S4, E2 Confronting multiple Crises: A Conversation with Ha-Joon Chang on the State of the world economy

Professor Ha-Joon Chang and Professor James Putzel discuss the state of the world economy.

Speaker: Ha-Joon Chang, SOAS
Chair: James Putzel, LSE

What is Cutting Edge Issues in Development Thinking & Practice?

These podcasts are recordings from the Cutting Edge Issues in Development Thinking & Practice lecture series 2023/24, 2022/23, 2021/22 and 2020/21, a visiting lecture series coordinated by Professor of Development Studies, Professor James Putzel and Dr Laura Mann.

The Cutting Edge series provides students and guests with fascinating insights into the practical world of international development. Renowned guest lecturers share their expertise and invite discussion on an exciting range of issues, from climate change policy, to pressing humanitarian crises. In 2020, the series took place online, enabling us to host fantastic speakers from around the world and to stream the lectures on YouTube, opening them up to a global audience. Now we are back in person but still recording the sessions to share with our global audience.

SPEAKER 0
Hello and welcome back to the Cutting Edge Lecture series. This is a lecture that's very much sort of within the theme of the cutting edge lecture series. We're talking about all the kinds of crises that are going on within the global economy today and how they affect the developmental challenge facing low and middle income countries. And when I was kind of writing down the crises, I kind of got a little bit depressing by the end of it. But luckily we have a kind of Superman of development studies to help us confront these challenges. So some of the challenges are the long term impacts of Covid, also the response to Covid in high income countries, raising the interest rates, creating all sorts of financial problems in low and middle income countries. The impact of Covid and the growing tensions between China and the US in terms of trade flows and the the emphasis on kind of reshoring and building more resilient supply chains, the economic slowdown in China and the impact that that will have on developing countries, the growing salience of industrial policies in high income countries, technological shifts happening, happening within production, things like automation and AI, the Russian invasion and the impact that that has had on the world's economy in terms of food and energy security and this growing geopolitical alignment, refugee crisis and of course the climate crisis and the kind of new emphasis now on green industrialisation and the way that various countries are trying to seek out new supply chains and new markets for the kind of next wave of industrialisation. So in order to help us kind of confront these challenges, we have the perfect speaker. We have Professor Hashim Chang, who is currently a professor of economics at Cambridge. He's also. Oh, sorry. I'm sorry. You were at Cambridge for 32 years. And last year joined Soas, where he's also the co-director of the Centre for Sustainable Structural Transformation. He's the author of countless books. I think some of you have probably already read them. Many of them you will read this year, including Kicking Away the Ladder Developmental Strategy and Historical Perspective, The East Asian Development Experience, the Miracle Crisis and the Future 23 Things They Don't Tell You About Capitalism, Economics, The User's Guide and your most recent book, which I think James might have a copy Edible Economics and also a lot of policy documents. He helped write the 2016 report, Transformational, Transformative Industrial Policy for Africa, which I use in my teaching. So really somebody who's able to talk about all of these different crises, I hope I'm not putting you in the hot seat and getting you guys as students to think about how development sits in this very dynamic picture that we're in right now. We also have our own Professor James Petzel with. Us today. As you know, he is the program director for the development Studies degree at LCC. He's an expert in the comparative politics of development in Southeast and East Asia. He's worked on lots of different topics, including agrarian change in the Philippines. He's done a lot of work on political settlement theory in relation to conflict and post-conflict environments and so many other things that we really are in for a special treat tonight. So, please, we're going to take an hour, an hour and ten minutes for discussions, and then we're going to open up for questions. I'd encourage you guys to write down your questions and be ready. I've noticed that the people who ask at the beginning, you know, fortune favours the brave, so don't wait until the end to put up your hand. I'm going to be a bit strict in allowing everybody just to ask one question, to try to to think of your best question for them. But without further ado, can you take us away, James?

SPEAKER 2
Okay. Yeah, it really is a pleasure, as always, to have you here at the school. And at least the students on my in my course have been reading you already this year. So I wanted to kick this off and this is kind of an informal way to do this thing tonight. So let's see how we go. I want to kick this off, mentioning that both the World Bank and the IMF are having their annual meeting in Morocco. I think it is next week. Yeah. And I'm wondering if this is happening at a particular inflection point in the global economy. We we have this huge financing gap facing especially the low income, at the least developed countries. And in terms of the SDGs that have been the Sustainable Development Goals, there seems to be a thought that this is this gap which is growing bigger now all the time, is going to be filled by the private sector and mobilising private investment. So I'm just wondering whether you think that the existing prescription for filling the financing gap facing developing countries is is adequate given what's going on in the international economy Now?

SPEAKER 3
I think to talk about that, we need to obviously talk about the challenges that developing countries are facing and more broadly, the world economy, because yes, I mean that there are the usual problems of meeting the Sustainable Development Goals and, you know, poverty, inequality, industrialisation, whatever that happened set in front of us. But now we have these added challenges of climate crisis, which is really reaching the point of no return. I mean, we will talk about climate crisis in greater depth later and the shocks from the pandemic from which many developing countries haven't really recovered. And on top of that, the kind of problems that are arising from the failure to adequately address the problems of the global financial system that was so blatantly revealed that in the 2008 financial crisis, because what people don't seem to. Talk about so much. Is that not that crisis? You know, it hasn't been resolved. We have. But I mean, until a few years ago that before the inflation started, we had lived in a world which was. Financially and macroeconomic is so screwed up that for over a decade there was no effective capital market. We got so used to zero interest rate. But when you think about it, this is like almost abolishing capitalism because the capital market has been basically suspended. You know, there is no real price in the capital market. And why did they have to do that? Because they didn't want to clean up the consequences of the global financial crisis in the correct way. Not just that that that put it into perspective, but after that 1929 Wall Street Wall Street crash. You know, I mean, a lot of changes were made. I mean, especially in the US. Yeah. I mean, they introduced a regulation on the stock market and bond market through setting up security. Sorry, The Securities and Exchange Commission, they introduced a Glass-Steagall Act that separated the commercial banking sector and the investment banking sector because Bill Clinton that abolished that. And that was one important reason behind this 2008 financial crisis. You know, they introduced that that welfare state through Social Security Act. They strengthened trade union power through Wagner Act or Wagner. I guess that the Americans would say, yeah, they set up the Federal Deposit Insurance Corporation and introduced that deposit insurance to stabilise the banking system. Now there was so many institutional reforms that are under recognition that are unsupervised, you know, that crooked financial system destroy the economy. What have you done? After the 2008 financial crisis, they raised the capital adequacy requirement for banks a bit. You know, that was it. Yeah. And they didn't even make people take responsibility. Now, can you imagine the, if you like, the pharmacological equivalent of 2008 financial crisis happening and no one even losing their job not to speak up but are going to prison. Yeah, but this is what happened effectively. Yeah. I mean, all these are Nobel Prize winners, you know, professors of finance, you know, central bank regulators. You know, they said that this is going to be a good thing, you know, to deregulate, to allow all these exotic financial instruments, you know, open up capital markets in developing countries. And when that happened, do you know any banker in the US and the UK who went to prison? No. I mean, they picked out the top rope guys. That is a poor the trader in some that was the Credit Suisse and this guy Epstein Yeah picked got a couple of crooks and said that these guys are responsible you know in fact some of you know the pharmacology professor said, you know, this drug is going to cure, you know, I don't know, malaria or that cancer or whatever. And if that guy was backed by corporate money, the World Bank and, you know, everyone and then this drug ended up killing thousands of people, you know, this guy would have at least been deprived of his Nobel Prize, you know?

SPEAKER 2
Yeah, exactly.

SPEAKER 3
In 1997, these two economies, Black and Schultz, they got Nobel Prize for their contribution to the theory of asset pricing. Two years later, when there was this massive financial crisis in Russia, it turned out that that these two guys were not just advising, they were partners of this of the hedge fund called Long Term Capital Management. And you know, they were not even deprived of the Nobel Prize, You know, Can you believe it? I said that.

SPEAKER 2
Let me follow up on this. You know, on this legacy of the crisis, you know, and even Stanley Fischer, who used to be the head of the IMF about six years ago or so, was astounded how quickly the very meagre reforms of the international banking system were being unravelled. Exactly.

