Branko Milanovic on What Comes After Globalization

It's pretty obvious by now that globalization has fallen out of favor. And while many pundits have deemed economic globalism dead, we are still figuring out what to call this new era. Branko Milanovic's chosen phrase is "national market liberalism," a term that sums up how a world once defined by the free movement of capital has begun to contract as the most powerful governments have come to favor mercantilism and nationalism. In his new book, The Great Global Transformation: The United States, China, and the Remaking of the World Economic Order, the famed economist explains what comes after globalization. He talks to us about China's economic evolution, the pressure it has put on elites in the West, and much more. See omnystudio.com/listener https://omnystudio.com/listener for privacy information.

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• 0:00Tracy Alloway?

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• 2:02Joe Weisenthal?

  Hello and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

• 2:07Tracy Alloway?

  And I'm Tracy Alloway.

• 2:08Joe Weisenthal?

  I have a personal question for you this time.

• 2:11Tracy Alloway?

  All right.

• 2:12Joe Weisenthal?

  Do you think of yourself as like a member of like the global elite? Like, are you, do you consider yourself elite?

• 2:18Tracy Alloway?

  I probably should in some ways because I think a lot of people would say someone who grew up in different countries, went to international schools, went to, I guess, a high-profile university, now works in the liberal media, as people would say, would be like a classic elite. But does anyone ever actually think of themselves as the elite? No.

• 2:42Joe Weisenthal?

  I try to, you know, maintain journalistic, unbiased. I would say, look, Joe, Tracy, they are clearly among the elite. They have good jobs at a Fortune 500 company. They are among the most well-educated demographic to ever exist in history. We get to work in a nice air-conditioned office, et cetera. On the other hand, you know, I could say like, look, that's nice. The real elite are big tech CEOs, et cetera. But I, look, I think.

• 3:09Tracy Alloway?

  Everything's relative.

• 3:10Joe Weisenthal?

  We're in the lead. I think objectively speaking, but I also think, I've been, I was thinking about this. There's really three big things that I think are like, if we think about the second, the rest of our lives or et cetera, like three really big things that would like cause me to have sort of like elite status anxiety.

• 3:31Tracy Alloway?

  Go on.

• 3:32Joe Weisenthal?

  Well, one of them is AI because we don't really know what it's going to mean for our literal jobs or the companies we work for, et cetera. That's a really big one. Domestic politics, I think, like, you know, I think we're living in the United States. Domestic politics feel like they continue to go off the rails in various ways that could impact a lot of things. And then I think, unfortunately, maybe I'll change this one day, I don't speak Mandarin. And if all of the interesting markets, finance news, if that becomes like the center of economic activity in like some really big way. People talk about the China shock that they mostly are talking about sort of Rust Belt manufacturing. There's like a China shock for like sort of service level, financial services, et cetera.

• 4:17Joe Weisenthal?

  I don't think like, you know, I don't think I would have as much to contribute in that world.

• 4:21Tracy Alloway?

  You won't need to learn Mandarin, Joe. You can just use AI.

• 4:25Joe Weisenthal?

  You know, have you seen the AI translator gadgets?

• 4:29Tracy Alloway?

  I have, yeah.

• 4:29Joe Weisenthal?

  They're cool.

• 4:30Tracy Alloway?

  Some of them are really good, yeah.

• 4:31Joe Weisenthal?

  Yeah. And like you had these things, there's two sides of a screen and you're just talking to them for the other person.

• 4:36Tracy Alloway?

  Yeah.

• 4:37Joe Weisenthal?

  But setting that aside, I don't know how well that would work on the podcast or video medium.

• 4:42Tracy Alloway?

  I gotta say, I still watch 90 Day Fiance. Do you know that show?

• 4:45Joe Weisenthal?

  No, go on.

• 4:46Tracy Alloway?

  Americans dating and marrying foreigners from abroad. And there are a lot of translation apps on that show, many of which go very, very wrong. So, anyway.

• 4:57Joe Weisenthal?

  Anyway, on this last point, though, I think like we know that probably started, certainly with like the first Trump administration, sort of like US-China tension has been sort of on this linear increase. It probably accelerated during COVID. And it's clearly spread beyond the US. It just gets, seems to get more intense by the week, including in Europe, where I think China anxiety, the loss of like industrial competitiveness has now really become top of mind for them.

• 5:25Tracy Alloway?

  Right. And it's even broader than China. I mean, we've spoken about it on the show, but it seems like there's a real nationalism to economics nowadays where, because of the pandemic, because of the war in Iran now and various other disruptions that we've seen, governments are really focused on building up their own supply chains, building up their own manufacturing bases, their own critical resources and all of that. So everyone seems to be trying to bring things in-house, which at the moment largely means taking things away from Asia.

• 5:56Joe Weisenthal?

  Yeah, that's, that would be the goal, right? They want to like replace these things. Anyway, I think as, you know, I'm 40, I'm about to turn 46, so maybe if I'm lucky, I'm about halfway through my life. I would say the first half of my life, I have benefited a lot from a certain order of things. And when I look around the landscape, I would say, I am not so sure that the order from which I've enjoyed many fruits and privileges is going to be as durable in the second half.

• 6:25Tracy Alloway?

  Sure, I guess so.

• 6:27Joe Weisenthal?

  Okay, so we should talk about what were these fruits and privileges that we enjoyed? And perhaps what would a new sort of order in which some of these arrangements from which we benefited, if they change? What could some of this look like in the future? All right. Well, I'm very excited to say we really do have the perfect guest, someone we've wanted to talk to for a long time, someone whose work is right in the heart of this. We're going to be speaking with Branko Milanovic. He is a research professor at the Graduate Center at CUNY, the City University of New York. And he is also the author of a new book came out this year, The Great Global Transformation, The United States, China, and Remaking of the World Economic Order. Professor Milanovic, thank you so much for coming on Odd Lots.

• 7:11Speaker 05

  Thank you very much for having me. It's a pleasure.

• 7:13Joe Weisenthal?

  What was the goal going into this new book? Why write a new book right now?

• 7:17Speaker 05

  You know, in some extent, when I finished the book, I thought the goal was basically to write an, to write an autobiography.

• 7:25Joe Weisenthal?

  Okay.

• 7:26Speaker 05

  That could sound strange because there is very little of me in that book. But I covered the period from 1974. Actually, I started the book in 1974 with the new international economic order. And then how it failed and how then unipolar moment came and how the United States was not only the most powerful country economically, politically, militarily, but also ideologically. And how that order, which you might call neoliberal globalization, is now expiring. And when I think actually my entire life, I remember each of these four orders. And I'm now present at the birth of what I call national market liberalism,

• 8:06Speaker 05

  which I think, as you were saying before, is a new economic order where lots of activities would be brought back home and where external economic policies would be essentially mercantilistic and not free trade.

• 8:20Tracy Alloway?

