Harvard Book Store; WGBH Forum Network; Globalization Paradox: Democracy and the Future of the World Economy

Good evening everyone. My name is Rachel Kass and on behalf of Harvard bookstore It's my pleasure to welcome you into this evening's event with Danny Roderick Harvard professor and author of the new book The globalization paradox democracy and the future of the world economy. Tonight's event is part of an exciting schedule here at Harvard bookstore this spring. And yes I am insisting on saying spring at this point. We kickoff March 5th an event for local author Andre Debussy the third who will discuss his new memoir townie in conversation with another local favorite Richard Russo. That discussion will take place on Tuesday the first at the Brattle Theater. And we saw a $5 tickets on sale at the registers. We also have tickets going on sale that day for events later in the month with science historian James gleich and NPR contributor Sara avowal. For more information about these and other upcoming events please visit us online at Harvard dot com where events are posted through March and are beginning to be posted in April. And where you can also watch cast author talks pronouncer PTF of our events calendar and find all sorts of other goodies. Now I'm pleased to

introduce Danny Roderic Professor Roderick is the Rafic Hariri professor of international political economy at the JFK School of Government here at Harvard. He earned his Ph.D. in economics and his MEPA at Princeton University and His research focuses on international economics and economic development. He has earned numerous awards and recognitions for his work including the inaugural Albert Hirschman prize from the Social Science Research Council in 2007. He's been widely published in scholarly journals and publications like The New York Times and The New Republic and His books include globalization gone too far and one economics many recipes. Professor Roderick's latest book The globalization paradox continues his work of challenging the perceived benefits of globalization. The book takes on three centuries of economic history and argues that our pursuit of democracy national autonomy and economic globalization are at odds with one another and that going forward we must choose our national priorities.

After the talk we will have time for questions followed by a signing here at this table. As always I'd like to thank anyone who purchases a book here this evening. By doing so you're supporting both a local independent bookstore and this author series. Now please join me in welcoming Professor Danny Roderic. Thank you. Thank you all for coming. It's nice to see the crowd here. Let me begin with with with a confession which is that I'm an economist. That means you're free to hold me and my friends culpable for everything that we've been going through in the last three years. I think I do think we share some of the blame. But I think I'm a bit of an unusual economist in that if you actually look at the book you'll see that I'm I'm not trying to sell you globalization. So it's is one of these sort of you know

unusual. I mean this way I want to hold onto it for the whole time. Guess what. What I've tried to do in this book is play a bit ofay of an unusual role where Try to on the one hand explain to economists and the technocrats and the policy people what the what the what the concerns of ordinary people of all globalization are. And that that sort of meant trying to actually understand them and then put it in ways and frameworks that could be communicated to the economists. And that's unfortunate. But I also was concerned about trying to explain you know why is it that economists thinks think globalization is such a wonderful thing that has done so many good things for so many people around the world. So the book is I hope you'll find you know when you look at it you'll find that

it's fairly readable. I've tried to make it readable but there is enough economist in it and that's why I start out with compassion. I was driving a couple of hours ago on the highway and I was listening to a a news program and there was somebody being interviewed was a political I guess it was a Republican being interviewed on economic policy and the subject was the deficit of course. And he was saying a lot of things about why the deficit ought to be reduced and he said and most fundamentally most importantly we have to reduce the deficit so that we can compete in the in the global economy. And I thought about that and I said how many times have we heard this and just take remove the bit about we have to reduce the deficit and substitute any and all of whatever you think this country ought to be doing. Or any other

country ought to be doing and call it x. And we have to do X to compete in the global economy how many times that we have we heard that it's become sort of like a mantra we have to cut the government we have to it doesn't have to be such just the right wing it's not just Republicans right because you also hear we have to invest in our people so we can compete in the world economy we have to invest in infrastructure. So we have to compete in the world economy. We have to invest in R&D so we can compete in the world economy any number of things that you want to do and it makes you makes you start to think you know when. When did it become the norm that everything we're going to be doing was for the world economy rather than the other way around. You know why is it that you know you know we're supposed to be doing things for the world economy as opposed to the world economy doing things for us wasn't actually sort of the whole idea

that globalization and the world markets and this openness and this new era was actually going to be benefiting us. And I think this way of thinking about the relationship between how we fit into globalization is a relatively recent narrative it's a narrative really of of the that started in the 1980s that suddenly we started to look at the world economy in a very different way. We started to look at two does being sort of in service in the service of the world economy rather than the other and then the other way around. And what I'm trying to do in this book is actually to reverse or or or provide an alternative narrative which I think sort of puts globalization in its proper sphere wishes to say let's look at how globalization can work for us. What that what does that actually mean for how far we can push the globalization.