SPEAKER 3
Yeah. Yeah.

SPEAKER 2
And we didn't hear that kind of criticism from Stanley Fischer. Yeah. But I want to ask you, you know, now we we see more and more sub-Saharan African countries, especially the poorest ones, facing a new debt crisis, a debt crisis that makes us think about the 1970s and early 1980s. And I'm wondering if you can explain how that linked with the financial crisis.

SPEAKER 3
Yeah, so how this is. I think this, you know, because they didn't want to make any institution reform. They first tried to save the financial system by lowering interest rate to zero. You know, unprecedented. The Bank of England. I mean, it became a true central bank in the 1840s, but it was set up in the 1680, 1690s, I think. So they have a record of its interest rate for the last 350 years. Interest rate was never lower lower than this and it was zero not just for, I don't know, three months of crisis, you know, it was zero for like over ten years. Yeah. So that the system is that that sorry. They try to save the system by cutting interest rate even that was not enough. So they invented this thing called quantitative easing, which was flooding the money with the system, the flooding, the system with the money, but only channelling it through these banks, which then didn't channel it to the real economy. So they sat on these assets. So that lent it to the best customers that from their point of view. And I remember when I first came to this country in the 80s as a graduate student, a retired British banker, said that the secret of British banking success is that you never lend money to people who need it know. Yeah. So that you that lend money to this that that funds and the the hyper wealthy individuals, what do they do? They invest in assets and then you create a huge asset inflation. You know, the absurdity of this was seen during the pandemic, during the pandemic in the UK, in the US, the economy was tanking at the rate of about 10% per year during those months because American and especially British stock market was breaking record like every week. How is this possible now that the financial economy is completely disjointed, that from the real economy, so that, you know, money was out floating around to that absurd extent and then developing countries when they faced various crises, first up from the malfunctioning in the global economy that came with the financial crisis and then the ending of super growth in China, which had reduced their earnings export earnings from the commodity boom and then the pandemic. And what do they do? I mean, they want money, but then, you know, the global multilateral financial institutions say, no, we encourage you to borrow from the private sector so they that the issue bonds that in dollars. And yeah, I mean for a while that that looked okay because the interest rate was zero at the core of course that when you are a peripheral country, you will have to pay quite a bit more than zero. But still, I mean, it was a lot lower than what they were used to. But now interest rate has been going up with the inflationary pressure, you know, coming from the pandemic and the resulting disruption of supply chains that the war in Ukraine and so on. Now that these countries are finding it that that impossible to repay the debt. Yeah. So now we are in for a very, very difficult time and yeah, now they're also told that you need to make energy transition and, you know, do all kinds of things. How are they going to do it in this kind of situation? It's a mystery.

SPEAKER 2
So, you know, Laura was going through the whole list of crises that were facing in the global economy. And, you know, what strikes me is that the pandemic that erupted on top of the continuing mounting evidence of the impact of climate change is raising rather fundamental questions about the structure of the global economy. So we have very long value chains, right? The supply chains are very long. There's been a concentration of corporate power such that I think Unctad came out with a report last week that that that just. Work. Companies control 70% of the trade in grain. You know, and we see we saw during the pandemic how impactful the pandemic was on incomes, because so many people in so many countries have become almost entirely dependent on low paid service sector work. Right. So so they're out of work and had no income. And in fact, the the approach to poverty reduction that guides a lot of our international development agencies and the bilateral development agencies has been such that they just lifted people beyond the threshold of poverty. So we are pandemic erupted. You had millions of people thrown back into poverty. So this is a big question I'm asking you. So what what is the possible direction of change that's indicated by that? It suggests that the way the global economy is organised now, with its long supply chains, etcetera, and the concentration of power within it is, you know, terribly dysfunctional. I mean, we'll go, we can talk more. Yeah.

SPEAKER 3
I mean yeah, that work well at least seem to work fine when everything was running smoothly. I mean China is booming, sucking into imports and churning out the all kinds of things that almost every node of the supply chain that probably except at the top, except in a few industries, you know, And, you know, there were no kind of major war or the disruptions that are happening. And yeah, I mean that you develop this system of supply, which is based on the assumption that everything will work like a clockwork, you know, the so-called just in time management system invented by the Japanese. Indeed, 1970s and 80s. But yeah, the problem is that this that the system is very, very efficient, but it has so many links which could be broken. It's so complicated that one thing gets disrupted and the whole thing the goes out of sync. But, you know, this is not simply about concentration of power in the biggest global companies, although, I mean, that is the most important aspect. But, you know, there are a lot of companies producing these very specialised producer goods, you know, that machine parts, industrial chemicals and so on that have huge market share, you know, So that back in was when was it, 2011 or something like that, when there was this massive earthquake and Japan, Fukushima apparently one relatively small by the standard of, you know, the, you know, shell and, you know, the General Motors and so on, a relatively small chemical company had its factory destroyed. But it turned out that this company was supplying something like 70% of world output of this very specialised chemical that you need to use in kind of fitting these microchips into mobile phones. Yeah. And yeah, I mean, when that happened that that the production of. These chips and the mobile phones got disrupted by months. So every time when you specialise. I mean, you gain by that raising efficiency. But that efficiency is we are only belatedly realising that the cost of this fragility. So how do you make this more the resilient, as they say? Well, for developing countries, the problem is that even more complicated because that they need to find a way to kind of upgrade within the value chain. Yeah. I mean, whether it's that true more independent route or by it being fully that buying into the the global supply chain system, they need to do that because you know that especially with concentration of power at the top, the developing countries at the end of supply chain, they are getting crumbs. I mean, the best example is the Philippines. If you go to the World Bank website, you will find this that the data which shows the share of high tech product in total manufacturing export. And by that standard, the Philippines is the most high tech economy in the world. That ratio is like 65%. South Korea 35%. The US 25%. Singapore, 30% was something like The world is 40. But despite that, the Philippines has only $3,500 per capita income because what they do is euphemistically known as a screwdriver operation. I don't know whether they even use a screwdriver. It might be just the fingers, you know. So that that you know, it's one thing to be plugged into this global supply chain, but for developing countries that they need to find a way to operate within that chain. It can be done. You know, when South Korea and Taiwan first started joining this global value chain in the 1960s. Now they are doing the lowest of the lowest. So that, for example, LG, the Korean company, which is like the king of display market these days, is started out as the lowest grade assembler of TV for the American company RCA. But then the South Korean government had this industrial policy which had pushed and helped LG and other companies upgrade to the top of the value chain. And when RCA went bankrupt in like 2012 or something, LG bought a huge chunk of it. It's like, I don't know that the poorest campesinos that are in Latin America, Latin India, that are coming back to buy the land. So you can't do these things. But, you know, it requires a very determined long term effort and investment.

SPEAKER 2
So the Philippines has 80% of the content of its electronics exports are import. So that really underlines how how how little is actually being created. Exactly. You've written a lot about industrial policy. And you if if countries are going to upgrade in the global value chains, clearly they they they need to articulate an industrial policy, unlike the Philippines. I mean, every country has an industrial policy, but the industrial policy was just to assemble electronics, right. In the Philippines. So but what I'm wondering, for many years, obviously, with the neoliberal formulas, starting with Thatcher and Reagan and those reforms, one couldn't talk about industrial policy. And you've commented now in recent years how once again, we can put it on the table and have a discussion about it. I'm wondering if you think that the arrival of Biden in the White House and the legislation that he's taken, you know, kind of historically passed legislation around green industrial policy. It's clearly the articulation of a fairly long term and, you know, really highly financed industrial policy. So is it a game changer in terms of the international debate now, in terms of countries and developing? Countries being able again to talk about an industrial policy to meet these challenges in these global value chains. What are your thoughts about that?

