Conversations with History - Stephen S. Cohen

welcome to a conversation with history I'm Harry Kreisler of the Institute of International Studies our guest today is Steven s Cohen who is professor in the Graduate School the University of California at Berkeley and he's also co-director of the Berkeley roundtable on the International economy also at Berkeley he's a senior fellow at the New America Foundation in Washington and he's just written with Brad DeLong the end of influence what happens when other countries have the money Steve welcome to our program good to be here with you Harry where we born and raised New York and looking back how do you think your parents shaped your thinking about the world they kind of applauded if you were reasonable and realistic and didn't think or weren't all that impressed if you could cite the great religious authorities and was there a lot of discussion about politics and the economy around the dinner table or did that come later that came later and what what got you interested in in pursuing degrees in the field of politics and I was an undergraduate where did you do your under that Williams College aha for a young boys of good family at the time they subsequently not women there and it was a major in political science and economics and I couldn't tell him I didn't know where one ended and the other began I've had a lifelong difficulty is this economics is this politics so I kind of did both and then from from there you went on to graduate school in oh it was a little interruption I was too early as an undergraduate editor of the college magazine mm-hmm the Dean called me into his own this and said give me a choice hey you're out of here today I'm throwing you out mm-hmm well Dee you stop editing that thing and go take a junior year abroad and I said Paris he said done and and what what was he objecting to a particular yes zero tone of first there was the tone and then there was a particular piece looking back it was kind of obnoxious there was about some poor guy there who taught a course on religion sex and love in the Bible among other things and was up to be president of a small college nearby I wrote a little Limerick I see so it was off to Paris jointly signed with the daughter of the chairman of the board of trustees of that College was an undergraduate at the time so that for that you should be tossed I mean it was just an awful I see so so did you get more discipline in in Paris or was it rather you were exposed to the culture I don't know with it I don't think there's a bore about discipline so much as exposure to the world and a whole place is to think about an economy France never accepted the kind of economics we mainstream here the difference in the government and the private didn't make sense to anybody that the government was the referee know the government is the partner of everything and everyone so so state nothing did that experience give you a focus so that you now really kind of have a sense of of what you wanted to do well I didn't give you any focus I really had a great time so much to see and do and learn and when I got back this one professor Cullen what was your project yeah I started looking at a French economic planning I see so he said very good write a paper about mm-hmm so I did and then I went off to graduate school first I applied to law school a few times and the Harvard Law School has that cattle on the Facebook the pictures of the incoming class if you look under cover not only covered Steve Cohen to the few of it there's one photo missing was me I see so you're not accepted but didn't go I actually wrote a stupid letter you know still wiseguy kid you know I look upon entering Harvard Law School is a symbol of my own total defeat in life and I and they didn't take kindly to that I guess oh they care a lot I'm sure they were not in the least bit disturbed and did I applied the year after in the admitted henna I didn't go again and I went to the London School and and focusing on politics and knew how I did it yeah and they had a mic over to program or you could do both mm-hmm so I did and I ended up doing a thesis on French planning Frederic another Florida you see the little if they stick to you mm-hmm and and what what was it just to be clear about this what was it that led to this focus you think that experienced junior year of Robbie and then you found this whole interface between the two realms very significant so noble it was that experience and the need that afternoon to have a subject for that professor in one in one in half an hour so there had a SEP so I kept going and that was in those days of features at LSE was well the idea was you'd write a book mm-hmm not a an article or two articles that shows you can play they do all the necessary tricks he wrote a book so about this book and it came out at Harvard Press called modern capitalist planning something like I actually have it modern capitalist planning the French model the French model alright and and it what what did you learn in in the writing of that book and and and all the research and hell I mean did it raise your ratio to a new level and seeing this interface first it was all about the interface yeah this state business the economy and where it's all seen is one mm-hm and I started looking around the world and countries making important changes rapid growth changes in there where they go Japan and you see the enormous role of policy of the actions of the state in steering it and enabling it and that you know in the funny way set me up for an understanding of Japan mmm-hmm when there's to be those big arguments there was no argument Japan was doing well this would be now in in the 80s no T's in the eighties Japan was definitely doing well this is one question fabulously and there was a whole it's a majority of American economists saying well the states too involved they should