Paul Krugman: Idea that Climate Change Requires Austere Back-to-Nature Lifestyle

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thank you what is the most persistent
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zombie idea on the left and is there one
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is there an idea to what you have
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subscribed in the past which you now
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kind of put into that category oh boy I
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mean the trend the left is not nearly as
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good at maintaining zombie ideas partly
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because there there are in fact not that
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many leftist billionaires and and
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billionaires there are some but not very
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leftist and so I mean well let me put
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this way we were talking about climate
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and environment and and climate change
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and economic growth I’m running to a lot
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of people still who are now this is
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telling you that there I don’t think
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there are a large part of the electorate
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but there are
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but the circles I move in I run into
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people who are sure that to fight
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climate change we have to stop living
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the way we’re living and a much more
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austere back-to-nature lifestyle is the
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only way to deal with climate and that’s
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an idea that it’s just clearly wrong if
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we actually asked by we know enough
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about the technological and economic
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solution to climate change that ASUS a
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green society that does not burden the
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planet would almost certainly be a
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society that looks a whole lot like what
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we have now in people with the driving
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cars they’d be using electricity but the
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cars with the electric and the
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electricity would be generated by solar
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and wind and it but the actual rhythm of
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daily life could look very much like
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what we we have we don’t have to go back
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to to an agrarian pastoral Eden to to to
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deal with the issue but it’s it’s
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something that sounds again it sounds
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serious from a different point of view
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it sounds like if you’re serious about
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climate change you must be serious and
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believing that we have to give up on
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this consumer oriented society and and
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all of these these comforts that we take
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for granted but in fact it’s not true so
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that would here that would be an example
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of a kind of a left-wing zombie in other
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countries in the belief that you can
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just dictate all prices and you know you
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can put price controls on everything and
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not and never face shortages that’s not
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something we see in the US but they
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Venezuela clearly there’s some refusal
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to face reality going on but that would
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be these house but again zombies mostly
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flourished because their big money
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behind them not all of them but mostly
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and and and the no.4 for every George
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Soros there are 50 quiet billionaires
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supporting extremely reactionary causes
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and what about the question the question
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of an idea you’ve changed your mind oh
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so most of my changes have been in the
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in the other direction look at minimum
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wages no no a piece of economic research
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has has shaken my views as much
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actually I’m gonna give you two and and
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me at this this is a great risk of
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turning into a Monty Python routine
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amongst the issues three okay so
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actually so I’ll give you two one
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minimum wages up until sometime in the
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mid 1990s I believe that clearly
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increases in minimum wages would cost
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jobs they might be desirable otherwise
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but econ 101 said that that’s what
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happened and then we got this amazing
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body of empirical research because we
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get in the United States we get a lot of
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natural experiments when one state
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raises its minimum wage and the
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neighboring state does not and the
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overwhelming evidence says that minimum
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wage increases at least within the range
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we see in the US do not cost jobs and
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that changed my view has said labor
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markets are very different from where I
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thought it actually moved me towards
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emphasizing the role of power and in
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labor relations and so on another one I
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used to think that it was always
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possible just by printing money to get
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full employment and and the experience
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of Japan in the late 1990s when despite
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a very easy monetary policy they slid
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into deflation changed my views totally
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I there was a there was a group of us
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actually of when I when I arrived at
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Princeton in 2000 was a bunch of Japan
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warriors who were really very shaken by
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the Japanese experience because we we
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looked at it said you know this could
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happen to us so with me people you
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wouldn’t have heard of but very
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influential in the professional arts
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Vince and Mike Woodford and the fourth
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was Bernanke Ben Bernanke don’t know
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what happened to him he disappeared I
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think yeah so we so that but no the the
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Japanese Japan’s Lost Decade
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changed my view and basically made me
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much more Keynesian much more believer
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that there are times when you really
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need to have the government do the
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spending yes how do you successfully
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regulate the financial markets while not
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scaring the business community in sort
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of trying to
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in the middle of a class that any form
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of common sense reform or tax is not
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Marxist Leninist and it’s not going to
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take away all their assets and money
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okay you know we’ve done this before
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right we imposed extensive bank
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regulation in the 30s which didn’t
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obviously cripple the economy we the
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post-war generation was was the best
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generation in in in certainly in US
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economic history the the the only I
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would say the problem is not scaring
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people not looking Marxist the problem
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with regulating financial markets is
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first of all they’re the financiers have
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a lot of clout but but beyond that it is
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hard to keep up with financial
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innovation which very often is not