  Why do you call it national economic liberalism?

• 8:23Speaker 05

  I call it because I was thinking, actually, if you define liberalism in the most general sense, or take also neoliberalism, which would not be very different. You have on domestic side, you have policies which are liberal policies economically. Everybody knows that, you know, free pricing, competition, so on. You have socially policies which are about affirmative action, egalitarianism in terms of personal identity. And then internationally, you have policies on free trade, low tariffs, movement of capital, labor, and goods, and so on. And finally, you have an aspirational policy about the movement of the other factor of production labor. That has never really happened, but aspirationally, you can say ideologically it is there.

• 9:09Speaker 05

  What is happening now is that we take this entire international part, chop it off, and say, wait, these rules do not apply anymore. What applies now is essentially national sort of mercantilist policy. It's a policy of, you know, beg or die neighbor to some extent, but certainly zero-sum game or even a negative-sum game. It's entirely different. But domestically, I really see the administrations like Trump, Macron, and others. I see them as essentially continuing with neoliberal policies domestically. So that's what I think, actually, that's why I invented this new term that was a kind of national liberalism. So it's not, and to be more precise, national liberalism on the market side, not necessarily on the social side domestically.

• 9:52Joe Weisenthal?

  It's interesting. You say something interesting in the beginning of your book where you talk about, you know, going back to the middle of the 20th century, or maybe in the immediate wake of the Great Depression, to stabilize capitalism, we adopted sort of like, the government got involved. We got, we took in a little dose of socialism, and that saved capitalism. And then you sort of, kind of a joke, you talk about like, okay, well, the goal was maybe to, you know, the sort of like, post-World War II era, save socialism and various, by injecting some market element. And then there's like this yin yang effect that you sort of see, where it's like, two different systems adopt

• 10:33Joe Weisenthal?

  some element of each other, in theory, or that could have gone the way, as a way of like, bringing about stability.

• 10:40Speaker 05

  Well, that was my idea, actually. I was wrong in that sense, because I actually, in the very beginning of the book, as you know, in the introduction, I bring up, my first book was published in 1989, and actually, in the very first sentence of the book, I mentioned that I ran into Jeff Sachs and David Leibton, whom I knew from work on Poland, you know?

• 10:58Joe Weisenthal?

  Yeah.

• 10:58Speaker 05

  And so, I told them, well, I've got this book, and actually, I gave the book to Jeff Sachs as a present. I found it in the bookstore. And then he says, okay, you have to write something. And I said to Jeff Sachs, who is trying to save socialism. And Jeff kind of looks at me, he says, what are you talking about? And I remember these words exactly. He says, I'm trying to bury socialism. And I said, oh, why? Wait. And that's what I actually understood, the misunderstanding. For me, the introduction of market principles and market measures, and privatization to some extent, was exactly the same, by analogy, what Keynes did to save capitalism from Great Depression. You inject doses of socialism

• 11:40Speaker 05

  in order to preserve the capitalist framework. So I thought the same would happen in 1989, my big mistake. But I just wanted to mention that, because I think it's a nice anecdote, that actually, we saw the same thing, but saw them in two different ways.

• 11:54Joe Weisenthal?

  But arguably, that is a characterization of what did happen in China, particularly after Mao, right? So it's like, you have this communist country, still communist, but clearly, a country that has embraced, I don't know about capitalism, but markets, for sure, in a very big way, maybe even better than us.

• 12:15Speaker 05

  No, I mean, definitely. You can actually then translate what they said, and say, well, maybe I was right, because I really meant China. But I did not. In those days, I really meant Eastern Europe and the Soviet Union. China is, of course, a very special case. And of course, I'm sure we'll talk more about China. But it is an example that, again, 15 years ago, nobody expected what has happened. And if people tell me they did expect, I just go back to what they wrote. And they got Nobel Prize, you know, prizes for writing that China would never technologically develop, like 15 years ago. And then, we see now the reality, which is entirely different.

• 12:48Tracy Alloway?

  By the way, I'm gonna get you to sign my copy of the book, in the hopes that it makes it into the preface of your next piece of work, as the lead anecdote.

• 12:58Speaker 05

  I'll put some very neutral stuff.

• 13:00Tracy Alloway?

  With a place like China, I'm glad you brought this up, because there's this weird tension in the way people talk about it, as both an economic and security threat. You know, China is gonna compete with us, and it's gonna get everything, et cetera. And then talk about it as a relatively weak country, in some ways, people still talk about it, sometimes, as a developing country, or even, you know, 10 or 20 years ago, people would talk about the poor farmers. You hear less about that nowadays. But how, how would you explain, like, that, the dual way, that people tend to think and talk about China, in terms of its threat to the West?

• 13:37Speaker 05

  Let me start first by rephrasing your question, because, once you start speaking of the threat to somebody, then we are really no longer in economics as we studied it. We are now exactly in that world of mercantilistic international competition. And you know, it has actually, sort of, moved into our thinking, without us even realizing. To give you another anecdote, I was once on the show with very famous economists, I will not mention the name. And of course, the topic was China.

• 14:04Joe Weisenthal?

  We'll Google it.

• 14:05Speaker 05

  Topic was China. And then, you know, we're talking about the general things, about, you know, wages, exports, imports, something like, very general, where actually, general economic principles should apply. And then he suddenly says, no, no, but for us, the United States, it is bad. And I was thinking, wait, you're not in the government. I understand, I would understand if you were in the Treasury, yes, of course, this is your duty to look after the United States. But you, as a general economist, you have to think about whether it is good for the world or not.

• 14:34Tracy Alloway?

  Right. Absolute gains versus relative gains.

• 14:37Speaker 05

  But, since we are now in this new world, what do I think about China? First of all, I have to tell you that, for example, what you see in China, actually, it happened to me, like, a week ago, people are very much surprised when you tell them, you're now a rich country. I mean, when I say, okay, by the World Bank definition, actually, this is the real conversation, you are the upper-middle-class-income country. And they are kind of surprised. And there was a woman who tells me, you know, I submitted a publication for the US Journal, and I paid, I think, $50 as a developing country. And they write back to me and say, no, you are now classified as advanced country, and you have to pay $100 for the submission fee. But you know, this stuff is still very much present in China. I think Chinese do not see themselves, by and large, as a rich country. They speak

• 15:21Speaker 05

  of this, as you know, officially moderately prosperous society. And I think it's a correct denomination, if you will. China is not France, it's not Italy, it doesn't have that income level. But, on the other hand, as you actually implied, technologically, it is at a level which is actually only similar to the United States. And that is that duality that we observe, you know, maybe the villages, I have not been there, but I know that actually, there are villages who are below $2 per day, you know, we are absolute poverty line. And on the other hand, we have them as the leaders of artificial intelligence. So, hard to reconcile.

• 15:59Joe Weisenthal?

