‘China: The Bubble that Never Pops,’ author discusses China’s economy

The speculation over the impact that coronavirus has had on the Chinese government and its reputation continues to grow. Tom Orlik, Chief Economist at Bloomberg and author of newly published ‘China: The Bubble that Never Pops’, joins The Final Round to discuss his findings and what can be expected from the Chinese economy in the next decade. S

Joseph Stiglitz: the Right’s China Policy was Designed to Raise Profits by Weakening Wages (Labor)

Joseph Eugene Stiglitz (/ˈstɪɡlɪts/; born February 9, 1943) is an American economist, public policy analyst, and a professor at Columbia University. He is a recipient of the Nobel Memorial Prize in Economic Sciences (2001) and the John Bates Clark Medal (1979).[2][3] He is a former senior vice president and chief economist of the World Bank and is a former member and chairman of the (US president’s) Council of Economic Advisers.[4][5]
some ways I one has to recognize that
42:32
China may have been lucky they began the
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development strategy just at the moment
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when the West was very open to importing
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manufacturing goods it was a moment
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where because there were a large profit
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opportunities in the West that sustained
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the opening with wrong without regard to
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the effects and workers over the over
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the effects and the overall economy so
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in a way China’s success is testimony to
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the failures of democratic politics in
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the United States in Western Europe
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because the rules the game were designed
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worked to advantage American
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corporations Western European
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corporations with no attention paid to
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the consequences to the workers as the
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United States d industrialized now some
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countries in Europe did pay attention
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and they did have active labor market
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policies that shifted workers from the
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old sectors that were dying into the new
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sectors and Scandinavia has been very
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good in these active labor market
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policies which I think are really
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important in the United States we didn’t
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do that even though economic theory said
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opening up of trade between an
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banks country like the United States and
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China West events would result in lower
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real incomes for unskilled workers
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there’s a missing Stover theorem and it
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was unambiguously clear even though we
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were getting cheaper goods real incomes
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of unskilled workers would go down and
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it’s only if you had a mystical belief
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in trickle-down economics would you
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think otherwise but our politicians did
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have a mystical belief in trickle-down
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economics and they asserted this over
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and over again and so even when you know
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in the Democratic Party we tried to get
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Trade Adjustment Assistance we try to
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have some active labor market policies
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when we couldn’t because of concerns
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about austerity and not enough budget
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concerns they wouldn’t work we went
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ahead anyway there is a growing sense
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the United States though that actually
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the agenda on the right was to increase
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unemployment and suffering you say why
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would they anybody you know why do
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people want suffering well it was part
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of a concerted agenda if you look at to
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weaken the bargaining power of workers
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and drive down the wages which increases
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profits so if you look at this from a
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conservative point of view the reforms
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and our labor laws and reforms in the
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way antitrust policy was enforced that
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reform is a not the right word but
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changes in those laws changes in
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corporate governance and implicit
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understandings the legal frameworks and
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in the investment agreements in the
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trade agreements the investment
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agreements they gave more secure
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property rights if American firms
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invested abroad than if they vested at
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home which meant that they were
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encouraged to invest abroad which also
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meant that if the firm if workers came
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to affirming
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we want higher wages and the firms know
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if you we give you if you continue to
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demand higher wages we’re going to leave
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that was more credible so I think it was
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a deliberate strategy to drive down the
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wages of workers and it worked in terms
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of the economics that I described before
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it did drive down the wages but it has
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now led to these this political backlash
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with which we are dealing so there is a
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relationship between China’s success and
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some of the problems that we’re facing
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it wasn’t inevitable we could have
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managed it better we should have managed
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it better but we didn’t but just as a
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footnote the point I’m making is that
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that was a particularly
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Africa won’t be able to follow the
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manufacturing export-led growth model
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that led to the success of East Asian
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countries including China in fact now
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globally manufacturing employment is in
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decline in any country that believes
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that manufacturing should be at the
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center of their economic policy is
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misguided it can be part of it it can’t
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be at the center well let me just
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conclude by SEP some let me just
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conclude by a set of remarks about that
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in a way that pertain to all countries
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but we’re we’re china realized this in a
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way more forcefully than many others
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have and that is that reform is a
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never-ending process that societies are
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always changing technology’s changing
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and therefore the policies that are
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going to make a society successful have
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to change in a corresponding way
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for China China’s entering a new stage
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of development it’s facing critical
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problems of inequality health
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environment livable cities markets won’t
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solve those problems in fact many of
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those problems have been created by the
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fact that they had markets that were too
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unfettered to under-regulated
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they’re going to have to regulate them
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better there are further questions posed
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by changing globalization the
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recognition of the risks of excessive
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financialization the West
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I believe hasn’t succeeded in adequately
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taming financial markets as you know
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this is this week is the 10th
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anniversary Lehman Brothers and and a
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lot of people are talking about have we
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done enough I think it’s absolutely
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clear no and what’s particularly
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disturbing is the Trump administration
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is trying to undo the inadequate things
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that we’ve already done again I was at a
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dinner right before the inauguration of
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Trump where one of his chief economic
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advisors was there
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I don’t normally associate with his
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people might make it clearer but it was
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an embassy dinner so I and I didn’t know
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he was going to be there anyway
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and he was talking about how he was
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going to deregulate the financial sector
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within weeks after taking office and the
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first thing that struck me is he clearly
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had no idea of our democratic processes
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yeah he really thought you know Trump is
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the dictator he gets to write rewrite
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all the rules no no none of these
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processes that we put in place as
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democratic checks against authoritarian
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leaders no knowledge of that was just so
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clear but the second point I was going
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to ask what somebody who asked it before
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I did quizzically
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didn’t we have a crisis in 2008 and the
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implicit answer was that was ancient
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history and we have to move on but it’s
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not ancient history and I think the
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risks are very much with us one of the
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concerns that I increasingly seeing in
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China is that as China grows the
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influence of vested interest will grow
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and you can feel it already
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another just a little anecdote every
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year when I go to China I often talked
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to the finance minister and I’ve been
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pushing them to move away from their
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debt finance growth model to more tax
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financed in particular I’m telling them
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they need a carbon tax and it would
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raise a lot of revenue it would help
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clean up their air pollution exceed me
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an obvious idea and the finance minister
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every year says great idea and he says
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we have some political problems which he
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means the auto industry the coal
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industry this you know steel industry
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and so forth we’re gonna work on it next
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year we go through the same conversation
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as China has grown and it has taken on
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many of the features of a modern vested
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interest economy we’re getting change is
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becoming more difficult and that of
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course is is very worrisome but the
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principles that guided China in the
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first 40 years are likely to continue to
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be relevant and that by that I mean the
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pragmatism crossing the river by feeling
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this still stone they’re going to be new
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problems not fully foreseen would that
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appear it will have to address these
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problems
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using insights from theory and past
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experience and the second critical point
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is openness there is much to be learned
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from experiences of others and from the
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ink sykes of non-ideological economic
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analysis and again we’re in a particular
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moment where I hate to keep coming back
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to the United States but we’re a little
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bit obsessed with with our problems one
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can’t help but reflect on the closed
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mindedness of our current administration
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of not looking around you know if you
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think you’re number one and you think
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that you’re the there’s nothing to learn
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from anybody else that is part of the
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beginning of the end so we hope that
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this is just a temporary interlude but
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as we reflect on what makes I know
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successful in the ways it is I think
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there are a lot of lessons for all of us
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to think about how we can make our own
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economy successful for all of us thank
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you
54:30

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