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innovating in the sense of you know
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doing things better but as is innovating
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a way of finding ways to set things up
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that evade the regulations so you
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regulate banks and then people create
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something that is functionally a bank
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but doesn’t technically meet the
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definition of a bank and evades the
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regulations it’s hard to keep up with
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that and and if it’s not a well solved
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problem in the we had a significant
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financial reform in the US under Obama
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not everything you I would have wanted
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but it was significant but on many of
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the issues it depends upon this
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Financial Stability Council which has to
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define systemic lis important
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institutions that they’re mean and
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there’s no clear definition it’s kind of
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like pornography you know when you see
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it which is not a stupid way to do it
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but it depends upon having honest people
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of goodwill in charge and now we have
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the Trump administration so so the
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dodd-frank is not a very effective tool
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and it always depended upon upon good
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leadership and
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we have not found I haven’t come up with
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a way to the thing about doing a regular
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old-fashioned commercial banks is that
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that system works the regulations work
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the the guarantees work without
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requiring that there be smart leadership
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or good judgment calls at the top and
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unfortunately everything we try to do to
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deal with more modern financial
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institutions is requires both goodwill
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and sophistication which are both the
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now and very short supply question from
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the balcony please thanks very much so
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we’ve mostly discussed zombi ideas in
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the kind of domestic policy context i
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wanted to ask about zombie ideas in the
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international context in the sense of
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the Washington Consensus and trade
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liberalization and specifically I want
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to ask what your thoughts are on the
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extent to which countries can still
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develop by exporting I has the impact of
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technology and the scale of China made
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it essentially impossible for a trade
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liberalization to facilitate development
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okay that’s a good question
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I think empirically it’s just the
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premise is wrong so we all know about
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China and we know that China occupies
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this huge space and China is a unique
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success story nobody else has matched
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their rates of growth but it’s not the
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only success story so when I took I like
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to talk about the the unfamiliar cases
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Bangladesh Bangladesh is a desperately
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poor country and and compared with
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working conditions and in in the first
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world it’s it’s is horrible and they
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have factories that collapse and kill
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hundreds of workers and all of that but
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Bangladesh is actually they’ve they’ve
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tripled their per capita income and
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there there are very poor country but
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they were a country that was right on
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the edge of Malthusian starvation and
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it’s all because of the ability to
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export if the the ability basically
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clothing labor-intensive
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that they’ve been steadily gaining
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market share at China’s expense because
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China has been moving upscale and that’s
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that’s showing that you can get yeah
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that’s that’s major development that’s a
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major change it’s it’s not it’s a long
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way from from turning into into Western
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Europe but it’s it’s it’s a very big
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deal and it’s showing that the
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globalization can still work for for
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poor countries so I that’s that’s what
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the line Bangladesh is not a it’s not a
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banana republic it’s a pajama republic
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but but that you know they can make fun
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of it but in fact their use that’s a
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very large number of people who are
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lifted at least some ways above
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starvation level by globalization and
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another question from the balcony please
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looking at it as a economist with a
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mathematical mind what impact do you
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think a shift a proportional
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representation would have over time as
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you compared to the electoral colleges
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and first-past-the-post which we have in
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the UK other British Commonwealth
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countries which tend to over time have
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led to two party states so what if we
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shifted the proportional representation
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okay I mean firstly the u.s. the the
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u.s. electoral college system is
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monstrosity that’s a that’s not about
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first-past-the-post it’s about a system
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that at the presidential level gives
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disproportionate representation to to
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some states with small populations and
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at even more important we have the
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Senate which where half the Senators are
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elected by 16 percent of the population
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so this is a that that’s crazy
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that’s a deeply basically we’ve we’ve
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evolved into a rotten borough system for
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half of the US government and that’s
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that’s a clear monstrosity as for the
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rest I mean I don’t know I mean this is
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not I’m not a political scientist I talk
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to political scientists which by the way
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is rare for economists we actually talk
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I actually talk to these goods to other
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social sciences and take them seriously
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and but what I would say is that the the
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there are places with proportional
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representation
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that also managed to be very
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dysfunctional so you know Israel I
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believe has proportional representation
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and I would not say that Israeli
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politics these past 15 years have been a
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model of good ideas and wisdom
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prevailing in fact they I mean every
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system has its problems and one of the
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problems with proportional
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representation is it sometimes causes
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small factional parties with with very
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antisocial goals to to be kingmakers so
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that’s not an easy solution either I