get out of everything and no one in Japan what this made any sense of what so ever and it was easier for me to understand what the Japanese thought they were doing because I sort of it in French as opposed to thinking of it in anglo-saxon and that kind of carried through and most things that have done mmm-hmm now this raises an interesting question because what what we've learned here is that that you wound up going abroad to see this connection and that turned you in essence in to a political economist yes one would say which is not something that grows naturally in the American and vile you find us under glass in a few museums we don't wait here you're brought out from under the glass when when there's a crisis in the system which which leads us finally and we have crises rather frequent right now now no so let's say that the students want to figure out how to develop the skills to do this how do you prepare what is it you you have to learn in the way of a skillset to do political economics will you have to first learn to be marginalized with being an outside normal career paths closed mm-hmm it's no kidding around right it's a closed shop in economics really you don't do it if you can't make in a kind of metric model you can't utter it and you can make a very powerful kind of metric models at the expense of what you talked about mm-hmm has to be small and it's built on a set of assumptions so so and this is something I wanted to talk about it is in comparing what you do to what the an economist and the economics profession that you're saying there's a there's a kind of narrowness of the focus in a a an awe at the elegance of the theory which may or may not relate to what's actually going on in the real world oh definitely yeah in fact I don't believe as a requirement for a PhD and most of the top economics departments you were asked to know anything about economic the history of economic thought what about economic history mm-hmm what has happened how big and I think that's an egregious loss and also politics right I mean it isn't there don't do politics yeah yeah the assumption is so so it in a way flaw here is that the there is a disconnect which leads to a lack of understanding of kind of the institutional setting the politics of the setting in which a particular paradigm is embraced yeah or viewed in another way as an economist if there's a trade off for the power of your analysis you sacrifice sometimes that comes around to bite you badly and and I I think we've already learned from you that in your particular case your analysis of France contributed to the power of your analysis of Japan when that became an important issue that has the rise of the Japanese economy so what I'm hearing you say is comparative studies become very important that is comparing comparing case studies it absolutely helps to know something about what's going on over there especially when they interact mm-hmm now you you are a co-founder and a co-director of the Berkeley roundtable on the International economy which is very like the cheese of course it would have to be because of that junior year yeah that was one of the first of those years as a grad student right so so what what then and and talk a little about that that group here at Berkeley because it it became important for the campus and internationally in sort of understanding the trends and the world where political economy was really important as we became less competitive and the rest of the world became or some parts of it became more competitive well that's another one of these things you know life's about a certain by the gentle I had spent two years in New York previously sabbatical and most of it I spent hanging around the Institute for Humanities at NYU mm-hmm they gave me this marvelous office there were some interesting people great did you read a lot of novels or what the novels with a nice part of it the studies of the studies that criticized the studies of the novels were a little not my favorite but I came back when I got back what am I going to do mm-hmm and it seemed what do we have here the great outdoors mm-hmm California me yeah I'm not too good at that mm-hmm then there was strange and exotic sexual practices at the time I lucked out with an absolutely lovely and beautiful wives you know I wasn't gonna be good at it anyway so that left technology mm-hmm which I knew nothing I don't plan to learn a little and semiconductors go into everything mm-hmm everything so all the sudden if you follow the chip you get whatever you want to go mm-hmm and this was 1982 so I met up with John zeisman and political science here and very shortly thereafter with Laura Tyson and economics so let's work together so we didn't found an institute we said let's actually work together mm-hmm we get some outside dough and we cold run it we don't need a great stamp of approval from the bureaucracy we just cooperate which is unusual on a campus exceedingly so and that has held for all these 25 years in change more and we started what was really going on was that Japanese challenge to the United States and advanced technology as well as in manufacturing mm-hmm so out of that came an early book I did with John Heisman called manufacturing matters where we argued it is a poor idea for a great big nation not for little specialized place Roxburgh London Oh big to lose its advantages in manufacturing and and that that was kind of the beginning of the cycle where we were doing less and less manufacturing which actually becomes an important element in your new book yeah and we you know one of the keys was what the Japanese ones were terrific Canon it was a heavy role of the Japanese government pushing this mm-hmm and our argument was this is the way it's being played so maybe we ought to play it intelligently in these terms we didn't the United States you know yeah yeah yeah let's now move