The Path to Prosperity in a Post-Global World

this is Rob Johnson president of the institute for New Economic thinking I'm here today with Rana faruhar from the financial times a good friend of inet a teacher an illuminator she stirs the drink and today we're here to celebrate homecoming the path to prosperity in a post-global world not surprisingly written by Ronald haruhar what was that little inner voice that came to you and said you've got to write this book where did this book's inspiration come from you said to me once nothing really resonates in the real world unless it matches people's felt experience at some point and you know as I have moved through the world for over three decades reporting in three different continents on economics and business there have been so many times where the market Orthodoxy and what we were being told by policy makers experts business people was not matching my own felt experience and my felt experience comes from being born and raised in Indiana I had immigrant parents but I grew up in farm country in the Rust Belt my Dad ran manufacturing plants and so I really saw the Fallout through the 80s and the 90s of both the Reagan Thatcher Revel Evolution and the unleashing of of sort of animal spirits with capital but then later the changes in trade policy the sort of neoliberal trade policies that were adopted by the Clinton Administration um and and how those affected my community and you know just to stop and say I work for the world's biggest business newspaper I'm I'm well aware that the last 40 years have seen the creation of more Global wealth than ever before but as we all know too well there have been huge pockets of inequality that have grown in almost every country but particularly in developed countries in the industrial base and so that that experience of seeing we're being told one thing but I'm seeing and feeling another thing on the ground was really an inspiration for this book I've I've always had a sense that the global economy had moved a little too far ahead of national politics and that those two things need to needed to be remored just as wealth and place needed to be remored that wealth was traveling um and and locating in too few places Geographic and institutional and that there needed to be a greater dispersion I said there are a number of people who kind of had that felt Awakening I remember rahu Rajan writing a book saying there's something missing here and and a book that uh I read uh right after Donald Trump was elected I come from Detroit not too far away from Indiana and uh I remember being in Detroit where the enthusiasm that Donald Trump could create now obviously the clintons had been behind NAFTA welfare reform uh and Criminal Justice Reform and various things in a 73 black City you'd understand their uh unhappiness but I watched the trumpian kind of energy take hold and I watched how [Music] which Mark hope people thought the system was rigged and it wasn't sustainable and you know there's an old Chinese adage I can't quote it exactly which is people do not engage in Revolution for their own well-being they do it for their children's well-being and when people started feeling in this country the things were happening they were being justified I know you're up coming up on a very very interesting seminar series on the neoliberal order in uh the next week or so I guess and uh this this sense that what you might call what's being projected on top of us might satisfy certain Elite power centers but it's not being felt and and I'll tell you one of your predecessors in journalism was no longer alive William Grider sensed that when he wrote with David Stockman about what was happening with the Reagan Revolution or when he wrote about the Federal Reserve and his question was independent from whom and and I think you're how did I say I would say you're following their footsteps but I think you're resonating with very similar concern well I appreciate that I mean I um I try to blend real data and Analysis and and big picture with with the felt experience and you know I'll just share one of the anecdotes in the book and I put it up front because I thought it really encapsulated uh what I was trying to get at was a conversation I had with Richard trumfka who was the former um uh AFL-CIO yeah yeah lovely lovely man really you know a lion of the American labor movement he's passed now but um I had a conversation with him a few years back because I was trying to understand what was what was the conversation being had between labor and policy makers at the time of NAFTA at the time of the movement of China into the WTO which eventually happened in 2001 and I said you know what did folks tell you and he said he remembered um a policy maker from the Clinton Administration coming to him and saying you look you know we know this is going to kill you guys but it's going to get better after time you know the wages are going to level out leveling up you know the whole uh whole notion of of Equalization of wages over time globally and he said to the policy maker well okay but how long is that going to take and the policy maker said three to five generations and that's the kind of thing that really you know it's hard for people to not think wow I'm not a human being to you I'm a I'm part of an algorithm that you're running and we haven't had a national conversation about how this is going to go so there's an old adage that free trade was good because you could make everybody better off and nobody worse off but the asterisk which Chinese leaders often shared with me is you've got to do transformational assistance for that to be true and Donald Trump has got everybody mad at China right now as though we did it but what was missing was the transformational assistant particularly in the Rust Belt in the United States and uh and so it doesn't require three generations it's three generations if you don't do transformational assistance it can be not at all it's a displacement but with assistance in moving schools reorienting businesses you know there are a lot of movie theaters and restaurants in Detroit that shut down if they'd been assisted in moving to other places their Vitality would have been maintained we we all know this and you know I would add that there was something else that was left out of