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Is Economic Self-Sufficiency a Myth? · Trumponomics

0:02
Speaker 1: Bloomberg Audio Studios, podcasts, radio news. What I would point
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Speaker 1: out to people who take the view that globalization has
0:11
Speaker 1: gone too far is that you'll miss it when it's gone.
0:15
Speaker 1: We can't roll up those supply chains and cut ourselves
0:19
Speaker 1: off from other countries about dramatically changing the way we live.
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Speaker 2: I'm Stephanie Flanders, head of Government and Economics at Bloomberg
0:35
Speaker 2: and This is Trump Pnomics, the podcast that looks at
0:37
Speaker 2: the economic world of Donald Trump, how he's already shaped
0:40
Speaker 2: the global economy. What on earth is going to happen
0:43
Speaker 2: next this week? Why you'd miss globalization if it went
0:48
Speaker 2: Probably a lot more than you think. There's been a
0:51
Speaker 2: lot of books written in the last few years about globalization,
0:53
Speaker 2: deglobalization and the populist threats to integration. But one that's
0:58
Speaker 2: a bit different is Ben Choose Exile Economics. What happens
1:02
Speaker 2: if globalization fails. Ben is the policy and analyst correspondent
1:07
Speaker 2: at BBC Verify and was previously economics editor of BBC Newsnight,
1:12
Speaker 2: a job I used to have million years ago. What's
1:15
Speaker 2: distinctive in Ben's approach is he's taking the arguments against integration.
1:19
Speaker 2: You might say both seriously and literally he's asking not
1:23
Speaker 2: just whether it's desirable for nations to shun globalization to
1:27
Speaker 2: be self sufficient, whether it's even possible. I sat down
1:32
Speaker 2: with him in late June at an event organized by
1:35
Speaker 2: The Conduit in London to discuss his reporting, his style
1:38
Speaker 2: of storytelling, and how his own family history played a
1:42
Speaker 2: part in the development of the book. I thought it
1:44
Speaker 2: was worth sharing with you an edited version of that conversation.
1:48
Speaker 2: I started by asking Ben why he decided to write
1:51
Speaker 2: the book.
1:57
Speaker 1: On that question, I feel incredibly honored to have had
1:59
Speaker 1: a sort of front row seat to see the impact
2:03
Speaker 1: of globalization firsthand. And of course what does that mean.
2:06
Speaker 1: We've all seen globalization in our lives. But because my
2:09
Speaker 1: family came from China, my father's family came from China
2:12
Speaker 1: in the in nineteen sixty he came over to the UK.
2:15
Speaker 1: I was born here, but he's still got family back
2:18
Speaker 1: in China, and I first visited. I write about this
2:21
Speaker 1: in the book, but I first visited China in nineteen
2:23
Speaker 1: eighty five. When I went there, I was a quite
2:25
Speaker 1: young child, and I still remember it incredibly vividly, the
2:30
Speaker 1: lives they were living those forty odd years ago, and
2:34
Speaker 1: it was incredibly uh frugal. Really, you know, in family
2:38
Speaker 1: of six lived in about three rooms. They would pull
2:41
Speaker 1: out mattresses from under the beds and all sleep on
2:44
Speaker 1: the floor, just simply because that's the only way they
2:46
Speaker 1: could live. They didn't have things like washing machines, microwaves.
2:49
Speaker 1: We were living in Hong Kong at the time, so
2:52
Speaker 1: they asked us to sort of go to this special
2:54
Speaker 1: friendship store, which is the only place where you could
2:57
Speaker 1: get western white goods, and you had to be a
3:00
Speaker 1: foreigner to buy them, might from not from China. And
3:02
Speaker 1: then we bought it and then get gifted it to them.
3:04
Speaker 1: And it's crazy now because you think, how out have
3:06
Speaker 1: you ever been to ch I'm sure a lot of
3:07
Speaker 1: you being just like how CONSUMERISTI all is. You can
3:10
Speaker 1: get anything there that you can get here, iPhone's laptops,
3:14
Speaker 1: certainly washing machines. So to see first hand how their
3:19
Speaker 1: lives have changed in my lifetime, and I think it
3:23
Speaker 1: is very largely due to globalization. So I suppose the
3:27
Speaker 1: question is why did I want to write this book?
3:28
Speaker 1: Because I think that I could bring something a sort
3:31
Speaker 1: of bit of personal experience, if you like, to seeing
3:33
Speaker 1: how the good that globalization has done to my own family,
3:38
Speaker 1: and to see it very vividly in a personal way
3:42
Speaker 1: really brings it home. And when we hear people like
3:45
Speaker 1: Robert Leitheiser, who is Donald Trump's first trade advisor in
3:49
Speaker 1: his first term, he wrote this book that says it
3:53
Speaker 1: with the title No Trade is Free, and he very
3:55
Speaker 1: explicitly states that it was a mistake to trade with
3:58
Speaker 1: China or allow China specifically into the World Trade Organization
4:03
Speaker 1: in two thousand and one. It was a mistake. And
4:05
Speaker 1: I just kind of like incredibly jarring, because what comes
4:08
Speaker 1: into my mind when I hear that is my own
4:10
Speaker 1: family backing Gangdhou in southern China. Well, really wasn't a
4:13
Speaker 1: mistake for them. And now we can talk about the
4:16
Speaker 1: ways which China does create very serious problems for the
4:21
Speaker 1: world trading system in many many ways. But I think
4:24
Speaker 1: on a very personal and human level, I think I
4:27
Speaker 1: really wanted to tell that the other side of the
4:29
Speaker 1: story actually and bring that personal experience to bear.