What it means for the kind of rules we should place on Globalization what it means for the balance between the nation state domestic policymaking on the one hand and global governance and international institutions on the other. Let me give you a bit of an idea about what's in the book or what that the nature of the argument in the book by sort of briefly going over three steps in the argument or three building blocks in the argument. The first of these is the idea that markets and governments are complements. They're not substitutes. There's markets and governments go together. They're not at dots with each other. This is another one of these ideas the fact that markets and the states you know sort of have to get out of the way so that markets can work well. I think it's one of the has been one of the most destructive ideas in terms of our thinking about economic policies when you think about what makes

markets work well. Markets work well only when you have a broad range of strong institutions that underpin those markets. You don't have markets without legal institutions. Markets do not work well without regulatory institutions. Markets are given to instability. If you don't have stabilizing and institutions and markets cannot last if you don't have legitimizing institutions So markets are self-creating they're not self-regulating they're not self stabilizing they're not self legitimizing. What makes markets last and and provide for prosperity. Are these other institutions mostly provided by collective action by the public sector by government. In modern days you know think about the alphabet soup of regulatory institutions that you need to ensure that the products you buy on the marketplace are safe or that the banks most of the

time do what they're supposed to be doing. Or that when you run into a crisis that the Fed the Federal Government is there to actually pump liquidity into the system bail out banks that are going on so that the crisis one go worse and so forth. So one of the striking regularities around us today is that actually markets work best when the states when the governments are strongest not the weakest. You can actually give this a even a statistical. Meaning by looking at the correlation between how open an economy is to trade and how large the government or the public sector of an economy is and is very positively correlated to most open economies in the world are in fact the ones where the governments are largest in terms of tax revenue or in terms of public spending. So the first idea is really just to get into our minds that if we want markets to work well including global markets we have to have very strong public institutions to ensure that markets

work the way that they're supposed to do. The second idea the second building block here is is the notion that when you think about how the state and various public institutions are organized to provide this infrastructure for a market to provide these under undergirding of markets there's not a single model that that market based capitalism or market based systems. Don't come in a single model. There is an almost infinite variety of models of market capitalism that that you can think off and not and not one of them is necessarily superior to the other. Every decade we have an idea of what the best model but the best economic model is you remember the Japanese model of the 1980s you know sort of the idea was that here was sort of capitalism at its best that we need. No everybody needed to become more like Japan. Of course in the 1990s it was the American model of financial capitalism and look where

that got us. Everybody's not talking about the Chinese model. Do we really want to be like China or can anybody really be like China. The point is that when you think about how you regulate markets what kind of labor market institutions do have what kind of corporate governance what kind of social protections under welfare state there are many many different ways in which you can arrange those institutions which means that in fact that is one of the major strengths of capitalism and why it has proved so durable. Despite all its problems is that it's very malleable that you can sort of you know the kind of capitalism we had even within a country in the United States 19th century version of capitalism is very different from what we have today. So capitalism changes both across time and over space. And we shouldn't sort of fixate on this idea that if you want our economy to work well that there is just one sort of made big ideal that we have to that we have to

all converge to. So a second point here is that we really think we should think about the world as being comprised not as different societies or different market based economies that are all necessarily converging to one single model but when one where countries ought to be able to free to express their desires and preferences with respect to exactly the shape those institutions ought to take. So that would be a world in which we accept the legitimate diversity of institutions under girding capitalisms recip. Point number two point number is sort of the third building block is the idea that when you think about how we decide collectively about what kind of institutions we should have what kind of financial regulation what kind of labor markets what role should trade unions have in labor markets. How extensive should our social protections under welfare state be when we think

