November 8, 2023 Professor Harold James spoke about his latest book, “Seven Crashes: The Economic Crises That Shaped Globalization.”
This event was co-sponsored by The Griswold Center for Economic Policy Studies, Julis-Rabinowitz Center for Public Policy and Finance, Economic History Workshop, European Union Program at Princeton, and Liechtenstein Institute on Self-Determination.
Uh it’s my great honor today to introduce Harold James as our speaker for today’s talk on his most recent book Seven crashes the economic crisis that shaped globalization as you all know Harold is the clawed and law Kelly professor in European studies here at Princeton professor of history and international
Affairs and the director of the program in contemporary European politics he has a glittering array of accolades and awards he’s the official historian of the international monetary Fund in 2004 he was awarded the helmet Schmidt prize for economic history and in 2005 uh the Ludwick Ard prize for writing about
Economics his research spans many areas of History economics and finance as we all know in terms of the topic of today’s talk on globalization it’s an area where he’s made a whole series of fundamental contributions including his 2001 book on the end of globalization focused on the interwar period and uh
His later book the destruction of value the globalization cycle and then of course the book that we’re going to discuss today on seven crashes Harold’s book draws our attention to the complex interplay between institutions technology and globalization and how insights from the past can inform a present day debates and controversies
The issues that IT addresses are of particular importance as we look ahead and think about the future of globalization in the context of a Resurgence of protection here in the United States recent supply chain disruptions in the aftermath of the co9 pandemic and of course geopolitical concerns such as tensions between China
And the United States and the Russia Ukraine war Harold’s going to aim to talk for around 35 minutes uh before then opening up to Q&A and Harold it’s a great privilege and honor to hand the floor over to [Applause] you so thank you so much uh Steve it’s
It’s really wonderful to be back as you know I’m not really here this year I’m in Berlin uh at The Institute for advanced study there um so I I it’s it’s wonderful to see the good weather and see so many uh friends um so let let me talk a little bit about
This um book on seven crashes uh turning points in the history of globalization um at the moment uh I think uh particularly at the moment uh we’re very very confused and there are all kinds of different narratives that are being thrown around and uh contradictory narratives and so I wanted to start a
Little bit uh with with that with the with with the present um is this advancing now yeah that looks good um can I go back a few wonderful um so so uh yes there’s this kind of apocalyptic sentiment um that we’re at the end of something and uh Steve
Mentioned that already and Steve’s been involved very much in these uh debates about whether globalization is ending um so uh 2001 I did a book that was about the interwar collapse of globalization um today there’s an abundance of literature on the end of globalization or the collapse of
Capitalism um and uh so you know I just wanted to throw out these fantasies that are going the of fantasies of the collapse of everything um end of globalization end of stable money uh end of capitalism end of macroeconomics um and focus particularly on the end of globalization story in a
Way this man is the poster child for that uh Peter Navaro um was a kind of enthusiastic free Trader uh for a lot of his career and uh really pushed the idea that free trade was uh contributing to prosperity and liberalization and making the world safer for democracy um and
Then uh as president Trump’s uh trade advisor he turned completely in the opposite direction and uh went with the attacks on globalization the attacks on globalists um the argument that uh the covid virus was the uh divine retribution for globalization that globalization was the original sin
That had produced co uh and that it needed to uh be rolled back but there are uh plenty of more sober people who make the same kind of arguments so last year uh Larry think at Black Rock made that argument about the end of globalization and the odd thing is uh
That this is occurring at a moment when technology is changing more quickly uh than I think at any point over the last 50 or 60 years and so we’ve got this tremendous technical advance and uh it’s advance in in biology in medicine in uh artificial intelligence most strikingly
Um but how is that really compatible with this story of the end of globalization um uh so uh another uh figure who’s addressed this uh very prominently uh CIA director uh William Burns talks about this as being a plastic moment in which there de globalization Supply shocks um he talked about the Russian
Invasion of Ukraine um the threats to Taiwan I think you can add the Hamas attack as well um to the shocks that are uh threatening to divide the world into blocks with people talking about fragmentation or FR Shoring or kind of softer version of that is Der risking
And then uh finally also inflation shocks and inflation shocks are a major threat to political stability in many many countries um so spectacular cases of inflation in Argentina uh or or turkey uh but even the inflation that we’re experiencing in the United States or that Europeans are experiencing is
Creating an enormous political uh backlash so globalization um by some measures was slowing down in the 201 depends but even that is controversial so the headline fact that is often used to describe that process is that uh between the second world war and the middle of the 2010s until