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Speaker 2: I think, and of course I find that criticism about
4:35
Speaker 2: the Entry's wto jarring for a whole other reason because
4:38
Speaker 2: when I was at the US Treasury, we were just
4:40
Speaker 2: negotiating the China entry to the WTO, and since then
4:46
Speaker 2: almost everyone thinks that that was a mistake, including many
4:49
Speaker 2: of the people who were involved in negotiating it, because
4:52
Speaker 2: various assumptions were made about what was going to happen
4:54
Speaker 2: to China after that, that they would basically become more
4:56
Speaker 2: like us and sort of market driven, that being part
5:00
Speaker 2: of the global economy would push them on this same
5:03
Speaker 2: path that we've all been on, and that clearly has
5:06
Speaker 2: not happened, And you engage very directly with that in
5:10
Speaker 2: the book. We should part that briefly, but I guess
5:14
Speaker 2: we should also slightly lay out your stall in terms of,
5:17
Speaker 2: you know, what's the architecture of the book? How did
5:20
Speaker 2: you decide that there are real things that people are
5:24
Speaker 2: responding to when they're nervous of globalization?
5:28
Speaker 1: Yeah? Absolutely so. The gestination of this book was really
5:32
Speaker 1: in the pandemic, when the question that was arising in
5:36
Speaker 1: lots of people's minds was, hang on, has globalization gone
5:39
Speaker 1: a bit too far? Are we a bit too interconnected?
5:42
Speaker 1: Has it made us vulnerable where we thought it was
5:45
Speaker 1: making us more prosperous. We all remember in the pandemic
5:49
Speaker 1: the shortages of things like masks, medicines, and hard on
5:53
Speaker 1: the heels of that, of course, we had Russia's invasion
5:56
Speaker 1: of Ukraine in twenty twenty two, where there was a
5:58
Speaker 1: big shock to global oil prices and food prices, and
6:02
Speaker 1: there was a real sense that we were a bit
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Speaker 1: too exposed and maybe we should start to do produce
6:08
Speaker 1: more at home, that those supply chains shouldn't be as
6:11
Speaker 1: extensive as they are, and that maybe, as I said,
6:15
Speaker 1: globalization had gone a bit too far. I really started
6:18
Speaker 1: the idea of writing this and it came out of it.
6:20
Speaker 1: Actually a BBC radio series I did called The New
6:22
Speaker 1: Age of Autarchy with a question actually rather than an answer,
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Speaker 1: and that question was is it possible to actually do
6:28
Speaker 1: those things to be more self sufficient in terms of
6:31
Speaker 1: things like food and energy and medicine, you name it.
6:36
Speaker 1: It was a good faith exploration of whether it was
6:39
Speaker 1: possible or not. And as I started to write it,
6:41
Speaker 1: explore these supply chains in more detail and go into
6:45
Speaker 1: some of the complexities of the way the global value
6:50
Speaker 1: and supply chains have constructed, it became more and more
6:53
Speaker 1: clear to me that actually the answer probably is no.
6:56
Speaker 1: At least we can't roll up those supplies chain and
7:00
Speaker 1: cut ourselves off from other countries about dramatically changing the
7:04
Speaker 1: way we live. And I think on some level we
7:06
Speaker 1: all know that, don't we, Because you know globalization if
7:09
Speaker 1: you think, well, just look around you. We wake up
7:12
Speaker 1: in the morning and you brush your teeth and toothpastes
7:14
Speaker 1: from Poland, and you go and have your breakfast and
7:16
Speaker 1: the grapes from Egypt, and then you put on your
7:19
Speaker 1: clothes and it was perhaps it sticks together in Bangladesh,
7:21
Speaker 1: and then you drive your German made car to the office.
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Speaker 1: That's the typical way someone describes how globalization shapes our lives,
7:28
Speaker 1: and it's all true. But what I discovered in this
7:31
Speaker 1: researching this book and lots of other people that made
7:34
Speaker 1: this point as well, And it's not just about those
7:36
Speaker 1: consumer goods which are the fruits of globalization. It's the
7:41
Speaker 1: components which make those consumer goods which are unfathomably globalized
7:46
Speaker 1: as well. Just talking about semiconductors, you know, we hear
7:50
Speaker 1: about those and we took Trump and others and Biden
7:55
Speaker 1: all wanted to make them in America rather than import them.
