among the G7.

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Speaker 1: We're talking about a country that has led the tech

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Speaker 1: waves in every single cycle over the last half a century.

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Speaker 1: It has the deepest capital markets, the most thriving stock market.

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Speaker 1: So when we talk about it hasn't really worked out,

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Speaker 1: are we really talking about a very specific segment of

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Speaker 1: the population and it is related to income inequality? Is

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Speaker 1: that what we're talking about?

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Speaker 2: OK, the.

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Speaker 2: You're absolutely right. America is the number one country in

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Speaker 2: the world by all the measures that you have recited

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Speaker 2: and many more. America is admired by all the rest

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Speaker 2: of the world. What's the sense in which America has lost?

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Speaker 2: America used to be 25% of the global economy. It

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Speaker 2: is 25% of the global economy today.

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Speaker 2: The rise of the rest of the world has not

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Speaker 2: undermined America's position at all in these measures. But I,

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Speaker 2: you're right that I do think there are some specific dimensions.

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Speaker 2: Where America feels it has lost ground.

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Speaker 2: Some of it

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Speaker 2: Um, all of it is very real.

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Speaker 2: But it's also uh

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Speaker 2: Uh, the, the way in which these problems have been

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Speaker 2: managed have aggravated.

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Speaker 2: The situation. So, you referred to a number of things.

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Speaker 2: Let me pick up on what you say, and then

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Speaker 2: perhaps also add a little bit more inequality, which you've

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Speaker 2: mentioned very correctly.

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Speaker 2: Inequality in America has critically left behind segments of America's

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Speaker 2: own population.

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Speaker 2: Uh, it has impact social mobility, and in doing that,

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Speaker 2: it has put up frictions, so that the most capable

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Speaker 2: in America.

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Speaker 2: are tethered by birth.

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Speaker 2: And are unable to rise to take on the tasks

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Speaker 2: where they could contribute most to economic and social progress.

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Speaker 2: So there's great frustration. Not only is their well-being, uh, damaged,

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Speaker 2: America doesn't operate at full efficiency as a result of

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Speaker 2: high inequality and social immobility. This creates a domestic unease

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Speaker 2: within the nation.

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Speaker 2: But the way in which this has been aggravated is

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Speaker 2: that a lot of that domestic unease.

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Speaker 2: Has been channeled one way or another, back to the

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Speaker 2: world at large.

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Speaker 2: Remember when trade, I said trade was supposed to be win-win.

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Speaker 2: Many Americans don't see that anymore. What they see is

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Speaker 2: a flood of cheap imports from the rest of the world, China, notably,

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Speaker 2: and they see that as somehow, they see this wave

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Speaker 2: of cheap imports coming to America, making life affordable.

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Speaker 2: But also conversely, in their view,

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Speaker 2: Stealing American jobs, dismantling American industry, turning into ghost towns,

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Speaker 2: what were once thriving middle class American communities.

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Speaker 2: This, these challenges have been aggravated by a political leadership

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Speaker 2: that has not been able to communicate to the people.

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Speaker 2: The good things that have emerged from these developments, but

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Speaker 2: also notably,

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Speaker 2: have not been able to build social structures that help

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Speaker 2: reduce the pain and smooth the transition for its population.

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Speaker 2: This is a case of where.

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Speaker 2: You have different segments of the population, some benefiting, others not.

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Speaker 2: And it's the squeaky wheel that gets the grease. Those

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Speaker 2: who have not benefited from the system, but feel they've

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Speaker 2: been disadvantaged.

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Speaker 2: are the ones that have made themselves politically pivotal.

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Speaker 2: And so they are moving an entire nation.

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Speaker 2: And that movement of the entire nation is one that

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Speaker 2: unrolls back so much of the progress that that nation

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Speaker 2: has made in its gifts to the rest of the world.

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Speaker 2: The political leadership, um, for whatever reason, have not been

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Speaker 2: able to communicate what's going on in this, and have

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Speaker 2: not built structures that help reduce.

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Speaker 2: The pain of chunks of the American population. And it

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Speaker 2: might be that because they see a different reality as well.

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Speaker 2: They see at a geopolitical level,

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Speaker 2: An America that once dominated the world in dimensions beyond

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Speaker 2: what you just said, economically, militarily, technologically.

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Speaker 2: But it is in America that discovered that when it

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Speaker 2: builds a system that's a level playing field.

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Speaker 2: That allows others through creativity and hard work, to also succeed,

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Speaker 2: so that everyone has a fair shot.

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Speaker 2: This America discovered that with that fair shot, others actually

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Speaker 2: did very well indeed on that level playing field.

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Speaker 2: The world that America dominated, we think of as being

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Speaker 2: a unipolar world, and that will receded from unipolarity to

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Speaker 2: now instead, a version of multipolarity, where there are pockets

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Speaker 2: and circles of excellence everywhere across the world, even outside

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Speaker 2: the United States. Now, one would think this is a

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Speaker 2: good thing.

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Speaker 2: That there's technological excellence in China, in Germany.

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Speaker 2: In um the Netherlands, in Japan, in Southeast Asia, and Singapore,

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Speaker 2: all of this increases.

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Speaker 2: And egalitarianism in the world. It makes everybody truly part

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Speaker 2: of the world.

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Speaker 2: But America's perception of this is filtered through this idea

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Speaker 2: that the world is a zero-sum world.

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Speaker 2: And then when others win, that means I lose. And

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Speaker 2: you see this over and over in President Trump's narratives

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Speaker 2: on how the rest of the world has ripped off

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Speaker 2: the United States.

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Speaker 2: There's a, a, a huge gap in communications and understanding,

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Speaker 2: and it is not one that is inherently self-correcting. So

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Speaker 2: it's a very unfortunate world that we find ourselves in.

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Speaker 2: Even though it began with the best of intentions for everyone,

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Speaker 2: so much of the world has benefited from the good

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Speaker 2: things in those intentions.

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Speaker 2: But America is perhaps singularly upset with the way this world.

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Speaker 2: In carrying out what it wished.

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Speaker 2: Ended up being a world that it was no longer

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Speaker 2: unipolar single hegemon on.

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Speaker 2: So that it seems to me is a is a

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Speaker 2: collection of disparate views, different, but all working in the

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Speaker 2: same direction, to make America feel greatly ill at ease

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Speaker 2: with the world.

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Speaker 2: Peculiarly, a world that America itself built.

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Speaker 1: Peculiar indeed, uh, in terms of that feeling ill at ease, uh,

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Speaker 1: the temptation for politicians, it seems to me has been

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Speaker 1: to attribute this outcome which is, you know, not considered

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Speaker 1: acceptable to external policies, so the defense policy and trade

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Speaker 1: policy and immigration policy.

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Speaker 1: It seems to me that the real dislocation in the

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Speaker 1: United States over the last half a century has been

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Speaker 1: related to domestic policy, it's tax policy and social security

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Speaker 1: policy and health policy and education policy. I was recently

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Speaker 1: looking at WHO's health adjusted life expectancy metric. US ranks

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Speaker 1: number 74 in the world because of wide incidences of

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Speaker 1: morbidity and disabilities. So even people if they live up

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Speaker 1: to 65, 75, they're not living well.

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Speaker 1: I don't think it's possible to really point finger to

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Speaker 1: an outside actor for that outcome. It's largely in my view,

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Speaker 1: at least related to domestic policy, so to get your

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Speaker 1: sense of where you stand on this.

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Speaker 2: Yeah, the, you know, the, what, what you have recited

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Speaker 2: earlier and what we are now coming to, uh, is

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Speaker 2: a collection, we began with a collection of ways in

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Speaker 2: which America was clearly the most successful nation. And now,

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Speaker 2: very appropriately, you're pointing to indicators that suggest, what parts

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Speaker 2: of it are not really as successful. What is this domestic, uh,

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Speaker 2: what are the domestic challenges that America faces?

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Speaker 2: Um, that, no, we referred to earlier, very quickly in

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Speaker 2: terms of inequality.

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Speaker 2: But, you know, it's, it's much more than just inequality. America,

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Speaker 2: even if it is the number one country in the

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Speaker 2: world by all the earlier measures we said, it is

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Speaker 2: no top performer in infant mortality, in education, which you

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Speaker 2: referred to, in health, in life expectancy, in racial harmony,

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Speaker 2: in public safety, or none of these indicators, is America

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Speaker 2: a top performer. Now,

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Speaker 2: Is this the fault of leadership? Is this the fault

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Speaker 2: of governance? It is too painful for any leadership to say,

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Speaker 2: this is a problem we created.

