openpolitics.com

60:42

thank you what is the most persistent

60:45

zombie idea on the left and is there one

60:47

is there an idea to what you have

60:50

subscribed in the past which you now

60:51

kind of put into that category oh boy I

60:55

mean the trend the left is not nearly as

60:58

good at maintaining zombie ideas partly

61:03

because there there are in fact not that

61:07

many leftist billionaires and and

61:09

billionaires there are some but not very

61:12

leftist and so I mean well let me put

61:20

this way we were talking about climate

61:22

and environment and and climate change

61:25

and economic growth I’m running to a lot

61:27

of people still who are now this is

61:30

telling you that there I don’t think

61:31

there are a large part of the electorate

61:33

but there are

61:34

but the circles I move in I run into

61:36

people who are sure that to fight

61:39

climate change we have to stop living

61:41

the way we’re living and a much more

61:43

austere back-to-nature lifestyle is the

61:47

only way to deal with climate and that’s

61:49

an idea that it’s just clearly wrong if

61:53

we actually asked by we know enough

61:55

about the technological and economic

61:57

solution to climate change that ASUS a

62:00

green society that does not burden the

62:02

planet would almost certainly be a

62:04

society that looks a whole lot like what

62:06

we have now in people with the driving

62:08

cars they’d be using electricity but the

62:10

cars with the electric and the

62:12

electricity would be generated by solar

62:13

and wind and it but the actual rhythm of

62:16

daily life could look very much like

62:18

what we we have we don’t have to go back

62:20

to to an agrarian pastoral Eden to to to

62:25

deal with the issue but it’s it’s

62:26

something that sounds again it sounds

62:29

serious from a different point of view

62:30

it sounds like if you’re serious about

62:31

climate change you must be serious and

62:34

believing that we have to give up on

62:35

this consumer oriented society and and

62:38

all of these these comforts that we take

62:40

for granted but in fact it’s not true so

62:43

that would here that would be an example

62:44

of a kind of a left-wing zombie in other

62:46

countries in the belief that you can

62:49

just dictate all prices and you know you

62:53

can put price controls on everything and

62:54

not and never face shortages that’s not

62:58

something we see in the US but they

62:59

Venezuela clearly there’s some refusal

63:02

to face reality going on but that would

63:05

be these house but again zombies mostly

63:08

flourished because their big money

63:10

behind them not all of them but mostly

63:12

and and and the no.4 for every George

63:17

Soros there are 50 quiet billionaires

63:21

supporting extremely reactionary causes

63:23

and what about the question the question

63:25

of an idea you’ve changed your mind oh

63:27

so most of my changes have been in the

63:33

in the other direction look at minimum

63:36

wages no no a piece of economic research

63:41

has has shaken my views as much

63:46

actually I’m gonna give you two and and

63:50

me at this this is a great risk of

63:52

turning into a Monty Python routine

63:54

amongst the issues three okay so

64:00

actually so I’ll give you two one

64:01

minimum wages up until sometime in the

64:05

mid 1990s I believe that clearly

64:09

increases in minimum wages would cost

64:11

jobs they might be desirable otherwise

64:13

but econ 101 said that that’s what

64:15

happened and then we got this amazing

64:17

body of empirical research because we

64:19

get in the United States we get a lot of

64:21

natural experiments when one state

64:22

raises its minimum wage and the

64:24

neighboring state does not and the

64:26

overwhelming evidence says that minimum

64:28

wage increases at least within the range

64:30

we see in the US do not cost jobs and

64:33

that changed my view has said labor

64:34

markets are very different from where I

64:35

thought it actually moved me towards

64:38

emphasizing the role of power and in

64:40

labor relations and so on another one I

64:43

used to think that it was always

64:44

possible just by printing money to get

64:47

full employment and and the experience

64:50

of Japan in the late 1990s when despite

64:54

a very easy monetary policy they slid

64:56

into deflation changed my views totally

65:00

I there was a there was a group of us

65:03

actually of when I when I arrived at

65:05

Princeton in 2000 was a bunch of Japan

65:07

warriors who were really very shaken by

65:10