  You know, I think for a long time, people in the West, like, didn't think about China. I mean, maybe like, people in the Treasury or whatever, they didn't think about China very much. It feels to me, like, one of the remarkable things about the last 10 years, and it literally has been 10 years, has the whole West, the Western political economic unit. So it's like, governments in Europe, and obviously, the US. And then, as you say in your book, you might also, as part of this Western political bloc, might even incline to include, like, Korea and Japan. Has, you travel around, you were recently in Paris, has everyone essentially come around, in some level, to where Trump was in 2016?

• 16:41Speaker 05

  Yes, I think basically, that's the case. You know, and that actually, if I go back to my book, and chapter one, it is structured on two levels. We talked so far about the level, the first level, which is countries' GDPs and countries' importances. And of course, China then suddenly starts playing a very important role there. But there is another level, which of course, thanks to the work that I've done for, like, 30 years on global income distribution, I also observe. And that second level is personal income level. What happens with the rise of Asia and China in particular, is for the first time in two last centuries, you have lower parts of Western income distributions sliding down in global order. So if you're bottom decile in Italy, okay, you're not reached

• 17:26Speaker 05

  by Italian standards, but you know, you're okay. In the world level, you're at the 70th percentile of the world 30 years ago. Well, now, you're at the 55th percentile. In other words, if Italy had qualified for the World Cup, that Italian would not have the money to come to watch Italy. But he had money 30 years ago to come to watch Italy. So, you know, there is this loss of economic position of individuals in Western countries. So, you know, the China thing plays on two levels. It plays at the level, US versus China or the European Union, which is an abstract level, state versus state. But it plays at the level, you against the Chinese guy. And that, I think, is, actually, that's what

• 18:09Speaker 05

  I tried to bring in the book, these two levels. And I think it's important to have them in mind.

• 18:28Joe Weisenthal?

  There are some market stories where you want every detail. Tracy and I have made quite a few podcasts on that basis. But sometimes, you've only got 10 minutes and need to know what's moving markets and why. That's the Barclays Brief Podcast. Every week, experts from Barclays Markets and Research get you up to speed on what matters and what to watch next. About the time it takes to grab a coffee. So, search Barclays Brief, wherever you get your podcasts.

• 18:52Speaker 01

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• 20:28Tracy Alloway?

  I like the idea of measuring wealth in ability to watch World Cup games.

• 20:32Speaker 05

  It's internationally priced good.

• 20:34Joe Weisenthal?

  Yeah, that makes sense.

• 20:36Tracy Alloway?

  Just going back to the idea of national market liberalism and pressing on the point you just made. The response to or the backlash against globalization in your description has been, I guess, tearing down the liberal aspect of the international economy and international trade and not domestically. So domestically, you still preserve, you know, large parts of capitalism. It didn't have to go that way, right? You could have had domestic changes in terms of income redistribution and things like that. Why do you think so much of it was just focused on the international order rather than domestically?

• 21:14Speaker 05

  You know, I don't know, but let me try to answer that question. You know, I'm very often asked, probably you would have asked if I don't bring it up first. That was the elephant chart. The elephant chart.

• 21:25Joe Weisenthal?

  Yeah, the great elephant chart. No one's so viral.

• 21:27Tracy Alloway?

  I was gonna ask if you're annoyed every time anyone mentions the elephant chart.

• 21:32Speaker 05

  I'm actually tired of it, but still I have to use it. You know, the elephant chart what it showed, really the bottom line is, okay, middle classes of the West have not been doing well. Growth rate of 1% per annum, per capita, not very well. The top of the Western distributions are doing very well. You know, under Clinton especially, you know, 3% and more. And then, of course, China is doing very well. So you are sitting there, you are a government of the United States, let's say. You have two possible options. You have, okay, we go for policies that would actually tax the rich, that would transfer the money, that would do, I don't know, serious start of re-skilling of labor, public education, because I come from public education, public education rather than private,

• 22:13Speaker 05

  get rid of all these fancy schools that are being bankrupted by billionaires and do a serious effort. Or you say, oh, look, China is like screwing us, so let's go after China. China is really benefiting because they are stealing property rights and they are doing this or that. And eventually, the decision was made, why it was made like that, but maybe politically, it was more pragmatic or whatever. And I think that Trump 2016, for me, is the watershed year. Because many of the policies that Trump then imposed regarding China, that continued under Biden. They were done in a more maybe intelligent way, but basically they continued. And I think that was the change. And then after that, we really have an acceleration in these policies.

• 22:55Speaker 05

  But you have a very good question, maybe for political scientists, I don't know. It could have gone the other way. I totally agree. It would have gone into more social democratic capitalism rather to go into this nationalist liberalism. Yes.

• 23:09Joe Weisenthal?

  Yeah, because this is something I think about a lot, which is like, let's say we were to like, take back, rewind the clock to like 1989 or 1992. And I always think to myself, like, I was nine years old in 1989, so I didn't think about these things. But I always think to myself, like, if I had been, say, like, in my, early in my career, in my twenties in those years, I'd be like, oh, it's obvious. Like liberalism or neoliberalism, one of those two, it's just like, it's clearly, it's clearly the way of the future. It's clearly superior. It's proven itself in the decisive test against like, which was the better model against the Soviet Union.

• 23:50Joe Weisenthal?

  Even to this day, I actually find it pretty remarkable, the degree to which China held the line in that decade, when everything was pointing to, it's like, the question is settled. We know what's the better system. And now, of course, we have lots of people questioning all the systems. But it's sort of remarkable to me that in the 90s specifically, you had like one country that not only didn't just sort of like embrace, you know, free elections, et cetera. Like, it didn't even ever seem to be, to come particularly close.

• 24:24Speaker 05

  Well, I often think of the 90s, I was older than you then, and I was then in Washington and working for the World Bank. You know, the neoliberal ideology was so omnipresent and it was actually commonsensical. So it's like, it's like you're now, if you were to now argue, like, okay, this is not wood, this is actually steel. Well, we all see that it's not actually. So it was very commonsensical and you believed that whoever would actually say something against that, it's like either like uneducated or crazy or some of the mixture of the two. Because it has indeed had actually total ideological hegemony, total ideological hegemony. I was not happy, but I was not happy for other reasons which have to do with my life and other things. And actually, recently I found an article, an article that was then published, I think,

• 25:09Speaker 05

  in the monthly review, which questioned, it was very early, 1999. But you know, it was an unusual article and I think we all took it as a common sense, that it is an ideology that would win. Now, come to China very briefly. China played it very low then. They did not actually, they were like a sleeper. They were not disturbing things at all. And then, of course, many people in America now, I think some are self-serving, they say, oh, we really did not bother with China because we thought China would evolve the way that South Korea did and Taiwan. It would become richer, it would become our partner, then they would democratize and they would become like another United States and it would be everything fine. Whether they really believed that or not, I don't know.