the equation you know I grew up on Factory floors as I said my dad ran businesses all over the Midwest and I had another felt experience which was shared by interestingly a lot of people in engineering a lot of people that you're a real business practitioners that you know put aside ricardian economics maybe it's okay for Portugal to make wine and Britain to make cloth but I don't think Ricardo thought about the entire Industrial Supply Chain of whole Industries being outsourced and what that would mean not only for a community but for competitiveness and Innovation because some particularly at the the I would argue the period we're moving into right now where the consumer the Innovations of the consumer internet are beginning to come into the business space which is going to be profound you know the Internet of Things the industrial internet I I see that just and we can go into it just some of the incredible innovations that are coming it's it's it's mind-blowing in order to really reap the rewards of those things you do need to have a certain level of hubbing I believe of production and consumption iteration between scientists researchers machinists manufacturers and this goes to something else um which you know countries like Germany and Japan never really forgot which is the um the respect and the the the knowledge of Labor and how you uh bring labor and management and business together to everyone's benefit that's kind of a micro part of this but it's a it's a very important part of it China never forgot that I think that's what dual circulation is actually partially about one of the things I want to add just to this Dimension is a lot of people are very concerned now about racial polarity so on one side talking about wokeness others are saying what would you guys abuse this for 400 years and and they're right but one of the things that's not being said frequently though the scholar Peter timmin uh in his book on the declining middle class that he did he emphasized that when in regions the economy turns down people become afraid and in the survey data their fears about their future go up those fears are in locks that correlate correlated with rises in racial animosity and other people like Shannon lanaut who is a fabulous what I'll call social scientists related to health we talk about Angus Deaton and and case diseases of Despair she did a study for inet on the on the geography of where austere local budgets machine learning and automation or globalization or financial crisis impinged and created fear that's where the diseases of Despair are located and you can locate the diseases of despair with where Donald Trump outperformed his Republican predecessors against Hillary Clinton and then you take it internationally the afd in Germany the brexit vote Marie Le Pen all of these things correlate with the diseases of Despair and the economic what you might call shocks or or disturbances and so our social cohesion in this case I'm talking about black and white or black white and Asian is in the balance it is endogenously provoked by the fear that's engendered by the economy yeah there's there's something else that's interesting in that too um for starters you're absolutely right um you know any place any place where there was Prosperity Biden either took that area or did better any place there wasn't Trump took it my county that I grew up in went 76 Trump 76 percent Trump I actually remember it's funny just as a side note um when the Republican primaries were happening in 2016. I was at our mutual friend Jillian tet's house and there was a group of big Republican donors Paul singer was there amongst other people and um the Indiana primary was going on the back of the um on the TV and back and every at that point nobody thought Trump was going to win no conservative thought Trump was going to win they were all sort of you know figuring out what's the strategy and I I kind of piped up and said I think he's going to take Indiana and everybody was like no no no and I said what do you all have to offer these people what is your message you know what is your message you don't have a trickle down that's you know but the problem of course as you and I know was that the left had not connected yet the issues of race and class in a way that they needed to and they had not redeemed themselves I would say amongst um some of the the working population as I believe they are now doing and I would look at people like even someone like a rokana who's speaking up and saying you know if we can't have a diverse democracy unless we get the economy right you know I mean I I that connection of class issues and race issues I think are very important to getting back onto the right track it's very very um Haunting in the sense that these distributional issues and tensions have Arisen the polarity has arisen which makes politics of consensus harder to achieve at the same time lays daunting challenges like the pandemic and climate change have descended upon us and I don't know if there's a higher Spirit or not but if there is they're really raising mistakes by bringing these things to the table all at the same time I mean they're raising the stakes but they're also in a way providing the solution I mean you know one of the things I talk about in the book I quote Bill Janeway who's an inet another friend and inet um uh co-founder and board member and you know he has the wonderful Theory he's iterated about productive bubbles in fact I think I saw him first at an inet conference with you years and years ago talking about his book and uh and I remember my mind was kind of blown at that point and uh you know but but his take which as I've done more research I totally agree with is that the times that you get shared sustainable productive growth across all levels of society are when there is a big transformative technology that can be underwritten by the public sector you know put some put some floor under it and then it's privatized um and people are brought along this happened with railroads it happened with the internet it is so clearly clean tech today and we have the pieces in place to get this right I'll give you an example from the book that I think connects a lot of the dots that we've been talking about here in addition to looking at agriculture I looked at the textile