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don’t really know what the answer is
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except to say that that you know people
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people are both generally clever and
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often nasty and they can find a way to
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screw up any system question trip down
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here hi
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you said earlier that the American
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economy is in a pretty strong position
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so I was wondering how much he thought
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Trump could legitimately claim
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responsibility for that and then
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alongside that what are the strong II
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cannot strongest economic arguments to
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voters for voting against him okay the
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reason that we’re in a relatively strong
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economic position is that it’s basically
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deficit spending after years and years
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of saying no debt this is an existential
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threat then we must have austerity which
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really hobbled the US recovery under
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Obama as soon as Trump was in office for
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Republicans said oh we don’t care about
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that I mean the last two State of the
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Union speeches have not so much as
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mentioned the deficit and that even
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though it’s badly done it does give a
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boost to demand so I guess you could say
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the Trump has gets some credit in the
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sense that by getting elected he caused
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congressional Republicans to stop
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sabotaging the economy that’s not a you
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know vote Republican and and and and the
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and the economy won’t be undermined by
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by our sabotage efforts so that’s not a
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great electoral slogan but it might win
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in the election I have to say and I lost
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the room what the rest of that was but
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the
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was one of the strong strongest economic
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arguments to voters to vote against him
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oh the thing about Trump is that he’s
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managed to preside over a economy that
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by sort of aggregate measures
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unemployment rate is low GDP growth has
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been pretty good not spectacular but
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pretty good but which is is showing
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increased hardship for many people
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despite that I mean we were making huge
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progress in reducing the number of
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people without health insurance that has
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now gone into reverse the number of
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people who say that their that they are
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that they are postponing or not
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undertaking necessary medical treatment
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because of expense has skyrocketed
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and the America like the UK there’s
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tremendous regional divergence we have a
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large part of the large parts of the the
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heartland which are in severe economic
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decline as social collapse and that has
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just accelerated you know despite the
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low overall unemployment rate the state
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of affairs in Eastern Kentucky is
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terrible and life expectancy I guess it
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rose slightly this past year but you
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know mortality rates are rising and it’s
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as in case an Angus Deaton say deaths of
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despair people dying from from opioids
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alcohol and suicide have been rising
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despite the strong economy so this is
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actually that earlier question about GDP
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you know the GDP growth not saying that
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the that it’s false but under under the
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surface of that good GDP growth is
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actually a substantial increase in
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misery just a one final question from
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thanks bull great to see you here my
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question is about the u.s. minimum wage
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obviously it’s very very low compared
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it should be you know from visiting the
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US for last 25 years it seems P and
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getting no three jobs to make ends meet
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what do you think the minimum wage
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should be and one of the reasons other
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than you know losing jobs that perhaps
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people have been keeping it down the
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minimum wage suppressed oh so I asked
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that in Reverse I mean the reason the
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minimum wage has been held down is
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because employers want chief labor and
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they have a lot of clout the question of
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how high to go is an interesting one
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and it’s the so even the the big move in
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the u.s. is for $15 and that’s a I’d say
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even $15 an hour even Alan Krueger who
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was one of the key researchers on that
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revelatory work was a little nervous
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about 15 and that the problem is
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regional the the state of New York the
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state of California no problem you have
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a $15 minimum wage and and there’s
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absolutely no reason to think that
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that’s economic difficulty we’re talking
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about Mississippi or Alabama places with
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much lower productivity you might start
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to have some job loss at that level I
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think that the preponderance of the
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evidence says that $15 is okay that
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there might be some minor job loss in
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some of the least productive parts of
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the US but but overall not a big deal I
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think 20 I would start to make me really
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nervous
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that then you start to really be a
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problem in in potentially problematic
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territory but it’s it’s why they see
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actually in this case I think a federal
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minimum wage of 15 and then higher wages
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and in in in appropriate States it makes
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sense this is one of these cases where
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federalism works to our advantage and
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and it’s interesting by the way Alan
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Krueger did do at one point he he went
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to to Puerto Rico which part of the u.s.
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is subject to the u.s. minimum wage and
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much lower productivity and said there
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we should be able to see clear evidence
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that the minimum wage cost jobs and he
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couldn’t find it he said I don’t really
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believe this by
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I can’t find the evidence so so for the
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moment I say let’s let’s go for 15 and
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see what happens and then maybe maybe
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look for the high productivity states to
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to go beyond that great I’m so sorry to
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have to draw it to a conclusion but you
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will have the opportunity to meet ball
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and and get the book signed for now
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please join me in thanking him for
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really fascinating today all right