• 25:51Speaker 05

  But China was not at the center of attention that it actually became over the last 10 years. There is no doubt about that. People implicitly believed, I think, or wanted to believe that China would become a, quote-unquote, "normal capitalist liberal country."

• 26:08Tracy Alloway?

  I mean, since we're talking about a normal capitalist liberal country, one of the, in quotes, one of the things about China is you always hear that the government is trying to boost consumption, right? Reduce savings, boost consumption. And they seem to struggle with it. And so I'm curious how you square, you know, the growth of the middle class in China and the idea that actually, you know, by certain standards, they're pretty wealthy now, with that reluctance to spend.

• 26:37Speaker 05

  You know, that's a very complicated question and I'm not a macroeconomist, but I had only a couple of days ago, the discussion on Twitter and a sub stack on that. First, the effects. The fact is actually China consumption to GDP ratio is very low. It's like about 40, 45%. US is 70%, India is 50%. So clearly, it should be a 10 percentage points higher. People, of course, argue that there is compression of wages and of course that state-owned enterprises then have large retained profits. Now, the good use of these retained profits by the state essentially, is they can actually use enormous amounts of money to direct to certain activities in, for example, railroad construction or artificial intelligence.

• 27:21Speaker 05

  Or actually, what people don't mention, but China has really done very well in space exploration as well. And you know, this is not like no money at all. And I think the next one would be air production of the airplanes, which they already have started, but they have not broken. So, and you can use that money also to have political economic influence in Africa and elsewhere. So I think there is a political economy reason why China needs to have, from the point of view of the government, these large amounts of money. And I think it's easier to have this so-called wage compression or actually lack of sufficient growth of wages if your wages still grow by 3 or 4, 5% per year. Now, if your wages were zero, then it's harder to have a compression. But if you have 5%, fine.

• 28:04Speaker 05

  In the past, maybe you had 8%, but 5% is good enough. So I think there is a political economy reason behind that in China. So I'm not quite sure if they really, what they say, they really would like to accomplish that and they cannot. Because yes, for example, they could increase social transfer significantly and people would spend that money. Lots of saving, I think it's not untrue, is due in China to the fact that actually, particularly in rural areas, you don't have social protection.

• 28:31Joe Weisenthal?

  Just real quickly going back to the question of like, how did China not get swept up in the neoliberal consensus that was like so hegemonic in the 1990s? The other thing that you observe in your book is that even earlier in the century, it never got particularly interested in like the non-line movement or the so-called third world countries, et cetera. Is it just have a history of not being particularly interested in the flavors of the month outside of its borders?

• 29:03Speaker 05

  I actually think that China is an isolationist country culturally. And you know, people talk about the US being isolationist and all that. And of course, there is a trend of politics in the US, which is basically meant to control of the Western Hemisphere. So it's not really total isolationist, but at least not get entanglements in Europe. But China, I think culturally, and I actually recently discussed that with some friends, like, you know, the fact is that there are like, all Chinese economists, all Chinese authors essentially writes about China. And my publisher in China says to me, I had several books, three books, I think, published in China. And he says to me, look, we are actually very happy with your books. We sold, I don't know, probably several, I mean, I don't care about much, several thousand copies.

• 29:47Speaker 05

  Because he said, you know, Chinese audience, they don't want to read anything which is not about China. So it's hard to sell things that are not talking about China. US, yes, because now there's this competition. But the rest of the world, not that much. So I think there is a certain ideological thing which might go really back centuries that, you know, China. Thought itself, the center of the universe.

• 30:09Tracy Alloway?

  It's the Middle Kingdom.

• 30:10Speaker 05

  It's the Middle Kingdom. And everybody comes to the Middle Kingdom and they just, you know, do kowtow and say, well, you guys are great. And maybe we trade the giraffe for a little bit of porcelain and then you go home.

• 30:22Joe Weisenthal?

  Yeah.

• 30:22Speaker 05

  So I think that that ideology, I mean, under, there is still a presence of that. And I think that limits China's influence of terms of soft power. Because if you don't want to study others and to write books about them and to actually try to fashion what they think about themselves, you're not going to have soft power. Let me just finally give an example.

• 30:42Joe Weisenthal?

  Sure, please.

• 30:43Speaker 05

  I read recently Richard Pipes. He was a famous historian of the Soviet Union. When he went to the Soviet Union in eighty nine, he was not published before, you know, under communist regime. He was agreed to there by accident read that in somewhere, like a greatest historian in the history and all that. Because his books were so influential in influencing Russians see their own history. So that's what I meant when you're interested in other countries. So you have to have somebody, and not only one person, but you have lots of people who would write about other countries and influence what other countries think about themselves. And so long as China does not have that, its own soft power, I think, will be limited.

• 31:23Tracy Alloway?

  You have a chapter in the book about the elites, so about Joe and me.

• 31:26Joe Weisenthal?

  Yeah.

• 31:27Tracy Alloway?

  In it, you invent a new word. My Greek is not very good, but homo ploutia.

• 31:32Speaker 05

  Yes, that's correct.

• 31:32Tracy Alloway?

  Homo ploutia. And this is the idea that in America, certainly, like the wealthy have been getting increasingly rich, both through actual labor income, so how much they're being paid to do their jobs, as well as capital income, so dividends or whatever. And this is something new, according to you. So I'm really curious, like, how do you explain the rise of homo ploutia? And I always think, you know, if you think about someone who's making a lot of money from both labor and capitalism, you've got to talk about Elon Musk, right? Like, he's sort of the standard bearer.

• 32:07Speaker 05

  You also or me.

• 32:09Tracy Alloway?

  Yeah.

• 32:09Speaker 05

  Yeah, I mean, because the book deals with the top ten percent of Americans. So this is not a small group, you know? It's like we're talking about, we take, this is all empirical. We take like the top ten percent, which is, you know, thirty million people approximately. And what you find there is that there is an increasing percentage of people who are in that top ten percent, who are also in the top ten percent by income from property, cash income from property, and top ten percent by income from labor, from your job. And that is new. And now, actually, there are more studies. This is early on, but now there are people starting exploring whether it existed in nineteen thirties and twenties and so on. But think of the nineteenth century capitalism.

• 32:51Speaker 05

  You had big guys like JP Morgan or millions of others, you know, millions, hundreds. But they were not laborers, technically. You know, they made money through entrepreneurship and sort of corporate management of the company. Their income was income from corporations, income from capital. But here now we have a significant upper middle class that is rich in both ways. And I think it's, I mean, we are probably here all belong to that group. And what is interesting, then, that's actually what I use, is that in the book, now I use Daniel Markowitz's work on meritocracy a lot.