supply chain quite closely and I picked textiles because um of all the industries in the U.S that were hollowed out when China joined the WTO textiles was was and Furniture were the top two for obvious reasons low margin Industries um you know they they went abroad right away but I wanted to see okay what was left and what could we learn from that so what was left of this textile supply chain in the Carolinas is almost like a darwinian case study of how you want to run a good business they tend to be and interestingly they tend to be mid-sized family-owned private they're not having to deal with the pressure from the street they're they are not investing and really investing for the future because these are four five six generation family businesses and they're very rooted in the community and in almost you know Guardian kind of way like there's a there's a you know he the the head of the business knows that if he doesn't treat somebody right he's going to go down the street and you know get called on it so they're so these these folks know how to work together as competitor collaborators and um during during covet it was interesting they came together at you know t-shirt sales and cheap underwear sales fall off a cliff so they think well you know we got some people to keep on the payroll what can we do let's try and make some masks well it was interesting because they called up for all Peter Navarro's Bluster they call up the the Trump White House and you know he has no plan he had no idea no coordination no understanding of what these you know these people could do for them so they kind of got together and they did it themselves and they they made a plan and they made a bunch of mass and some of them trucked them up to the north themselves and there is an example right right there okay how about um since these folks have learned how in this 16 month period how to take the price of an American-made mask from 30 cents to 10 cents uh and a Chinese mask is three cents so when you factor in labor and environmental there's not too much air in between those let's have the federal government or the state government set a floor under that let's let's give them that market and help them to continue to move into other product areas like perhaps connecting with EV manufacturers in South Carolina that are getting Federal subsidies because that's a more strategic industry these are just basic bits of dot connection you know but we have had such a mindset I mean it's such low-hanging fruit like I feel like you and I could go down there in a truck and get this done in a week but but but it we have had such a mindset about oh you can't touch on you can't nudge anything public policy has no role in business it's it's just so atypical the rest of the world just doesn't think that way and but I think things are changing now and I think you know what we've seen with semiconductors for example which I also talk about in the book um you know this is not about um about China I mean even from China's perspective I think the idea that we we had a neoliberal system where it was all about driving down prices and efficiency to the extent that 92 percent of high-end semiconductor chips end up being made on one very contentious Island that's not good for anybody you know that's just kind of basic we need a little more resiliency in the system here and so I feel like in some ways covid and also the war in Ukraine you know which kind of awakened us to the idea that maybe getting your energy Supply from an autocrat is not such a good idea it's been a bit like a scrim that's been pulled back on some of these fragilities in the system that we're beginning to see now it's interesting uh when you talk about that which Michael hiding in plain sight or all these collaborative weaves that could be done I was I'm reminded in 2017 the writer Peter Goodman who I know you know yes we used to sit together at Davos and talk in the cafeteria area and none of us will be invited back obviously going on and written a book about his experience uh yeah but I remember him coming to see Leif progrowsky who was the Swedish attache excuse me in New York and he had an article about the robots are coming and Sweden is fine uh interesting and the reason I underscore this today is that I think you're you're traveling in a Terrain now that's very important the terrain is in America we were viewed as having the flexible supply side yes and so you could reallocate things efficiently and transform the economy and Europe was quote sclerotic right and stagnant and what Peter was alleging in this article was and this is after this is December of 2017 uh it was his article I talked to him in the first quarter of 2018. but what he was saying was with Donald Trump having fomented the legitimacy of all this despair the system is rigged and what have you we're now at a place in America where the resistance to technological transformation is going to grow out of Suspicion that will lose like West Virginians losing on climate change because nobody takes care of them like they didn't take care of Cleveland or Detroit so then you're in a place where in Sweden they say the possibility Frontier of incorporating robots is great will all keep our health care our pension our children stay in school and we'll get some transformational training let's do it yeah because they still feel like they're part of the society in the United States that dynamism was part of what we advertised but there's there's now what I might call a cloud over it yes that may be resistant to the progress that we could make and some of that may be what you might call a little bit of what you're experiencing people aren't reaching out to each other to the extent that they could oh well I think that there is something to that and um you know one of the things I'm very curious about I touched on it a little bit in the book but I'm watching it play out in real time um are some of the is some of the technological displacement of workers that's happened in the blue collar space in part because in this country we have not trained them as well as say Germans have or Japanese have um is that going to come to the to the White Collar space now and I had a very interesting conversation actually in Davos um uh this past year where there was a round table of CEOs