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Speaker 2: It is very natural for nations at that point to

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Speaker 2: say that the outside world must have had something to

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Speaker 2: do with this, through unfair competition, through ways in which

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Speaker 2: they manipulate the system, through how we've been ripped off,

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Speaker 2: and that's why we're suffering the way we are. And

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Speaker 2: Uh, the, the world in its, uh, global conversation has

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Speaker 2: come to an understanding of how there is this quite

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Speaker 2: varied landscape. Uh, a very, a very careful forensic unpacking

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Speaker 2: of how this has happened, I think at an overarching

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Speaker 2: level has not been done. We have good understanding, I think,

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Speaker 2: of the degree of drug addiction.

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Speaker 2: In the United States, how fentanyl is among the, you know, the,

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Speaker 2: the top killers of US, uh, of the US population,

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Speaker 2: ages 35 to 49, but we don't have a clear

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Speaker 2: overall accounting of how this measures with

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Speaker 2: The multilateral system that America built, competition with China, competition

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Speaker 2: with all the rest of the world, but even without

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Speaker 2: that accounting, a lot of the political narrative and a

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Speaker 2: lot of the political understanding within the United States has

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Speaker 2: led to a serious dangerous geopolitical rivalry. And it's a

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Speaker 2: geopolitical rivalry that

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Speaker 2: You know, touches, makes contact with other trends, other ways

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Speaker 2: of thinking. Let me, if I may, uh, mention just one.

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Speaker 2: And this is an idea that uh international relations scholars

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Speaker 2: write about.

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Speaker 2: It's called the tragedy.

301
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Speaker 2: of great power competition.

302
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Speaker 2: It's a tragedy of any international system with great powers

303
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Speaker 2: in it.

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Speaker 2: And the idea here, putting aside all the domestic concerns

305
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Speaker 2: you and I have gone over. Putting aside the challenges

306
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Speaker 2: with trade, putting aside the challenges with income inequality, it's

307
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Speaker 2: a very single issue focused narrative, and that is, the

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Speaker 2: United States being the number one great power, needs to

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Speaker 2: prevent any other hostile hegemonic power from gaining ascendancy.

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Speaker 2: That rival today is revealed to be China.

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Speaker 2: But in previous eras, when America had had uh implicit

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Speaker 2: or explicitly adopted this thinking,

313
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Speaker 2: The identity of this alternative hegemonic power has varied.

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Speaker 2: That China is uh governed by the Chinese Communist Party

315
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Speaker 2: is only secondary to the idea that it is now

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Speaker 2: a rising hostile hegemonic power and its continued ascendance.

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Speaker 2: Would severely constrain America's freedom of actions and future prospects.

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Speaker 2: This is a narrative, a realist narrative that um

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Speaker 2: is embedded in in the thinking of some of America's

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Speaker 2: strategic leaders, and it measures so well with the economic

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Speaker 2: challenges that we're seeing, the domestic problems that we have,

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Speaker 2: you and I have described. All ideas are aligned on

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Speaker 2: this notion that America will once again

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Speaker 2: The the green, pleasant, lively, great nation that it wants

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Speaker 2: to be, if only it eliminates the possibility of alternative

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Speaker 2: clusters of power. This is a very dangerous way of thinking,

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Speaker 2: but it's aligned now with so much of the mood

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Speaker 2: that emerges from all the other dimensions that you and

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Speaker 2: I have described.

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Speaker 2: America, it's, I, I feel that the world is in

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Speaker 2: a very dangerous place at this stage, because there's so

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Speaker 2: much alignment on so many different fronts on the idea

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Speaker 2: that geostrategic rivalry, geopolitical rivalry is the critical issue of

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Speaker 2: the day, and that fixing it will fix all of

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Speaker 2: America's problems.

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Speaker 1: Of course, both you and I have studied in US

337
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Speaker 1: education institutions. Both you and I have worked in the US.

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Speaker 1: It feels like a very distant world, uh, now than

339
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Speaker 1: it was then. Um, in your letter, you had a

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Speaker 1: few suggestions for the incoming US president. What were they

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Speaker 1: and are they being heeded to?

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Speaker 2: OK. Um, so, so I should be clear, I did

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Speaker 2: not ever expect that America would heed any of these suggestions.

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Speaker 2: I thought that there were suggestions that for me, uh,

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Speaker 2: were ways to try and see how to align what

346
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Speaker 2: America wants.

347
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Speaker 2: With what the world needs.

348
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Speaker 2: And if America continues on this zero-sum realist strategic rivalry,

349
00:22:44,609 --> 00:22:47,679
Speaker 2: China shock narrative, we will never get there.

350
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Speaker 2: So I wanted to see if there was any way

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Speaker 2: in which we could nudge that thinking towards something that

352
00:22:54,209 --> 00:22:58,129
Speaker 2: allowed the rest of us in the world space to

353
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Speaker 2: exercise agency, to move.

354
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Speaker 2: The world into a better place. So, let's, let's uh

355
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Speaker 2: see what those three suggestions were. First thing I said

356
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Speaker 2: is that

357
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Speaker 2: Um,

358
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Speaker 2: Ask yourself, America, what is it that really matters to you?

359
00:23:16,380 --> 00:23:18,180
Speaker 2: What's your plan, right?

360
00:23:18,989 --> 00:23:24,629
Speaker 2: And consider the unthinkable. If you are not number one.

361
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Speaker 2: What would happen?

362
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Speaker 2: So I phrased it as saying, if you're not number one,

363
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Speaker 2: what changes?

364
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Speaker 2: Absolutely nothing.

365
00:23:34,770 --> 00:23:37,728
Speaker 2: You will not lose the respect of any of the

366
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Speaker 2: rest of us. You will continue to be the great economy,

367
00:23:41,930 --> 00:23:45,319
Speaker 2: and you can be the great society that you already are.

368
00:23:45,689 --> 00:23:50,199
Speaker 2: Everything about you remains completely unchanged. Does that label of

369
00:23:50,199 --> 00:23:52,530
Speaker 2: being number one really matter to you?

370
00:23:53,479 --> 00:23:56,839
Speaker 2: Uh, rather than perhaps saying, you know, whether America would

371
00:23:56,839 --> 00:23:59,439
Speaker 2: heed this or not, I might describe to you what

372
00:23:59,439 --> 00:24:03,680
Speaker 2: some of the pushback against that idea is, because it's

373
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Speaker 2: not just Americans. For many of the rest of us,

374
00:24:06,660 --> 00:24:09,589
Speaker 2: we think being number one is really significant. That's why,

375
00:24:10,000 --> 00:24:13,639
Speaker 2: my goodness, we have university rankings. In your business, you

376
00:24:13,640 --> 00:24:17,239
Speaker 2: have rankings of financial institutions. Does being number one really matter?

377
00:24:17,910 --> 00:24:21,599
Speaker 2: You know, for the great powers in the world, I

378
00:24:21,599 --> 00:24:25,869
Speaker 2: want to, um, so, bring out the idea that today,

379
00:24:26,680 --> 00:24:29,199
Speaker 2: We're no longer the Cold War.

380
00:24:30,310 --> 00:24:33,349
Speaker 2: Now, in during the Cold War between America and the Soviets,

381
00:24:33,510 --> 00:24:37,709
Speaker 2: there was a worldwide contention of political systems.

382
00:24:38,400 --> 00:24:40,729
Speaker 2: And these political systems had deep

383
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Speaker 2: Irreconcilable ideological conflicts.

384
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Speaker 2: Only one.

385
00:24:48,329 --> 00:24:50,040
Speaker 2: could stand.

386
00:24:50,800 --> 00:24:53,520
Speaker 2: Because they were inconsistent with each other.

387
00:24:54,319 --> 00:24:55,649
Speaker 2: If America lost.

388
00:24:56,790 --> 00:25:01,469
Speaker 2: was displaced, then it's people's way of life and its

389
00:25:01,469 --> 00:25:04,750
Speaker 2: entire system of government would be at risk. There's no

390
00:25:04,750 --> 00:25:08,579
Speaker 2: way to hide that. Then it really did matter to America.

391
00:25:09,189 --> 00:25:12,849
Speaker 2: But today, America has made China out to be its

392
00:25:12,849 --> 00:25:14,030
Speaker 2: geopolitical rival.

393
00:25:14,689 --> 00:25:15,688
Speaker 2: And it's true

394
00:25:16,869 --> 00:25:19,989
Speaker 2: Some of the things that China does are very awkward

395
00:25:19,989 --> 00:25:21,300
Speaker 2: for the United States.

396
00:25:22,469 --> 00:25:30,579
Speaker 2: China's manufacturing prowess have indeed undermined America's employment potential.