to your book because a lot of these themes we've been talking about come together here let me show it one more time the end of influence what happens when other countries have the money so why did you and Brad the long write this book well again it started less delivery I find much of my life is lacking in a certain amount of strategic planning that we were going to do a piece on sovereign wealth funds the rise of these enormous tilts lots of money huge it are controlled by the government right directly or indirectly but government controlled large amounts of money it's a little different than what had been previously the case and the model for all of these is that we've been multi exemplary Norway mm-hmm Norway good norway's Kuwait gun right because Norway had oil oil money piling up and they learn something if you just dished it out everybody know you're gonna have an inflation mm-hmm you were gonna make all your man your currency we go way up all your normal business would be destroyed in terms of competitive and you had the mess this used to be called the Dutch disease because the Dutch had gone through this experience in the 60 they had some oil they generated a lot of money and they blew it all the way it did them no good the opposite so the Norwegians simply said we're putting it all in a bank account offshore because you bring it onto it raises it and will live on the interest mm-hmm and and the money is in another currency the dollar in this case invested abroad about other currencies so overwhelmingly you know large portion in dollars all over and they invest it the way the California retirement system does you know they don't own more than one percent of most common what they invest in they have some political things no bomb makers I think those cigarette makers you know they're right good good good good Scandinavian good yeah good Norway now if all the investment funds were like this he'd be not at all certainly not even a problem not even a question mm-hmm they're not you have a very large Russian mm-hmm sovereign wealth fund yeah yeah come on mother to two sources of these there's the the mineral oil which are a bunch of the you know Persian Gulf and oil countries and Russia in a big way and then they're they're Chinese manufacturers the Asian manufacturers example or a China has you know north of 2000 billion dollars in dollars yeah say north of two trillion in dollars sitting there in various tilts it's not necessarily a sovereign wealth fund but under direct and indirect government control mm-hmm how do you use it well if you were the Chinese government you try and use it strategically I mean one thing is you just put it out there and earn a return and be blind for index funds in other words you say well our mission here on earth is to advance the Chinese economy well we got this enormous tool here what do we do with it well what we need we could use some technology well this may help us get it mm-hmm as we were raising some of these questions come to think of it it might be political mm-hmm if that President of the United States whatever his name is it makes no difference starts doing things that we don't like that hurt us that burkas what if the limousine that brings the Chinese bankers to New York to buy the US debt every Thursday morning mm-hmm mm-hmm like what if we announced in advance we're gonna have a flat tire mm-hmm and not show that might send the the market down a thousand point that the president made making he has to think about us before opening his big mouth mm-hmm this is a change is this not a change so so in essence that what what came about as the sovereign funds developed especially in the case of the Chinese was really a change in in the power balance between the two country's beginning in the economic realm and this is a major unexpected disturbance if you buy into what you call the neoliberal view of the world which was the doctrine the policy that the United States had embraced several decades ago so the book moves toward a look essentially it's it's the epitaph of the neoliberal paradigm for domestic policy in the United States okay hope that policy produce this very great disturbance which we'll talk about again in a minute the sovereign funds let's have a lot of big disturbance yes yes I think it has been pretty unfortunate for America so so what is the neoliberal paradigm that's really simple hmm leave it to the market okay get the fat stupid bureaucratic hands of the state out deregulate mm-hmm and play this out mm-hm and everything will spin around and work out fine mm-hmm now there are a lot of problems with this sometimes it doesn't that's called macroeconomics gains but also what if the other guys are not doing it mm-hmm may even make believe which I don't believe for a minute that this is the best way to do it for a country mm-hmm what about the other countries mm-hmm so if you were playing touch football and the other guy's got a helmet and child a planet mm-hmm maybe this is not a good idea there is a strategic element and that sometimes absent in such thinking you know a whole bunch of things came together one was I started a long argument in this book that way income distribution mmm-hmm the period I don't know 1947 when the dust settled from the war up into the mid seventies the American economy was doubled mm-hmm so GDP per capita and the guy the 50-yard line the guy in the exact median income district he doubled also and the guy in the top 10% he doubled also so we went with an unchanging equal income this the ranks didn't change forward for the great generation so so we maintained prosperity we move forward from say the 30 years after World War 2 and everybody was gaining together equally equally yeah and those were their great that was the great American dream and we were gaining even bigger than the numbers indicated because television and washing machines