about how we are designing those specific institutions of capitalism who should be doing those thinking and how we should do should we decide. Well in a democracy you think that it ought to be decided through democratic deliberation through democratic mechanisms of decision making accountability and representation. Right. And then you ask what is the appropriate locus of that decision making. Another way of asking that question is to say where are our political communities organized today in the world. By and large political communities are organized at the nation state. Don't go looking for global governance anywhere. Don't go looking for global politics anywhere. Don't go looking for any of the institutions in the world having the kind of of of of of thick exchange of politics that we see at the nations at the level of domestic politics so for very good reasons and for the foreseeable future we're going to have

politics organized mostly at the level of nation states. That means that the nation state is going to remain with us. And we simply cannot wish it away. And all the talk about a flat world a flat world without borders where domestic governments are disappearing is simply hogwash. You look at the recent crisis when you asked the question when push comes to shove who bailed out the banks who bailed out the auto companies who pumped the liquidity to inflate the economy to stabilize demand and who ultimately was the is no good people actually felt was responsible. The answer to all of that is actually national governments. It wasn't the IMF it wasn't the World Bank it wasn't the World Trade Organization. So that's point number three that political communities political communities remain organized

largely around nation states. So when you put those three building blocks together you get a picture of how we should think about globalization and the future of globalization that I think is is quite different from what a lot of sort of chatter around the future of globalization is and this is a vision this is a picture which I try to describe with greater detail in a book which basically says that we need a better balance between the prerogatives of the nation state between democratic nation states on the other and the scope and the reach of markets since we cannot truly underpin global markets with global institutions democratically governed. We need to reduce our ambitions about how far we can push globalization. We cannot have what I call in the book hyper globalization a world in which we're

trying to make world markets as integrated as unified as well functioning as domestic markets. That might seem obvious but it's remarkable how much of our policy efforts at the international level in domestic level are animated by that view as if we can keep pushing on on lowering barriers removing barriers so that we can have this single unified global market when that's really any possibility. So this is a vision of globalization which I try to sketch out in the book that puts the national democracy's front and center that says the global rules leave room for domestic policy makers to design their own policies their own institutions their own preferences. And second that you might think that this would be actually very detrimental to the world economy if all countries all

democracies in the world and other nation states were to decide just to go on the basis of what they want to do that this might be the collapse of the world economy. I argue that that is in fact not correct. That is not true. A world in which world of democracies in which countries decide their own policies and their own settle on their own institutions is actually a world that's going to be much more conducive to a healthy globalization than one where we simply try to rein in domestic policy makers as much as possible. And the reason for that is going back to where I started out with which is that we can have a globalization and economic globalization only to the extent that people believe and actually see in practice that that is working towards the kinds of ends both economic and social that people want to see and that's possible only when we have that kind of control and the strong institutional underpinnings of globalization are actually

provided and they can only be provided at the level of nation states. So you know in a nutshell this is what the book is about. It's about trying to argue something that might seem on the face of it counter-intuitive and paradoxical that we actually are going to get better globalization a healthier globalization the better functioning world economy if we actually give some more power to nation states instead of assuming that we can keep sort of moving towards a sort of global institutions or global governance or global rules or global governance that's going to help us create the world markets work better. So let me just stop here. I'm I'm happy to ask questions. I'm happy to get. I'm always happy to ask questions. I also happy to get some. So including those who want

to disagree with me. So thanks again for coming I'm happy to listen to you now. There was one question for I guess it was. It was. Oh yes. Yes. No I think that's a great question. And first of all I think you're absolutely right that the that the

conception of the global economy that we had with the Bretton Woods regime sort of set of rules that we had for unless they had the first three decades after the Second World War were very different. And in a way what I'm trying to do is get back to that earlier conception that I think that a better balance between domestic objectives and the global economy. And also secondly for the reasons you cite we live in a very different world economy. If we win if we go back to the spirit of that we're not going to be able to go back to exactly the same. So the you know the United States let's say you know maybe 30 years ago the share of trade in GDP was about maybe six to eight percent and now it's more like double that. Not a huge amount but it is double what it was. We're never going to go back to that. And that's not what I'm arguing. What I'm arguing is that the choices that we make as we go forward. And I think we do have many choices there because the integration of markets and the progress of