397
00:25:31,880 --> 00:25:39,020
Speaker 2: But Beijing has absolutely no designs on revising American's society

398
00:25:39,020 --> 00:25:42,939
Speaker 2: or government. Quite the opposite. The Chinese people want to

399
00:25:42,939 --> 00:25:46,819
Speaker 2: have American people's way of life. I mean, they might

400
00:25:46,819 --> 00:25:49,410
Speaker 2: not want to get into all the different things that

401
00:25:49,410 --> 00:25:53,688
Speaker 2: Americans do with freedom of speech, certain practice of democracy,

402
00:25:53,900 --> 00:25:56,260
Speaker 2: but in the main, the Chinese people want.

403
00:25:57,500 --> 00:26:02,859
Speaker 2: The grassy backyard, the picket fence, the white SUV, they

404
00:26:02,859 --> 00:26:05,300
Speaker 2: want all these things that Americans have. The Chinese people

405
00:26:05,300 --> 00:26:10,199
Speaker 2: do not want to replace American people's way of life

406
00:26:10,199 --> 00:26:11,609
Speaker 2: with anything else.

407
00:26:12,469 --> 00:26:15,130
Speaker 2: So, we're in quite a different situation.

408
00:26:16,010 --> 00:26:17,709
Speaker 2: I guess a second thought is.

409
00:26:18,599 --> 00:26:20,810
Speaker 2: For the rest of us in the world, we realized

410
00:26:20,810 --> 00:26:25,938
Speaker 2: that being number one means that it, it could mean

411
00:26:26,329 --> 00:26:31,469
Speaker 2: America has pushed itself to ever higher performance. It saw

412
00:26:31,469 --> 00:26:33,640
Speaker 2: the challenge from Sputnik.

413
00:26:34,449 --> 00:26:38,420
Speaker 2: It created the Apollo space program, it landed people on

414
00:26:38,420 --> 00:26:42,639
Speaker 2: the moon. It pushed itself to ever higher performance.

415
00:26:43,920 --> 00:26:45,229
Speaker 2: Alternatively,

416
00:26:46,439 --> 00:26:50,800
Speaker 2: A nation can also be number one by simply keeping

417
00:26:50,800 --> 00:26:51,909
Speaker 2: others down.

418
00:26:52,819 --> 00:26:57,920
Speaker 2: Instead of improving yourself and lifting performance, you spend all

419
00:26:57,920 --> 00:27:01,959
Speaker 2: your energy keeping others down. So, you know what, America,

420
00:27:02,000 --> 00:27:04,359
Speaker 2: for the rest of us in the world, being number

421
00:27:04,359 --> 00:27:08,469
Speaker 2: one is not as meaningful as it used to be now,

422
00:27:09,040 --> 00:27:12,839
Speaker 2: because we see the games that America is playing, and

423
00:27:12,839 --> 00:27:15,239
Speaker 2: we don't think this is a good way to be

424
00:27:15,239 --> 00:27:15,879
Speaker 2: number one.

425
00:27:17,770 --> 00:27:21,540
Speaker 2: And being number one, has the very unfortunate.

426
00:27:22,420 --> 00:27:29,579
Speaker 2: Uh, unintended consequence of making the world automatically.

427
00:27:30,560 --> 00:27:31,239
Speaker 2: Zero sum.

428
00:27:32,680 --> 00:27:35,448
Speaker 2: If you're number one, and someone else wants to be

429
00:27:35,449 --> 00:27:37,889
Speaker 2: number one, they can only ever be number one.

430
00:27:39,310 --> 00:27:44,099
Speaker 2: By displacing you. So they win only if you lose.

431
00:27:44,469 --> 00:27:48,790
Speaker 2: This makes for a 01 b binary view of the world.

432
00:27:49,689 --> 00:27:54,889
Speaker 2: And it's not helpful in a world that desperately needs

433
00:27:54,890 --> 00:28:00,989
Speaker 2: global cooperation on climate change, on energy transition, on battling

434
00:28:00,989 --> 00:28:02,270
Speaker 2: the world's pandemics.

435
00:28:03,109 --> 00:28:08,310
Speaker 2: On, uh, the on regulating artificial intelligence and making sense

436
00:28:08,310 --> 00:28:13,339
Speaker 2: of modern technology. In a world that needs cooperation, having

437
00:28:13,339 --> 00:28:16,379
Speaker 2: a 01 binary view of the world.

438
00:28:17,459 --> 00:28:21,060
Speaker 2: Having a view of the world that says that someone

439
00:28:21,060 --> 00:28:25,250
Speaker 2: else wins only if you lose, does not make for

440
00:28:25,250 --> 00:28:26,619
Speaker 2: any cooperation.

441
00:28:27,329 --> 00:28:30,939
Speaker 2: And so this is a particularly bad time to be

442
00:28:30,939 --> 00:28:33,819
Speaker 2: trying to be, to to be working so hard at

443
00:28:33,819 --> 00:28:34,989
Speaker 2: keeping to number one.

444
00:28:36,280 --> 00:28:39,079
Speaker 2: So, I said that it was uh

445
00:28:39,949 --> 00:28:44,310
Speaker 2: Not helpful to be so obsessed with number one. Moving

446
00:28:44,310 --> 00:28:46,390
Speaker 2: away from this obsession with number one.

447
00:28:47,609 --> 00:28:49,160
Speaker 2: Here's a win-win idea.

448
00:28:50,089 --> 00:28:53,089
Speaker 2: China can be economically successful.

449
00:28:54,390 --> 00:28:57,469
Speaker 2: America can be economically secure.

450
00:28:58,390 --> 00:29:01,910
Speaker 2: There's no contradiction between those two, but we have to

451
00:29:01,910 --> 00:29:05,869
Speaker 2: work to get there. Focusing on being #1 does not

452
00:29:05,869 --> 00:29:08,829
Speaker 2: help that kind of a collaboration.

453
00:29:10,060 --> 00:29:12,239
Speaker 2: I said, I went over ground that, you know, tell me,

454
00:29:12,540 --> 00:29:15,300
Speaker 2: you and I have gone over, which is that beyond

455
00:29:15,300 --> 00:29:17,579
Speaker 2: being number one, America needs to take care of its

456
00:29:17,579 --> 00:29:20,739
Speaker 2: own people. And the way it's performed in many of

457
00:29:20,739 --> 00:29:23,780
Speaker 2: these social indicators that you and I have described, inequality,

458
00:29:23,939 --> 00:29:35,089
Speaker 2: social immobility, health, racial harmony, uh, literacy, life expectancy, infant mortality, drugs, addiction,

459
00:29:35,300 --> 00:29:37,540
Speaker 2: it's not number one in any of these.

460
00:29:37,849 --> 00:29:43,829
Speaker 2: And it's neglecting the well-being of its people by chasing obsessively,

461
00:29:44,300 --> 00:29:47,890
Speaker 2: being #1 in the world. It's leaving out the unfortunate,

462
00:29:48,140 --> 00:29:52,500
Speaker 2: the weak and the vulnerable. And by constantly focusing, finally,

463
00:29:52,609 --> 00:29:55,319
Speaker 2: the third thing I said to them was that by

464
00:29:55,319 --> 00:29:57,260
Speaker 2: constantly trying to be number one.

465
00:29:58,359 --> 00:30:00,670
Speaker 2: You are ill at ease in the world.

466
00:30:01,739 --> 00:30:06,540
Speaker 2: You cannot feel comfortable in a world that seeks to

467
00:30:06,540 --> 00:30:10,819
Speaker 2: compete with you along lines and rules that you have

468
00:30:10,819 --> 00:30:12,589
Speaker 2: told the rest of us to do.

469
00:30:13,609 --> 00:30:18,689
Speaker 2: Competition, market-based competition is how we all improve. You told

470
00:30:18,689 --> 00:30:21,449
Speaker 2: us to do that, but if you are constantly obsessing

471
00:30:21,449 --> 00:30:25,079
Speaker 2: about being number one, never allowing others to get ahead,

472
00:30:25,290 --> 00:30:29,189
Speaker 2: having a zero-sum view of the world, you are undermining

473
00:30:29,449 --> 00:30:32,319
Speaker 2: the best thing you have actually gifted to the world,

474
00:30:32,810 --> 00:30:36,449
Speaker 2: and you are reducing the well-being, you're harming, damaging the

475
00:30:36,449 --> 00:30:38,979
Speaker 2: well-being of the world. So, I, I said those three

476
00:30:38,979 --> 00:30:42,599
Speaker 2: things to them, and, you know, I think you and I.

477
00:30:44,300 --> 00:30:48,859
Speaker 2: Being sensible people, we would say, oh, those are things

478
00:30:48,859 --> 00:30:53,449
Speaker 2: that I can imagine any successful country would want to do,

479
00:30:53,660 --> 00:30:57,489
Speaker 2: not least a country that's already shown the world how

480
00:30:57,859 --> 00:30:59,140
Speaker 2: by emulating it.