7:58
Speaker 1: But if you look at the supply for something like semiconductors,
8:01
Speaker 1: they're so unfathomably complex, coming from hundreds of different countries,
8:07
Speaker 1: these raw materials and the machines that make them that
8:11
Speaker 1: it really is impossible to see any single country having
8:14
Speaker 1: a fully nationalized supply chain in something like semiconductors, computer chips,
8:20
Speaker 1: and it goes for many other things as well, and
8:23
Speaker 1: I talk about lots of examples of these in the book.
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Speaker 1: So Yes. I started out I guess with a question,
8:28
Speaker 1: and I came increasingly to an answer, which is that,
8:32
Speaker 1: you know, don't take globalization for granted, or don't assume
8:36
Speaker 1: that it's going to be simple or easy, which is
8:39
Speaker 1: obviously what a lot of the exile economic exponents populist
8:43
Speaker 1: politicians say it's going to be quite easy to do
8:45
Speaker 1: these things. It really won't be. It'd be very expensive.
8:48
Speaker 1: And you know, I'm a BBC journalist. It's not my
8:50
Speaker 1: job to say what people should want or what politicians
8:53
Speaker 1: should do. What I'm trying to do in this book
8:55
Speaker 1: is say, be aware of the costs, be aware of
8:58
Speaker 1: the implication it's impossible. Well, you know, if people genuinely
9:02
Speaker 1: think that it's worth it, then that's fine, but I
9:06
Speaker 1: would like them to do it with the full facts.
9:09
Speaker 1: In mine.
9:10
Speaker 2: You mentioned semi conductors. I think with electronics generally people
9:14
Speaker 2: will sort of understand that it's a pretty complicated supply chain,
9:17
Speaker 2: and in fact, that is what we're discovering. You know,
9:19
Speaker 2: with the tariffs. Donald Trump sort of outraged the thought
9:24
Speaker 2: that even with various high tariff rates, Apple's still not
9:28
Speaker 2: going to want to make iPhones in the US and
9:30
Speaker 2: to your point, cannot make iPhones in the US because
9:33
Speaker 2: there's so many things coming from different parts of the world.
9:37
Speaker 2: But food, how hard could it be to be self
9:40
Speaker 2: sufficient in food?
9:42
Speaker 1: Well, that was one of the most fascinating journeys I've
9:45
Speaker 1: been on actually in the book, because that was the
9:46
Speaker 1: one where I started out was I think, I'm sure
9:49
Speaker 1: many of you will will will have this sense that
9:51
Speaker 1: do we really need to import so much food from abroad?
9:54
Speaker 1: You know, the UK provides about or supplies about sixty
9:58
Speaker 1: percent of the food that we consume in so, you know,
10:02
Speaker 1: pretty reliant on the rest of the world for food.
10:05
Speaker 1: And why not, as the farmers say, you know, produce
10:10
Speaker 1: more at home, consume more at home. It'd be good
10:13
Speaker 1: for good for farmers, good for the economy, and good
10:17
Speaker 1: for food security. And I think that is quite an
10:18
Speaker 1: intuitive argument. It's a very common argument that you hear.
10:23
Speaker 1: What I've discovered in the book is that it's really
10:26
Speaker 1: for a large part of the world, it's just not
10:28
Speaker 1: feasible to rely only on the food that can be
10:30
Speaker 1: grown in that individual country. So there's a striking cistic
10:34
Speaker 1: from a study done in twenty twenty which I imagine,
10:38
Speaker 1: if everyone on the planet had a one hundred kilometer
10:43
Speaker 1: circle drawn around them, what proportion of the world's population
10:48
Speaker 1: could feed themselves from staple foods grown within that one
10:51
Speaker 1: hundred kilometer radius. And the answer is it's only twenty
10:56
Speaker 1: five percent, So only a quarter of the global population
10:59
Speaker 1: could feed themselves within that area. So how big would
11:03
Speaker 1: that circle need to be around every single person on
11:06
Speaker 1: the planet so that they could feed themselves on staple
11:09
Speaker 1: foods like wheat and corn and potatoes and what have you.
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Speaker 1: It would have to be two thousand kilometers. And what
11:16
Speaker 1: that tells you is, given the size of countries, given
11:19
Speaker 1: the size of the planet, is that if we're going
11:21
Speaker 1: to feed ourselves as a world, as a planet, we're
11:23
Speaker 1: going to be incredibly reliant on trade in food. This
11:27
Speaker 1: idea and food self sufficiency is a non starter for
11:32
Speaker 1: probably most people on the planet. And that's really sobering thought,
11:36
Speaker 1: isn't it, Because we often hear this line, as I said,
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Speaker 1: we just do it at home. Just do it at home. Well,
11:41
Speaker 1: it's not going to happen. At least we're not going
11:43
Speaker 1: to have the kind of diets that we used to,
11:45
Speaker 1: increasing reliance on meat in large parts of the world,
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Speaker 1: the variety of food. But simply we can't feed ourselves
11:52
Speaker 1: as a planet with just national production.