the Japanese experience because we we

65:12

looked at it said you know this could

65:13

happen to us so with me people you

65:16

wouldn’t have heard of but very

65:17

influential in the professional arts

65:18

Vince and Mike Woodford and the fourth

65:21

was Bernanke Ben Bernanke don’t know

65:24

what happened to him he disappeared I

65:26

think yeah so we so that but no the the

65:31

Japanese Japan’s Lost Decade

65:33

changed my view and basically made me

65:36

much more Keynesian much more believer

65:38

that there are times when you really

65:40

need to have the government do the

65:41

spending yes how do you successfully

65:45

regulate the financial markets while not

65:50

scaring the business community in sort

65:53

of trying to

65:55

in the middle of a class that any form

65:58

of common sense reform or tax is not

66:01

Marxist Leninist and it’s not going to

66:03

take away all their assets and money

66:05

okay you know we’ve done this before

66:10

right we imposed extensive bank

66:14

regulation in the 30s which didn’t

66:17

obviously cripple the economy we the

66:19

post-war generation was was the best

66:22

generation in in in certainly in US

66:24

economic history the the the only I

66:29

would say the problem is not scaring

66:31

people not looking Marxist the problem

66:33

with regulating financial markets is

66:35

first of all they’re the financiers have

66:39

a lot of clout but but beyond that it is

66:45

hard to keep up with financial

66:49

innovation which very often is not

66:53

innovating in the sense of you know

66:55

doing things better but as is innovating

66:58

a way of finding ways to set things up

67:01

that evade the regulations so you

67:04

regulate banks and then people create

67:06

something that is functionally a bank

67:07

but doesn’t technically meet the

67:09

definition of a bank and evades the

67:11

regulations it’s hard to keep up with

67:13

that and and if it’s not a well solved

67:16

problem in the we had a significant

67:21

financial reform in the US under Obama

67:24

not everything you I would have wanted

67:26

but it was significant but on many of

67:29

the issues it depends upon this

67:31

Financial Stability Council which has to

67:34

define systemic lis important

67:37

institutions that they’re mean and

67:40

there’s no clear definition it’s kind of

67:43

like pornography you know when you see

67:44

it which is not a stupid way to do it

67:47

but it depends upon having honest people

67:51

of goodwill in charge and now we have

67:55

the Trump administration so so the

67:58

dodd-frank is not a very effective tool

68:00

and it always depended upon upon good

68:04

leadership and

68:06

we have not found I haven’t come up with

68:08

a way to the thing about doing a regular

68:10

old-fashioned commercial banks is that

68:15

that system works the regulations work

68:18

the the guarantees work without

68:21

requiring that there be smart leadership

68:23

or good judgment calls at the top and

68:25

unfortunately everything we try to do to

68:27

deal with more modern financial

68:29

institutions is requires both goodwill

68:34

and sophistication which are both the

68:36

now and very short supply question from

68:39

the balcony please thanks very much so

68:41

we’ve mostly discussed zombi ideas in

68:43

the kind of domestic policy context i

68:45

wanted to ask about zombie ideas in the

68:47

international context in the sense of

68:50

the Washington Consensus and trade

68:51

liberalization and specifically I want

68:54

to ask what your thoughts are on the

68:56

extent to which countries can still

68:58

develop by exporting I has the impact of

69:02

technology and the scale of China made

69:06

it essentially impossible for a trade

69:07

liberalization to facilitate development

69:10

okay that’s a good question

69:13

I think empirically it’s just the

69:16

premise is wrong so we all know about

69:19

China and we know that China occupies

69:21

this huge space and China is a unique

69:25

success story nobody else has matched

69:27

their rates of growth but it’s not the

69:31

only success story so when I took I like

69:34

to talk about the the unfamiliar cases

69:39

Bangladesh Bangladesh is a desperately

69:43

poor country and and compared with

69:46

working conditions and in in the first

69:49

world it’s it’s is horrible and they

69:51

have factories that collapse and kill

69:53

hundreds of workers and all of that but

69:56

Bangladesh is actually they’ve they’ve

69:59

tripled their per capita income and

70:03

there there are very poor country but

70:06