481
00:31:00,170 --> 00:31:03,880
Speaker 2: By being attracted to it, by wanting, by admiring it,

482
00:31:03,969 --> 00:31:07,119
Speaker 2: and wanting to be like it, you can be successful.

483
00:31:08,060 --> 00:31:10,699
Speaker 2: But in this obsession to be number one in creating

484
00:31:10,699 --> 00:31:15,619
Speaker 2: a zero-sum narrative on the world, America has undermined its

485
00:31:15,619 --> 00:31:20,459
Speaker 2: own strongest advantage. This is what I said, I don't

486
00:31:20,459 --> 00:31:21,329
Speaker 2: expect anyone.

487
00:31:22,270 --> 00:31:25,030
Speaker 2: To listen to me in this kind, in in that

488
00:31:25,030 --> 00:31:27,750
Speaker 2: kind of an exchange, but I think it seems to

489
00:31:27,750 --> 00:31:30,060
Speaker 2: me to be a narrative that makes sense.

490
00:31:31,530 --> 00:31:32,160
Speaker 1: Of course, in

491
00:31:32,160 --> 00:31:32,729
Speaker 1: the

492
00:31:33,680 --> 00:31:38,400
Speaker 1: core of those observations, I think there are some testable predictions.

493
00:31:38,800 --> 00:31:40,760
Speaker 1: One is that, you know, if you do have a

494
00:31:40,760 --> 00:31:43,760
Speaker 1: very insecure superpower, you will see a lot of policy

495
00:31:43,760 --> 00:31:46,550
Speaker 1: volatility because it will decide to do one thing today

496
00:31:46,550 --> 00:31:48,199
Speaker 1: and change its minds tomorrow, and I think that's what

497
00:31:48,199 --> 00:31:51,239
Speaker 1: we're seeing playing out in the last 3.5 months since

498
00:31:51,239 --> 00:31:54,119
Speaker 1: Donald Trump came back to office. I was in Washington

499
00:31:54,119 --> 00:31:57,959
Speaker 1: DC a few weeks ago and I noticed that this

500
00:31:57,959 --> 00:32:01,199
Speaker 1: is the, you know, Christmas time basically in perpetuity for

501
00:32:01,199 --> 00:32:02,589
Speaker 1: the lobbyists of America.

502
00:32:02,890 --> 00:32:06,400
Speaker 1: You have the pharma lobby constantly lobbying for tariff on

503
00:32:06,400 --> 00:32:08,079
Speaker 1: pharma to be taken down or at least put on

504
00:32:08,079 --> 00:32:11,079
Speaker 1: a temporary hiatus. You have the same kind of lobbying

505
00:32:11,079 --> 00:32:13,680
Speaker 1: going for the electronic sector and the steel sector is

506
00:32:13,680 --> 00:32:17,189
Speaker 1: lobbying for even higher protection and higher tariff. So everybody

507
00:32:17,189 --> 00:32:20,880
Speaker 1: is out for themselves. This clear rules of games that

508
00:32:20,880 --> 00:32:24,160
Speaker 1: were in place of doing business are being replaced with

509
00:32:24,160 --> 00:32:28,439
Speaker 1: complexity and uncertainty and all sorts of rent seeking because

510
00:32:28,439 --> 00:32:30,479
Speaker 1: one basically looks at the administration as one.

511
00:32:31,050 --> 00:32:33,880
Speaker 1: We have to engage on a bilateral basis, which bilateral,

512
00:32:34,609 --> 00:32:38,400
Speaker 1: by which I mean sectoral or company by company, and,

513
00:32:38,449 --> 00:32:42,189
Speaker 1: and that just creates a lot more uh distortion. Um,

514
00:32:42,329 --> 00:32:46,369
Speaker 1: so what's your sense? I mean, we've had quite 100

515
00:32:46,369 --> 00:32:50,199
Speaker 1: days of trial and, and so your, your observations.

516
00:32:50,650 --> 00:32:53,729
Speaker 2: It has been quite a ride. Uh, you're right that

517
00:32:53,729 --> 00:32:57,810
Speaker 2: we should be experimenting to figure out the best way

518
00:32:57,810 --> 00:32:59,890
Speaker 2: to do things. Um.

519
00:33:01,930 --> 00:33:04,930
Speaker 2: You know, a great economist, Robert Lucas, once said that,

520
00:33:05,050 --> 00:33:09,390
Speaker 2: you know, large scale social experiments, uh, of the hyperinflation and, and,

521
00:33:09,449 --> 00:33:12,489
Speaker 2: and similar, and I suspect he would think of what

522
00:33:12,489 --> 00:33:14,290
Speaker 2: we're going through now is one of those large scale

523
00:33:14,290 --> 00:33:15,209
Speaker 2: social experiments.

524
00:33:16,329 --> 00:33:21,069
Speaker 2: are best viewed from a distance. We want other people,

525
00:33:21,280 --> 00:33:24,680
Speaker 2: if they're gonna experiment on this, other people should leave

526
00:33:24,680 --> 00:33:27,380
Speaker 2: us out of it, tell us when you've got an answer,

527
00:33:27,520 --> 00:33:30,599
Speaker 2: good answer, because as we're going through this process, a

528
00:33:30,599 --> 00:33:32,839
Speaker 2: lot of harm is being done. There's gonna be a

529
00:33:32,839 --> 00:33:36,040
Speaker 2: lot of scarring, uh, businesses are gonna go under.

530
00:33:36,619 --> 00:33:39,579
Speaker 2: Ordinary people are going to suffer terribly. The jobs will

531
00:33:39,579 --> 00:33:43,060
Speaker 2: be lost, and, you know, as Trump said, well, you know,

532
00:33:43,180 --> 00:33:48,290
Speaker 2: we've gone from a world where he promised immediately after

533
00:33:48,290 --> 00:33:50,859
Speaker 2: the election, America would have the strongest economy in the

534
00:33:50,859 --> 00:33:54,260
Speaker 2: world to one where now Americans might have to make

535
00:33:54,260 --> 00:33:59,150
Speaker 2: do with only 2 dolls rather than 30 at Christmas. I,

536
00:33:59,459 --> 00:34:01,939
Speaker 2: that's a kind of experimentation that, um,

537
00:34:02,469 --> 00:34:06,180
Speaker 2: It's not, it does not seem to be clear that

538
00:34:06,180 --> 00:34:07,900
Speaker 2: it is directed.

539
00:34:08,840 --> 00:34:10,020
Speaker 2: And advancing

540
00:34:10,919 --> 00:34:14,759
Speaker 2: There is, you know, you said correctly that, uh, as economists,

541
00:34:14,840 --> 00:34:17,239
Speaker 2: we want to be, we want to be open to

542
00:34:17,239 --> 00:34:21,739
Speaker 2: the idea that the experiments to move us to better policies. Uh,

543
00:34:21,760 --> 00:34:26,000
Speaker 2: that's absolutely right. But we also don't want to read

544
00:34:26,560 --> 00:34:32,029
Speaker 2: into sheer randomness, the idea that there's a cunning plan.

545
00:34:33,350 --> 00:34:36,589
Speaker 2: There's an observational equivalence for a large part of this,

546
00:34:36,909 --> 00:34:40,388
Speaker 2: and we need to wait a bit before we, we

547
00:34:40,389 --> 00:34:43,350
Speaker 2: attribute to it that uh that there are good things

548
00:34:43,350 --> 00:34:45,830
Speaker 2: that are going to emerge from this. It's not clear

549
00:34:45,830 --> 00:34:48,030
Speaker 2: to me that there will be a lot of institutions

550
00:34:48,030 --> 00:34:50,489
Speaker 2: are being destroyed, a lot of uh

551
00:34:51,649 --> 00:34:55,330
Speaker 2: Rules and conventions that are actually, that all of us

552
00:34:55,330 --> 00:34:58,889
Speaker 2: can can uh agree are good ones are being torn apart.

553
00:34:59,560 --> 00:35:01,429
Speaker 2: And it's not clear to me that we're gonna settle

554
00:35:01,429 --> 00:35:05,989
Speaker 2: at a new, new normal, that will actually be good again.