11:55
Speaker 2: Although that fact does cast some light on why Donald
11:57
Speaker 2: Trump w with want Canada, because I think the Americans
11:59
Speaker 2: will probably do quite well if they could just take
12:00
Speaker 2: all of the Canadian planes.
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Speaker 1: Well, that was another interesting thing about it, because America,
12:06
Speaker 1: on the face of it, is very abundant in food.
12:09
Speaker 1: It produces more than it consumes. It's a big agricultural
12:12
Speaker 1: exporter to the rest of the world in net terms.
12:15
Speaker 1: But even America relies on fertilizer imports quite a lot
12:20
Speaker 1: of them from Canada. So even if you say America
12:23
Speaker 1: doesn't need the rest of the world when it comes
12:25
Speaker 1: to food, well, it actually needs chemicals from the rest
12:27
Speaker 1: of the world to make its agriculture so productive.
12:31
Speaker 2: In your chapter about food, you also you have a
12:33
Speaker 2: distinction which I think is used for in another areas
12:35
Speaker 2: as well, because you think of self sufficiency, as we
12:38
Speaker 2: often painted politically, as being the same as security. If
12:41
Speaker 2: you're making it your own, then you're not at the
12:45
Speaker 2: behest of foreign powers and dictators. But you make the point,
12:50
Speaker 2: especially with food, that food security is very different from
12:54
Speaker 2: that and is often just related to poverty.
12:56
Speaker 1: Yeah. I had a look at countries ranked by by
13:01
Speaker 1: food self sufficiency, so how much of their own consumption
13:06
Speaker 1: they're producing at home, and also about their levels of
13:08
Speaker 1: food security. Is the proportion of the populations who are
13:11
Speaker 1: struggling to feed themselves. So just to take two examples
13:15
Speaker 1: which I've plucked out in the book, which I think
13:16
Speaker 1: are really illustrative, So the Zambia in Africa, which is
13:21
Speaker 1: only seven percent reliant on imports according to the measures
13:26
Speaker 1: of the which I was looking at, so it basically
13:28
Speaker 1: produces more or less all that it consumes when it
13:30
Speaker 1: comes to agriculture, but it has food insecurity levels which
13:35
Speaker 1: are extremely high, so more than fifty percent. And if
13:40
Speaker 1: you look at a country like Mauritius in the Indian Ocean,
13:44
Speaker 1: which has a food self sufficiency ratio which is incredibly low,
13:50
Speaker 1: so almost the inverse of Zambia, but its food security
13:55
Speaker 1: was incredibly high. And what's the difference between those two countries.
13:58
Speaker 1: Mauritius is a much richer country than Zambia is. So
14:03
Speaker 1: precisely as you said, I think the lesson is what
14:06
Speaker 1: leads to food insecurity is not reliance on imports. It's
14:10
Speaker 1: poverty and you need to solve that if you want
14:13
Speaker 1: people to be well fed, rather than obsessing about local production.
14:18
Speaker 2: And actually, and you made the very obvious point which
14:20
Speaker 2: I hadn't thought about, that you could be completely self sufficient,
14:24
Speaker 2: but if you have a crop failure, if you've also
14:27
Speaker 2: closed yourself off from the world, then you are instantly
14:30
Speaker 2: less secure just through that factor.
14:31
Speaker 1: Lae. Yeah, I mean we all know this in a
14:34
Speaker 1: way because we all saw the example of Ukraine. Ukraine
14:36
Speaker 1: it has this reputation of the bread basket of Europe
14:39
Speaker 1: going back for decades, and it is it is. On paper,
14:42
Speaker 1: it's incredibly food secure, it produces more than it consumes.
14:46
Speaker 1: It's a big exporter to the rest of the world.
14:49
Speaker 1: But when it got invaded by Russia in twenty twenty two,
14:52
Speaker 1: it had to rely on the World Food Program to
14:55
Speaker 1: feed three million of its population. That just shows you
14:58
Speaker 1: how just have a large amount of agricultural production doesn't
15:01
Speaker 1: necessarily make you secure.
15:04
Speaker 2: So it's fair to say we've not overplanned this conversation.
15:07
Speaker 2: But you have taken me perfectly to the subject of
15:10
Speaker 2: Ukraine and Russia. Because energy is the other example where
15:14
Speaker 2: I think it's the most intuitive to people that we
15:16
Speaker 2: just can't depend on other nations for our energy, or
15:19
Speaker 2: at least it would be much better if we weren't.
15:21
Speaker 2: And the celebrated example which you go through, but I
15:24
Speaker 2: think a lot of people were have in their heads
15:26
Speaker 2: is you know, the way Europe, especially Germany. But Europe
15:30
Speaker 2: allowed itself to become very dependent on Russian gas, despite
15:34
Speaker 2: that the risk of overreliance on Russia being identified by
15:38
Speaker 2: Americans and the American intelligence community and others. So what
15:43
Speaker 2: about energy. Surely it is better for us to be
15:46
Speaker 2: independent in our energy supply, especially now we can get
15:48
Speaker 2: all of this nice you know wind.