globalization does start a process that just happens on its own. It's a process that we shape by the decisions that we make by the decisions that we take in the World Trade Organizations by the decisions that would make taking the Basel Committee when we decide on capital adequacy rules. So decisions that we decide when when the IMF decides whether capital controls are OK or not. So I think I'm what I am I am calling I think for a rather drastic change in mind frames. But I think in terms of what it does that that means in practice and what I outlined in the last chapter in the book in terms of some of the concrete things that we ought to be doing goes on to be more marginal changes as we go forward. But I think cumulatively will have the impact that I that I by that. I want to see which is to liberate policymakers in the right direction from this sort of you know self-imposed constraint that they have you know

whatever they have to do they have to justify in terms of being competitive in global markets. It was a question of. Markets. Yeah I think the the I mean I read it. I mean you know the difference between strong institutions and weak institutions by traveling to places where there are weak in situations or insitu or so is a question about partly about enforcement. It's partly a question about who makes the rules whether it's just a narrow lead or more broad based. So therefore ultimately a question about admirable durability of those

rules is a question about how well those rules match up with the actual realities. But you know it's actually about the design of those so you can say about financial regulation was it well-designed was it actually actually designed to. Adequately deal with the kinds of risks that financial markets are facing. So it's partly about the appropriate design partly about the mechanisms of accountability and control and partly about enforcement. But you know whatever you decide you're actually able to do actually able to try to implement those things. And I think you know in terms of those dimensions we look at across the world of course you see huge amounts of differences on those two on all three dimensions. Well it has an impact on the rest of the world. I don't feel like I feel like on

mainstream now. I mean in many ways I mean I think when you look at for example how. Have views have changed on capital controls is quite striking. I know that the capital controls or freedom of mobility or financial capital is sort of like one of these bellwether things about how our approach to globalization that that you know whenever you know we get very skeptical about globalization we say let's regulate those short term capital flows those hot the hot money that I know that sort of you know can destroy economies because they can leave just as quickly as they can go. And then there are periods of time when we say this wonderful let's just money flow wherever it can go so that people can borrow and lend and you know sort of why interfere with these things. You know the sort of the gold standard in 19th century was of course a period of off very you know free capital flows and then sort of coming out of the Second World

War the thinking of the the architects of the Bretton Woods regime the architects of the IMF and the World Bank and so forth including most prominently John Maynard Keynes was that capital controls I mean the financial capital flows the soft money flows had been the reason why the world economy during the interwar period had been so unstable. So they say we just want to be kept there. You have to have capital controls all over the place you can't let short term capital move around. And that was the reigning orthodoxy up until really the early 1980s and into the 1980s. So people said why bother you know why not. You know just you know this you know just let capital flow freely and for the last 30 years that has been the orthodoxy countries you know sort of have moved in you know sort of just letting finances and financial flows move all around. Now one area where in fact we've seen this change very happened very very prominently is in the aftermath of the crisis the

IMF which had been on the sort of the leading edge of those who argue for freedom of mobility. The IMF has not come back last year and said we think that there is a legitimate role for capital controls in the world economy and that that actually may make sense. I sort of like it. Total total change in the mind frame. This is totally a result of the financial crisis and the effect of that. Now I'm happy to say that my views on this haven't changed because I always thought that capital controls ought to be part of a sort of part of the tool. I could have read them the IMF policy brief on this 20 years ago. But then at the time you know sort of I was looked at you know sort of as a bit of a maverick on this on these issues and now that view has become I think much more mainstream. That has happened a little bit in the in the in the trade front as well. For example the argument that I've

repeatedly repeatedly made that if you want an open trade policy you better have very strong social policies very strong social protections. Again that's sort of has become more or less mainstream even in the United States where idea that the idea that that you really need to ensure that there is much better adjustment assistance wage insurance or something else for job for people to lose their jobs. That is good social policy good economic policies good political policy that you need to have those things so it has become more of a mainstream idea. What I think is is sort of new in this book as you know that there's the broader conception of the broader architecture of trying to say look you know it's it's you know we don't worry about the you know the nation state getting too strong right now. The problem is not that the nation state is too strong. The problem is the nation's trade is too weak. And actually by making the nation state a bit stronger it will make the world economy work better.