mm-hmm no price in the flavors are not don't explain what really like penicillin I mean and that lowers of the cost so you know this doesn't tell you how good it was yeah so the next 25 30 years beginning say in about 74 oh the mid seventies because I don't have that number in front of ya I don't want to get hung them yeah yeah we grew bit slower but we grew mm-hmm I don't know about 3/4 increase over the period tilden hours and roughly speaking all the gang went to the top 10% mm-hmm the middle gained way under 1% per year mm-hmm and you know the counting is not so clear these are not precise they pretend to be precise they try to be presented it's hard we had a real shift mm-hmm then we also changed the shape of the economy so and now let me just remind our audience we're walking you through the consequences of the neoliberal paradigm which dominated both political parties and which was embraced by both Reagan and Clinton and the bushes yeah and another thing that's what about in the last since let's say 1980 issue mm-hmm manufacturing as a percentage of GDP looked at what we produce mm-hmm declined by about 6% of GDP 6% of GDP is a big number get you out 1 Pentagon mm-hmm the whole darn thing mm-hmm that's about gives you a sense of size 1 Pentagon mm-hmm and we offset it by increasing the proportion of GDP but exactly the same amount of finance insurance and real estate transactions the the payment work complete reshaping of our economy we've reshaped our economy many times in the past it was always led by government policy as is typically the case why the great example was the opening of the West the transcontinental railways led by government policy which was easy policy in his first big in good government policies always easy mm-hmm because everyone kind of agrees mm-hmm how you do it is where the nastiness comes in okay and it was easy because they didn't have to vote any money had all that unlimited amounts of land so we'll give you a checkerboard pattern this shaped the economy the 19th century and into the 20th their big shaping their growth of railways steel all the mass market ears Sears it all you know it sort of followed we get another round of this after world war ii the suburbanization made possible enabled planned perhaps without knowing yet but doesn't matter morgen insurance the GI bill the FHA the government guarantee loans and the highways mm-hmm the National Defense Highway Act which ring the cities with suburban highways we just have to call it in case the Russians wanted to go from shopping centers and then finally the big defense budget that is a great permanent defense budget and more recently the shift to allow finance to really get out of the box and and the so so what you're suggesting is that as a political economist you can see that the embrace of a paradigm was in a way a kind of a statement of planning which wasn't put out there for everybody to see but but the the consequences were it shaped our economy in the future think about things this way you'll get things back yeah well if you're gonna go do things that way we have someone has to sit there so if you do this you're gonna get this kind of thing if you do that you're gonna get that so we borrow all this money from China the average American family goes deeper and deeper into debt right because his income is going nowhere mm-hmm and we're consuming more and more all this goes through the banking system mm-hmm so the banks are making a lot of money on everybody's debt as they go into debt sure yeah and now one side it's pretty straightforward the Chinese factory makes some stuff mm-hmm Walmart gets it puts it on their shelf mm-hmm we are not making that product presumably in theory yeah a or anymore yeah or less and less yeah where it's being squeezed and you seeing it you know that that is that six percent because the manufacturing decline by six percent of GDP on this side of what we produce not on the side of what we consume that didn't change very much we still get the go test number of t-shirts and the cars the fuel it's just coming in mm-hmm so that didn't change its not like manufacturing went away out of the earth it went away geographically mm-hmm now what we did with this borrowed money and what we put in place of the manufactured jobs was our doing mmm-hmm we didn't have to do that mm-hmm we could have put it into any number of worthwhile endeavors mm-hmm health or energy technology yes for example we didn't mm-hmm so so in looking at this what we we embrace in a bipartisan way a view of of what our policy should be that what the decrees an unfettered market enough I think you say in the book a fettered government we the government ties its hands and greenspan brings out the punch bowl and by that we mean them you know it's a free market both globally and nationally and you're telling us and in this book and now that the consequences were over time greater inequality if not a consequence it followed along with this a bloating of the financial sector without our sort of consciously doing this an ability to control we're going to have a bright but anyway and then the third thing was the helping pushing along furthering the the Chinese emergence as an economic superpower because they became the place where products were made and they to protect their own economy they save the money and loaning it to us as we spent more than we made in a way it's more of an intimate embrace that nobody wants let's take us in China we owe them two trillion bucks maybe even more okay they call up they want it said no problem do you want in hundred dollar bills or 20s will fill an aircraft carrier with it and send it out so there's no way they can get their money back there's no way we can pay it's like 20,000 bucks per household mm-hmm so there we are we stuck with each other they need us because they've built their economy to be export-led