they were a country that was right on

70:07

the edge of Malthusian starvation and

70:11

it’s all because of the ability to

70:13

export if the the ability basically

70:17

clothing labor-intensive

70:19

that they’ve been steadily gaining

70:21

market share at China’s expense because

70:23

China has been moving upscale and that’s

70:26

that’s showing that you can get yeah

70:28

that’s that’s major development that’s a

70:29

major change it’s it’s not it’s a long

70:32

way from from turning into into Western

70:35

Europe but it’s it’s it’s a very big

70:37

deal and it’s showing that the

70:39

globalization can still work for for

70:41

poor countries so I that’s that’s what

70:45

the line Bangladesh is not a it’s not a

70:48

banana republic it’s a pajama republic

70:51

but but that you know they can make fun

70:54

of it but in fact their use that’s a

70:56

very large number of people who are

70:57

lifted at least some ways above

71:00

starvation level by globalization and

71:03

another question from the balcony please

71:06

looking at it as a economist with a

71:08

mathematical mind what impact do you

71:11

think a shift a proportional

71:12

representation would have over time as

71:15

you compared to the electoral colleges

71:18

and first-past-the-post which we have in

71:19

the UK other British Commonwealth

71:22

countries which tend to over time have

71:24

led to two party states so what if we

71:26

shifted the proportional representation

71:28

okay I mean firstly the u.s. the the

71:33

u.s. electoral college system is

71:35

monstrosity that’s a that’s not about

71:38

first-past-the-post it’s about a system

71:40

that at the presidential level gives

71:42

disproportionate representation to to

71:45

some states with small populations and

71:48

at even more important we have the

71:50

Senate which where half the Senators are

71:53

elected by 16 percent of the population

71:55

so this is a that that’s crazy

71:58

that’s a deeply basically we’ve we’ve

72:00

evolved into a rotten borough system for

72:03

half of the US government and that’s

72:05

that’s a clear monstrosity as for the

72:08

rest I mean I don’t know I mean this is

72:13

not I’m not a political scientist I talk

72:16

to political scientists which by the way

72:18

is rare for economists we actually talk

72:20

I actually talk to these goods to other

72:21

social sciences and take them seriously

72:24

and but what I would say is that the the

72:29

there are places with proportional

72:31

representation

72:32

that also managed to be very

72:34

dysfunctional so you know Israel I

72:38

believe has proportional representation

72:39

and I would not say that Israeli

72:44

politics these past 15 years have been a

72:47

model of good ideas and wisdom

72:50

prevailing in fact they I mean every

72:52

system has its problems and one of the

72:54

problems with proportional

72:55

representation is it sometimes causes

72:57

small factional parties with with very

73:01

antisocial goals to to be kingmakers so

73:06

that’s not an easy solution either I

73:08

don’t really know what the answer is

73:10

except to say that that you know people

73:13

people are both generally clever and

73:19

often nasty and they can find a way to

73:21

screw up any system question trip down

73:24

here hi

73:25

you said earlier that the American

73:26

economy is in a pretty strong position

73:28

so I was wondering how much he thought

73:30

Trump could legitimately claim

73:32

responsibility for that and then

73:33

alongside that what are the strong II

73:35

cannot strongest economic arguments to

73:37

voters for voting against him okay the

73:41

reason that we’re in a relatively strong

73:43

economic position is that it’s basically

73:47

deficit spending after years and years

73:49

of saying no debt this is an existential

73:52

threat then we must have austerity which

73:54

really hobbled the US recovery under

73:58

Obama as soon as Trump was in office for

74:00

Republicans said oh we don’t care about

74:02

that I mean the last two State of the

74:04

Union speeches have not so much as

74:06

mentioned the deficit and that even

74:09

though it’s badly done it does give a

74:13

boost to demand so I guess you could say

74:16

the Trump has gets some credit in the

74:19

sense that by getting elected he caused

74:22

congressional Republicans to stop

74:24

sabotaging the economy that’s not a you

74:27

know vote Republican and and and and the

74:29

and the economy won’t be undermined by

74:31

by our sabotage efforts so that’s not a

74:34

great electoral slogan but it might win