15:50
Speaker 1: And so yeah, yeah, well, I mean it takes me
15:52
Speaker 1: back again to twenty twenty two when this was what
15:54
Speaker 1: the politicians were saying. This, as you said, Stefinitie, it
15:57
Speaker 1: shows the folly of relying on energy imports. A country
16:00
Speaker 1: like Russia can hold you hostage and cut off the
16:03
Speaker 1: supply and then you having to have power cuts or rationing.
16:07
Speaker 1: I found it very compelling that argument in twenty twenty two.
16:10
Speaker 2: But when you start as you were paying your gas.
16:12
Speaker 1: Bill, yeah, absolutely, I'm sure we all felt this, didn't
16:15
Speaker 1: we And it does tell so perfectly, doesn't it with
16:19
Speaker 1: the argument that we should decarbonize and rely on renewables.
16:22
Speaker 1: And it's all true to some extent. But if you again,
16:26
Speaker 1: if you go into the weeds, go into the supply
16:29
Speaker 1: chains of all these renewable technologies, you just see how
16:32
Speaker 1: distributed they are right around the world. Just for example,
16:36
Speaker 1: the battery that goes into an electric vehicle, the amount
16:40
Speaker 1: of critical minerals that it relies on is vastly greater
16:44
Speaker 1: than a petrol car. And those critical minerals are spread
16:47
Speaker 1: right across many, many different countries. There's no single country
16:51
Speaker 1: can realistically source all those critical minerals at home and
16:54
Speaker 1: have a national supply chain. Goes for China, goes to America,
16:58
Speaker 1: certainly goes for the UK. And so you just go
17:01
Speaker 1: through all these renewable technologies and you realize that actually
17:04
Speaker 1: we are going to be reliant on imports if we're
17:07
Speaker 1: going to have a renewable energy generating sector. So that's
17:11
Speaker 1: not to say that it shouldn't be done. It's to
17:14
Speaker 1: say that, actually, be wary of the rhetoric of self
17:18
Speaker 1: sufficiency or tarchy when it comes to energy, just as
17:22
Speaker 1: you should be wary of it when it comes to food,
17:25
Speaker 1: or semiconductors or medicines.
17:27
Speaker 2: If you read the book, we can sort of take
17:29
Speaker 2: it as read that he goes through quite a few things, medicine, steel, semiconductors.
17:34
Speaker 2: It's really hard, all of them to be self sufficient.
17:37
Speaker 2: If Donald Trump was sitting here, he would say, yeah,
17:41
Speaker 2: to right, it's really hard because we've had thirty years
17:44
Speaker 2: on the wrong path. You know, we took the cheaper option,
17:47
Speaker 2: the easier option. We took advantage of like falling to
17:49
Speaker 2: transportation costs, companies becoming more global, the fact there was
17:55
Speaker 2: a sort of broadly peaceful global environment. Countries are all
17:58
Speaker 2: seemed to be moving in the right direction. So businesses
18:01
Speaker 2: created these enormously complicated supply chains that they never should
18:05
Speaker 2: have done. And yes, it's going to be really painful
18:08
Speaker 2: to aren't pick it all. But if we don't, we're
18:10
Speaker 2: going to wake up tomorrow and everything we want is
18:13
Speaker 2: you know, being made by China.
18:14
Speaker 1: Yeah, well, Donald Trump has changed his tune on this,
18:17
Speaker 1: hasn't he, Because I'm sure you remember definitely in the
18:19
Speaker 1: campaign trail he wasn't talking about the long, difficult journey
18:22
Speaker 1: to a more resilient American economy. Now you're right, he
18:25
Speaker 1: has started to talk about how this will be hard
18:28
Speaker 1: and there are other you know, there will be sacrifices
18:32
Speaker 1: a long way. But I think how would I try
18:37
Speaker 1: and persuade Donald Trump?
18:40
Speaker 2: Just tim right? The Biden administration in some ways institutionalized
18:45
Speaker 2: his kind of gut instinct slash tweets, and he did.
18:49
Speaker 2: They did sort of focus more on resilient, focus more
18:52
Speaker 2: on industrial bis. But it was based on that same
18:55
Speaker 2: negation of the original idea of global or what a
18:58
Speaker 2: driven the previous version of globalization, which is we have
19:03
Speaker 2: to think about the long term costs our strategic position
19:06
Speaker 2: with regard, particularly with regard to China, not just the
19:10
Speaker 2: short term cost benefits.
19:11
Speaker 1: Yeah. I think Richard Baldwin, I think you've interviewed recently,
19:14
Speaker 1: had a great phrase that Trump was not how did
19:19
Speaker 1: he put it, He said he wasn't a new turn.