You know I think there's too much of a willingness to abdicate responsibility on the part of domestic politicians. And I think this is an as as as as part of the electorate this is what we should not allow them to do. I think it's actually often is easier to deal with the power of money

at the domestic level than it is when the same money power is exercised in international fora so very concrete example is when you think about how we should regulate our financial system how we should regulate banks. There is broadly speaking two ways you can go one way is to say no we want a globally consistent harmonized system of financial regulation so that banks have a level playing field wherever they go. Sort of a constant that they have a common set of regulations. All the other ways you can say well we'll do mostly we'll design our regulations ourselves. And even though they might differ from those in Europe in Japan in Canada or whatever that that it'll be us made. And for the same reason that Europe will say you'll be Europe. Japan will say Japan made and so forth. Now what happens in practice and what has happened when we've gone the first route which is to sort of try to design these regulations at the global level

because nobody here has any access to you know how these decisions are actually made in Basel in Switzerland where I actually sort of a bunch of bankers get together and decide what the rules ought to be. That's how those rules have been designed in the past by something called the Basel Committee on on on on regulation. And so there you have you know no control there it's really just money speaks period. But if those things were actually determined it was viewed that the right locus of decision making for those things were actually the domestic political setting it would be much harder for the power of money to have money will always be powerful but there will be much greater countervailing power than than what has happened recently. So I think one advantage of actually drawing back some of this responsibility bringing it bringing it back home is that you get a much wider set of of stakeholders and voices speaking on these

issues. Now when I talk about these two sort of economists and tech and policymakers they say oh my god you're going to politicize these issues. That's exactly my point. I want to politicize these issues because you know a lot of this stuff is political and just by sort of not taking that out of this political domain it's not like you're necessarily getting better outcomes you're just getting just one set of voices determining the outcome which makes you wonder. Well let me say a word about sort of a comparison and then a word about what that means for globalization. I think when I look at those two countries I you know obviously China until very recently has done much much better economically than India has.

But I think the future looks much tougher for China and does for India. And I think India has one huge advantage compared to China which is that it is democratic that it has those democratic mechanisms of governance. The most fundamental institutional transformation that the country needs before it becomes wealthy is already in India's past whereas it's in China's future. So I think you know the the good the critical question that China faces as you know in the next not necessarily next couple of years but certainly the next couple of decades. How is going to manage that huge institutional transformation of becoming either becoming more democratic or ultimately if it doesn't become more democratic. I don't think it's the economic engine will continue to function nearly as well. It's obviously a question where the Chinese are extremely extremely nervous in the context of these Middle Eastern you know sort of protests it the

way that they've reacted suggests that they're very very very very concerned about this issue as well. But that's I think that's you know I think you know looking towards the future this is one major reason why I would bet on India rather than on Dan Rather on China in terms of what this implies. You know the rise of India and China implies for globalization. I would say this that that this feeds into and strengthens my argument. Granted China is not a democracy. However both China and India value intrinsically national sovereignty to it to an extent that it's become you know sort of quaint in India advanced in dust in the advanced industrial countries. So if we are going to be moving towards a world where the United States

and Europe the main international powers in terms of global institution building are becoming much less powerful. India and China are rising. And their day put tremendous importance on the importance of national self-determination national the nation state and national sovereignty. Don't tell me what to do. I won't tell you what to do. That the stability of the world the stability of the architecture of that world is possible only if you recognize that the nation states centrality has got to be maintained so you cannot build a stable international economic order on the assumption that you're going to get all of these countries together and they will all agree on what their policies ought to be or what they will only agree on a common set of financial policies common set of trade policies common set of labor market policies and so forth. So the best that you can think of is actually think of a world in which to get design traffic rules. How are you going to mediate