with a crazy to do and they get this money they can't use now they could use it they could buy all their cars here but this would wreak hell on their auto and steel industries and so forth they don't want to do that this was a little the way Keynes explained the economic consequences of the Versailles Treaty the French had British said the Germans are going to pay us back he said how do you want steel you want cars no no no no no no that we want doesn't work but were they crazy and I don't think so I don't think so their intention their goal I think they realized their goal beyond their wildest dreams was to learn how to make things you had a nation of peasants really poor peasants I don't think Americans understand how poor a poor peasant is for the rice so you have electricity probably not and so so so by exporting and protecting your self from a situation where you're forced to devalue you currency you continue to industrialize your converting more and more of these peasants into workers working in the city you're producing more and more Goods you're learning how to manufacture if you all get learn how to do it right expensive this is the machine they had the nation to pester they couldn't produce large amounts of consumer goods for their own country because there was no one to buy it there was no buying power there and you know these dollars are probably they could be useful they're not altogether wasted so they got to get good and therefore powerful at production and they they in this under this formula they need to sell these products and there and then we get the result you already described namely they make all these dollars but they want to keep them far away so to speak and hence the development of the enormous power of their sovereign fund that sort of thing yeah so they have all this money and balances and they got to do something with it and it you know some of the things are obvious they'll buy a lot of what do you do with it okay they keep buying American government Treasury bills Fannie Mae's that's one of the reason the government ran in and said okay we're covering Fannie Mae China another thing they will necessarily do is buy American and Farah how companies around the world because you get something for it EE maybe you get more than you just bought that company for you may be able to bring home what it does best and route that at home and move up the technology and come this ladder and you get power or view the other way America has had the money that's for about hundred years and after the war certainly we had all the money everybody owed us now we are the world's biggest debtor and there is no number two and there's no number three and there's no number four and no number six and then you get Argentina we owe everybody tons and some people a really great tonnage now we used to use the money when we were making it and had the money we still think we do you know we haven't realized much of this and we always used it for the good of the world but it was we who defined what was good for the world so when the French and British he was in 1956 sent some troops into Suez to tell that fellow NASA straighten him out about the Suez Canal and that properly I know whenever she used to be in a pink oh right likes okay said he kind of hinted that he might COFF the hint that they might hint to dink the Sterling and the Franken on the spot out they came so he had the money he used it as a lever we used it to support the electoral prospects of various parties and in Italy let's say against other parties in Italy who we thought would be less good for the maturation of democracy you know I think we were quite right we used it and it also gave a soft power your suggestion was the basis of our soft power and we were the example to the world so we had this very wonderful kind of soft power where people do like we do they kind of imitate our ways or institutions or mannerisms and you don't have to tell them to they want to and this is something the English enjoy truly they came up with this great story of the gentleman who is the mixture of a medieval knight a Scottish miser fiercer than that and then okay and they invented these activities sports walk in high sports all of them they were tennis soccer all of them the whole idea of organizer that came out of people the whole way of being and doing classy you know if you look at a photo of the late 18th century the court of Louis glorious blue and red and green silks wigs and everybody was then you got the shift where England became unquestionably the power and it was commercial England the whole world is suddenly dressed in drab gray the same suit we still wear the collar goes up and down a little in and out a little we took some of the starch happened in every domain you see the power of this the ascendant the dominant the society now the economy is the big engine of that but there's other stuff lasts the you know even after the reason for it you carry on so we have had an enormous influence all around the world I'd save us all the young people have the body language of American teenagers they listen to it so let's take this or deafness analysis another step as you do in the book because what what you're really saying is that our paradigm the neoliberal pair aligned led to let us to really change who we were in you know an important respect but it also led to a change in the balance of power between states and the creation of these sovereign funds and and I think the next step in your analysis is to say well wait a minute this is all coming about and what is emerging is a different view of the relation of the state to the economy especially in these places which are the holder of the sovereign funds and you're raising a question about will they be able to capture the innovation and the ability to intubate which comes with having money and being able to buy companies