2014 uh World Trade was consistently growing more quickly than World production and from 2014 onwards uh that relationship changed and World Trade was growing less than uh production and so that’s before the big shocks of 2016 the political shocks of the brexit vote which can be interpreted I think as
Anti-globalization vote um and the Trump election um so it’s before that turned to really big scale protectionism um and uh there’s a substantial debate and we may want to go into that in the question session about whether this is really there uh because uh there’s a lot of uh
Argument precisely about this issue um I mean this is a measurement of trade value uh but the physical amount of trade uh measured in ton miles or ton kilometers has been growing all the time um and in addition to that there’s the completely weightless interconnection of the internet and internet transactions
Haven’t shown any sign of De globalization and some people will take this and say well actually There’s A peculiar explanation of it which is just that if you measure value um anytime that there’s a big increase in the oil price um the value of trade goes up um
And anytime that there’s a big in decrease in the uh oil price in the middle of the 2010s um then uh the volume of trade uh the value of trade goes down but the volume obviously doesn’t change um so um you know this uh uh photograph I took outside the
National Bank of Poland uh in the in the Summer where they had a quite controversial poster um big placard outside the central bank I don’t know any other Central Bank that’s done something like this which says that um inflation in Poland is the result of the
Um Supply shocks uh of the of covid uh the aftermath of Co um and it’s the result of Russian aggression in in Ukraine and next to it there’s another side of the same thing which says to accept any other story of the rise of inflation is to accept the false
Narrative of the Kremlin uh so it’s it’s very very uh politicized but we have this uptake in inflation uh practically everywhere few exceptions um so that’s really the background that made me want to think about this in a longer term perspective and uh you know what I want
To do in the next two slides is to uh present the message of the book uh very very simply so just a kind of very very back of the envelope uh presentation of what the book is about um this figure uh is this relationship between trade and world output and you
Can see the wobbles as you get into the recent period uh but I think you can also see uh that there are uh really two dramatic moments in which there’s a big increase in uh trade one in the middle of the 19th century uh following the 1850s uh and the other from the
1970s um and uh so those are two of the turning points uh that I highlighted in the book um and you can also see the downturns so massively the Great Depression the aftermath of the first world war is a you know this is odd actually because the aftermath of the first world war
Politically created a lot more States and so one of the things that is slightly odd about this is that this is just a measurement of international trade and so if you get more States you would expect actually the to be more trade because uh for instance Czechoslovakia and Hungary and Austria
Are all trading with each other other internationally after 1919 whereas you they’ done the same thing before the first World War uh but then that wasn’t international trade that was in the absur Empire so this is surprising this is even more surprising um 2008 uh looks
As if it has many many Echoes of the Great Depression and um policy makers are aware of those uh kinds of parallels so we’ve got moments when globalization goes down um moments when globalization goes up and um I wanted to try to summarize that and uh so uh this is
The the verbal version of a back of the envelope uh postcard uh version of the story um that there are major Supply shocks that in the end drive more globalization and the historical ones are the 1840s and the aftermath of the 1840s and the 1970s um the 1840s uh
The you know the way I think about that is to think of one country in particular but that country is just the extreme example of it the Irish Potato Famine uh in the middle of the 1840s following a series of bad harvests and rainy weather um and the potato then rotting but the
Potato was not just the staple crop of Ireland it was also in Britain it was also in the Netherlands Belgium Northern Germany across the European continent and the lesson of that was very very simply that Europe couldn’t feed itself and uh so it it also demonstrated very very drama atically the incompetence of
Governments and so governments everywhere failed in the face of this Supply shock um and uh the end result is political revolution and so the revolution swept over Europe in 1848 and led to a really dramatic reassessment of what government was about and the governments of the 1850s were not simple reactionary
Governments there’s a beautiful book by Christopher Clark that’s just examined exactly that issue um we’re not simply reactionary governments but governments that thought about how to handle things better um so let me go back and uh just think about what exactly this distinction here between the supply
Shock and the demand shock um you know how can we tell which is which um I mean in a way this is this is very very simple as well uh kind of uh economics 101 approach to it and so you can get at this uh by looking at
Prices and the amount of goods produced or the amount of goods sold if there’s a demand shock in the Great Depression for instance um prices go down sales go down volume of goods traded goes down everything uh goes down if there’s a positive uh demand shock