and we were talking about work from home and it was really interesting who who was into it and loved it and who didn't want any part of it and it kind of spoke to different corporate cultures a lot of women were thought this was the greatest thing ever and they were so happy and there this was a way to keep talent and you know awesome a lot of the the the Silicon Valley Bros were just like no you can't run a business like this you've got to go back um but you know some of the the larger tech companies like Google Etc Facebook were saying okay you know you can you can work anywhere well one of the CEOs turned to me and said you know I actually think it's kind of diabolical the tech folks what they're doing letting people work everywhere because they figured out if you can do it in Tahoe you can do it in Bangalore and they're gonna just send everything away and that's interesting to me and I'm this is very much a live conversation right now in trade policy circles and labor circles as you know as as we start to think about what is America's trade path in Asia going to be the iPath stuff you know um are we going to see a race to the bottom with with data and with digital services and with privacy that we saw in a manufacturing sphere in an earlier generation we cannot get this wrong um you know Rob I'm thinking about something else you told me or you you shared with me um a couple years ago we were talking about the the talent War competitiveness War different economic models China V U.S and you said which I have come to totally agree with that the country that wins is going to be the country that curbs the elites best and uh that's true because if you feel that the system is rigged and it is rigged in certain ways let's face it I mean I see that every I see that every day around me I you know I get to play in both sandboxes um and uh we we've got to fix that or otherwise yeah we we are we're going to have a major um social catastrophe on our hands I think yeah Evan Osmos who writes for the New Yorker and I once had a conversation about the haunting feeling that with the system rigged we can't unrig it and the evidence that he cited was the number of billionaires that are building getaway weather in New Zealand or what have you yes and you're saying instead of feeling powerful yeah and then working for the public good to transform things they are so frustrated yeah about systemic dysfunction even though they have millions of dollars in their pockets yeah that that's a daunting how would I say smoke signal it's a very systemic reform that we need and we can't do it's so panglossian because you know I mean who's gonna smelt their steel eventually and who's gonna who's gonna fix their utility grids in in New Zealand but you know you're putting me in mind of a a a conversation I had that I had recently with a labor Advocate and a friend of mine that that is a little tangential to this so I had done a column I spent a little time um in the Hamptons this summer a couple weeks with my family on vacation and you know I do not own property there but I can afford to go and spend two weeks there and I wrote a column about how there was this hyper spot inflation there that I had noticed in other very wealthy places like Jackson Hole or certain you know parts of the west where what was already happening in in the inflation environment was just on steroids so I I had an anecdote about walking into the IGA to do my shopping and filling up a cart and having it cost eight hundred dollars at the IGA not at the fancy Boutique well I wrote that because to me that was I was thinking about it in just a very um data oriented way I thought it was it said something interesting about monetary policy about how the wealthy were spending about how long it might take for the FED to get ahead of inflation if there were enough um if there had been enough asset creation that that that people could just keep spending like that you know um indefinitely but my friend called me and said you have to stop writing about buying 800 cards of groceries and I was like oh okay why you know well if you ever want to you know be a progressive politician or if you ever want to you know be be confirmed people don't want to hear that and I thought well golly that's interesting because is it my job now to pretend to be someone I'm not in order to be accepted amongst My Tribe yes and that with the concentration of wealth and power vis-a-vis universities expertise like we talked about earlier the commercial media among politicians if you want appointments Consulting contracts all those kind of things maybe it's not even conscious but there's this little Echo like are are you becoming self-destructive and and I thought gosh I don't I don't really want to want to be the kind of kind of pulls upon upon cuz I'm worried about getting a point in the path that you go down and your journalism just starts to fall apart um but it was interesting I mean I think it spoke to the polarization that you're talking about there is according to my young scholars initiative which has studied this among graduate students and assistant professors there are increasing mental health issues yeah because what I would say maybe not entirely consciously strategy like you and I are talking about but the awareness if you will that Rome is burning and we're just fiddling is very very intense it's not uh it's how would I say uh I I've had beautiful seminars with no laureates who are instructing the Young Scholars on how to maintain your integrity and keep going forward towards a successful career and it's it's not a simple pathway it's there's these people are not wearing rose-colored glasses well I'm curious just on the economics profession for a minute I I'd be curious what you've what you would say to this because your business for the last decade plus has been to try and change the economics profession both at the level of academe but also within the media and you know I've watched you and you've made some important changes I feel like we are at a bit of a Tipping Point finally because you're hearing words like neoliberal in the mainstream media you are you're starting to see all kinds of organizations um you know jump into this conversation uh you know from Big universities the Hewlett foundations funding a bunch of stuff um