74:36

in the election I have to say and I lost

74:40

the room what the rest of that was but

74:42

the

74:44

was one of the strong strongest economic

74:46

arguments to voters to vote against him

74:48

oh the thing about Trump is that he’s

74:50

managed to preside over a economy that

74:55

by sort of aggregate measures

74:58

unemployment rate is low GDP growth has

75:02

been pretty good not spectacular but

75:04

pretty good but which is is showing

75:08

increased hardship for many people

75:11

despite that I mean we were making huge

75:13

progress in reducing the number of

75:15

people without health insurance that has

75:17

now gone into reverse the number of

75:19

people who say that their that they are

75:23

that they are postponing or not

75:27

undertaking necessary medical treatment

75:29

because of expense has skyrocketed

75:32

and the America like the UK there’s

75:38

tremendous regional divergence we have a

75:43

large part of the large parts of the the

75:47

heartland which are in severe economic

75:50

decline as social collapse and that has

75:53

just accelerated you know despite the

75:55

low overall unemployment rate the state

75:58

of affairs in Eastern Kentucky is

76:01

terrible and life expectancy I guess it

76:06

rose slightly this past year but you

76:07

know mortality rates are rising and it’s

76:11

as in case an Angus Deaton say deaths of

76:14

despair people dying from from opioids

76:19

alcohol and suicide have been rising

76:22

despite the strong economy so this is

76:25

actually that earlier question about GDP

76:27

you know the GDP growth not saying that

76:31

the that it’s false but under under the

76:34

surface of that good GDP growth is

76:36

actually a substantial increase in

76:38

misery just a one final question from

76:43

thanks bull great to see you here my

76:48

question is about the u.s. minimum wage

76:50

obviously it’s very very low compared

76:53

it should be you know from visiting the

76:55

US for last 25 years it seems P and

76:57

getting no three jobs to make ends meet

77:00

what do you think the minimum wage

77:02

should be and one of the reasons other

77:05

than you know losing jobs that perhaps

77:07

people have been keeping it down the

77:09

minimum wage suppressed oh so I asked

77:12

that in Reverse I mean the reason the

77:14

minimum wage has been held down is

77:15

because employers want chief labor and

77:20

they have a lot of clout the question of

77:24

how high to go is an interesting one

77:26

and it’s the so even the the big move in

77:34

the u.s. is for $15 and that’s a I’d say

77:39

even $15 an hour even Alan Krueger who

77:43

was one of the key researchers on that

77:45

revelatory work was a little nervous

77:48

about 15 and that the problem is

77:52

regional the the state of New York the

77:55

state of California no problem you have

77:58

a $15 minimum wage and and there’s

78:00

absolutely no reason to think that

78:02

that’s economic difficulty we’re talking

78:05

about Mississippi or Alabama places with

78:08

much lower productivity you might start

78:10

to have some job loss at that level I

78:12

think that the preponderance of the

78:14

evidence says that $15 is okay that

78:18

there might be some minor job loss in

78:21

some of the least productive parts of

78:22

the US but but overall not a big deal I

78:26

think 20 I would start to make me really

78:28

nervous

78:29

that then you start to really be a

78:30

problem in in potentially problematic

78:33

territory but it’s it’s why they see

78:36

actually in this case I think a federal

78:38

minimum wage of 15 and then higher wages

78:40

and in in in appropriate States it makes

78:44

sense this is one of these cases where

78:45

federalism works to our advantage and

78:47

and it’s interesting by the way Alan

78:49

Krueger did do at one point he he went

78:52

to to Puerto Rico which part of the u.s.

78:55

is subject to the u.s. minimum wage and

78:57

much lower productivity and said there

78:59

we should be able to see clear evidence

79:01

that the minimum wage cost jobs and he

79:03

couldn’t find it he said I don’t really

79:05

believe this by

79:06

I can’t find the evidence so so for the

79:09

moment I say let’s let’s go for 15 and

79:11

see what happens and then maybe maybe

79:15

look for the high productivity states to

79:20

to go beyond that great I’m so sorry to

79:24

have to draw it to a conclusion but you

79:27

will have the opportunity to meet ball

79:29

and and get the book signed for now

79:32

please join me in thanking him for

79:34

really fascinating today all right