Say in the 1960s uh prices go up sales go up everything goes up um the characteristic of the supply shock is that the prices and the volume of goods um or the value of goods move in different directions so the prices increase in the 1840s but the amount
Goods go down uh or in the 1970s the price of oil increases but the amount of oil that’s sold goes down and so it’s simply a business of looking uh at the big headline stories of price movements and the volume of uh trade or transactions um the
1970s um very very similar story and you know you can tell a story I think also back story of why you get to 1973 and the oil price and it may come out of the big um positive uh demand shock of the 18 of the
1960s uh but the the result in 1973 and then repeated again in 1979 uh is evident um so what are these Supply shocks do and why do we expect you know why is it reasonable to expect um and you know why am I going to give a kind of optimistic picture about what
Globalization is going to do in the future after the supply shock that we’ve been through um well the answer is that the supply shocks are the moments in which technology that is largely already there is taken up and used in a revolution AR way to transform the world
And to meet exactly the causes of the supply problem um and so you know just a never V of that uh for the middle of the 19th century and then another one for the 1970s uh phase in the middle of the 19th century the steam engine had
Been around for a long long time uh there were steam engines in the early 18th century um the patent for the the most famous advance in the steam engine uh from Matthew Bolton and James Watt is in 1776 um steam engines are quite widely used to pump water water out of mines
And then in the 1820s they begin to be applied to Locomotion um and uh but little bits uh so uh the first uh British Rail Road is a tiny little stretch in Yorkshire between Stockton and Darlington uh the first German railroad is between nberg and F there are all kinds of political
Objections to having more railroads um and uh basically uh they’re not making the network connections which make them so transformative from the 1850s onwards and so it’s only when you get networks of railroads that connect with each other um and then the steam engine applied to transoceanic shipping uh that
You really will see how you can get out of the hunger problem of the 18 1940s um and a hunger problem where every government failed so the British government thought of itself as being the most advanced government in the world um but it fails spectacularly in dealing with the humanitarian challenge
Of the Irish Potato Famine because what they do at first is they say um okay uh people are starving we’re going to provide uh food we’re going to subsidized food and we’re going to have uh buy food and and Supply to everybody well uh the effect of that is that it
Drives up the budget deficit and it drives up the trade deficit uh the answer to that is that you need to increase the interest rates in the rules of the gold standard system you increase the interest rates and you get a business recession um and then uh the
Aftermath of that is the government says we can’t afford this we have to stop it and so in the as the hunger is getting worse and as the epidemic diseases are spreading the British government stops the provision of food to the St ing people of Ireland um it’s it’s a
Grotesque failure of management of political economy um so you you have to think of something different some other better way of of doing things and it’s the the networked Communications that allow that um in the 1970s uh similar story uh containers shipping is in theory quite an obvious thing to do um
There had been a containers ship already in the 1930s uh from the 1950s onwards containership service between uh the port of New York and Florida uh but that’s not enough to create the network defects uh you need everybody to have container harbers that ports that are capable of dealing with containers and
So uh it’s only when the cost of Transportation Rises because the oil price Rises um that you get an overcoming of all the political obstacles uh that existed to introducing container ports um and from the 1970s the container Revolution transforms the world and if you want to see where I’m
Going with that um you know the optimistic picture is that uh the supply chain epidemic uh the the epidemic that caused the supply chain shocks uh after after Co um made us rethink the way we do some things and uh you know for instance I think there are some people
Online for instance for this uh this discussion um uh you know we we had that technology we could do that before but the widespread adoption of that technology is only in the aftermath of covid um uh tele medicine again it’s an obvious thing to do uh but it’s only
With covid that you start to do that uh working from home um you know clearly a for many people a desirable thing to do but only after covid could you do this um and so you know the consequences of this are really transformative for Education
Um you know I I don’t know how many of you have experimented with something like the K Academy um if you look at that you can see this amazingly effective course uh really sophisticated calculus course that explains it much much better than any teacher I ever had
At school could do um and that’s available free to anybody in the world who has an internet connection um medicine uh you can potentially revolutionize the way in which we do medicine and these were things education medicine housing that were getting more and more expensive and were oppressing