you know you've got um open-minded economists um saying hey we need help here we need we need inductive thinking we need other practitioners coming in so are we are we at a change point and what will it look like on the other side to you uh what I can't give you a definitive answer but I'll paint a picture of the scenario that I perceive when we started I know the vision was the financial sector had engaged in extreme Access Financial Theory with its pretend knowledge of the future we were just doing what they call backward induction from the mathematics of a known future was a was a false consciousness and we thought to restore expertise credibility and confidence in governance would go to work people like George Soros and to a great degree myself being involved in both Senate banking governance that we would address this Challenge and he held in all kinds of people from all over the world came in and helped us address the Queen's question but what's happened subsequently and some people would say the bailouts where they as Joe stiglitz said they paid the polluters created a disintegration in faith in governance and a disintegration in faith in expertise and so the early inet was involved in if we do some things with Harvard Princeton Yale Cambridge Stanford Oxford whatever and those guys realize we're not hostile toward them but we want to evolve things that could work what's happened now is whether it's on it or whether it's the elite universities expertise has been kind of thrown in the garbage can and so we're in a place now where the situation is wide open because nobody's deferential to the to the profession but in the tumult and this is why I don't have a clear answer for you in a tumultuous emotional climate all kinds of different unconscious cautions raised their head and trying to maintain as I said about you in the opening of this conversation a constructive agenda for a pathway forward is a necessary condition to Healing rather than deepening the void that we're all experiencing so it is an opportunity but it's a dangerous time at the same time and we really have to filled that void you use very psychological terms and it is a very psychological moment I mean what we need is empathy real empathy real listening um you know I'm I'm I'm thinking about um another anecdote I had in reporting my book um you know I was I was walking down the street just the other day in fact in my extremely Progressive blue neighborhood of Park Slope Brooklyn and I heard a um I Heard a mother I heard a little girl ask her mother are there still really racists in the world and the mother said which was kind of an amazing I like I thought that was profound because she was thinking about it really in a kind of a deep way you could see from her voice and the mother said yes in the south [Laughter] oh boy we're in Park Slope Brooklyn here we're reporting anecdote when I was down in the Carolinas doing this work on on textiles and Manufacturing I visited a ginning facility um uh there was a older working class white woman who was sort of managing the facility and on her team were four Latino men and they were working with their hands side by side all day long you know and I watched them to at the end of the day in loud noisy conditions to produce a block of ginned cotton that she then took and They Carried together onto a little scale and weighed and she then used a handheld calculator to calculate the value of it it's like 458 dollars and I had watched them do that over the course of two hours and I thought wow this is this is something that people don't understand that are writing about these places a that these people don't want to be told how to um how they behave how how you know they they have a felt experience of their own working in this diverse Community um that they want to be able to articulate in their own way and not be labeled in a certain way and it's it's funny you know she even reminded me so much of some of the women I grew up with the guy who was running this um it's the textile company who was taking me around comes up to her and says um oh I want to get you and your whole team some hoodies I'll send them up over for free and she sort of nods and I turned at her and I caught her eye and she sort of smiled at me and she goes he knows I'm not gonna do that I'm not going to take that and I thought so this quiet Pride you know that was just very present and that people I think I find it a great privilege to experience that in my reporting and I think that people who are making policy would do very well to spend more time in places like this yeah uh there's a wonderful scholar who's looked at both history and contemporary racial animosity he's at Stanford University I believe his name's Gavin Wright spelled with a W uh w-r-i-g-h-t and he has contributed to some inet conferences and work and uh I would encourage our listeners as well as you too I'll send you the some of his work but he he's very much understood all kinds of the different cross courts another person who I greatly admire and I'm glad to say is on the inet board is John Paul at Berkeley University who runs something called the othering and belonging Institute who's really gotten into what you might call the um foreshadowing of the kind of social design that we need for the common good yeah with with race gender and other other dimensions of polarity you know I'm hopeful just to just to add one hopeful note too I know we're almost out of time but I'm hopeful that the shift that we're going to see demographically um and structurally towards the care economy is going to be an opportunity to bridge some of these gaps because you know we're talking about David goodhart right head heart hands you know it's it's about bringing it all together and the care economy which is going to be very local how There's an opportunity to really Elevate and enrich those jobs um and to bring along women to bring along people of color to um connect services and Manufacturing them and you could imagine if I wanted to be really optimistic which I'm feeling like right now you could imagine a real win-win not just economically but but in terms of our culture there

Channel: New Economic Thinking

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Length: 37min 46sec (2266 seconds)

Published: Wed Oct 19 2022