19:21
Speaker 1: He was a culmination of something that had been going
19:23
Speaker 1: on for a very long time in politics, this gradual
19:26
Speaker 1: sense of, you know, globalization is not working the way
19:30
Speaker 1: we thought it, we hoped it would, and we need
19:33
Speaker 1: to think more about pulling inwards and turning inwards and
19:37
Speaker 1: doing things differently. Because you're absolutely right, Joe Biden had
19:42
Speaker 1: a lot of those same instincts as well. His administration
19:45
Speaker 1: had a lot of the same instincts, and they were
19:47
Speaker 1: quite protectionists when it comes to things like Chinese electric vehicles,
19:51
Speaker 1: Chinese batteries, and you know, really took on what Trump
19:57
Speaker 1: had done in his first term and took it to
19:59
Speaker 1: a whole new level. And when it comes to when
20:01
Speaker 1: it came to making it harder for China to source
20:04
Speaker 1: the most advanced microchips, they were much more proactive than
20:09
Speaker 1: the Donald Trump had been. So I think that's really
20:11
Speaker 1: important to recognize that this isn't something that just don't
20:14
Speaker 1: just started when Trump came to the White House. What
20:17
Speaker 1: I would point out to people who were not Trumpian
20:19
Speaker 1: but sort of take the view that globalization has gone
20:23
Speaker 1: too far is that you'll miss it when it's gone.
20:28
Speaker 1: I think it's probably the right way to frame it
20:30
Speaker 1: because we have taken it for granted that some of
20:33
Speaker 1: the huge benefits, not just in terms of like my
20:35
Speaker 1: family in China, but all our lives have been enhanced
20:41
Speaker 1: and we've been made much more productive and wealthier as
20:44
Speaker 1: a result of globalization over these past fifty years. In
20:50
Speaker 1: a sense, trade is being used as a scapegoat for
20:53
Speaker 1: the failures of domestic politics to redistribute those gains and
20:58
Speaker 1: to compensate the low from it. So I would say,
21:02
Speaker 1: I suppose if Trump was here saying, you know, there
21:05
Speaker 1: are undoubtedly problems in America, economic problems, communities which are suffering,
21:11
Speaker 1: but don't make the story all about trade. Make it
21:13
Speaker 1: about how you can use the immense resources of America
21:19
Speaker 1: to improve their lives. It's quite interesting. I was listening
21:22
Speaker 1: to JD. Vans, who's slightly more sophisticated figger than Trump
21:26
Speaker 1: when it comes to making these arguments. And he gave
21:30
Speaker 1: a speech in March to the American Dynamism Conference, and
21:33
Speaker 1: he said the problem of the American and global economies
21:37
Speaker 1: that has been too addicted to cheap labor, both at
21:41
Speaker 1: home and talking about immigration and abroad, meaning outsourcing American
21:46
Speaker 1: multinationals sending their supply chain to broad cheap labor. And
21:50
Speaker 1: he said that as undermined American innovation, which is pretty
21:54
Speaker 1: crazy because America is the most innovative and dynamic economy
21:57
Speaker 1: by far in the world. If it's had a net
22:00
Speaker 1: negative impact on American innovation, it's pretty hard to see
22:02
Speaker 1: it in the statistics.
22:04
Speaker 2: But well, you mentioned Jadevance. I mean, I think it's
22:06
Speaker 2: interesting because it comes through more strongly in what he
22:09
Speaker 2: says and that speech. Part of the kind of rebellion
22:12
Speaker 2: against globalization that jade Vance represents is kind of rebellion
22:17
Speaker 2: against modernity, against the modern global economy and what's happened
22:22
Speaker 2: to communities and day to day life from only get
22:28
Speaker 2: going for the most productive, the cheapest way of making things.
22:32
Speaker 2: You know, America's moved to a massively service based economy.
22:37
Speaker 2: And I think his argument would be, and lots of
22:38
Speaker 2: people say this that those service sector jobs, even if
22:42
Speaker 2: you can afford to buy lots of stuff with them,
22:44
Speaker 2: because you've got all these cheap things that were being
22:46
Speaker 2: made in China, we quote un quotes were happier when
22:50
Speaker 2: we were making that stuff ourselves. And maybe we had
22:52
Speaker 2: a bit less, but we had community and we didn't
22:55
Speaker 2: have you know, endless insecure jobs and other things So
23:00
Speaker 2: how is it if you're a politician, how do you
23:02
Speaker 2: tease out that argument against trade from the sort of
23:07
Speaker 2: broader sense that we've sort of culturally gone the wrong
23:09
Speaker 2: direction because of this advanced industrialization.