555
00:35:07,120 --> 00:35:10,080
Speaker 2: Well, we'll have to see, and the world right now

556
00:35:10,080 --> 00:35:16,000
Speaker 2: is going through a very fragile state. Uh, America's economic progress,

557
00:35:16,080 --> 00:35:20,610
Speaker 2: I think, is, is critical for how economic well-being in

558
00:35:20,610 --> 00:35:24,229
Speaker 2: the rest of the world will evolve. It was critical for,

559
00:35:24,350 --> 00:35:28,029
Speaker 2: for how China will continue its journey of growth and development,

560
00:35:28,560 --> 00:35:32,590
Speaker 2: but America also stands on the brink of a sharp downturn,

561
00:35:32,870 --> 00:35:35,709
Speaker 2: and there are many indicators that are suggesting that. So,

562
00:35:36,429 --> 00:35:40,030
Speaker 2: I would say, uh, yes, some of these things we

563
00:35:40,030 --> 00:35:42,550
Speaker 2: might call experiments, but it's not clear to me that

564
00:35:42,550 --> 00:35:45,070
Speaker 2: there's a plan about how where these experiments are going

565
00:35:45,070 --> 00:35:45,790
Speaker 2: to get us to.

566
00:35:46,520 --> 00:35:49,509
Speaker 1: Oh, indeed, uh, pro, before we start this recording, you

567
00:35:49,510 --> 00:35:52,908
Speaker 1: and I were talking about um the influence of US

568
00:35:52,909 --> 00:35:56,989
Speaker 1: policy that if nations that are, you know, more comfortable

569
00:35:56,989 --> 00:36:00,500
Speaker 1: with the transactional zero-sum nature of doing business, they actually

570
00:36:00,500 --> 00:36:03,530
Speaker 1: find resonance with Trump's words, um, you know, you can

571
00:36:03,530 --> 00:36:05,870
Speaker 1: think of certain countries that are, you know, non-democracy.

572
00:36:05,989 --> 00:36:08,889
Speaker 1: is commodity dependent could very well fall in the camp.

573
00:36:09,020 --> 00:36:11,060
Speaker 1: So I want you to sort of share with us

574
00:36:11,060 --> 00:36:14,659
Speaker 1: your thoughts on the impact of US policy shift. I've

575
00:36:14,659 --> 00:36:18,179
Speaker 1: seen politically, for example, Canada and Australia's election results show

576
00:36:18,179 --> 00:36:20,939
Speaker 1: that Trump is actually doing the left of center parties

577
00:36:20,939 --> 00:36:23,870
Speaker 1: a favor because the country sort of coalescing against sort

578
00:36:23,870 --> 00:36:25,339
Speaker 1: of non-Trumpian views.

579
00:36:25,590 --> 00:36:28,250
Speaker 1: Um, but when we talk about the Middle East, for example,

580
00:36:28,459 --> 00:36:31,860
Speaker 1: there seems to be resonance with Trump's policies. So globally,

581
00:36:32,659 --> 00:36:35,540
Speaker 1: this big shift out of the US, would it take

582
00:36:35,540 --> 00:36:38,218
Speaker 1: us down a path where we start moving to the

583
00:36:38,219 --> 00:36:40,860
Speaker 1: US camp or is Trump actually doing a huge favor

584
00:36:40,860 --> 00:36:44,419
Speaker 1: to the cause of globalization by moving away but letting

585
00:36:44,419 --> 00:36:46,379
Speaker 1: the rest of the world see the wisdom of it?

586
00:36:47,669 --> 00:36:52,110
Speaker 2: OK, so, OK, so really interesting points that you've raised here.

587
00:36:52,320 --> 00:36:55,279
Speaker 2: One is I, I don't want to uh give this

588
00:36:55,280 --> 00:36:58,089
Speaker 2: the suggestion that um

589
00:36:59,399 --> 00:37:04,389
Speaker 2: That, you know, that, that, that the president, by being, uh,

590
00:37:04,399 --> 00:37:07,320
Speaker 2: by acting the way he has, has brought all the

591
00:37:07,320 --> 00:37:10,399
Speaker 2: rest of us together, and that we see a, a,

592
00:37:10,479 --> 00:37:13,189
Speaker 2: a way ahead. I mean, that's a little bit like saying,

593
00:37:13,439 --> 00:37:15,199
Speaker 2: you know, I'm, I'm hitting my head with a 2

594
00:37:15,199 --> 00:37:18,360
Speaker 2: by 4, but it's a good thing because look how

595
00:37:18,360 --> 00:37:21,120
Speaker 2: well I feel when I stopped doing that. And we

596
00:37:21,120 --> 00:37:24,189
Speaker 2: can't say blame, when we can't give Trump.

597
00:37:24,550 --> 00:37:26,800
Speaker 2: Uh, the credit for that, that we've you know, sort

598
00:37:26,800 --> 00:37:29,070
Speaker 2: of come to a better place as a result of

599
00:37:29,070 --> 00:37:31,959
Speaker 2: his sort of messing us around, if that is indeed

600
00:37:31,959 --> 00:37:37,709
Speaker 2: what's happening. The, there's an optimistic side in my reading

601
00:37:37,709 --> 00:37:40,919
Speaker 2: of what you say. And, and that is that um

602
00:37:43,129 --> 00:37:48,129
Speaker 2: America might be disrupting the international system hugely.

603
00:37:49,560 --> 00:37:52,509
Speaker 2: But what it's not trying to do.

604
00:37:53,540 --> 00:37:56,080
Speaker 2: is to replace that international system.

605
00:37:57,409 --> 00:38:00,629
Speaker 2: It is not happy with the international system, but it does,

606
00:38:00,669 --> 00:38:04,949
Speaker 2: it's not come to us with a plug-in replacement for

607
00:38:04,949 --> 00:38:08,709
Speaker 2: that system. It's not got those, the, the, the new

608
00:38:08,709 --> 00:38:13,468
Speaker 2: version of political convergence, economic efficiency, and comparative advantage that

609
00:38:13,469 --> 00:38:18,030
Speaker 2: here instead is what it's doing. America seeks to change

610
00:38:18,030 --> 00:38:20,169
Speaker 2: its trade relations with the world.

611
00:38:21,310 --> 00:38:25,649
Speaker 2: But it doesn't seek to change the world's trade relations.

612
00:38:26,840 --> 00:38:29,770
Speaker 2: It is not seeking to replace the system, and if

613
00:38:29,770 --> 00:38:33,570
Speaker 2: that is indeed what's happening, then there is space for

614
00:38:33,570 --> 00:38:37,489
Speaker 2: the rest of us to build our own system. And

615
00:38:37,489 --> 00:38:40,489
Speaker 2: let me, let me say why there's some evidence for

616
00:38:40,489 --> 00:38:43,489
Speaker 2: thinking that this is not just wishful thinking.

617
00:38:44,540 --> 00:38:45,739
Speaker 2: Cast our minds back.

618
00:38:46,560 --> 00:38:48,330
Speaker 2: To when there was a TPP.

619
00:38:49,469 --> 00:38:52,899
Speaker 2: TPP was supposed to be this grand plan that would

620
00:38:52,899 --> 00:38:56,100
Speaker 2: bring a huge part of the world to a high

621
00:38:56,100 --> 00:39:01,860
Speaker 2: new level in trading relations, right? So TPP was coming

622
00:39:01,860 --> 00:39:03,169
Speaker 2: along and then Trump

623
00:39:04,020 --> 00:39:08,840
Speaker 2: On the first day of Trump 1.0 tore up TPP.

624
00:39:09,699 --> 00:39:11,659
Speaker 2: And what we had relied on, what the rest of

625
00:39:11,659 --> 00:39:14,290
Speaker 2: the world had relied on would happen, was certainly not

626
00:39:14,290 --> 00:39:19,330
Speaker 2: in place anymore. It was an epic fail from a

627
00:39:19,330 --> 00:39:20,449
Speaker 2: single act.

628
00:39:21,469 --> 00:39:24,500
Speaker 2: But we were hoping, uh, we were hoping that that

629
00:39:24,500 --> 00:39:27,969
Speaker 2: uh that single act, uh, destroyed a lot of what

630
00:39:27,969 --> 00:39:31,009
Speaker 2: had been built to that. So, TPP will no longer existed.

631
00:39:32,520 --> 00:39:36,330
Speaker 2: But notice, but remember what happened after that. Japan and

632
00:39:36,330 --> 00:39:40,239
Speaker 2: other like-minded partners said, well, there's a lot of this

633
00:39:40,239 --> 00:39:43,479
Speaker 2: that has been torn up, that's actually quite good still.

634
00:39:44,010 --> 00:39:46,729
Speaker 2: So let's make CPTPP.

635
00:39:47,560 --> 00:39:50,540
Speaker 2: Right. So that's the rest of us go off. America

636
00:39:50,540 --> 00:39:52,110
Speaker 2: has decided it doesn't want to be part of this.

637
00:39:52,189 --> 00:39:54,070
Speaker 2: That's the rest of us go off and see what

638
00:39:54,070 --> 00:39:56,540
Speaker 2: we can make of this, and CPTPP came into being.