to have foreign facilities in your own country the next big question is how far will they be able to take that you're I think you've got it I think that's an essential question certainly having the money helps and you know you and I formed this clever startup it all or investor comes from some Chinese company maybe partnered with in in an American private equity thing but the Chinese company is borrowing unbelievable amounts of money from the bank which itself is borrowing unbelievable amounts of money from the Chinese government so that's that same fun coming through a few stops comes here they invest in our technology and they are investors so hey we're going go go go go next you need more money you know we can really do this well if we move keep you guys hearing but we're thinking we mean some of the stuff back to Shanghai where we keep a better book that's one very likely sort of thing also what the next round of innovation is going to be nobody knows but yes people do know there are no specific things but you know energy technology everyone knows that well we're not doing very well I mean every one of our politicians explains that we are a world leader we are always a world leader we're not we're apathetic follower we certainly don't have much of an installed base we're not leaders in making this stuff we have a lot of very promising laboratory work so do other people and the disconnect between laboratory work and then you got naked we're as an Internet technology there's no making it you can sell one product or a hundred million it's the same the cost to the second you know to produce um one more copy of our software and you can automate the click you don't have to actually click um we're asked to make solar panels you gotta make them and so forth windmills titles whatever how G so no we could be but that's for we're not will we be we could I think it's entirely a political question and for that I see every reason for a certain amount of choking heartbreaking pessimism and and this mistakes this full circle back to your career in a way and where you started because you told us well I got interested in political economy the interface between politics and economics and what we're what you're now telling us through the analysis in this book is that we have to think differently about the relation of the state to the economy in this new global context which we have partly created and if we're we don't we're going to be up a creek because for example in energy technology the state is gonna have to do something along the lines of what the Pentagon did during the Cold War in terms of setting the stage for us moving forward yeah and my sense is that well you just said it but but let's explore this why are what what do you think will make us adapt to this very different view of the relationship of the state to the economy because if the state has to be you say we can't do planning and we won't do it because it's a it's a concept that goes against our culture and our Institute then what do we do to prepare us for this world which we've created and which we're now losing in you have an easier question we did a little bit of planning and be enough as you said we had this thing called the Pentagon and the nice thing about the Pentagon thing was it was like brackets in economic thinking you could think up to the bracket and after but you're not allowed to think about what's going on there it's off the table for economic thinking and a lot of it was just a huge waste I mean a colossal waste some of it was vital to save ourselves and the world and some of it a small part was America's industrial policy we didn't call it industrial policy you know picking winners we called it military and this would be through a judge planes for instance commercial jet planes I remember the Boeing 707 was them well some of the Europeans used to argue that the Boeing 707 was the K 135 military tanker with windows really was and it came down the same assembly line using the same fantastic machine tools that could sculpt the Brancusi statue in 12 dimensional space with the big jet engines that had been developed a huge cost the technology needed special metallurgy that gave us the undisputed lead in the sky satellite technology do you know of a guy in Silicon Valley who could put that out no you can't do those in a garage a whole raft the internet its maiden name as you remember was the dolphin that the good folks at DARPA said what happened if the Russkies knew Chicago we have to communicate right they created a communication system with no central node or nodes and then accrued computing everyone remembers the first computers fill the room 10 times the size of this and needed 50 people to change the bulbs who on God's earth would buy one of these babies and that is the seed corn of the round of innovation that propelled our economy for a long time it was the government picking it's not so hard to pick winners if you you know some of these things that it's in that which particular model is a different story but getting things going in that direction now let's talk a little about the Obama administration in its first year because he was elected with a lot of hope about the way he could change things and and if we look at his policy with you he was elected less with hope than with desperation what w bush and company had done to smash to destroy this great country and they did I mean you named the dimension from the big one our role in the as the leader of the world he became somehow the bad guy had a world our role as rich we ended up with a beggar's Bowl our role is let them see us they saw a new audience they saw our grass even the small things like environment so to speak whatever it was they destroyed it through a combination of ideology and pure cynicism so you had people turn to the sky please they came a Nobel Prize for being alive and