23:13
Speaker 1: Well, it's incredibly difficult. I mean, Dave the Evans, You're right,
23:17
Speaker 1: he does talk in that sort of nostalgia we must
23:19
Speaker 1: bring back manufacturing, and others in the administration in America
23:21
Speaker 1: talk about Americans screwing the little screws into iPhones and
23:24
Speaker 1: returning to a manufacturing economy. At other times he's more
23:28
Speaker 1: with the tech bros. In fact, he was in this
23:30
Speaker 1: conference he was talking about innovation. But I think it
23:33
Speaker 1: comes down to a fundamental problem with the argument that
23:37
Speaker 1: you reindustrialize America through tariffs and reindustrialize it full stop
23:42
Speaker 1: to create great jobs. Is that as many people have
23:45
Speaker 1: pointed out, But it's absolutely true. What you're going to
23:49
Speaker 1: get if you bring American if you bring more manufacturing
23:52
Speaker 1: back to America, is not a huge amount of really
23:54
Speaker 1: high paying jobs. And the turning back of the clock
23:57
Speaker 1: to the nineteen fifties where everyone took their lunch pale
24:00
Speaker 1: to the factory. You're going to have robots now that
24:02
Speaker 1: will create higher incomes for some people, but it's not
24:05
Speaker 1: going to fundamentally shift the structure of the American economy
24:09
Speaker 1: the labor force back to the way it was all
24:11
Speaker 1: those decades ago. So I think I think the honest
24:15
Speaker 1: answer is that, yes, there's a big seam of nostalgia
24:19
Speaker 1: that people like Jdvans and many others in America are mining,
24:25
Speaker 1: but it's not one that is going to be actually deliverable.
24:28
Speaker 2: I guess one other sort of obvious response to some
24:31
Speaker 2: of what you've said is if it's also inevitable, if
24:35
Speaker 2: there are all these forces technology and other things that
24:38
Speaker 2: are putting on us a path to integration and making
24:42
Speaker 2: it extremely hard to unpick these supply chains, then maybe
24:45
Speaker 2: we don't have to worry about protectionism after all. Maybe
24:49
Speaker 2: you know, if it's going to all prove in a
24:50
Speaker 2: few years time, if it's going to prove to be
24:53
Speaker 2: completely counterproductive and or prohibitively costly, shouldn't we just like
25:00
Speaker 2: sit back and wait for it all to play.
25:01
Speaker 1: Wait, wait for it, yeah, wait for people to come
25:03
Speaker 1: to their senses. I think that is compelling in some ways,
25:06
Speaker 1: and I think there's a bit of a debate actually
25:08
Speaker 1: when you look at analysts because some say, look what deglobalization.
25:12
Speaker 1: You know, in some measures in terms of data flows
25:14
Speaker 1: across borders. If you look at the actual complexity of
25:18
Speaker 1: supply chains, we have never been more more globalized than
25:22
Speaker 1: we are today. Notwithstanding these these many years of politicians
25:27
Speaker 1: making these policies to withdraw us inwards and attempt to
25:30
Speaker 1: resure and friendshure, et cetera. If that's the result, then
25:35
Speaker 1: you know, why why are we even talking about this
25:37
Speaker 1: term deglobalization. I think my answer would be, on the
25:40
Speaker 1: one hand, that's true, but if you look at the
25:43
Speaker 1: number of actual acts that politicians have taken to put
25:49
Speaker 1: barriers up, it is definitely glowing going up. You are
25:52
Speaker 1: seeing a trend of politicians to fight against this global integration.
25:57
Speaker 1: And my answer would be that you're effectively It may continue,
26:01
Speaker 1: the wheels may keep turning, but you're throwing sand in
26:03
Speaker 1: the gears of it. This is one of the greatest
26:06
Speaker 1: engines of prosperity that we've seen ever, is globalization. And
26:12
Speaker 1: if you make it harder, then your living standards will
26:15
Speaker 1: not rise as rapidly as they otherwise would have countries,
26:19
Speaker 1: and that's in developing, that's in rich countries and developing
26:21
Speaker 1: countries are going to find it harder to get onto
26:24
Speaker 1: that economic ladder of having better lives and integrating into
26:28
Speaker 1: it into global supply chains in the way that China
26:32
Speaker 1: did in the past, in a way that countries in
26:34
Speaker 1: Africa are trying to now so effectively pulling up the ladder.
26:37
Speaker 1: So I think, yes, I think there is a strong
26:41
Speaker 1: case for saying that we are not going to deglobalize.
26:43
Speaker 1: It will just be too hard. But I think we
26:45
Speaker 1: can still make life very difficult for ourselves and much
26:47
Speaker 1: more difficult than it needs to be.
26:49
Speaker 2: And the response to the strategic worry that we will
26:52
Speaker 2: wake up in twenty years time and find that a
26:56
Speaker 2: very different government, very strong government, with very different value
27:00
Speaker 2: system certainly doesn't believe in journalists of Newsnight has control
27:06
Speaker 2: over key parts of our economy because we've decided to
27:09
Speaker 2: buy all our solar panels from them, and all of
27:11
Speaker 2: our electric batteries and all our electric cars. How do
27:14
Speaker 2: we get around that?
27:15
Speaker 1: Well, that is that is an extremely tough one. China.