Uh in advanced industrial societies the middle classes they they’re being uh transformed um the MRNA vaccine itself is a kind of demonstration of the same effect like the steam engine or the container ship the MRNA vaccines were around in some form uh from the 1990s um uh and the thought is that they
Can be used to fight really rare tropical diseases and so it’s very very quick in the aftermath of the identification of the covid virus of the the Corona virus um that you use the MRNA vaccine and produce in an amazing speed uh widely distributed vaccine um and then you
Realize that this can be also used for other common diseases deadly diseases in fact for for some forms of some common forms of of cancer so we’re we’re really at this revolutionary uh moment um uh so uh you know that that really is the story story of why we should expect
Supply chain uh problems uh to revolutionize the world but also at the same time uh when you’re talking about Supply chains uh there’s also a push and a feeling uh that these can be politically instrumentalized and so um there are all kinds of shortages that come up immediately after covid um
Um chips um we had a great book talk last year with Chris Miller’s wonderful book on chip Wars um semi semiconductors um uh but uh energy looks like the classic one you don’t need to think back everybody really remembers uh the 1970s or remember stories of the 1970s
Um and uh uh so it’s very obvious uh that you can if you have a supply of energy you can instrumentalize that and so you know maybe you think most obviously of Russia when I talk about that but it’s not just Russia it’s it’s an obvious move so for instance um
Algeria supplies gas to Spain and Spain resells some of the gas to Morocco um uh they’re locked in a conflict about the Western Sahara uh and uh then in the midst of this Supply shock uh Algeria says we’re going to suspend the supplies to Spain unless you stop selling selling
The uh the gas to Morocco um so instrumentalizing it is is is is everywhere and more and more uh countries realize or political actors it don’t need to be a country to do this realize that they can use uh Supply scares to change the world uh so it
Becomes a scary world uh but it becomes a world also in which the technology holds out things um I I wanted also in the book um you will see if you if you care to look at the book um that each chapter on each of these turning points um has
Not only an account of the crisis and a classification whether it’s a supply shock or a demand shock or uh whether it’s um confusingly and destructively both in the case of the first world war um it has not only that uh but I also try to analyze the way in
Which these shocks change the way in which people think about economics and so I identify a little bit arbitrarily uh I could in some cases have taken different figures in some cases uh for instance in the aftermath of the Great Depression it’s very obvious that you can’t write that story
About how economics is transformed without thinking about canes um but some of the other choices you might might say well why did you choose this person rather than that person um uh but again I think this this kind of classification is is interesting uh in that it shows the way in which different
Themes uh come to the four and so uh the first figure that I take um you know the first great analyst as it were of the Revolutions of uh the political revolutions and the economic revolutions of the 1840s is K and I think a sort of obvious figure
To take um and Marx uh thought that uh you know very much in terms of those slides at the beginning uh that at these moments of Supply shocks we live in a kind of apocalyptic world in which we think we’re at the end of times and everything is collapsing and that’s
Certainly very much the message that um Marx had in the late 1840s uh and then the 1850s and 1860s as he sees the response to globalization um he’s more and more aware that it needs to be analyzed and so he sat there in the British museum uh
Reading room in what’s now the British library in the great Dome of the British Library he sat there uh day after day after day for years uh copying out tables of figures uh from the newspapers from the London times or from the quite recently then uh published Economist and
You can see those in his notebooks um he copies out these tables of figures and stares at them and wonders how he can get a relationship between them and he’s aware uh that uh there are mathematical ways of getting it an understanding of the relationship between different
Different uh movements um uh and he often invokes uh as a kind of iconic figure the Belgian mathematician alons kley um and says you know if we really use the methods of Ky we can get the laws of motion of modern society in the same reading room and that’s the the
Figure for the next um uh iconic Economist is the man who who actually uh gave economics its modern title because he said you know the previous title still in many British universities in in titles of chair is political economy but Stanley Jans um said uh you know why’
You why’ you have this political thing you know why don’t we just call it economy uh economics um not political economy uh but jeans’s um sort of similar look with a big beard um was sitting there in the same reading room making the same kind of analysis but
Actually had the mathematical Tools in order to give an solution to it and you know oddly it exactly the same time and kind of really not correlated with each other at all because they weren’t aware of each other’s work until both of them had published it um in France or in the
Francophone World sometime in in Geneva Leon valras um has the same kind of exercise and so um what is the upshot of that um I think uh that in these moments of the after aftermath of Supply shocks you think very much in terms of the adjustment of