being elected is replacing that yeah hope please please bring us back the United States we've known and loved the world needs the United States it's not sure it's gonna get it so if he would let us less except for what you're saying if he was elected out of desperation do are we seeing evidence that he can move us in the area of recognizing some of the problems that you've identified and in in particular the changing role of the state as it deals with this series of problems and this seems to be very much related to the way the banks are treated basically in light of the disaster that came about in in last year's financial crisis because in a way what you're telling us is that the the banking sector grew from 14% to 21% and with that came a lot of power to influence elections and campaigns and so on is that going to change and what will it take to change that because it would seem that there are two problems here one is airing for this future that is upon us with the development of the sovereign funds where the state has to play a greater role but the other is to to putting putting the banking sector in place in its place I think you got it right so why ask me I don't know look we did this health care reform I cannot explain it to myself let alone to a student it's a jujitsu a bit why is it so complicated remember there are other countries on earth all the others have health care systems that work better than ours all the rich countries ok I'm not talking about Bangladesh Switzerland that is private guys France that has both and they all have better numbers at much less cost much less cost we are doing this health in order to preserve the health insurance companies and a few other we are doing this banking reform maybe bailout reform may be in order preserve why preserve it I'm perhaps you know too foolish and I don't understand it's my ignorance why I have to preserve the health insurance that gobble up everything make everybody's life a misery if you've ever had god forbid some medical it's a nightmare while you're crying your heart out you have to deal with these refusal and change of service and your doctor has that is not in this group and his none that it is ridiculous it is painful it is wasteful og everybody in the country knows that so why don't we change it well maybe we're you know when you watch countries who get into trouble so he's political the cause of the bad economy is political and and that I guess is what the economists are afraid to admit or don't have the the analytic skills to admit it neither it's outside of their domain that's the next office over there we don't do that you know dope political but you know if we got the political house in order then the economic staff could you know there's a lot of really good work but right now the problem is rooted in the political side and I think you're suggesting that the paradigm the neoliberal paranoia pine has collapsed but that may not be recognized as one of the refreshing things about your book I thought was that it it length this collapse two choices that were made several decades ago by both parties and and we're really not ready to admit that I don't I think you're quite correct I think we're gonna the the patient is not dead we've got him out of intensive care he's still in the room they're running us I thought nothing today we're gonna have a it seems to me another go at it at the neoliberal look look what's going on in in the finance sector that to go what's going on in the health sector back to go well that's two big hunks of everything so we seem unable now you think what can change it is a crisis then I'm not going to change it because you even the president says hey we really want to change this so crisis and maybe they rate let me can they come to think of the tragedy of Obama is he was elected a year too early remember Roosevelt was elected in 32 election November he took office was it March the crisis starts in 29 by the time the election came around it was a disaster and by the time he kept an even we said you know you want to work with me boy no no he it really was a disaster so good mr. rose Oh do whatever you want please do something Obama came in it hadn't gotten bad enough and and the other thing to further your point is that enough was done to make it not bad enough for the the world that the Roosevelt inherited mm-hmm so I'm not sure we're gonna make any real changes and if we don't of course we're going to uh even worse trouble I think goes without take on that Pesa yes there we go yeah oh it's economics that is no visible sign so so I want to thank you for being our guest Steve and I want to recommend very strongly your new book which you wrote with Brad DeLong the end of influence because it is well written it's it's it's not a long book but it really lays out the crisis we're in but looking at it in such a way that we see the broad picture so thank you very much for the book and thank you much very much for being on our program it was a pleasure and thank you very much for joining us for this conversation with history

Channel: UC Berkeley Events

Views: 12,473

Rating: 4.8805971 out of 5

Keywords: UC, Berkeley, ucberkeley, event, Conversations, With, History, Harry, Kreisler, Stephen, Cohen, End, of, Influence, webcast.berkeley, cal

Id: S7hB6LEyW68

Length: 59min 14sec (3554 seconds)

Published: Wed Jan 20 2010

Reddit Comments

[u/martls6]

Thanks very much for the link. Great explaining of world politics in combination with economics.

"It hasn't gotten bad enough to make the necessary changes."

[u/buttertub]

Great video that shows a great picture of our current political state in relation with the economy. I get the sense that he prefers bigger government, which I don't agree with, but he does a great job of shaping some of the problems we have faced and face currently.

[u/[deleted]]

Harry Kreisler is so annoying.