• 33:31Speaker 05

  That class is very specific because, on one hand, it is rich capitalists, quote unquote. They really defend private property. In the past, when people spoke of the professional managerial class, they thought these would be people who run state-owned companies or private companies. I use James Burnham, you know? He was saying capitalism will be dead because managers would run companies regardless, so they would be in charge. And secondly, these people, because they have high labor incomes and they went to fancy schools, they believe they deserve it. And that means that the meritocracy, protection of private property, large capitalists and hardworking ethos is combined.

• 34:12Speaker 05

  And I would venture to say this is a new combination in history of capitalism.

• 34:18Joe Weisenthal?

  No, I feel like I'm part of that class. I worked really hard.

• 34:20Tracy Alloway?

  Don't you call it, you call it folksy elites, right?

• 34:23Speaker 05

  I'm sorry?

• 34:24Tracy Alloway?

  Folksy elites.

• 34:25Speaker 05

  Yeah, they are folksy elites because they love to be folksy. It's actually, it's an interesting thing. I mean, I think sociologically, if you look at the elite that you were seeing, the Jane Austen and so on, they actually wanted to show their elite. What you find in American elite, and I've spent some time around that elite, is that they really want to show that they are not an elite. They do give you signals that they are.

• 34:48Joe Weisenthal?

  Yeah.

• 34:48Speaker 05

  But they do it in a fairly discreet way and they like many of the things to actually, to be, to be very folksy, you know?

• 34:56Joe Weisenthal?

  I do that.

• 34:56Speaker 05

  Make no mistake.

• 34:57Joe Weisenthal?

  No, no, I do it. I say like, oh, I went to a public university, the University of Texas. It's just a state school, which happens to be one of the best schools of the nation and incredibly wealthy. But that is how I do that folksy elite move, by reminding, I'm just a product of public education.

• 35:15Speaker 05

  And of course, they like to mention that they work hard, which is true. Actually, if you look at the number of hours of work in the US, it's actually increasing with wage per hour. So they do work a lot. So they work a lot, they studied quite a lot, they feel they deserve it.

• 35:30Joe Weisenthal?

  Yeah.

• 35:30Speaker 05

  They have this capital incomes and they transmit all these advantages to their children that they believe, actually, the children deserve that. But the problem, and that was what Markowitz says, the problem is that then actually does create in sort of an elite that has a self-perception that it deserves that. And that is, to some extent, really unpragnable elite. Because you cannot get rid of them because they have a hard capital income. Since stock market goes down, they would actually have labor income.

• 35:58Joe Weisenthal?

  I love my children. They don't deserve it. They're very spoiled. They didn't do anything to deserve the lifestyle that they have. And it's, so I, that's the one area.

• 36:08Speaker 05

  You say that because you want to be folksy elite, you know?

• 36:10Joe Weisenthal?

  No, no, no, no, actually, like, just getting all personal a little bit, just like, no, it bothers me a little bit because it's like they have all these privileges.

• 36:20Speaker 05

  No, no, it bothers all of us, but actually, we still do it because you're not going to go to work against your kids. No, nobody does. So, I mean, this is, I mean, this is a very good elite, as the elites go. But it is an elite nevertheless.

• 36:32Joe Weisenthal?

  Going back to China, when we, when people talk about China, they, and we're human, so we always do this, we reach for historical analogies, right? Maybe the story is that it's kind of like Japan. Maybe the story is that it's kind of like the US after World War Two and you pull different strands from it, et cetera. But I think more and more people are saying, no, this is a new thing. This extraordinary concentration of so much production in one country specifically, it is novel. And the numbers, setting aside the qualitative differences, you have some distinct metrics, including like just the sheer like population level, like wealth compounding gains

• 37:16Joe Weisenthal?

  over the last several decades. Is it really just a sort of like a new phenomenon that we don't have good analogies for? And can you like talk about like just the scale of what we call the rise of China?

• 37:28Speaker 05

  Well, the scale, I can talk about the scale. I mean, I really, I don't know, I'm wary of analogies. I don't know, there is like analogy with Japan as well. There is analogy with the Soviet Union, there is analogy with the US. Actually, I use the analogy even with the, with English, with industrial revolution, because the growth, going back just for a moment on, on the elites, the growth, we actually did the same thing, I did this with the quarters, actually Chinese quarters. We did five percent top of Chinese urban population. And this is their elite. And what you see in that elite, nineteen eighty eight, where the first data begin, is that two thirds broadly, two thirds of the income of the elite comes from state-owned enterprises, government jobs and jobs in the Communist Party. Okay?

• 38:10Speaker 05

  Well, go today to two thousand eighteen, and now we have a data for two thousand twenty-three. It's the reversal. Two thirds of total income from the elite, in the elite, for the elite, comes from private sector jobs, professional jobs in private companies, and one third from state-owned enterprises, Communist Party and government. So that was why I made the comparison with the UK. Because the number of so-called, you can call it capitalists, and they are called actually, in Chinese official terminology, they are called individual owners and larger owners, not capitalists, but owners, okay? When we look at the data that were done by Bob Allen, English economic historian,

• 38:50Speaker 05

  for the growth of the capitalist class in England between sixteen eighty eight and, I suppose, nineteen hundred, we see exactly the same thing, but over a hundred fifty years. There is more capitalists, you know, there were a small number in the beginning, then they became much larger number. And their relative income compared to landlords originally was much lower and then starts catching up. So what you, I call that extensive and intensive increase of capitalists. And then in China, it took forty years for that and the UK took one hundred fifty. So the change in China is just at a level that we have not historically seen. So in that sense, I totally agree with you. It is something that in terms of size of the population and the speed,

• 39:34Speaker 05

  we do not have an equivalent case.

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• 41:57Tracy Alloway?

  I mean, there are risks that come with the rise of this sort of national market liberalism. And you talk about the potential for great power conflicts, for war, basically, for more income inequality, plutocracy, all that stuff. Can you envision, is there any scenario where you get like a relatively good equilibrium?

• 42:20Joe Weisenthal?

  Harmony?

• 42:21Tracy Alloway?

  Yeah, like, I mean, could, could this type of market liberalism live in peace with itself, I guess?

• 42:29Speaker 05

  Okay, let me put the other hat now, the optimistic hat. You know, the chapter two in the book deals with precisely that question. That was a question which I think is really so relevant. It says, what did economists or political scientists think about the relationship between openness slash globalization and war on peace? And then you have people from Montesquieu who actually believe that trade leads to immediacy to peace because we are both trying to actually sell our goods. We have to be nice to each other and stuff like that.

• 42:56Tracy Alloway?

  I remember that.

• 42:57Speaker 05

  And of course, another extreme is John Hobson with imperialism in 1902, and then Rosa Luxemburg and Lenin, who actually, and Schumpeter, who believe that when you have a large powers, they fight for markets, companies fight for markets, but because they need markets, control of the labor force in the, in foreign countries and elsewhere, they basically take the state to play that military role that they need, which is actually what we see today is basically large scale companies need the support of the state if they want really to do jobs elsewhere. And that was really sort of a negative, more belligerent sort of variant of that, of that view.