SPEAKER 3
Yeah, no industrial policy, right? You know, started out as a career economist that working on industrial policy. My PhD was on industrial policy. It was published as a proposal to political industrial policy in 1994. I've been doing research on it for over three decades, but, you know, until probably about 2010, you know, I mean, if you told people that you are working on industrial policy, they look at you like you are crazy. And yeah, even Justin Linde, the former chief economist of the World Bank, was a, you know, a very mainstream neoclassical economist, told me that when he was the chief economist at the World Bank and tried to promote some industrial policy, you know, the kind of industrial policy such as this, very mild, you know, I mean, he was met with such resistance. I mean, when I met him in a conference, I mean, I knew him at a personal level a bit, and he confessed probably 90% of the economists who work under him actually are against the industrial policy. And he said that it was bloody hard to even make people talk about it because they think this is a non subject. Now, of course, that was at the liberal electric and intellectual debate because the industrial policy never had disappeared, you know. I mean, my book The Ladder, I showed that the is at least until the 70s, you know, most of today's rich countries use their very extensive industrial policies, you know. I mean the EU. Yeah. Allegedly to abolish industrial policy but they just renamed it policies for the regional balance, thereby giving tons of money to Spain and Portugal and that some of the Eastern European countries to develop infrastructure. You know the host that foreign investors I mean they and the Americans that spend huge amount of money on subsidising research and development. In the case of the US, I mean, they had arguably the biggest, at least in financial terms, the arguably the biggest industrial policy program in the world, only that they called it defence policy.

SPEAKER 4
Yes.

SPEAKER 3
Yeah. So that you know that that that that probably many of you have heard that you know the kind of. Computer, Internet, you know, GPUs. All these things were initially developed as a result of the US defence research policy. Very few people know this, but even semiconductor was initially almost entirely financed in his research by the US Navy. So they had that that all this the electronics related industries that are being, you know, massively, directly and indirectly subsidised by these defence programs. I mean they have but these series of research institutes called the National Institutes of Health is not just one place but scattered all over the country doing research on, you know, biotechnology, genetic engineering and other aspects of health related technologies. You know, I mean, I think they found it too embarrassing and took it down from the website. But until about ten years ago, you could go to the website of the American Pharmaceutical Industry Association and could see that at least 30% of the pharmaceutical research in the country was financed by the government. So you had all those policies, of course, that are being hidden and so on. You know, the it was a bit incoherent. So now that they are trying to be more coherent. But, you know, I mean, I wouldn't be too sure because the next year the orange manta could win again. Yes. And that is all out of the window. Yeah. So, yeah, but they are very serious about it. However, trouble is that they are doing it to basically promote their own interest. And still developing countries are discouraged from doing this. I mean, now because of the US and the EU becoming more explicit about industrial policy, the developing countries have a bit more political space. I mean, they can say, well, you keep telling us not to do it, but your inflation reduction act, it violates the local content requirement that the provision in the WTO use a cbam carbon border adjustment mechanism. He said he didn't tariff, you know, and so on, so that they have more space. But in practice that, you know, these countries that these are powerful countries will just do what they want. And developing countries when they try to do it will be, you know, officially taken to the dispute settlement court of the WTO or the bullet by, you know.

SPEAKER 2
Yeah. So you think there's going to be a lot more reassertion of do what we say, not what we have done. Only now it's even what we're doing. That's right.

SPEAKER 3
Doing. Yeah. Yeah. But, you know, I mean developing countries have to just the, you know, do it themselves, you know, because, you know, time is running out. I mean, you know, if developing countries do not take action, you know, renewable energy will be the second oil.

SPEAKER 2
Well. You know, this is exactly what I wanted to move our conversation on to now, and that's the climate crisis, because it's so profound. We see how how in every sector we talk about agriculture, we see the pollution, you know, the destruction of soils. We talk about international trade, and we see the destruction of the seas. I mean the seas being destroyed not only by all the plastics we're putting into them, but also this horrible the worst kind of fuel, the most polluting fuel is being used to ship things around the globe. So we have we have new problems of the the scale of ice melting at the poles. We're really in deep trouble. So in the face of that and thinking about this need for developing countries to get on with it and, you know, capture some of the manufacturing capacity, the capacity to establish a modern industry, how are developing countries going to be able to catch up? In the face of this, the pressures of climate change. And they're being hit the hardest and the most immediate by the by the changing climate. Yeah.

SPEAKER 3
No one ever touches I mean, nothing new about this, you know, I mean, all the time that the technologically more advanced countries, you know, define the opportunities for developing countries. You know, you know, for example, Peru had an economic boom called the guano boom in the 1830, the 40s, you know, which was based on them, the country that digging all this accumulated guano and exporting it as the very highly priced fertiliser to Europe, you know. But well first of all that they overexploited it and after about 30 years they began to run out of the stuff. But you know that few decades later of fatal blows are dealt to them because the Germans invented that technology to fix nitrogen from the air using electricity, the famous the Harbour Bosch process. And that was the end of Peru's. Yeah. The economic boom. Yeah. And yeah, so that basically that the rich countries define even what is the resource. Yeah. I mean you've heard about this, that coltan, you know, which is dug out by, you know, the warlords in the Democratic Republic of Congo, because it's a crucial metal in the the the microchips that for mobile phones. You know, I mean people that mobile phones are coltan was I mean yeah, it was a mineral but it wasn't that valuable you know so that we are going to see why we are already seeing it in this ecological transition. I say ecology, not just climate, because as James said, it's not just climate. We are in a comprehensive ecological crisis. But, you know, recently Germans have invested a lot in Namibia, their former colony, which then was that that taken by South Africa as a colony after the First World War anyway, so that they apparently have built huge solar farms in Namibia with which they are planning to produce green hydrogen. So they are going to generate energy. The green energy from the solar panels use it to make this hydrogen fuel, which they'll ship back to Germany. Maybe sell it to the Koreans. Yeah. What is the difference between that and Shell going to Nigeria and pumping oil out and shipping it back to Europe? You know, if you are not careful that these that the renewable resources are going to become the second oil, it will leave nothing well, virtually nothing in the country where it is produced. And yet developing countries need to. I mean, it's a huge challenge, but they need to make sure that they get a slice of this action. I mean, if I thought that these guys are coming to exploit your energy, can you at least that do a deal similar to what you do with things like oil? I mean, that give us 65% of the revenue and then use it to develop higher value added activities where there is a processing of that particular minerals or that that some development of some industries are using the renewable energy that is generated by German, Chinese or Korean or whatever, that solar farms and geothermal that power stations and what have you. Because if they don't do it, I mean, we are going to repeat the same thing again and again and again. I mean, the developed countries will define what is a resource They identify the source come to you if you're lucky enough to have it, but then they'll just take it out and then maybe ten years later that this won't be resource anymore. I mean, that, you know, already in the battery, you know, the market, the Chile, Bolivia, Argentina, they are quite happy because they have a lot of lithium. But the Chinese are developing sodium batteries sold.

SPEAKER 2
The Cop 28 is coming up next month in the UAE. So can we expect any movement on this? We had a promise for a very important fund to be established to allow this kind of technology transition and developing countries. But so far, it remains pretty, pretty empty.

SPEAKER 3
No, no, we have to keep at it. I mean, we have to ask for the climate reparations. We have to ask for loss and damage. We have to ask about technology transfer. We have to ask for more affordable financing. I mean, okay. I mean, even if we did that, that we know what developing countries get won't be a lot. But if you don't ask for them, you are not going to even get them. Yeah. Yeah. So I mean, the progress on those fronts that are infuriatingly slow, but it's actually a lot better than what it was, say, in 1992.

SPEAKER 2
I suppose we have to guard against, you know, going even further backwards. You know, you saw all this progress and you've written about it, and your students have as well, or former student. Ethiopia and Ethiopia is really, you know, incredible fast development, progress being systematically dismantled. Exactly. Yeah. You know, by not to mention the conflict in the war in Ethiopia. So so the the forces that be are not too welcoming.

SPEAKER 3
That's right. Yeah. Yeah. No Ethiopia between the mid 90s and mid 20 tens was actually growing faster than China. I mean of course it started from a very low base, so even then it's barely $1,000. But you know, it does start doing very, very well. But yeah, I mean that with the kind of ethnic conflicts and, you know, the undermining of these more interventionist regimes by certain forces in and outside the country now. Yeah. I mean that is on those. Yeah. I mean.

SPEAKER 2
There's two more things I wanted to ask you about before we let everybody else ask you questions. And the first has to do with this what seems now a huge geopolitical shift and a very antagonistic position coming up from the west, Western Europe, the United States towards China, you know, and sanctions about what what technologies can be exported to China, etcetera. And I'm wondering, how profound do you think this this schism is and how dangerous is it in relationship to global security?

