openpolitics.com

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

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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

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