these know the interface between these different institutional arrangements in these different countries. And that's exactly the kind of globalization I think we ought to have anyhow. So does this adds recognition that India and China are going to be now an ever growing part of the world economy adds an additional layer of practical necessity to the desirability of of the kinds of global arrangements. I've been I've been advocating. Yeah. Yeah yeah yeah. I agree. I argue in the book that there are some global normative

standards. For example I would prefer democracy and human rights as one of those as a clear. I would say that that's a global normative standard that that democracy does no nation state can legitimately say I don't have to be democratic because I'm different. They can say I need different kinds of financial regulations or different kinds of labor market regulations or different type of social protection because I need I need different. But I don't think any nation state has can say from a normative standpoint that my people don't need democracy or my book that my people don't need human rights. So from that standpoint I think there are those Does that at that level at least there are very strong normative standards and the way that those work into my argument is to say that when we think about these traffic rules that we're going to be talking about. So part of these traffic rules are about thinking. When should countries be allowed to opt

out or exercise an escape clause from an international agreement. And there I would say that if you're a democracy or a prima facia democracy that any decision you make. On the face of it reflects the will of the people and therefore you do not have to you don't have any reason to justify yourself as to why you're doing something. Whereas for a non democracy that argument doesn't fly. So a specific example of this would be to talk about for example labor standards issue of labor standards I think India can legitimately say because I'm a democracy labor standards I have reflect the will of my people. Of course democracy you know works in all kinds of weird ways. But you know who am I to say that their democracy is worse than mine. So it's a very clear cut stand that says that that institutions that reflect because goes inside the Democratic are in some sense reflect the will of the

people and that's an argument that China cannot use and therefore these rules would actually discriminate between democracies and non democracies would set higher thresholds that non-democracies would have to jump over because of the Philippines. Yes. I mean I think you know. If we have a deliberate if our domestic trade policies and our

domestic policies are being decided in the way that I suggest through domestic deliberative practices there's no presumption that that means that the individual participants in that debate will care only about themselves or only about their communities or only about their nation states. They may very well if you can convince them or I can convince them or as their own consciousness changes over time because they care about what's happening elsewhere. They may very well start taking into account that their decisions have impact somewhere else and that therefore there are some tradeoffs and therefore some somethings that they want that might be good for their communities might have harmful effect on other countries and how to trade those off. So those are all deliberate. Those are all relevant considerations that should enter into our discussion. All that I'm saying is that the appropriate locus for that discussion for the foreseeable future is going to be the

domestic setting not transnationally through international NGOs or corporate social responsibility or any other kinds of global governance mechanisms you can't think of one. What country are you from Mozambique. Well. You.

Know. This is a question worth three books. I've written two of those the stocks every Israel. I mean that of course is the you know is the big question and the way that I think about this is is in a number of steps. One is to really ask the question Do you have a government in place who actually is interested in economic development in the first place. This might seem like a you know crazy question but not all governments actually want economic development. Not because they're evil but because you know there may have so many other constraints or so many other considerations. You know keeping the

ethnic balance you know sort of you know ensuring that you know cronies or whoever are being sufficiently fed and so forth. So the first consideration is that if you if you don't have a government that's going to make economic development a real priority. I mean you know you've lost it already. Then what you're going to get is a lot of you know sort of fake action. You'll get a lot of aid you'll get a lot of you know words you're going to get a lot of omissions and you're not going to get it. You look at the you know sort of you know big transitions in economic growth economic development you know why is it that South Korea and Taiwan all of a sudden took off in the early 60s why did China all of a sudden took off in the late 70s Why is it that you know Mauritius began to take off in the 70s in all of these cases you have you know governments that come into power and that that really truly make economic growth and development a key priority. That's number one. Number two is you say

do you have a government that is sufficiently self-confident that is going to rely on its own resources and own its own understanding of what its problems are. Because if you get a government that's simply going to invite the world bank and the IMF and economists from Harvard to come and tell them what to do and they think that's how you get economic development policy is something not going to work because one of the key lessons from the history of development is that all successful development programs have a high degree of context specificity. Nobody would have been able to tell China that the way to not develop was going to be the kind of two track pricing and the special economic zones and the township and village enterprises that they came up with no Western economists would have been able to dream up all of these things. It was just thinking about sort of what might work here. Being pragmatic being experimental and that requires sort of you know sort of listening to