SPEAKER 3
Yeah. Well, I have actually a slightly different take on this from other people. I mean, first of all, you know, I think we. Always have to take a historical perspective in thinking about this huge kind of global forces. You know, we talk about poly crisis. You know, I mean, we are told that we are living in a uniquely crisis ridden time. Yes, in one sense we are because of the climate challenge. I mean, that has to be made clear. But other than that, are we necessarily in a more crisis ridden country than at other periods? You know? I mean, go back to the 70s. I mean, I say go back to 1976. I mean, Saigon had just fallen to communist forces in North Vietnam. We had thought that four fold increase in oil prices in 1973, that following the Arab-Israeli war, that war not the US, only like 4 or 5 years ago suspended gold convertibility about US dollars because its economy was so weakened compared to Europe and China. You know, there was a huge crisis. I mean, in 1972, there was a Club of Rome report that was saying that we are going to run out of oil. That around 1995, you know. I still remembered that reading about that report. I mean, I was it was too difficult for me because I was only like at that 1011. But you know that. Yeah, but the newspapers kept saying that we are going to run out of oil in 1995, you know, And I was thinking, gosh, I'm not even going to be able to ride a car that the when I'm 28, you know. Yeah, of course. I thought we have actually run out of the oil, you know, the oil that was extractable with the technologies of those days. So they were actually not wrong. Only that we have found much more powerful ways of extracting oil that, you know, two kilometres below the seabed and all that stuff. So, you know, there was that energy crisis, you know, thought it was that great worry about global hunger. You know, the Green Revolution was launched, but we are not sure whether it will actually that produce enough food to feed people. You know, the war famines that Bangladesh you know the following the the war of secession from Pakistan. You know, the world was at that in a huge crisis, multiple crises. And I just gave you the 1970s but go to the 80s and 90s, you know okay. Some decades of it more grim than others. But basically that's how the world moves. You know.

SPEAKER 2
So we have one last crisis to comment on.

SPEAKER 3
Yeah. But this that however, I think the when it comes to China-US confrontation, I think it's not really as serious as people think because first of all, this is not the second Cold War, the Soviet bloc and the US bloc during the Cold War. They did even trade with each other. Yeah, they could not. Well, except that that they couldn't do it without nuclear bombs because then everyone will die. They could not destroy the other and still be okay. But the US and China, they are like conjoined twins. No, seriously. So yet US median wage until a few years ago had been stagnant for four decades. You know. How did the US start to survive as a political entity? A By that that encouraging people to pile on their debt and be by importing cheap consumer goods from China? If the US that wants to that end this trade relationship with China will be a huge political crisis because that that people are not going to be able to survive with the kind of wages that they are getting. China owns that 13% of US Treasury bills. Can you tell about several relationship with a country that owns one seventh of your national debt? Yeah. No, this is impossibility. I mean, the all the supply chains, okay. I mean, they talk about the reshoring frame shoring and so on, but this is going to take at least. Couple of decades, even with the concerted effort to unwind that global supply chain that had been built over the last 40 years with China at the centre. Okay. I mean, that Intel build is the first the chip factory in Asia outside China in 25 years in Malaysia. But, you know, these factories are last for ten years, 15 years. I mean, it will take a couple of decades to divest that from Chinese, that economy, even if it was that possible. So in that kind of situation, I think the confrontation is actually currently only focussed on things with military implications. Yeah, there there is a conflict. The US is not going to let this military dominance that the that taken over by China. But. At least in the next couple of decades. It's only there that it can really fight China.

SPEAKER 2
But at the same time, so it's not China who's been invading states and. Yeah, exactly. Taking down states. Yeah, it's not China has one foreign military base and yeah.

SPEAKER 3
If you had you know as a good Korean I'm not a fan of China another fan of the US, not a fan of anyone because we've always been invaded and divided and chopped up and. Yeah, yeah. Anyway, but you know, yeah, even for Korea, I mean it is obvious if you are a Chinese person, you will feel threatened. Yeah. You are basically surrounded by countries which are American army bases, American aircraft carriers, you know, I mean that. So yeah, you are very right. I mean that you need to look at this from both sides, but also to finally wonder even that this military front, you know, I think that, you know, the Americans started this too late. If they wanted to put that push China behind, they should have started at least ten years ago, maybe 15. Yeah. Now China's closed. I mean, recently Huawei announced this new phone which uses this, what is it, seven nanometre or whatever that are cheaper that the people thought China cannot make. Yeah so actually the pie that that that bearing down on these military chips that the Americans might be actually encouraging China to catch up you know by making it necessary for them to do these things. You know. So I think that, yeah, this is a lot more complicated than that. What newspapers usually make out. Yeah. Yeah.

SPEAKER 2
Okay. I'm I had a lot more questions to ask you, but I want the audio audience to be able to do it. But before I turn it over to the audience, I have to ask you about this book.

SPEAKER 3
Ah, yes.

SPEAKER 2
Edible Economics, A Hungry economist explains the World. I, I learned in this that you and I started graduate studies coming to the UK in the same time. That's right. I didn't realise that I was older than you. Yeah, Yeah. By almost a decade, I think. But anyway, we started at the same time and we saw, you know, we arrived in a place that was a culinary disaster. I mean, there was ever since everything had been drawn back during World War Two. Yep. Never been restored. So we did see over these decades since then, you know, this explosion of good food. That's right. In the UK, it's expensive. Yes. That's the students. No. Who just arrived in London.

SPEAKER 3
But it's better than expensive bad food.

SPEAKER 2
Yeah. Yeah, that's right. But at the same time, we saw this, you know, the recipe of economics, as you put it, becoming more and more restricted for all these decades. So I just want to ask you, what prompted you to write this book and perhaps you can tell everybody why they might want to read it.

SPEAKER 3
Yeah, Well, I mean, the short answer to that question is, you know, I like economics. I like food, so why not? Yeah, but a longer and more serious that answer is, you know, my view is that in a capitalist economy, democracy is meaningless unless everyone understands at least some economics, you know, because every decision, even though it may not look to be related to economics, is now made with reference to economic dimensions. Whether it's the preservation of cultural heritage or the teaching of ancient languages in universities. You know, I've even met some British people who tried to defend the monarchy in terms of the tourist revenue generation. Yeah, you know, I'm well, I'm not a UK citizen, so what I think about this doesn't matter. But as an anti-monarchist, I can do that. I can say these guys shouldn't exist, but at least they make money. Yeah. So let's keep them. Yeah, but if you're a monarchist in this country, the monarch is supposed to be the head of the state religion Church of England. And technically, all British subjects are members of the Church of England. Yeah. And you try to defend that kind of foundational institution in terms of the. Forest revenue that it generates. It's come to that in that kind of society. If you don't know economics, you don't know what you are voting for. So that I have been engaged in a kind of personal crusade against economic illiteracy. You know, I've written many books are trying to draw in the ordinary citizens into the discussion of economics. But yeah, I mean, however hard I try. People find economics boring. I think what I write is a bit more interesting than what most other economists write, but not massively so. I have always wanted to write a book that could draw people into economics in a natural way. So here, every chapter starts with, well, it's titled After the Food Ingredient. You know that chocolate chilli, acorn, garlic. You didn't know that you could eat Acorn, but we eat a lot of Acorn in Korea. And then I started with some stories about that food item. It could be about this biology could be about this, that role in some historical event or my personal relationship with it. But before you know it, it's morphed into an economic story. And yeah, so it's basically food. The story is a bribe. You know, bribe two people to make them read economics. Yeah, it's a bit like the ice cream that some of your mothers might have promised to you before she asks you to eat your vegetables for my bribe. Is that better? Because the ice cream comes first in this book. Yeah. So you don't have to read that economics if you don't want to, although they are telling from various reviews in Amazon and so on that there are some readers who have been deceived by this trick. But yeah, because they say things. I bought this book thinking that it's about the food. It isn't. But yeah, I got to learn some things about economics. I'm not complaining.

SPEAKER 2
So anyway, it's a really delicious meal.

SPEAKER 3
So yeah. Now is that even better? Is in paperback, so it is more affordable. Yeah.

SPEAKER 2
Okay. Thanks a lot.

SPEAKER 3
By the way, if you come from a country with less than $10,000 per capita income, please go ahead and copy the book. Yeah. People like you about reading pirate comic books. So I'm not going to kick it to the letter.