Prices what prices are trying to tell you um and you know this is the moment that gave rise to the marginal Revolution to Valas um or Jans or less mathematically uh to car MGA in Austria um and um you know by contrast uh the the big demand shock moment the Great
Depression uh or 2008 um they give rise to a very different kind of thinking um in which people have to think big Aggregates um and so it’s can’s thinking about aggregate demand uh it’s Keynesian thinking about uh aggregate demand neoc kanian uh newans in the uh aftermath of
20 8 because you know it’s it’s it’s an obvious case you’ve got a shortfall in demand and you need to fill it and any kind of filling is good so you you just think of the the Aggregates or you know it’s not just keynesians who think like
This it’s um uh Milton Friedman is concerned about stabilizing the aggregate of the money supply he’s not concerned so much with the with the big with the fine adjustments um and uh I think you you can think of the difference um in the Great Depression or in 2008 it’s
Really important in order to get a stabilization of society uh that you get extra demand or that you stabilize the money supply um in the aftermath of a supply shock it’s not at all obvious that that’s the right answer and so that turned out to be the wrong wrong answer
In the 1970s it turned out to be the wrong answer in 2020 uh because you’ve got a much bigger fiscal stimulus particularly in the United States than you had in 2008 with much less of a reason to do it and uh then the argument is well you don’t need aggregate demand
You need very very specific kinds of products that are made in these circumstances you need vaccines or you need microchips or you need before you had the vaccines protective medical equipment face masks uh all of that and you you you can’t get that by injecting more aggregate demand
If you inject aggregate demand you’ll just uh get a demand for other things for all the things that we consumed in such a big way in 2020 and uh 2021 and so uh the the argument at the end says you know what are we looking at today we’re looking at a Resurgence of
Microeconomic and thinking about the particularities of adjustment rather than filling in the big gaps in demand so um the um the the overall message is that the way in which we interpret economics uh is enormously important in each of these events and I thought I might
Um quote the last page the last sentence of the book which is quation from KES in 1919 when the world was really very very gloomy um and KES wrote then that he feared all this makes it increasingly probable that things will have to get worse before they can get better things
Will have to get worse before they can get better and my gloss on that is that we learn most when things are at their most bmal so we are indeed at the moment in right in the middle of a absolutely fantastic and transformative learning process and thank [Applause] you
1980s fall of the Iron Curtain and just before that China opens up to the world economy and a lot of economists have sort of argued that rapid especially rapid globalization chart you showed towards the beginning is really in part driven by that kind of emergence of China in particular and Eastern Europe
Into world markets and that I guess it’s also a supply shock and it kind of connects with geopolitics the role of geopolitics shaping globalization which then also becomes very relevant thinking about things today as we go forward where geopolitics and in particular us China rivalry could play a critical role
In shaping the pace of globalization so I was kind of curious for your thoughts on that as another possible shock and how you think about global geopolitics um I I I mean in some ways the 1970s were a moment of geopolitics as well so uh you know I think uh your
Your your question is is is is terrific um and really important but I I I kind of uh worry a little bit when people say that uh the they they you find it very very often now I mean I think I if you’re asked if people in the street sophisticated people in the
Street are asked to give the date when China became a threat uh they will characteristically say 200 one so it’s the entry into the WTO that is the transformative moment um but you know my story is really uh that uh Den XO ping in the end of the 1970s uh thinks that
Something’s gone wrong with China’s model of development and that they need to do something different and so uh there’s this fantastically influential uh visit that Deng had to Singapore and he looks at Singapore and you the Singapore is obviously uh an autocratic regime but one that is very very
Connected into the world and he says you know this is the way that we’re going to we’re going to manage our future um and so uh you know the story of uh of China uh after 1979 seems to me to be a story of China moving into globalization and then um a
Story in 2008 uh where you when you think of of uh demand stabilization um China is the big demand stabilizer in 208 with the 4 trillion renman B program uh China’s just nailed the uh you know what could have been the Great Depression I mean the FED as well of
Course you know there are lots of things that go right in the in 2008 but China is an important part of that and then um uh so uh the there’s a great photograph that uh I I really love of the April 2009 um London G20 Summit where um uh you
Know in in the front row uh there’s uh President Obama and then Russian president uh president mvv um in they’re being gripped uh kind of uh iron Embrace by the political clown who led Italy at that moment uh so bisone is sort of smirking and pulling them together and
Um one row above is hinau and uh you see on hena’s face that he’s not concerned with this kind of townish story and then what happens I mean I think an interesting story and one that I’d like to explore a bit further um is that uh you have China thought that the reward