• 43:42Speaker 05

  But if I want to be optimistic, I think, I mean, let's go to concretely to the questions today. If we could stop and find a ceasefire and a solution of the war in Ukraine and Russia, in the Middle East, Iran and the United States and Israel, I, I think that we would then at least eliminate the possibility of a huge war, which then, of course, if you have a huge war, all the chips are off, you know, you have no idea what will happen. But at least then we could start, I think, redesigning economic system, having, as people have said, a new Bretton Woods, and having a solution where actually China would have greater influence, and not only China, India as well. Europe definitely much less because Europe has the

• 44:27Speaker 05

  influence in these organizations that reflected 1945, when, you know, obviously, Europe was basically still colonial powers and countries like Indonesia, Brazil, and so on. So that would be the optimistic scenario. Stop the wars and renegotiate international economic relations.

• 44:46Joe Weisenthal?

  You were in Paris recently. How are Europeans elites, how are they living with themselves having come around to Trump's view on China? That must drive them crazy, right? They must create this terrible psychic toll on them to have to agree with Donald Trump on something. But you hear it all the time from Murd, Macron, et cetera. How are they digesting this?

• 45:10Speaker 05

  I don't think it was that hard because Germany definitely has been affected by China in electric vehicles.

• 45:16Joe Weisenthal?

  Yeah, no, no, the clear, the math is clear.

• 45:18Speaker 05

  So it was clear, I mean, they, they side now with Trump because they do have similar problems. Yeah. I know, I don't know, you know, the, the, well, I don't really know European elites, but you know, what I find strange about Europe, I, I'm not very optimistic on, on Europe for many reasons. But you know what I find strange is that Europe really needed in order to, needs actually, in order to prosper two elements. It first needs cheap energy, which was really fueling European growth in the last 40 years or 50 years. But then they decided because of the war with Russia and Ukraine, to just cut off Russian energy and to buy much more expensive American energy. You'll say, well, that's kind of bizarre, but okay, let's do it. Then it's also the continent with the decline in population.

• 46:03Speaker 05

  And the only way to stop that decline in population is to have immigration. But then they say, and it's increasing now, they don't want immigration at all. You have maybe Spain that is an outlier, that is in favor of immigration, but nobody else does. If you look at Nordic countries, they have.

• 46:19Joe Weisenthal?

  They want Latam immigration.

• 46:20Speaker 05

  They don't let them in, yeah.

• 46:21Joe Weisenthal?

  I mean, no, in, in Spain, they're liberal towards Latin American immigration.

• 46:26Speaker 05

  Yes, but they're liberal to immigration in general. And actually, Sanchez's government is totally at odds with everybody else on that, on immigration. And so they need people, but they don't want people. They need cheap energy, but they decided to cut off the energy. And then China shock comes, especially to Germany. So they are in, in, I think, different situation. And in such a situation, they have found some sympathy for Trump. But there may be some faint sympathy as well because they treat, I think, actually, many people treat Trump like a tiger in a cage, that you're with the tiger there and you just want to survive until the tiger is gone, you know? So you just please the tiger and say, okay, you know, you big tiger, you are great, but you don't really believe that. So there is that part as well, I think.

• 47:10Tracy Alloway?

  All right, say more about your recent trip to China. And I assume you met some Chinese elites over there and talked to them.

• 47:17Speaker 05

  It was really about economic history. And it was super interesting because the, the conferences that I went to, there were in three from Beijing, Shanghai, and then also one in a smaller city, Guangxi province, which is in the south, very sort of topical. We talked about the great divergence. And that was why, that was a topic which very popular among historians. Why is that the industrial revolution took place in England and not in China? If you look at 1750, the two countries are at similar level of development. China is big, has many technological innovations. You know, they have a book of technological innovations over 2,000 years and so on. So the story, the conference was about that. But then because of my book is really now the great convergence of China, then of course, that was interesting because it is

• 48:02Speaker 05

  to some extent a pound down of what happened before. And it is interesting to, to speak, obviously, to many people. These are people at universities and so on. As I was saying before, many people have a little bit of a disbelief that they are the rich country.

• 48:17Tracy Alloway?

  I was gonna ask, do you get any pushback on the convergence thesis or not really?

• 48:21Speaker 05

  Not really, but for example, what, what I did get is that when I was given that presentation for a while in China, I talked about global inequality. And I say between 1990 and actually until, probably until several years ago, China was a sort of automatic reducer to global inequality because it's a big country, it was still relatively poor, and they grow faster and global inequality goes down. And then I say, but that's no longer the case. Today, Chinese high growth is slightly inequality increasing at the world level because China then becomes further apart from poor countries like Sudan, Ethiopia, Congo, and so on, gets closer to the US, but the first element is stronger than the second.

• 49:04Speaker 05

  So when I say to them, that was interesting, young people especially, when I say to them, Chinese growth today is globally inequality increasing, they almost took it like it's an insult. So we, you're telling us we should not grow. I said, no, guys, this is an arithmetical thing. It is simply that your country has become too rich now arithmetically. If you grow at 8%, it's going to increase global inequality. Maybe you should redistribute within China, but I'm not talking about that part. But what I find it interesting is that people are still real, as I was saying before, they have a little bit of problem getting adjusted to the fact that they are now not a very rich country, but they have joined the club, around the club of the rich countries.

• 49:48Joe Weisenthal?

  Do you think that this China anxiety that's so prevalent in the US, Europe, maybe Japan and Korea, et cetera, do you think it will spread further and become a thing in the actual poorer parts of the world who presumably have industrial ambitions of their own? I mean, Brazil has a plane maker, they presumably, the Comac is going to compete with Embraer, et cetera. Like, could China find itself in a situation in which, there was recently a story, Malaysia specifically, limiting the number of imports of low-end Chinese EVs? Like, could what, okay, it started in the US with Trump, spread

• 50:33Joe Weisenthal?

  to Europe over the last several years, could it spread further?

• 50:36Speaker 05

  It could, but you know, let me just say, that's actually what my book is good. This is national market liberal, it's actually liberalism limited to the national market. So we really now totally think in terms like, what are we doing? Do, is Malaysia going to stop these goods? Is Brazil going to stop other goods? There was recently an article, I think in Foreign Affairs by Subramanian and another author, mostly from the Indian perspective, but essentially saying, if China is better in high-end manufacturing and middle and level manufacturing, then countries that would normally go into middle-level manufacturing actually would be also spaced out by China. But then I really have a problem with that argument, because I'm thinking, well, we are all caveting here because China is too efficient

• 51:20Speaker 05

  and too good. I mean, that doesn't make sense. If China is efficient and too good in producing X, Y, and Z, let them be producing X, Y, and Z. Why do we complain about this?

• 51:31Joe Weisenthal?