SPEAKER 0
Okay. Thank you very much. You did an excellent job of showing students how to subvert a question and to say there's no crisis. So, okay, do we have any questions from the audience? We have lots of questions. Can we take these two down here and then can we take. This this gentleman over here in the blue.

SPEAKER 5
Hello, everyone. My name is Peter. I'm from Norway. I study economics and philosophy. My question is structured in two points. Given a forecasted growth rate of 2% GDP growth globally needed to some degree for governments to pay their government debt and have a sustainable employment rate. So fourth, in 100 years, the world economy will be 12 times bigger. In 20 years it will be 140 times bigger in 300 years, 648 times bigger. And in 14 years, 20,000 times bigger and so on. It's compared to growth point number two. We have way more than enough financial and productive resources on earth to solve our problems. However, they are concentrated in very few hands. We could, for example, give all that is needed, everyone that needs it malaria, vaccines. But this is not a profitable, profitable endeavour for capital to be allocated by those who control it. Question Given the destructive nature of economic activity and consistent economic growth, is development a problem of growth or distribution? What can be done about the fact that financial and productive resources are controlled by so very few people? Thank you.

SPEAKER 0
Okay. And a reminder that I just want you to ask one question as a kind of chivalry to the rest of your classmates. Okay? Let's go up here to the gentleman in the blue, and then we'll come down to you.

SPEAKER 6
What do you think of Cuba's example for in terms of economic development and independence under Fidel Castro?

SPEAKER 0
Okay. And question down here.

SPEAKER 7
Hi. I have a question about the part that was about developing countries needing to make sure that they get a bigger slice when being exploited for their resources. Maybe it's a very simple answer or very complex. I'm not sure, but it sounds very logical. Like if I have the resources that you need and I need, I want a bigger percentage of the revenue, for example, that I just demand that. So when explaining that dynamic, do you blame the developing side or like the developed side that is the exploiter? Right.

SPEAKER 0
Excellent question. And I asked you guys to make eye contact with me if you want to ask a question. So the next round will move smoother. Okay.

SPEAKER 3
Can you.

SPEAKER 0
Can we. Yeah, we're going to take this one.

SPEAKER 3
Yes. Yeah. Okay. So that. Don't we have already enough? And do we need still more? Well, in theory, yes. We probably have enough to provide decent standard of living that to everyone on earth. But the problem is that, you know, in the absence of very powerful global government, we do not have the mechanism to distribute this. So we have to have kind of multi track the approach. And, you know, people talk about the growth that I think is actually a misleading term because, you know, we yeah, I mean, we want greater well-being and that doesn't necessarily involve growth. But that I think is wrong to focus on growth of material products. So we need to basically grow in a different way. We need to, you know, accept that that sometimes actually growth is a bad thing, sometimes that we need growth. So anyway, but the overall, the rich countries say that countries with more than $25,000 per capita income, but they don't need more growth, that they need to redistribute that and to kind of consume in a different way and have a different notion of what is a good society. The poorest countries, a countries with less than six, $7,000 per capita income, they need to grow. They need to grow, whatever that means, because at that level of income, growth is literally a matter of life and death, you know, because that you get to eat when there's growth, you get to eat another bowl of rice. You know, you can heat your house a bit more. You know, you can visit maybe not the hospital because it's too expensive. Maybe that that. But you can visit a local pharmacy once more and get some painkillers. Yeah. I mean you don't have to that that probably that you have less chance of your child dying at the age of two. Yeah. So those countries need to grow the what? I mean, according to the estimates about various climate scientists, what these countries do in terms of economic growth really doesn't change the the big picture of climate change. So they need to be allowed to do whatever they need to. The countries in the middle are the tricky ones because that does some of them, but should combine, if you like, for the short term growth and growth. Some of them need to completely restructure their economies. Others might find opportunities in the energy transition and become that kind of main source of renewable energy and therefore their growth that that do not really make a big impact on that that climate change. So I suggest that that we need to look at many different things, not just growth distribution, but different ways of consuming, you know, more collective consumption, cutting the working hours so that we have more kind of welfare coming out of spending time with the friends, family and community. You know, we need to think about that. Different ways of living. Cuba. Well, I mean, if any country can produce such good music, you know, they must be doing something right. Yeah, but, you know, Cuba Cuba has suffered so much from the US sanction. Yeah, it's a bit like I don't know what China is. Doing to Taiwan. So petty. You know why? Yeah. And of course, I thought biggest problem for Cuba, as well as North Korea, for that matter, was that they had relied on subsidised Soviet oil. And when that suddenly disappeared, everything collapsed. So that is difficult to tell whether the economic trouble was generated by the inefficiency of the economic system in the North Korean case. That is that that that that actually more obvious that this kind of I mean dynastic I wouldn't call it even communist. I mean dynastic semi feudal ruled by one families what that created all the problems but in the case of Cuba is not clear whether it's the socialist system or the US sanctions or the collapse of the Soviet that the union that has made things difficult for it. And finally, the.

SPEAKER 0
It's the biggest slide.

SPEAKER 3
Yeah, yeah, yeah, yeah. So I think that, you know, that there can be different views because especially when it comes to things like oil, you know, that many of the oil producing countries actually do not have the technologies to extract oil. So for them, it's either zero income from oil or, you know, 25% of whatever oil that the Americans and the French can't extract. And then they usually go for the second year. When it comes to solar energy, I think the pictures are quite different because there's solar energy imports that are much less that are capital investment and that that much that that the the fuel technologies then oil extraction. So there are probably these countries can bargain harder. They should bargain harder, you know because that especially in the early stages of development of these industries there's always that issue of scale economy. If you can produce something on a bigger scale earlier than others, you gain such a huge advantage that maybe that, you know, maybe I should say that to the Germans, that if you want this, that you need to pay us a lot more. So the dynamic is a bit different. Yeah.

SPEAKER 0
Okay. I'm going to try to institute a policy of having at least one woman and I just saying a lot more men have been making eye contact with me than the women. So women, please make more eye contact with me. So we're going to start with the man in the front row with the glasses and then the lady with the curly hair raising her hand over there. Okay.

SPEAKER 8
I hope everybody can hear me. Thanks for being here. First of all, you have been advocating for industrial, let's say, state led industrial policy based on the growth seen in Europe, the United States and mainly tiger economies. But actually, when we look at the African continent and I'm talking about Zambia or or states that tried to create growth through state led industrial policy like Zambia, Nigeria, Tanzania, this led to complete misallocation of resources in lots of sectors and often also failed diversification of the industry. So to, let's say, just have the oil or copper industries. And I just want your perspective on this. Shouldn't we make debate of growth much more diverse rather than just focusing on or just advocating for industry policy because it works for some countries, but it is not a fit model, fit for for, for all things. And for example, Tanzania, there was actually the market deregulation then that led to like 80s 90s to to increased growth. Thanks a lot.

SPEAKER 0
But in between, we're going to hear from you.

SPEAKER 9
Hi, my name is Valentina and I want to know, what do you think are going to be the consequences for the real economy of the current corporate governance strategy of maximising shareholder value where remunerated shareholders and investing in capital markets is preferred over reinvesting in productive capacities and innovation.

SPEAKER 3
Thank you. Okay.

S11
Hello, my name is Dua and I'm from Lebanon. You talked a lot about quantitative easing and the interest rates. How do you see inflation moving forward and what would be the role of central banks?