27:19
Speaker 1: I mean, I've talked, I started talking about how the
27:21
Speaker 1: miracle of globalization in China. I've seen the benefits of it,
27:24
Speaker 1: but I've also seen the downsides. I've seen the dark
27:27
Speaker 1: side of what the new China, what the Chinese regime
27:30
Speaker 1: is in terms of the crushing of personal freedoms of
27:34
Speaker 1: people in China, in terms of its economic mismanagement. I mean,
27:37
Speaker 1: everyone's talks about China as this great economic success, and
27:39
Speaker 1: in many dimensions it is, but it's also really messed
27:43
Speaker 1: up the property market. It's it's got deep set economic
27:47
Speaker 1: problems as well, and I've seen that in the same
27:50
Speaker 1: way I've seen the benefits. I've seen that up close
27:52
Speaker 1: in terms of my own family in China, and it's
27:56
Speaker 1: a very I can understand why Western politicians say we
27:59
Speaker 1: should be pus much distance between ourselves and this regime
28:02
Speaker 1: as possible. I completely understand that. At the same time,
28:06
Speaker 1: we take an issue like decarbonization, China has such a
28:10
Speaker 1: head start when it comes to the technology of solar
28:14
Speaker 1: panels and electric batteries and also wind turbines that it's
28:18
Speaker 1: simply not feasible for the world to decarbonize by twenty fifty,
28:23
Speaker 1: as nations have signed up to do without relying very,
28:26
Speaker 1: very heavily on Chinese renewable energy. Kit that's just the reality,
28:31
Speaker 1: and governments are going to have to choose there. And
28:34
Speaker 1: also I think that China is so integrated into global
28:37
Speaker 1: supply chains that this fantasy, you know, I think it
28:40
Speaker 1: is a fantasy saying that it's simply a case of
28:43
Speaker 1: you just turn the switch and it's and it's removed.
28:45
Speaker 1: And I think Donald Trump has actually found this out
28:47
Speaker 1: since Liberation Day. He started out very bullishly about the
28:51
Speaker 1: ability of him, you know, decoupling from China, as he
28:55
Speaker 1: put it, and within a couple of months they're making
28:58
Speaker 1: the deal. And I think a lot of American retailers
29:02
Speaker 1: went to see him, called him and said, the reality is,
29:04
Speaker 1: if you don't change course on this, you're going to
29:06
Speaker 1: have empty shelves, You're going to have prices spiking. And
29:12
Speaker 1: I think that message got through.
29:13
Speaker 2: Actually, I was in Hong Kong last week and I
29:16
Speaker 2: was struck by there's quite a few people. I sort
29:19
Speaker 2: of asked their investor types, market types. But what's surprised
29:24
Speaker 2: you most in the last six months or even the
29:28
Speaker 2: last twelve months. None of them said anything to do
29:31
Speaker 2: with Donald Trump. It was all how fast China has
29:34
Speaker 2: progressed in ex technology or why technology. There's so many
29:37
Speaker 2: articles you read now or reports on any subject, whether
29:40
Speaker 2: it's trade, technology, innovation, and you could just have a
29:45
Speaker 2: sub headline China's going to win. I mean, is that
29:48
Speaker 2: what you're basically saying that we should just accept that
29:52
Speaker 2: China's going to end up dominant in all these areas
29:54
Speaker 2: and we will just lose out by trying to be more,
29:58
Speaker 2: more diversified and less reliant on it.
30:01
Speaker 1: Well, I think going back to the what JD. Evans
30:05
Speaker 1: was saying and linking that to the ev picture of
30:07
Speaker 1: China's got such that amazing lead in electric vehicles. You
30:10
Speaker 1: know BYD you'll be seeing a lot more of those,
30:13
Speaker 1: I think on our streets, their electric vehicles in the
30:15
Speaker 1: coming months and years. But what JD. Evans was saying
30:20
Speaker 1: was that innovation needs a barrier, he needs trade walls
30:26
Speaker 1: with the rest of the world, and then American companies
30:28
Speaker 1: will innovate more. I think the evidence suggests the exact
30:30
Speaker 1: opposite will happen. If American wars itself off, it will
30:34
Speaker 1: not be subject to competition from companies like BYD, from
30:37
Speaker 1: a Chinese battery makers, etc. And they will stagnate behind
30:42
Speaker 1: those walls. What you are more likely to get and
30:45
Speaker 1: you have a bit of confidence and faith in Western
30:48
Speaker 1: companies actually faced with that competition. I think they can
30:51
Speaker 1: do well. I think they can innovate and they can
30:53
Speaker 1: properly compete. Don't forget China only moved into this space,
30:57
Speaker 1: what was it, you know ten to fifteen years ago,
31:00
Speaker 1: been an incredibly rapid development. So if you think about
31:04
Speaker 1: it in those terms, I don't see why Western carmakers
31:06
Speaker 1: or Western technology companies can't compete with China and through competition,
31:12
Speaker 1: I think what's more likely to happen is if you
31:14
Speaker 1: put up trade barriers and you don't compete, you will
31:17
Speaker 1: stagnate and you will fall further behind.
31:20
Speaker 2: Okay, well that was fantastic.
31:21
Speaker 1: Thank you very much, Thank you, Thank you all.
31:29
Speaker 2: Thanks for listening to Trump and Noomics from Bloomberg. It
31:31
Speaker 2: was hosted by me Stephanie Flanders and I was joined
31:33
Speaker 2: by Ben Chu at the Conduit in London. Trump and
31:37
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31:43
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