For doing that for who who who thought the reward for doing that would be that China would have a greater role in international institutions um it doesn’t get that um and the consequences that the successor to hin um president X just moves China in a very very different direction but it’s
In a way kind of expression of a frustration about the globalization Governors but you know also I think in all the things that China does it’s not de globalizing um and you know even even the story that’s often presented as the fact of deglobalization is that the share of uh
The US and Chinese trade is reduced but actually the the amount of trade is increasing still um and you know then there was this beautiful uh paper by Laura alaro where she shows that actually you know even that is misleading because all that’s happening is that China is
Selling more to Viet and Mexico and then that we’re importing more from Vietnam and and Mexico so um you know I I I think the uh the China story is very nicely explained actually by reactions to both uh the 1970s and the 2008 story and in that sense I I I find 2001
Overrated in the in the literature thanks terrific other questions Michael Harold I want to get I want to get back to that we talked a lot about this before but I want to get back to the fundamentals you talk about the difference between invention and Innovation okay so that there the steam
Engines invented but it isn’t really used until something happens so what what drives the invention I mean why like you know it’s like just saying these these things are lying around we grab them but where do they come from and and why are they being developed because I that’s my question
Um I I I I I mean I think uh you know that’s that’s that’s a good question but it’s a it’s a different one to the one that I’m thinking about in the book and so you know I would uh kind of uh say I
Mean you know this is um the result of all kinds of things you know it’s a kind of Joe Maria story of uh uh you know how you have an inventive society that is tinkering and producing all kinds of instruments and the steam engine is just
One of those um uh the uh you know the MRNA vaccine I think is a consequence of just enormous research expenditure on uh on uh you know every kind of uh biotech uh story and many of them end up as failures of course uh but you know this
This is something that’s lying around and is then capable of being taken up and um so I I’m much more concerned about the taking up moment and uh you know I’m not so concerned really about why nukan had this very early steam engine or you know why W and Bolton didn’t manage to
Propagate their idea more more broadly I think the um you know the interest is is for me at least in this this way in which these become really revolutionary instruments at the moment when they’re taken up in a big way and you know it’s also I mean all of these things the
Characteristic of them is that they only work if they’re taken up by lots and lots of people so if uh five people would have the MRNA vaccine that would be nice for them but it wouldn’t do any good to anybody else uh so you know the whole thing depends on lots of people
Being being vaccinated it’s it’s an exactly fine illustration of the network effect very curious what you me um I can guess but I the Summers vers cheddy uh the very bottom right corner what was the how do you characterize oh s well um what do you characterize as each of their positions
On whatever sort of you know I think it’s in a way very simple that Summers is you know in a way for me the living embodiment of can’s updated and uh so he’s got the analysis in 2008 if you nicely calculated amount and you know in retrospect may have been too
Little if they amounted the fiscal stimulus that you needed in 2008 um he’s there in 2020 to say that you need an immediate uh fiscal stimulus but then he’s very very quick to see uh that both the Trump and particularly the Biden story are overdone um and critic of the
Fysical stimulus on on classic Keynesian grounds um and the uh you know I I could have selected many you know as you know many many other uh microeconomists but the idea was to have somebody uh who uh was in the same institution uh had a completely different way of doing it and
Says that you know what you need to do if you want to fight the big social problems is uh not to think about fiscal stimulus but we need to know exactly what the education the income levels are in different parts of the city so you know this this kind of wonderful stuff
That you can do with chetty’s uh Maps where you know you you you see uh the part of Baltimore is very very prosperous and you know just a few miles away uh parts of Baltimore are just appallingly impoverished and the nature of the suppli shots no the
Bor who’s made these arguments that we should think about this more as like coming out of World War II Um understand what you’re yeah um but exactly I mean the kind of problems that uh the Chetty is dealing with are problems that are not really capable of being tackled by a big change of fiscal policy for a big change in monetary policy so’s he’s not interested in that
Kind of issue and you know in the same way that um you know fundamentally Jans or Valas are not interested in that kind of problem question a nice presentation heral I just wanted to have all these positive stories that you know whenever there’s a supply we we get the corner and we turn
Around you of I can also imagine that there’s some nonlinearities in this Supply shocks you I don’t when the supply shocks are very low or very high so that we might not get the corner at some point if you look back further in history you see some Supply shocks were