SPEAKER 3
Right? Yeah. On the first question, yes. I mean, some countries have been more successful with industrial policy than others, but that's the case with any policy, any, you know, the business model. I mean, some will do better than others. So that's not necessarily an argument against that industrial policy. But having said that, yes, I mean that you can do it better. You can do it less well. So what I made a crucial difference between the East Asian countries and some of the other developing countries was that the East Asian countries put a lot of emphasis on export. This is crucial because as a developing country, you need to have the foreign exchanges to buy machines and technologies if you want to develop your economy. I mean, you can get a bit of that from 48. You can get that, you know, get a bit of money from remittances. But basically this has to come from export. And many developing countries fail to build the capacity to export so that they initially build or set up the import substitution industries and that they soon run into trouble, eh, because that they cannot import the spare parts and the kind of the intermediate inputs that that they need to keep it going and b more importantly, they cannot upgrade these industries because they don't have the pulling exchanges to buy it, that the technologies and machines so that that. Countries that fail to do that fail to build a viable export model. Have a short period of growth and then they hit the wall. So so-called balance of payment constraints. Now, having said that, however, you know what the African countries that are managed with this crappy industrial policy during the 60s and 70s was much better than what they managed, that during the next 40 years of neoliberalism, because the per capita income grew in sub-Saharan Africa at the rate of 1.6% during the 60s and 70s, it grew at 0.3% per year for the last 40 years. Which means that that at the end of this 40 year period, African per capita income, is that something like 7% higher than what it was in 1980. You know, China used to grow that much in half a year so that you have to put these things into perspective. But the most important point is that, you know, that there are good industrial policies, there are bad industrial policies. So you cannot I don't know. I mean, some people, I don't know, go to gym and hotel back because they are not doing it right. Yeah, but that is not an argument against going to a gym. Yeah. I mean that it being bloody hard is an argument against it but not not hurting your back. Secondly yeah shareholder capital. I mean this is frankly the biggest disease that especially the Anglo American economies that have contracted. You know, I mean, is that really destroying capitalism? I mean, the American economy has published a massive series of research. That show that in the last, say, 25 years, the US and UK corporations have given away around 95% of their profit to shareholders in the form of dividends and share buybacks, which is a practice where you buy your own shares so that share price goes up, which allows your shareholders to cash in if they want. Some companies are actually borrowing money to to share buybacks. So basically the stock market is turned into an ATM machine. I mean, it's not you know, in the textbook, you learn that the stock market gives the money to corporations so that they can invest. Yeah, not anymore. Yes. I mean, the US always had the high the ratio of profit going to shareholders. But even there are until like the 70s, about only about half of the profit was given away to the shareholders and the other half retained in the company, most of which was reinvested. But now they are retaining only 5%. I mean, it's that the higher in the Europe, about 70%. But I mean even in Europe that is that that retention rate has fallen quite a lot. Yeah and as you thought that that the said this is restricting the ability of corporations to make productive investment which we desperately need because in many countries infrastructure is even in the rich ones, infrastructure is getting dilapidated. I mean, this country being the ultimate example, yeah, we need that investment for energy transition, you know, and we are not getting the necessary money. Inflation. How is it going to evolve? Well, if I knew that, I would be a very rich man. Yeah, but that one thing I can tell you is that this phase of inflation is supply driven is not because there's a lot of money floating around chasing after scarce goods, as the usual expression goes. So unless you fix the supply chain problem, unless you end the war in Ukraine, it's not going to be solved. So the central banks are now doing the only thing they know how to do to fight inflation, which is to raise interest rate. But this is creating havoc with the asset markets, which are they themselves had that blown up with the quantitative easing. So now we are in a way that tricky situation. I mean, some people are predicting that the new financial crisis will erupt next year because a lot of the commercial real estate in the United States are going to come up for renewal of their mortgage. And, you know, already some banks that earlier this year have sold this that that commercial that real estate mortgages at a loss because they are worried that when they all come together next year they're going to be hit. So yeah I mean that don't hold your breath. I mean that something that is going to happen, I mean, whether it's that commercial real estate in the US or that developing country, that crisis. Yeah. I mean that the beauty of financial crisis is that you think it's not going to happen until it happens. Yeah.

SPEAKER 0
Okay. We're going to start with the gentleman down here and then the lady in the blue jumper at the front.

S12
Thank you so much for your wonderful talk. I'm Marty, by the way, from Georgia. My question is, like, I want to connect, like to link macroeconomics with the industrial policy. So I think there is no industrial policy without. Well, yeah, it's general truth, right? There is no industrial policy without a proper macroeconomic management. But well, in 1970s some important things happened. Like Milton Friedman made the people believe that the money's natural. So as the industrial policy is on the side of it's under the fiscal priority, it's under the fiscal policy. So in times of current mainstream macroeconomics, which say basically that, well, I think that's false, that if you spend money, there will be inflation. So inflation is something like which stops us making any industrial policy in conducting any industrial policy. So I think developing countries is quite, quite hard like to find a way of. Macroeconomic management, which will help them to industrialise these economic sectors. So my question is, what do you think about MMT? Because MMT has quite different understanding of money which says that that's not natural. It has like influence on the real variables. So which is quite important for the industry. So is it something helpful for the industries? So thank you. Okay.

SPEAKER 0
And then the other man with the jacket. That I've seen.

S13
Okay. Okay. Hi, I'm Emily. You mentioned sustainable energy could become the new oil, and you've touched on it a little bit before. Cop 28 is going to see important talks in sustainable energy and climate finance. And it's hosted by big actors in the oil industry. So in a particular context, we've got the foundations of sustainable energy and climate finance happening within a certain context. Do you see the risk of patterns and practices of the oil industry seeping into sustainable energy discussions, even maybe a discourse and the way we talk about it? And how would you guard against it at international negotiation events? Thank you.

S14
Hello, my name is Enzo. I am a development phase student. I've been reading a lot of your work recently and I've come across this recurrent theme of the importance of industrial policy and industrialisation for development. And I wanted to ask, is it possible for every country to develop? Or do we instead live in a zero sum world where some countries are able to develop and other ones are always restricted to being exporters of primary goods? And this would be the reason why countries that have industrialised and developed are so eager to kick.

SPEAKER 3
Yeah, yeah. Yeah. First on the macroeconomic front. Yeah. Let's start with the observation that industrial policy doesn't necessarily need money. I mean, there are a lot of industrial policies that can be done, have to be done through coordination, better coordination, better dialogue. You know, the provision of a little bit of that financial support for, you know, the cooperative arrangements, whether it's agricultural cooperatives or the industry associations. So actually, it's a myth that that industrial policy needs money. Yeah, I mean, yeah, some of it does, but not all of it does. Yeah. This is why in the 80s, when there was the first phase of the modern debate on industrial policy, a lot of that anti industrial policy people say that actually Japan doesn't have much industrial policy because that if you look at their fiscal figures, industrial subsidy as a proportion of GDP is below the OECD average. Of course that that this is the typical problem that people are looking at only available data without knowing anything about the country, because there were a lot of other industrial policies about corporate restructuring and coordination of technological development, you know, joint research, you know that, you name it. Yeah. Now, having said that, yes, you need some money, but that, you know, the macro policies can actually, if you don't do it that well, that anti-inflationary macro policies can hurt the industrial policy. So you don't want that hyperinflationary situation. So you need to control that. But you can go to the other extreme. The best examples are Brazil and South Africa. In the last 25 years, you know, they had literally the highest real interest rate policy in the world, like ten, 12 years. And in those countries, capitalists basically have all become finance capitalists because who wants to make productive investment a problem with that? Striking workers and dispute with suppliers. And you know that problem at the customs when you could buy a government bond and have 11% return guaranteed. Yeah. So these are macroeconomic policies have killed those countries. So you need to get it right. Yeah. Finally, the final component of monetary theory. I think he thought that works in the US when you basically can print your money. But I don't think it's relevant for developing countries because they are very hard that macroeconomic constraints. The next one was oh yeah, is seeping into sustainable energy. I very much suspect so, yeah, but you know that only when we know that theory, only when we are aware that this if you are not careful, would be a problem for the renewable energy sector. We can fight it. Yeah. As I said earlier, I think there's a bit more room to for bargaining for the developing countries because we are not talking about drilling oil down from about two kilometres below the seabed. Yeah, we are talking about solar farms. Yeah, we are talking about that, the less capital intensive technologies. So let's hope that that we get somewhere there. And finally the industrial policy is zero sum game. I don't think so because that if you all. Yeah, I mean let's face it. I mean some countries will always do better than others. I mean that's by definition. But you know, you can't do that if other countries are successful, you have a bigger market. Yeah, I mean, this reminds me of this famous article that I published in. 1982, which is for a while very popular by this American trade economist William Klein, who argued that the so-called is a misnomer, in my view, but the so-called export led growth model of the four little tigers in East Asia, South Korea, Taiwan, Hong Kong, Singapore is not replicable because the OECD market already already been saturated. I mean, this article has been comprehensively disproved by China. I mean, the country that is kind of that that 15 times bigger than all of these countries put together has found market has lifted a lot of people out of poverty. So it's not a zero sum game. I mean, if there's any worry about industrial policy being too successful, it's the planetary boundaries, not the market. Yeah.