  Well, okay, I have a thought why we might want to complain about this. So clearly, we all enjoy every day the benefits of efficient Chinese production, and we have affordable computers and affordable phones and lots of other things and inexpensive toys, et cetera. One reason we might not love that is that if you can't build a car, if you can't build, like, you can't build a tank, ultimately, right? Dual-use technologies, you lose that manufacturing muscle. You lose that manufacturing muscle for commercial goods, and then you no longer have the muscle for military. And if you can't do that, as Alexander Hamilton said, you don't have sovereignty as a nation. This is like, you

• 52:16Joe Weisenthal?

  know, great, we all love these benefits. I love cheap things as much as anyone. But like, this, when I think about the world order, if no country can like actually protect itself militarily because they've lost, that has become totally hollowed out, isn't that a reason to be anxious?

• 52:33Speaker 05

  No, no, there is a reason, but then you go to chapter two and you say, well, I agree with Hobson, Lenin, and Rosa Luxemburg. Openness is war. That means basically, we cannot have ideologically an openness that is actually open without thinking about conflict. And I think it's legitimate stuff, because of course, conflict has been with us for so long. But that poses a question of what we started that with your belief and my own belief, and I think your belief in the 1990s, that all these contradictions are gone, that there was neoliberalism that is ruling everything, there will be no conflict, that we don't have to think about that, and if somebody produces X, Y, and Z, that's excellent, and so on.

• 53:12Tracy Alloway?

  Joe and I both did international relations degrees in the early 2000s. We are, we are well aware of this environment.

• 53:20Speaker 05

  And that actually, I agree with the real world, such as you described it, but that simply means that the world that we believed in 1990 was not the real world. That was a fantasy world. And that means that that ideology which underpinned that fantasy world was a fantasy ideology. So I understand from the point of view of military technology and all of that, that of course, countries cannot simply, particularly large, big powers. Small countries, it doesn't really matter. For big powers, it does matter, because then if big powers need helicopters, and they cannot produce helicopters because they don't have any industrial capacity, yes, they are not going to have helicopters, and that would be it, as we see now with drones and so on. So I agree, from the point of view of national

• 54:01Speaker 05

  security, yes, one has to be not concerned about China, because I hate China bashing, but to be concerned about other countries in general. You know, because everybody who is your ally might not become your ally tomorrow, you never know. So in that sense, yes, I agree with Alexander Hamilton. But as I said then, we are really in a different world from the world of unimpeded free trade, where basically you don't believe that there are, you know, significant military considerations. I would not say zero, but not significant.

• 54:30Tracy Alloway?

  Most of your work famously focuses on inequality and distributional effects and that sort of thing. When you look at the tools of, you know, again, this national market liberalism, we think about sanctions or tariffs, obviously, industrial policy, things like that. Do you have a preferred tool that like, would come with some distributional benefits, rather than just, you know, like shuffling rents between countries?

• 55:03Speaker 05

  When it comes to global income inequality, and I've been working on that, as you know, for many years, the ironic stuff about that is when, if you want to reduce global income inequality between individuals, you really have to worry about growth. Because the best way to reduce, and practically the only way at a global level, is high-growth rates of poor countries. And that's why Africa, in that point of view, and that's what I was telling the Chinese students when they were surprised that China is no longer, I say to them, the key point now is India's growth, and especially Africa's. Because Africa, you have five large countries, around 100 million people, actually 220 is Nigeria, but others

• 55:44Speaker 05

  about 100 million. So we are talking there about this five or six countries with the 1 billion people and growing, the only part of the world which is growing at 2% annually in terms of population. So that's really is going to define 21st century. Are we going to have a reduction in global inequality or not? If Africa doesn't catch up, we will have another increase in global inequality. So when it comes to global inequality, you really have to worry about growth. When it comes to inequality within nation-state, then of course, the situation is different. You have a host of policies that are quite well-known. You know, education, I think, is crucially important, in my opinion. And, you know, I'm not a huge fan of not slapping a tax on anything. You know, some people

• 56:27Speaker 05

  immediately just want to tax everything. But I do actually believe that there is a case for taxing extraordinary wealth, and I've called it in my Substack, I called it a pedagogical tax. And I tell you why it is pedagogical, because you have to tell people with extraordinary wealth, you are not going to rule us. I don't care how many billions you have, you're not going to rule us, and in order for you not to be able to rule us, I'm going to have an extortionary tax on you every year. And this is a pedagogical tax. That was Zuppan is actually calling for that. Piketty is calling for even stronger tax. I don't really have a view whether it should be 2%, 20% of that, but I think that should be a pedagogical tax.

• 57:08Joe Weisenthal?

  There's one line in your book I didn't really like, or I didn't get it.

• 57:11Speaker 05

  There may be more lines.

• 57:12Joe Weisenthal?

  I didn't, I didn't, maybe I didn't get it, or I didn't like it.

• 57:15Speaker 05

  There are many things.

• 57:16Joe Weisenthal?

  So, page 141, it says, "It is in this context that we should look at the politics of Donald Trump, Xi Jinping, and Vladimir Putin. Their policies try to stem or control the rise to complete economic and political dominance of the money elites." This strikes me with Trump in particular, is a thing I'd see post-liberals like to say on Twitter, and they fantasize that he's sort of like secretly, I don't know, secretly heterodox economics or something like that. When I look at the actual administration, I see an administration that is very orthodox when it comes to tax cuts on the rich. I see

• 57:55Joe Weisenthal?

  an administration that has invited big business leaders into the operations of government at a degree that's sort of unparalleled. In what sense is it defensible to put Trump in this category?

• 58:10Speaker 05

  It's a very good question, because it raises also the issue that I address, and by talking about national market liberalism, I actually put Trump in a category of people domestically, that pursues and continues, and actually in some sense, deepens the policies of neoliberalism domestically. But what I wanted to say here, maybe it was not clear, but what I wanted to say is they came to power on the basis of support that was, that came from parts of the population that were resentful about the people who, the winners of the neoliberal globalization. For the US, I don't need to expand on all that. People who voted for Trump, it has been studied, you know, in extent, so much more than I

• 58:53Speaker 05

  know. And, but the fact is, the 77 million people actually voted for him, and I think essentially voted because they were unhappy with what they have seen. They were expecting much more, they got much less. So I think in that sense, he fashioned himself as somebody who is fighting the elites. Of course, in reality, he's not. Actually, he is not only part of the elite, he has, as you said, brought them all in, and he does follow very conservative policies when it comes to taxes. Actually, of course, taxing capital less than labor, taxing top less, I mean, not less, but actually not increasing the tax rates and so on. So I agree. So what I wanted to say there, maybe it was not clear, the reasons for them coming to power was that a significant section of the population was unhappy with neoliberal

• 59:37Speaker 05

  globalization. And I think in the case, interesting case is Xi Jinping, for me. Putin as well. But Xi Jinping, what is interesting is, I think he came, and he actually explicitly said that he doesn't want rich people to enter the decision-making bodies of the Communist Party.