advice but also being sufficiently self-confident to to understand that that whatever work whatever works will have to be designed in light of local constraints and local opportunities and that requires some kind of off of self-conscious confidence. And the third I think is a little bit more more technical but I think it's important to sort of being able to have a clear sense of where the major constraints or or or obstacles to development are. It's clear that if you're a country like Mozambique you know you can turn yourself into Sweden overnight. So if you as the World Bank say what should I do the World Bank will come back and say you know your institutions are rotten. You have to fix them your governance is rotten you have to fix them your trade regime is rotten you have to fix them your subsidies are rotten you have to fix them your agricultural extension system is rotten you have to fix them. You can do all of that all at once. But the lesson from history from economic history is the good news is that countries get

rich without necessarily it all at once. Because if you're so far behind on all dimensions no it's enough to do just a few things just to get going. So that's the potential. And so what you need at that point is really to figure out where the most significant obstacles to picking your economy up is in some cases it's just going to be that you truly have corrupt leadership and unless you really change your governance and change it send a different signal to the private sector. You won't get any action. So there you just have to work on the corruption issue and maybe the trade policy the agricultural extension and other aspect of institutions can wait in other places. No you have a decent. Generally no. Maybe not a bad government but what you have is really a very high trade barriers. And then you have to work on that. And you know you can delay other things in other cases maybe you know that the banking system isn't working well and people aren't getting finance. And that's really the major obstacle if you fix that you can get high growth for the next 10 years until you know the

next thing becomes binding. So that's step really requires sort of having a good sense of where you start how you prioritize your reforms. All successful countries have had these broadly speaking these three elements. The unfortunate thing is I cannot give you a recipe because you know as I'm explaining to you I mean I think sort of when you look at the details of what countries have done it's actually it's not they've all given incentives to private markets to work but they've always had also strong governments. They also play the role of leadership and the devil has been in the details in the way that they've addressed those three key areas. These. Are

just last year. In the Congress Congress is very very. Focused. So I was like

I'm sorry. No no. You know I made a very I made a very very broad statement and you know that level of know you know I think we can probably agree that India is a democratic country and China isn't. China has a fair amount of local democracy today. But it's certainly you know you can go out and vote for the people that you want or you don't have the kind of civil liberties and press freedom that that you have and that I think also reflects itself in an labor market. It is true that just very recently wages have begun to increase but that reflects much more broadly sort of economic developments and not necessarily changes in bargaining and labor market bargaining or changes in collective bargaining institutions or the power of unions

in China. No I'm just talking about this the general you know I. Mean I recognize. I'm not familiar with the details of that if that labor laws so I'd be happy to hear about that maybe at the end of the end of the race card by this war. Right. Right. Right. Well maybe we can talk a little bit more after that.

OK. Now that's ok. Actually. Yeah. Yeah. The last chapter talks about four different areas so in the area off of trade policy I talk about how the next round of trade. Negotiations in the WTO ought to focus on on the rules of the regime. What I called about this sort of this these new traffic rules that's going to enable countries to have great greater room for their trade than industrial and other policies. So the idea is to to change the what trade

negotiators negotiate about from exchanging markets. Market access which is I lower my barriers you lower yours instead of having that conversation having a conversation about them you have more policy room in exchange for you having some more policy room. And can we design that in a way that's actually going to not create adverse spillovers on each other in the area of financial market regulation. I talk about how we should allow different countries to design their own different financial regulations and allow them to interfere in cross-border flows through complicated management or other techniques to prevent financial market arbitrage. In other words from flows from low regulation countries from undermining the integrity of regulations into more more highly regulated countries in labor markets I talk about how we could design a short term temporary labor scheme

where workers from poor countries can spend three to five years in the rich countries reap the benefits of that kind of globalization which I think I've been actually quite limited really from. In terms of expanding the global pie that's really the most unexplored frontier that we have. And I'm finding I talk about how we manage the rise of China and how we should deal with the question of macroeconomic imbalances and China's external surplus. So those are the the the the areas that I talk about. Thank you very much. Thank you.