SPEAKER 0
Okay. So I am trying to go in order, but adding having at least one woman in each one. So we have some gender representation. And the lady here with the blonde hair.

SPEAKER 3
Oh, well, this time you should have two women. Two women.

SPEAKER 0
Okay, let's have these two women right there.

S15
And so just returning a little bit to the financial crisis, which is perhaps not strictly related to development. And I was wondering, like what your takes are on what should be done then or what should have been done to resolve the 2008 crisis besides potentially putting the entire financial class into jail? But that's another discussion.

S16
When we're talking about macroeconomic concerns and so on? Recently, a lot of people have been talking about a move to the Wall Street consensus instead of the Post. Washington Yeah, yeah. Kind of the use of market based finance to through the kind of. Construction of development classes. And I was wondering, some people say that this might be a good thing in terms of industrial policy because it gives developing countries a little bit more leeway, whereas others are saying that it's more so kind of construction for construction sake without actually having a good lot. So I was wondering what your opinions were.

SPEAKER 0
Okay. And the gentleman up here and could you come round to the gentleman with the green pads and we'll take four of this round. And I can see.

S17
Thank you very much. I had a very short question. Recently, India has started trading in rupee with its neighbouring countries and the last meeting of the BRICs. A lot has been said about the domination of the dollar in international trade. What's your take on this and do you think that the potential election of Donald Trump next year. My effect, the outcome of the dollar domination. Thank you.

S18
And my question is, the problem with speaking truth to power is that it leaves you with truth and then with power. Given the fact that a lot of heterodox economists like you have written a lot of smart and good things about the global political economy. Why do you why do we still get austerity as a response to global financial crisis? And how can we as a younger generation affect future maybe towards some? Well, not smart ideas, but least can we regain power and democratise economics not only by writing smart books like economics with chapters name like Banana and Coca-Cola, but what should we do as a young generation Because we cannot write books yet.

SPEAKER 3
Okay. Great questions. Yeah, basically that in terms of the resolution of the financial crisis, I mean, you needed a comprehensive reform of the global financial system. I mean, none of it was done. Yeah. And you know, I could list many, many things. But just taking one example from all your question about shareholder capitalism, you know, why is that shareholder capitalism so powerful is because so many things have been the story of so many financial segments, of financial markets have been liberalised. So many new countries have been opening their financial markets and so many new products have been created. Shareholders have so many options. So companies feel that they have to be nice to them. So if you want to change that, you need to close down many of these avenues. You know, you could have that banned some kind of, well, legal but egregious that are practices like naked short selling, which means that you are actually short selling some shares that you don't even own, you know. I mean, is that that that crazy? I mean, there are so many things that you could have done, but very few of those were done. And what are few things that have been done with that rollback by Donald Trump? You know, so yeah, I mean, I'm not saying that that, you know, it was easy to do, but that, you know, unless you did at least some of those things, that it would have been resolved. Yet the so-called Wall Street consensus, you know, they talk about so-called de risking investment. Yeah, this is the private sector basically wanting to have their cake and eat it. Yeah. No, because they don't want downside risk. They only want upside risk. Yeah. And I'm not saying that actually that in itself is unjustified because sometimes you have to do that. I mean, that capitalism has developed in the way it has because you have actually the risk that a lot of investment, you know, for example, in the 19th century I mean that no country well that until the mid 19th century no country had generalised limited liability. Limited liability was a privilege that you would get for nationally important ventures from the Crown or the Government. Yeah. So actually being an entrepreneur is very risky. You run business, something goes wrong, they come and take your pots and pans. You know, they put you into prison that has prison, you know, I mean, in that kind of environment, it was actually a miracle. There were a lot of people invested, you know, So you de-risk the enterprise by giving the people that companies are limited liability provided that they meet some minimum condition. I mean, there was no bankruptcy law. Yeah. I mean, so you introduced bankruptcy law to protect the debtors that that from creditors, at least while they restructured the enterprise and the debt. Yeah. So I'm not actually against that de-risking itself. But this time around I think they are asking for too much know they basically want zero risk. Yeah I mean if that that that everything that you do is underwritten by the government that you know who wouldn't be a rich person. Yeah so I think we need to calibrate this very well. Yes. I mean there would be some need for you know the government that underwriting certain ventures and you know, giving some subsidies and backing it up. But in return. Well, A, the the limits have to be set clearly according to some general plan. And B, there should be conditionalities. Yeah. Yeah. At least the Biden government has that. Well, I mean, it's minimal, minimal, minimal conditionality. But they stipulated that if you are getting government subsidy that that from the poor from the inflation reduction Act while you are getting the subsidy you cannot do share buybacks. Yeah. And that's like the least that you can do because that that there was obvious danger that you give subsidy to these companies and instead of using the money to invest, they would give it to the shareholders. So you need that those conditionality. Yeah. Indian rupee dollar. Yeah. The sad thing is that the US dollar domination is. Backed up not just by the economic power, but the military power. So it's been so difficult to dislodge it that despite the launch of the euro, the expansion of renminbi. So I think it's going to take a while. Having said that, you know that these things are never lost forever. You know, Pound used to be, you know, 4 or 5 times that more valuable than the dollar and was the undisputed world currency. But it's not anymore so that but it will come in a long historical arc. It's not going to happen because I don't know six Latin American countries that start trading in Brazilian real and India that trades with Pakistan. I mean, the sad truth is that these economies are not significant enough. Yeah, that's that. Oh yeah. How how.

SPEAKER 2
Dominant the dominant currency of reserve has always been with the dominant military.

SPEAKER 3
Power. Exactly. Yeah, Yeah. Yeah, yeah. What do we do to democratise economics? Yeah. It's not enough to just study the different economics. You have to practice it in your life. Yeah, and actually that already. There are a lot of people doing that. I mean, this new generation of economists that who emerged after the 2008 global financial crisis that organise around rethinking economics movement internationally this that that network of that pluralist economists you know these people have you know not done things to democratise economics that in real life. So some of them have gone on to set up organisations that do popular economics, education. You know, some people have, but the continued with organisations are calling for the reform of economics curriculum. So not a student movement anymore, but that we are organisations with resources. And yeah, I mean people are going to work in the Bank of England, the European Central Bank government economic services and try to spread different economic ideas in those organisations. Even if you are not working in those positions, you can always that try to bring in, you know, that more sense that into what you are doing by, you know, persuading your colleagues that, that this is predatory, that that practice, you know, that we need to look at the bigger picture. And yeah so I think you know, because there's a limit to what you can do with revolutions. Yeah. Yeah. You can go on the street for two years. Yeah. But it cannot last forever, that kind of situation. So you have to build it into your everyday life, you know, whether it's a matter of, I don't know, talking to your friends and relatives or trying to do your job a bit differently, trying to participate in this campaign organisations. Yeah, I mean it depends on who you are, what you want, where you are working. But you know, unless you make it a part of your everyday life that this kind of campaign can last forever.

SPEAKER 2
Vladimir saying you still get austerity policies that are being prescribed.

SPEAKER 3
Yeah, yeah. I mean, that part I think is that very simple to explain. You know, these things are done because it benefits people with money and power. Yeah, as simple as that. Yeah. Yeah. The thing is that, you know, it's not because these people are stupid, that they are doing austerity policy. They are doing it because it benefits them. Benefits their friends. Yeah. Benefits their families. You know, I mean, it's not not because these people are so stupid that they cannot understand. Yeah. Keynes. Yeah. That is that not because they are so stupid that they don't know that that the, you know, the cutting, the welfare budgets and so on that drive people into desperation. Yeah, ignore it. But they still do it because it benefits them and they think they can deal with the consequences in some way, whether it's through populist deception or that kind of outright repression. You know, they are doing it because that they think these benefits. And they can get away with it.

SPEAKER 0
Okay. I'm I feel like I'm a bouncer in the best nightclub in London and I'm doing my best guys, but I'm just going in order. So let's have the gentleman here.

SPEAKER 1
Thank you.