In some countries we didn’t get the corner and things the whole system collapsed you know the Holy Roman Empire collaps or something like that um perhaps I don’t want to destroy your positive picture too much but just to have as a counterbalance also a up Supply shock you know was not then
Overdone with even more positive things coming forward on a global scale a supply shock that absolutely devastates society and where it’s unanswerable um I mean I I think the um um I I I I can’t really give you an example well I can I can give you an
Example of sort of basically misapplied policies in the face of a supply shock and you you know the the story in the 19th or the 20th century is that there are very very many different political systems and they produce different answers to it so um
Uh you know the uh this story of the 19th century um is you see that there’s been this big shock uh you want to learn how to respond to it and then um you know the the the most characteristic expression of that I think is the way that uh sent
These these experts all over the United States and Europe to look at what the United States did what France did what Britain did what Germany did and try to draw lessons from that and then they’re institutionalized in the in the in in the 1870s and um you know I think in the
Same way uh in the 1970s you could see that um the United States or the UK uh produced rather poor responses to the supply shock and German and Japan uh let the prices work uh and adjusted more quickly and so they become then the models that are attractive for other
Countries and so nobody is going around in the 1980s saying let’s study the UK and let’s model our institutions after the UK um I mean that that’s that’s also I think um actually you know part of the answer to Steve’s question or that has a big impact on Eastern Europe as well in
The in the 1980s and so it’s it’s it’s it’s driving the the search for a transformation long before the collapse of Communism so so I mean you you do see societies that don’t respond very effectively I think is is is is the answer and you know then you get a a kind of
Uh regime change just any other comments or questions one the corner gentle thank you I have two questions the first is on the last the current crisis or the Ukraine war and the co and you put a driver as a supply not great power competition now suppose we imagine a
Scenario after Ukraine being invaded by Russia the United States says oh Russia you sell oil as they want no sanction it seems that the outcome will be completely different how would you separate my point is how do you separate great power competition versus a Supply in Ukraine Cas right yeah and my second
Question is very short it’s um in you I forgot the precise words you use you use that in the case at least in a great power competition compete competitors they respond to the crisis and my question is do you see a converging trend of that reaction that we can almost predict if
The next Crisis comes how these great power will react um well uh the second one is uh requires an enormous amount of Investigation but also imagination and I I think many people won’t like to get pinned down into precise answers but the the the first question I think is is
Very very clear to me um which is that there is a link uh between covid and the escalation of geopolitical tensions and it’s the way that uh the supply chain shocks um really become prominent so everybody thinks about them and then if you’re controlling a particular supply
Chain or if you’re not controlling a particular supply chain in both cases you get really worried about and you need you you need to take some action uh to do that so you know China is worried then about where it’s going to get the energy supplies from or where it’s going
To get the rare Earths from and so it it it it pushes its its its its programs um uh but but I think also you know what what the uh that kind of uh story does is is to illustrate the way in which things are really completely not thought about
In advance and so in a way it’s the answer to your second question that we can’t possibly know all the linkages so for instance um you know we’ve after covid there was the big uh semiconductor shortage and in part because ships are not sailing to the right places
Um but um then when you get an additional element when uh uh 24th of February 22 uh Russia attacks Ukraine um you know only after that is there any discussion as far as I’m aware that the production of semiconductors depends on Neon gas and Neon gas is a product of
A particular kind of steel production that we don’t really do in the United States or the Europeans don’t do but both Ukraine and Russia were the big exporters of Neon gas and so you suddenly need to substitute and you can substitute you can find answers but you
You you have to look around for Solutions and so you know everybody is then thinking about Supply chains and how we’re vulnerable um but you know fundamentally it’s a very very difficult exercise to do because you know also one of of the things that became very clear
In Co that uh you know I think was known before uh but was the extent to which we’re dependent on uh if we want to have antibiotics um on generics that are produced in India but most of the generics in India are also sourced with supplies from China and so China is at
The heart of the supply chain for a lot of pharmaceutical products um so you know just thinking about that and thinking about the way in which it can be used for power play is you know my belief is that Co really accentuated uh the polarization and the fragmentation of the
World thank you very much Harold for just a fascinating presentation and questions and discussion thank you very [Applause] much but