639
00:39:56,709 --> 00:39:57,979
Speaker 2: And remember what happened.

640
00:39:59,070 --> 00:40:02,870
Speaker 2: Trump did not say a single thing about CPTPP. It

641
00:40:02,870 --> 00:40:05,620
Speaker 2: did not want TPP, but was quite happy to let

642
00:40:05,879 --> 00:40:10,389
Speaker 2: Japan and other nations continue with the CPTPP. It was

643
00:40:10,389 --> 00:40:14,699
Speaker 2: trying to change its trade relations with the world, but

644
00:40:14,699 --> 00:40:16,189
Speaker 2: was not trying to change.

645
00:40:16,830 --> 00:40:21,360
Speaker 2: The world's trade relations. And that's actually gives us some hope,

646
00:40:22,219 --> 00:40:26,100
Speaker 2: because if America does not seek to change or revise

647
00:40:26,100 --> 00:40:31,129
Speaker 2: the international economic system, but seeks merely to edit that system.

648
00:40:31,750 --> 00:40:35,408
Speaker 2: And then edit only those parts of the system that

649
00:40:35,409 --> 00:40:39,610
Speaker 2: lap onto America's shores. The rest of us have space.

650
00:40:40,520 --> 00:40:45,359
Speaker 2: To create our own open trading rules-based.

651
00:40:46,500 --> 00:40:51,138
Speaker 2: Almost multilateral system. It will be confined to just those

652
00:40:51,139 --> 00:40:54,500
Speaker 2: of us who are like-minded in our beliefs in competitive

653
00:40:54,500 --> 00:40:57,419
Speaker 2: advantage and free trade, but that's still pretty good.

654
00:40:58,330 --> 00:41:01,550
Speaker 2: So I think of that as being a possibility is

655
00:41:01,550 --> 00:41:05,429
Speaker 2: whether it's a possibility that emerges because Trump was recalcitrant,

656
00:41:05,510 --> 00:41:07,870
Speaker 2: I don't think it is, or whether it's a possibility

657
00:41:07,870 --> 00:41:11,429
Speaker 2: that it's open because Trump and the American administration have

658
00:41:11,429 --> 00:41:15,750
Speaker 2: decided to focus on America itself, that possibility is open

659
00:41:15,750 --> 00:41:17,439
Speaker 2: for us and we need.

660
00:41:18,479 --> 00:41:19,429
Speaker 2: To jump onto it.

661
00:41:20,469 --> 00:41:22,959
Speaker 2: So, I think that, you know, you, you, you describe

662
00:41:22,959 --> 00:41:25,520
Speaker 2: this in terms of what a uh a representative of

663
00:41:25,520 --> 00:41:29,010
Speaker 2: the nation might do. Let's bring this home to Singapore.

664
00:41:30,169 --> 00:41:33,489
Speaker 2: Singapore is an economic creation.

665
00:41:34,370 --> 00:41:38,000
Speaker 2: As we like to say here, it has no natural resources,

666
00:41:38,330 --> 00:41:41,580
Speaker 2: it doesn't have the usual things that make nations wealthy.

667
00:41:41,929 --> 00:41:47,729
Speaker 2: It's built on economic ideas, and hard work, creativity of

668
00:41:47,729 --> 00:41:50,839
Speaker 2: its entrepreneurs and people. So,

669
00:41:52,780 --> 00:41:59,320
Speaker 2: Singapore, Singapore's uh continued success relies on the kinds of

670
00:41:59,320 --> 00:42:02,770
Speaker 2: economics that has benefited it for the last 60 years.

671
00:42:03,020 --> 00:42:08,658
Speaker 2: There's an open trading system, globalization. Singapore is small, like

672
00:42:08,659 --> 00:42:11,510
Speaker 2: all other small countries, it will always produce.

673
00:42:12,300 --> 00:42:14,370
Speaker 2: Too much of what these people are good at.

674
00:42:15,060 --> 00:42:17,469
Speaker 2: And not enough of what these people need.

675
00:42:18,729 --> 00:42:22,040
Speaker 2: It has to have trade, and it has to have trade,

676
00:42:22,120 --> 00:42:24,049
Speaker 2: and that trade can be open to it.

677
00:42:24,840 --> 00:42:28,750
Speaker 2: Even without the United States. As long as we recognize

678
00:42:28,750 --> 00:42:33,239
Speaker 2: that America, for now at least, is not seeking to

679
00:42:33,239 --> 00:42:37,080
Speaker 2: create an international system in its own image, it only

680
00:42:37,080 --> 00:42:40,360
Speaker 2: seeks to control that part of the international system that

681
00:42:40,360 --> 00:42:43,399
Speaker 2: comes into contact with it. And just to hammer home

682
00:42:43,399 --> 00:42:45,070
Speaker 2: that point, today,

683
00:42:45,870 --> 00:42:49,270
Speaker 2: If you count up all the world's national exports.

684
00:42:50,270 --> 00:42:53,260
Speaker 2: America imports 13% of that.

685
00:42:54,500 --> 00:42:56,850
Speaker 2: America is still a very big consumer in the world.

686
00:42:57,020 --> 00:42:58,449
Speaker 2: It used to be much bigger.

687
00:42:59,750 --> 00:43:04,189
Speaker 2: If we were no longer able to export 13% of

688
00:43:04,189 --> 00:43:06,709
Speaker 2: what the rest of the world produces to America, it

689
00:43:06,709 --> 00:43:08,189
Speaker 2: would be very painful for us.

690
00:43:09,379 --> 00:43:10,370
Speaker 2: But we would live.

691
00:43:11,389 --> 00:43:14,540
Speaker 2: We would be OK. We would trade with each other,

692
00:43:14,750 --> 00:43:16,750
Speaker 2: we would create new ways in which the rest of

693
00:43:16,750 --> 00:43:21,139
Speaker 2: us can collaborate. And America would be off by itself.

694
00:43:21,229 --> 00:43:23,629
Speaker 2: It would want to control everything that it comes into

695
00:43:23,629 --> 00:43:28,260
Speaker 2: contact with, and whether that means it shrinks back into

696
00:43:28,260 --> 00:43:30,820
Speaker 2: a continental entity.

697
00:43:31,830 --> 00:43:34,120
Speaker 2: That that as my friend Graham Allison likes to say,

698
00:43:34,199 --> 00:43:37,560
Speaker 2: it's surrounded by friends to the north and south, and

699
00:43:37,560 --> 00:43:40,229
Speaker 2: fish to the east and west and nothing else.

700
00:43:41,159 --> 00:43:42,820
Speaker 2: Well, that might be the world that we need to

701
00:43:42,820 --> 00:43:46,080
Speaker 2: move towards. And I don't think that that's, I mean,

702
00:43:46,120 --> 00:43:48,600
Speaker 2: it'll be a poorer world. It be a world where

703
00:43:48,600 --> 00:43:51,919
Speaker 2: it's harder for us to get certain things done, but

704
00:43:51,919 --> 00:43:56,759
Speaker 2: it's a livable world, a global economy minus X, where

705
00:43:56,760 --> 00:44:00,399
Speaker 2: X equals the United States, is one that we might

706
00:44:00,399 --> 00:44:03,949
Speaker 2: want to start to imagine. And we see this already

707
00:44:03,949 --> 00:44:05,919
Speaker 2: in many institutions that have been built up.

708
00:44:06,449 --> 00:44:10,729
Speaker 2: There is something called the MPIA, the Multi-party Interim Appeal

709
00:44:10,729 --> 00:44:13,009
Speaker 2: Arbitration Agreement.

710
00:44:14,489 --> 00:44:19,169
Speaker 2: When America decided that the appellate body at the World

711
00:44:19,169 --> 00:44:24,850
Speaker 2: Trade Organization was no longer something that suited America, America

712
00:44:24,850 --> 00:44:28,560
Speaker 2: worked in such a way to prevent the appellate body

713
00:44:28,560 --> 00:44:32,649
Speaker 2: from becoming quarried. So the appellate body which judges trade

714
00:44:32,649 --> 00:44:35,689
Speaker 2: disputes between nations can no longer operate.

715
00:44:36,659 --> 00:44:40,429
Speaker 2: Now, in a world where America is truly central, that

716
00:44:40,429 --> 00:44:44,590
Speaker 2: freezes trade throughout the world. But what our 16 nations

717
00:44:44,590 --> 00:44:47,429
Speaker 2: did in 2020 was that they got together and they said,

718
00:44:47,510 --> 00:44:51,138
Speaker 2: let's set up a replacement for that. Let's call it MPIA.