S19
My name is Anna. I'm from Jordan. My question is rather simple, but how do developing countries catch up or use the bargaining chips that they can have from natural resources when the latter has already been kicked away, when they don't have the methods to actually catch up?

SPEAKER 1
Thanks. Okay.

SPEAKER 0
Thank you.

S11
Hi. My question was about inequality. And okay, we can see that even like the for example, in Africa, the richest countries, the one that became richest and the one that we're all starting, for example, Botswana, for example, South Africa. The idea is inequality. So what do you think? To what extent do you think that inequality is something that is necessary? To what extent do you need that? We will always need someone that is losing in order to gain something. And economically and with regards to growth. Thank you.

SPEAKER 0
And the man with the turquoise t shirts. And then the man with the green shirt up here.

SPEAKER 3
So like a bouncer, you are picking people with the best dresses, huh?

SPEAKER 0
I don't want that to be believed by the audience. There are some very sharp dresses who are on my list.

S22
So my question is been partially answered. So this related to a comment you made very early in the talk about the unique lack of repercussions in the financial sector for unethical behaviour for malpractice. And my question is, if the regulators continue to remain lax on these individual decisions, do you think that will contribute to the next financial crisis or is it more of a systemic issue?

SPEAKER 0
And the man with the green shirt upstairs.

S24
Hi. My family's from Cuba. I can tell you that categorically. They're not doing things very well apart from music and food. My question is about decision making. Both. It seems like we are facing very complex, difficult problems, but the decisions are being made by systems are perhaps a little bit antiquated, perhaps both on the political and electoral level, but also on the information system level, like how do we there excluding a lot of people from information, academia, media, that kind of thing. So I'm just the question is about kind of the future of those systems. How can we improve them? Yeah. Yeah.

SPEAKER 3
Thank you. Yeah. No, I'll try to be quick so that we can have more. Yeah. Question yet has not already been kicked away? No, I don't think so. That for example, you know, I often joke that the WTO has become the best friend of lazy government officials in developing countries, because when your minister wants you to do something, all you have to say is that all businesses are banned by the WTO because the guy is not going to run to the library, go through 103, 850 pages of WTO agreement and say, no, actually it can be done. Yeah, actually, they I mean, that the report that Laura mentioned, the one I did for UN Economic Commission for Africa, it actually in detail explains what are the available policy space. Of course, that is more reduced than before. I mean, that's not true. But you know, it's not as if you can not do anything. And yeah, also that you know, that developing countries are not doing as much as that what is allowed on the WTO. I mean, for them that a lot of countries can have very high tariffs, you know, even countries that that have committed to kind of put putting the ceilings on the tariffs that is known as binding. Yeah. The tariffs that 20, 2,530%. Yeah. When the actual average industrial tariff applied by developing countries barely 10%, you know, so they are not even using the full allowance. Yeah. So yes. That we can still do things. Inequality. Well, I mean inequality is of course not necessary. I mean, nothing is necessary. I mean, thinking that something is necessary is actually that the biggest step that that you can take towards defeat? Yeah. Because that that that one side you think something is natural, necessary. There is an alternative. Then you've already lost the debate. Yeah. So inequality is, of course not necessary. You know that the European countries grew at the unprecedented rate that during the so-called golden age of capitalism, despite having income inequality, that, I mean, it would shock you that today I mean, Gini coefficient in this country was like 0.24. You know, it was 0.22 in Norway in the 60s. You know, I mean that unbeknown to most people that even the United States had two communist presidents that that known as Harry Truman and Dwight Eisenhower, under whom the top income tax rate was 92%. It's not necessary. I mean, the. Yeah, I mean, of course you cannot go to the extreme like Maoist China or Khmer Rouge. I mean, that will be a disaster. But, you know, very, very low level. But inequality is compatible with a very dynamic economy. Yeah. I mean, that that financial malfeasance that, you know, these bad behaviours of course need to be rooted out. But yeah, the system is more systemic. I mean that like the, you know. Not just because some people broke the law. I mean, those laws themselves are the problems. I mean, allowing things like naked short selling, allowing the products to be sold that when they were really rubbish, repackaged as gold dust. Yeah. So that's the bigger problem. Decision making system is outdated. Yes. I mean, I think we have a great challenge, especially in the age of information manipulation. But I think that there are also many things that you can do to promote democracy which are not being done despite being relatively simple to implement. I mean, like electronic voting, you know, that, you know, Brazil can I mean, not that that prevented the the emergence of Bolsonaro, but, you know, that they vote for seven different posts that on the same day from president to the governor to the local district councillors all electronically. I mean, that makes our voting a lot easier. Why aren't other countries doing it? I mean, the US was having a civil war on the hanging chads. You know, these are little bits of paper that are sticking out from party. You know, it's their only because they don't want that people to vote and they want some room for the manipulation of vote counting. And, you know, so there are actually a lot of things that you can do to, you know, make politics that are better. You know, that I heard that in Belgium that the limit to political donation is something like €350 in the US. You can donate like literally that that that millions of dollars you so that is that making a difference.

SPEAKER 0
Okay. I'm just going to take very, very short questions, starting with the gentleman who has the microphone and then going upstairs and then the lady in the red. And I'm really sorry to everybody else. Please don't chase me up.

S25
Hi, Professor Chung. Thank you so much for talking with us. My question is very short. You had previously compared mainstream economics to the Catholic Church in the Middle Ages has become like the language of the rulers. Do you think a similar problem is happening in development where the language of development and what development is is being consolidated and controlled by, you know, UN development goals, SDGs and whatever that could be in the future? Thank you.

S24
Good question. Hi. I just want to ask a really quick, quick question. Basically, we were criticising the aftermath of the 2008 financial crisis. I just wanted to know what was the one fundamental structural change in the global economy, especially of those of the developing developed countries actually that you wanted to see that's not being carried out and you think that's causing further crisis?

SPEAKER 0
And the lady down.

SPEAKER 9
Professor Chang, you said that there is an economic dimension in every decision. What do you think about the political dimension of decision Is corruption and what it entails? A way of self kicking the ladder, the development ladder. And how so in developing countries does this could hinder people's incentive incentive to develop in a personal and in a collective way? Yeah.

SPEAKER 1
Yeah, yeah.

SPEAKER 0
Okay. I think.

SPEAKER 1
That's it. Okay. Yeah. And you.

SPEAKER 0
Can ask. You can chase Ha-Joon Chang instead of me.

SPEAKER 3
Yeah, actually, are we having this drink?

SPEAKER 1
We're going to have drinks so you can.

SPEAKER 3
You know, you can.

SPEAKER 1
Ask me that. Yeah.

SPEAKER 3
Okay. Yeah. I mean, whether it's economic development, you know, the terms of debate, the concepts, what counts as the acceptable scientific practice. These are all influenced by the power structure. So, you know, huge range of things. You know, indigenous knowledge is that that looked down upon because it doesn't use the language of Western science. You know, the if you do not buy into this individualistic philosophy, you are dismissed as social scientists. Yeah. So where do you stop? And, you know, I mean, even if you ignore those that are more fundamental things, I mean, what is the topic of debate? Is that basically determined by people who have greater financial resources and, you know, influence on media? Yeah. So you know that a lot of the problems are huge. Problems in developing countries are just brushed over and they get worried about some matters that that is very local to rich countries. You know, So, yes, I mean, that we have to keep fighting it. I mean, the grand the way of talking about this is decolonising development. But, you know, we don't need to take that discourse to that level just to see that what is debated, what is accepted and so on. Is that hugely influenced by the global power structure? Yeah, I think there is no one thing that will fix the global financial system, basically. You know, the problem is that the financial industry has become too powerful. And it has basically become a beast of his own. And the example of British the stock market during the pandemic clearly shows. Now this is that. Yeah, I wouldn't go as far as calling it a casino, but it's that thing that works on his own. I mean, it's got nothing to do with the real economy and that needs to be checked. I mean, that you need to shut down a lot of the segments of financial industry. You need to impose greater kind of requirements for that, that scrutiny and reporting. You need to punish people harder for malpractice, you know? I mean. These financial institutions make so much money that, you know, some years ago that got to some Swiss bank or something. I mean got a huge fine in the US by the SEC. Turns out it was. I mean big money like that 787 million or something. But turns out that this is just that that three days profit or something. So if you want to make it hurt.