• 59:57Joe Weisenthal?

  It's the pedagogical point you made.

• 59:58Speaker 05

  Yeah, pedagogical. He says to the rich people, as China historically had a case, merchants, yes, you get rich, do extremely well, but don't come here and tell us what we should be doing. We decide, and you get rich. And I think actually, under Jiang Zemin, he had this policy of the three represents, which ideologically justified the influence of the rich people in the Communist Party. And I think it's very clear that with Xi Jinping, there is a purge of such people out. So they can be still rich. I heard the story, maybe it's apocryphal, you guys must know that probably much better than I, but I was told when Jiang Ma was told that he is not going to have his IPO, the phone call was

• 1:00:38Speaker 05

  made by the mid-level official in the Ministry of Finance. And things don't happen by accident in China. That was a message. You don't treat with the Minister of Finance. You treat with the mid-level official. That's your level.

• 1:00:53Joe Weisenthal?

  Franco Milanovic, thank you so much for coming on the podcast. Very fun conversation. Really appreciate you taking your time.

• 1:00:59Speaker 05

  Well, thank you very much for inviting me. It was really fun. Actually, I love these conversations that are actually unscripted.

• 1:01:04Joe Weisenthal?

  Yeah, that's how we like to do it. Let's just, you know, just a little tour around the world. But no, that was great. Thank you so much.

• 1:01:22Joe Weisenthal?

  Up until prepping for this episode, I'd just like totally forgotten about the elephant chart and how that was like, man, that must have been in a million slide presentations in like 2015 and 2014, et cetera.

• 1:01:35Tracy Alloway?

  Yeah, Joe.

• 1:01:36Joe Weisenthal?

  Yes.

• 1:01:38Tracy Alloway?

  Can I be in the room when you tell your children that they're not getting an inheritance? Because you need to prove your folksy credentials.

• 1:01:46Joe Weisenthal?

  Well, I assume they, you know, if I'm fortunate enough to have a little bit left over, that they'll get some inheritance. But my, my daughter recently, like, I don't know if it was like from a TV show or a friend, I don't know. She learned the term trust fund recently. And she had, she's like, Oh, do I get a trust fund? And I was like, absolutely not. That is not something in your future. And then she was like disappointed. And I was like, No, no, like, you have to understand, no, even if no one respects those.

• 1:02:16Tracy Alloway?

  This is why you don't want money.

• 1:02:18Joe Weisenthal?

  Yeah, it's like, no, no, no one respects those people, et cetera. So she is learning about the world of, you know, but so far I've told her, she'll inherit something, I hope. I hope I have a little cash left over. She'll not be getting a trust fund.

• 1:02:32Tracy Alloway?

  Anyway, that was a fascinating conversation.

• 1:02:34Joe Weisenthal?

  Yeah.

• 1:02:35Tracy Alloway?

  And I do think this is like the big story of our time.

• 1:02:37Joe Weisenthal?

  Yeah, 100%.

• 1:02:38Tracy Alloway?

  The sort of like, turning away from globalization and bringing everything more inwards. I do think it's, it's very interesting and perhaps telling that so much of the policy, you know, we're talking about people who are upset because they're not getting as wealthy as they once could have been, basically. And I think it's interesting and telling that the policy solutions to that are all very much focused outward, things like tariffs and things like that, rather than anything focused domestically. So domestically, you still get market liberalism.

• 1:03:11Joe Weisenthal?

  Yeah. No, I think that's interesting. You know, I remember like, again, going back to the 2010s and I was, you know, you see that elephant chart. What the elephant chart showed was that like, on a global scale, the new middle class was coming from Asia.

• 1:03:25Tracy Alloway?

  Right.

• 1:03:26Joe Weisenthal?

  China, Asia in general, more broadly, which he talks about in the book. But on the flip side, it's like, okay, so some person who's sort of like in the middle in Italy, right? Like, they're pretty wealthy by global standards. If their status in the globe goes down because suddenly a lot more people are wealthy in China and Korea, Vietnam, et cetera. I'm like, I don't really see how that hurts them, right? It was interesting. I like, the World Cup ticket example is sort of a symptom of this phenomenon.

• 1:04:00Tracy Alloway?

  Yeah.

• 1:04:01Joe Weisenthal?

  There aren't that many things that are like the World Cup, where the existence of wealthy people elsewhere actually diminishes your relative. You know, you do see a few things like this, like, you know, people observe that, like, the Disney vacation is not as available to like a median household, the way it would have been in the 70s or 80s, because there are just like so many more people who like.

• 1:04:27Tracy Alloway?

  Right. It's also a competitive.

• 1:04:28Joe Weisenthal?

  It's competitive.

• 1:04:29Tracy Alloway?

  In the same way as the World Cup.

• 1:04:31Joe Weisenthal?

  I am also a little bit skeptical of the sort of basic economics claim that, say, the rise of Donald Trump, or the success, I would say, electorally of Donald Trump, is about this, like, agreed, there is like the sort of like, of course, there's this anti-elite, maybe anti-liberal elite tinge to it. But another big part of it, his success in 2016 was build the wall, right? Which is like a very different thing. That's about keeping other people out. There's very little to do with sort of like, you know, the sort of like, success of wealthy people in the United States.

• 1:05:08Tracy Alloway?

  You're not building a wall to keep out Mexican transformers.

• 1:05:11Joe Weisenthal?

  That was a huge part of the success in 2016. And I would say 2024 with sort of the perception or the, the sort of liberal border policies of the Biden administration. So I think like, it's very, people like to say, oh, it's like, there's this middle class and they look at the elite. No, a big part of Trump's success specifically clearly has to do with immigration, which is a different story, and perceived cultural change rather than inequities of capitalism or whatever.

• 1:05:42Tracy Alloway?

  All right. Shall we leave it there?

• 1:05:43Joe Weisenthal?

  Sure, let's leave it there.

• 1:05:44Tracy Alloway?

  This has been another episode of the Odd Lots Podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway.

• 1:05:50Joe Weisenthal?

  And I'm Joe Weisenthal. You can follow me at the Stalwart. Follow our producers, Carmen Rodriguez at Carmen Armin, Dashil Bennett at Dashbot, Cal Brooks at Cal Brooks, and Kevin Lozano at Kevin Lloyd Lozano. And for more Odd Lots content, go to Bloomberg.com/oddlots, where we have a daily newsletter and all of our episodes. And you can chat about all of these topics 24/7 in our Discord, discord.gg/oddlots.

• 1:06:14Tracy Alloway?

  And if you enjoy Odd Lots, if you like when we talk about the global elites, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely ad-free. All you need to do is find the Bloomberg channel on Apple Podcasts and follow the instructions there. Thanks for listening.

• 1:07:08Speaker 06

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