719
00:44:51,709 --> 00:44:56,310
Speaker 2: And moreover, let's situate it within the WTO. The MPIA

720
00:44:56,310 --> 00:44:59,620
Speaker 2: sits within the WTO and what it does is, it

721
00:44:59,620 --> 00:45:02,239
Speaker 2: does arbitration of trade disputes.

722
00:45:02,790 --> 00:45:05,929
Speaker 2: It did it originally for the 16 who signed on.

723
00:45:06,250 --> 00:45:09,429
Speaker 2: Today it's now 55. That's still only about a third

724
00:45:09,429 --> 00:45:14,459
Speaker 2: of WTO's 166, but it's getting things going. So, I

725
00:45:14,459 --> 00:45:19,770
Speaker 2: think of this as ways to build pathfinder multilateralism.

726
00:45:20,610 --> 00:45:24,310
Speaker 2: It's no longer multilateralism as we knew it that America

727
00:45:24,310 --> 00:45:27,909
Speaker 2: gifted us, but it's a way for small groups to

728
00:45:27,909 --> 00:45:33,820
Speaker 2: slowly emerge and surface, uh, vehicles, platforms where we can cooperate,

729
00:45:34,070 --> 00:45:36,909
Speaker 2: and that might be the world we move towards. So,

730
00:45:37,070 --> 00:45:39,429
Speaker 2: you know, like you say, Trump has done these terrible

731
00:45:39,429 --> 00:45:41,419
Speaker 2: things to the international trading system.

732
00:45:42,540 --> 00:45:46,229
Speaker 2: It's disrupted the world's geopolitics, and there are lessons we

733
00:45:46,229 --> 00:45:47,389
Speaker 2: need to take away from that.

734
00:45:48,290 --> 00:45:53,050
Speaker 2: For me, the critical lesson is not appeasement, not going

735
00:45:53,050 --> 00:45:56,310
Speaker 2: to America and saying, you want this, let me do

736
00:45:56,310 --> 00:45:57,089
Speaker 2: it your way.

737
00:45:58,080 --> 00:46:02,339
Speaker 2: Not retaliation, to like China, America did this, we're gonna

738
00:46:02,340 --> 00:46:05,529
Speaker 2: hit back against China, but there's a lot of space

739
00:46:05,530 --> 00:46:10,050
Speaker 2: between appeasement and retaliation, and that space gives the rest

740
00:46:10,050 --> 00:46:14,259
Speaker 2: of us rule to be creative, but how we engage

741
00:46:14,260 --> 00:46:16,580
Speaker 2: with each other in the world. So, so that's, that's

742
00:46:16,580 --> 00:46:19,138
Speaker 2: what I think of as the optimistic side of uh,

743
00:46:19,149 --> 00:46:20,219
Speaker 2: of this description.

744
00:46:20,889 --> 00:46:22,850
Speaker 1: Oh, I, I like it very, very much. And like you,

745
00:46:22,860 --> 00:46:25,270
Speaker 1: I've been thinking about this, to your point of, you know,

746
00:46:25,550 --> 00:46:28,949
Speaker 1: high 80% of global trade being non-US. So we are

747
00:46:28,949 --> 00:46:33,590
Speaker 1: calling it TOTUS TOTUS trade outside the United States. And

748
00:46:33,590 --> 00:46:35,509
Speaker 1: to us, the toto world is not just a very

749
00:46:35,510 --> 00:46:39,550
Speaker 1: high chunk of trade, but 96% of the global population, 75%

750
00:46:39,550 --> 00:46:42,468
Speaker 1: of global GDP by market prices, and 85% of global GDP.

751
00:46:42,544 --> 00:46:46,254
Speaker 1: In PPP terms. So yes, Prof, I think that leaving

752
00:46:46,254 --> 00:46:49,004
Speaker 1: the door open for the US, hopefully the US will,

753
00:46:49,135 --> 00:46:51,334
Speaker 1: you know, change its mind at some point, but even

754
00:46:51,334 --> 00:46:53,935
Speaker 1: if it doesn't, the world needs to go on setting

755
00:46:53,935 --> 00:46:56,695
Speaker 1: their own rules. Now some of the things you just said, Prof,

756
00:46:56,774 --> 00:46:59,654
Speaker 1: I think I saw echoes of that in an article

757
00:46:59,655 --> 00:47:02,895
Speaker 1: that you published or rather working paper, the last version

758
00:47:02,895 --> 00:47:04,135
Speaker 1: is from last month.

759
00:47:04,449 --> 00:47:09,679
Speaker 1: Uh, correlated trade and geopolitics driving at fractured world order.

760
00:47:10,050 --> 00:47:13,000
Speaker 1: So I think some of the things that you already

761
00:47:13,000 --> 00:47:15,290
Speaker 1: talked about are embedded in the paper, but maybe if

762
00:47:15,290 --> 00:47:17,209
Speaker 1: there's some stuff that we haven't talked about, some of

763
00:47:17,209 --> 00:47:18,360
Speaker 1: the insights from that paper.

764
00:47:19,209 --> 00:47:21,658
Speaker 2: Sure. Uh, well, thank you for bringing attention to that paper.

765
00:47:22,179 --> 00:47:25,489
Speaker 2: I actually just got the manuscript proofs for that. It's

766
00:47:25,489 --> 00:47:29,739
Speaker 2: coming volume, uh, that Danny Roderick, uh, is, is a

767
00:47:29,739 --> 00:47:34,139
Speaker 2: co-editor on. The, um, so what this, what this paper

768
00:47:34,139 --> 00:47:36,580
Speaker 2: does is it treats many of these issues that we've

769
00:47:36,580 --> 00:47:41,299
Speaker 2: discussed maybe in a slightly more directed economic focused technical way.

770
00:47:41,719 --> 00:47:44,250
Speaker 2: And what it says is that for the longest time,

771
00:47:44,540 --> 00:47:48,870
Speaker 2: we have thought that economics was to glue the whole

772
00:47:48,870 --> 00:47:49,770
Speaker 2: the world together.

773
00:47:50,760 --> 00:47:55,199
Speaker 2: Because you and I, we've studied competitive advantage, we've seen

774
00:47:55,199 --> 00:47:58,959
Speaker 2: the world become more integrated, and we know how more

775
00:47:58,959 --> 00:48:01,759
Speaker 2: prosperous the world is as a result of that. And

776
00:48:01,760 --> 00:48:03,759
Speaker 2: the question that you and I would ask and other

777
00:48:03,760 --> 00:48:07,360
Speaker 2: economist would ask is, why would anyone turn their backs

778
00:48:07,360 --> 00:48:11,319
Speaker 2: on this, right? Economics is a glue that keeps the

779
00:48:11,320 --> 00:48:15,550
Speaker 2: world together, no matter what else happens. In, uh, in

780
00:48:15,550 --> 00:48:17,760
Speaker 2: some ways of international relations thinking,

781
00:48:18,260 --> 00:48:20,850
Speaker 2: Uh, such as some of the ones that we've just described,

782
00:48:20,979 --> 00:48:25,219
Speaker 2: realism and others, the world is naturally always at odds

783
00:48:25,219 --> 00:48:28,699
Speaker 2: with each other. The world is naturally always in, in

784
00:48:28,699 --> 00:48:30,459
Speaker 2: deadly zero-sum competition.

785
00:48:31,100 --> 00:48:34,860
Speaker 2: But the reason the world doesn't fragment entirely is because

786
00:48:34,860 --> 00:48:38,879
Speaker 2: there's a glue that holds the world together, and that's economics.

787
00:48:39,739 --> 00:48:43,219
Speaker 2: So that is a a conventional way of thinking about

788
00:48:43,219 --> 00:48:46,979
Speaker 2: the evolution of the international system. So, what my paper

789
00:48:46,979 --> 00:48:52,449
Speaker 2: pointed out is that actually, uh, the economics and geopolitics

790
00:48:52,820 --> 00:48:54,259
Speaker 2: don't work at odds.

791
00:48:55,290 --> 00:48:57,639
Speaker 2: Not always, and in fact, for the last 20 years,

792
00:48:57,850 --> 00:49:02,229
Speaker 2: they've worked together in a remarkably coherent way. It's not

793
00:49:02,229 --> 00:49:05,609
Speaker 2: been a world where great power politics threatened to fragment

794
00:49:05,610 --> 00:49:09,560
Speaker 2: the world and then economics kept it together. It's the opposite.

795
00:49:10,050 --> 00:49:11,639
Speaker 2: Over the last 80 years,

796
00:49:13,139 --> 00:49:16,610
Speaker 2: uh, was, there was the beginnings of the international trading system.

797
00:49:16,699 --> 00:49:19,810
Speaker 2: People began to see how trade would benefit each other,

798
00:49:20,100 --> 00:49:23,100
Speaker 2: and there was a big movement to create these great

799
00:49:23,100 --> 00:49:26,149
Speaker 2: trade institutions, WTO and before that, GATT.

800
00:49:27,149 --> 00:49:31,020
Speaker 2: America was for a long time, uh, suspicious of this.

801
00:49:31,070 --> 00:49:32,520
Speaker 2: It's set outside GATT.

802
00:49:33,399 --> 00:49:39,040
Speaker 2: And then in the 1950s, President Eisenhower said, of course,

803
00:49:39,209 --> 00:49:43,179
Speaker 2: America should be in debt, because

804
00:49:43,840 --> 00:49:49,360
Speaker 2: The international trading system is one where, if America failed,

805
00:49:50,189 --> 00:49:53,889
Speaker 2: In supporting the international trading system, supporting a system of

806
00:49:53,889 --> 00:49:58,050
Speaker 2: free markets and open trade, it would cause great dismay

807
00:49:58,050 --> 00:49:59,009
Speaker 2: and disappointment.

808
00:50:00,110 --> 00:50:04,639
Speaker 2: Throughout the free world, when the Soviet Union was stepping

809
00:50:04,639 --> 00:50:05,929
Speaker 2: up its

810
00:50:06,699 --> 00:50:11,250
Speaker 2: Different and separate foreign economic efforts. The Soviet Union, remember,

811
00:50:11,419 --> 00:50:14,500
Speaker 2: was against free trade and open markets.

812
00:50:15,409 --> 00:50:21,560
Speaker 2: America found it useful, not only economically, but politically, to

813
00:50:21,560 --> 00:50:27,239
Speaker 2: be for it. So Eisenhower brought America into GATT and

814
00:50:27,239 --> 00:50:30,159
Speaker 2: then the world trading system. So, 80 years ago, at

815
00:50:30,159 --> 00:50:34,589
Speaker 2: the beginnings of the modern international world, geopolitics and economics

816
00:50:34,590 --> 00:50:37,509
Speaker 2: weren't working at odds, they were working together.

817
00:50:38,330 --> 00:50:41,250
Speaker 2: Now, I said that, actually, in contrast to what the

818
00:50:41,250 --> 00:50:45,000
Speaker 2: popular vision is, for most of the last 80 years,

819
00:50:45,409 --> 00:50:48,129
Speaker 2: economics and geopolitics have worked together. OK, so that's how

820
00:50:48,129 --> 00:50:50,620
Speaker 2: it was at the beginning of this era. What about

821
00:50:50,620 --> 00:50:54,009
Speaker 2: towards the end? Well, towards the end, geopolitics has once

822
00:50:54,010 --> 00:50:57,419
Speaker 2: again started to pull the world apart, but now, economics

823
00:50:57,419 --> 00:51:00,610
Speaker 2: is also pulling the world apart. You know, this does

824
00:51:00,610 --> 00:51:04,129
Speaker 2: not contradict IMF's and, you know, your and my calculations

825
00:51:04,129 --> 00:51:06,639
Speaker 2: for how trade is good for the world. It is

826
00:51:06,639 --> 00:51:07,060
Speaker 2: that

827
00:51:07,929 --> 00:51:13,860
Speaker 2: Economically, nations, many nations have come around to the view

828
00:51:14,350 --> 00:51:17,899
Speaker 2: that trade can cause high inequality.

829
00:51:18,770 --> 00:51:20,179
Speaker 2: Can be um.

830
00:51:21,040 --> 00:51:26,270
Speaker 2: Destructive of my domestic industry. And unless I am prepared

831
00:51:26,590 --> 00:51:31,580
Speaker 2: to put effort and energy into it, it will dislocate

832
00:51:31,909 --> 00:51:35,780
Speaker 2: my domestic worker population. This you and I would think

833
00:51:35,780 --> 00:51:39,449
Speaker 2: of as creative destruction. This is the forces of competition.

834
00:51:39,669 --> 00:51:42,109
Speaker 2: This is how the world has always been. But nations

835
00:51:42,110 --> 00:51:43,989
Speaker 2: in the world have moved to a point where they've

836
00:51:43,989 --> 00:51:45,219
Speaker 2: convinced themselves.

837
00:51:45,679 --> 00:51:50,658
Speaker 2: That China's manufacturing prowess leaves them no recourse because they

838
00:51:50,659 --> 00:51:54,500
Speaker 2: cannot compete with China anymore. So, bizarrely, the world of

839
00:51:54,500 --> 00:51:58,540
Speaker 2: globalized trade with China in it, and the, the sort

840
00:51:58,540 --> 00:51:59,209
Speaker 2: of uh

841
00:52:00,280 --> 00:52:03,339
Speaker 2: The, the lack of care that so many governments in

842
00:52:03,340 --> 00:52:06,370
Speaker 2: the world have applied to taking care of their own people,

843
00:52:06,689 --> 00:52:10,979
Speaker 2: means that the forces of trade are now also pulling

844
00:52:10,979 --> 00:52:11,899
Speaker 2: the world apart.

845
00:52:12,790 --> 00:52:16,658
Speaker 2: At the beginning, both economics and geopolitics brought us together.

846
00:52:17,310 --> 00:52:21,020
Speaker 2: In the last few years, economics and geopolitics are both

847
00:52:21,469 --> 00:52:25,419
Speaker 2: threatening to tear the world apart. So, unlike a world

848
00:52:25,419 --> 00:52:27,310
Speaker 2: where trade kept the world together,

849
00:52:28,129 --> 00:52:31,409
Speaker 2: And evil geopolitics that tried to pull the world apart

850
00:52:31,409 --> 00:52:34,870
Speaker 2: was bad economics. We had to keep it in check. Actually,

851
00:52:35,060 --> 00:52:38,279
Speaker 2: the reality is trade and geopolitics are correlated, hence the

852
00:52:38,280 --> 00:52:42,080
Speaker 2: title of my paper, correlated Trade and Geopolitics. We need

853
00:52:42,080 --> 00:52:44,959
Speaker 2: to recognize this, if we're gonna move into a world

854
00:52:44,959 --> 00:52:50,080
Speaker 2: where once again, globalization and trade can help improve people's

855
00:52:50,080 --> 00:52:51,770
Speaker 2: well-being without

856
00:52:52,889 --> 00:52:57,290
Speaker 2: Disrupting, once again, the geopolitical tensions that would tend to

857
00:52:57,290 --> 00:52:58,010
Speaker 2: pull us apart.

858
00:52:59,610 --> 00:53:03,089
Speaker 1: Well, this is absolutely fascinating, and I take tremendous resonance

859
00:53:03,090 --> 00:53:05,290
Speaker 1: out of that. Uh, what I'm gonna do, Prof, is

860
00:53:05,290 --> 00:53:08,129
Speaker 1: that I'll put links to both the open letter as

861
00:53:08,129 --> 00:53:10,250
Speaker 1: well as the paper on our show notes, because I

862
00:53:10,250 --> 00:53:13,810
Speaker 1: think uh this is a very valuable reading. Uh, I

863
00:53:13,810 --> 00:53:16,219
Speaker 1: cannot thank you enough for your insights. Thank you so much.

864
00:53:17,969 --> 00:53:20,250
Speaker 2: Thank you so much, Tara, and good luck on everything.

865
00:53:20,489 --> 00:53:23,050
Speaker 2: This is a wonderful series that uh you are, you

866
00:53:23,050 --> 00:53:23,600
Speaker 2: are doing.

867
00:53:24,189 --> 00:53:26,590
Speaker 2: More power to you. I'm a big fan. Keep up

868
00:53:26,590 --> 00:53:27,340
Speaker 2: the good work.

869
00:53:27,550 --> 00:53:27,989
Speaker 1: I'm, I'm

870
00:53:27,989 --> 00:53:29,989
Speaker 1: so appreciative of your words. I'd also like to thank

871
00:53:29,989 --> 00:53:32,750
Speaker 1: our listeners. Uh, Kobe Time was produced by Ken Delbridge

872
00:53:32,750 --> 00:53:36,500
Speaker 1: at Spice Studios. Daisy Sharma and Violet Lee provided additional assistance.

873
00:53:36,669 --> 00:53:40,830
Speaker 1: This is for information only. It does not constitute any

874
00:53:40,830 --> 00:53:44,219
Speaker 1: investment advice. All 153 episodes of the podcast are available

875
00:53:44,219 --> 00:53:47,060
Speaker 1: on Apple, Google, and Spotify, as well as on YouTube.

876
00:53:47,270 --> 00:53:49,468
Speaker 1: As for our research publication, you can find them all

877
00:53:49,469 --> 00:53:52,459
Speaker 1: by Googling DBS Research Library. Have a great day.