Kicking Away the Ladder Development Strategy in Historical Perspective

Well we're in a new world now where the US is after 40 years of telling everybody not to engage industrial policy is now saying yeah we're going to do it too but the developing countries can't do it on scale and so what I've been advocating is that we still have to keep the principles that were there in the forming of the trade rules which is trying to keep a level playing field and the question is how do you keep a level playing field it's very hard but one of the ways you do that is sharing technology particularly for protecting the environment so if the US developed a new tech green technology through industrial policy and gave it a competitive advantage over other countries it should share some of that knowledge at least with the developing countries to keep a moral level playing field otherwise we're back in the law of the jungle.

Well we're in a new world now where the US is after 40 years of telling everybody not to engage industrial policy is now saying yeah we're going to do it too but the developing countries can't do it on scale and so what I've been advocating is that we still have to keep the principles that were there in the forming of the trade rules which is trying to keep a level playing field and the question is how do you keep a level playing field it's very hard but one of the ways you do that is sharing technology particularly for protecting the environment so if the US developed a new tech green technology through industrial policy and gave it a competitive advantage over other countries it should share some of that knowledge at least with the developing countries to keep a moral level playing field otherwise we're back in the law of the jungle one of the other things I wanted to ask you again as someone whose work often dwells on the social benefits of particular economic systems how should we measure the success of a particular economy because one of the things you often hear is like okay well US GDP has been doing phenomenally well in recent years at least relative to other countries but on the other hand we're dealing with a decreasing life expectancy and things like that and one of the reasons I asked this question is because I got off the phone with my mom yesterday and she's embarking on her annual six-week holiday as someone who's employed in continental Europe and that sounds nice that's not something that US workers have so how should we be measuring what an economy should be doing for people.

Well we're in a new world now where the US is after 40 years of telling everybody not to engage industrial policy is now saying yeah we're going to do it too but the developing countries can't do it on scale and so what I've been advocating is that we still have to keep the principles that were there in the forming of the trade rules which is trying to keep a level playing field and the question is how do you keep a level playing field it's very hard but one of the ways you do that is sharing technology particularly for protecting the environment so if the US developed a new tech green technology through industrial policy and gave it a competitive advantage over other countries it should share some of that knowledge at least with the developing countries to keep a moral level playing field otherwise we're back in the law of the jungle one of the other things I wanted to ask you again as someone whose work often dwells on the social benefits of particular economic systems how should we measure the success of a particular economy because one of the things you often hear is like okay well US GDP has been doing phenomenally well in recent years at least relative to other countries but on the other hand we're dealing with a decreasing life expectancy and things like that and one of the reasons I asked this question is because I got off the phone with my mom yesterday and she's embarking on her annual six-week holiday as someone who's employed in continental Europe and that sounds nice that's not something that US workers have so how should we be measuring what an economy should be doing for people I'm glad you asked that because that's a question I've done a lot of research I did a book called mismeasuring our lives why GDP doesn't add up where I tried with a group of I was a chair of a co-chair of an international commission on the measurement of economic performance and social progress and our commission concluded very strongly that GDP was not a good measure of well-being it was a measure of market output but that's not the same as well-being we delineated ways in which there were major deficiencies we advocated that there's not a single measure that could capture anything as complex as ourselves or what makes us well off or our society but we should have a dashboard and you name several of the things obviously we want material consumption is part of it what we call GDP but health is another in terms of health the US has a lower life expectancy than in almost any other advanced country and one that's lower today than it was a number of years ago in spite of the fact that we're doing the best research in this area we value our leisure then as you say in european really value their leisure we value security that's why we have social security one of the things that we clearly have gotten wrong in many cases as we say oh be more efficient for the economy get our GDP if we kept back on social security well if you come back and social security you make people more anxious more uncertain so what if GDP goes up a little bit people are are all worried about what's going to happen in the last third of their lives you know that's pending wise and powerful as they used to say so to me well-being is really what we ought to be focusing on there are a number groups that have attempted to measure in various ways well-being and interestingly the united states while we are close to the top on GDP per capita are not at the top anywhere near the top on well-being in almost any of these studies.

Well we're in a new world now where the US is after 40 years of telling everybody not to engage industrial policy is now saying yeah we're going to do it too but the developing countries can't do it on scale and so what I've been advocating is that we still have to keep the principles that were there in the forming of the trade rules which is trying to keep a level playing field and the question is how do you keep a level playing field it's very hard but one of the ways you do that is sharing technology particularly for protecting the environment so if the US developed a new tech green technology through industrial policy and gave it a competitive advantage over other countries it should share some of that knowledge at least with the developing countries to keep a moral level playing field otherwise we're back in the law of the jungle one of the other things I wanted to ask you again as someone whose work often dwells on the social benefits of particular economic systems how should we measure the success of a particular economy because one of the things you often hear is like okay well US GDP has been doing phenomenally well in recent years at least relative to other countries but on the other hand we're dealing with a decreasing life expectancy and things like that and one of the reasons I asked this question is because I got off the phone with my mom yesterday and she's embarking on her annual six-week holiday as someone who's employed in continental Europe and that sounds nice that's not something that US workers have so how should we be measuring what an economy should be doing for people I'm glad you asked that because that's a question I've done a lot of research I did a book called mismeasuring our lives why GDP doesn't add up where I tried with a group of I was a chair of a co-chair of an international commission on the measurement of economic performance and social progress and our commission concluded very strongly that GDP was not a good measure of well-being it was a measure of market output but that's not the same as well-being we delineated ways in which there were major deficiencies we advocated that there's not a single measure that could capture anything as complex as ourselves or what makes us well off or our society but we should have a dashboard and you name several of the things obviously we want material consumption is part of it what we call GDP but health is another in terms of health the US has a lower life expectancy than in almost any other advanced country and one that's lower today than it was a number of years ago in spite of the fact that we're doing the best research in this area we value our leisure then as you say in european really value their leisure we value security that's why we have social security one of the things that we clearly have gotten wrong in many cases as we say oh be more efficient for the economy get our GDP if we kept back on social security well if you come back and social security you make people more anxious more uncertain so what if GDP goes up a little bit people are are all worried about what's going to happen in the last third of their lives you know that's pending wise and powerful as they used to say so to me well-being is really what we ought to be focusing on there are a number groups that have attempted to measure in various ways well-being and interestingly the united states while we are close to the top on GDP per capita are not at the top anywhere near the top on well-being in almost any of these studies so we're recording this july 1st just yesterday there was an election in france in which the nationalist party or the right wing party did really well there seems to be this trend and you could say with brexit and trump and you know various things going around the world of countries voters specifically seeming to reject internationalism free trade whatever you want to call it in various flavors and i'm sure there are numerous causes and we could debate that for our cultural whatever but what do you see happening when you look at these things is it has there been a failure of governments in rich countries to deliver the benefits of economic growth to citizens like when you look at this and this sort of rejections of some of the last 40 50 years what do you see happening very much i think the dominant economic framework of the last 40 years which is neoliberalism you have left neoliberalism and right neoliberalism but it was basically neoliberalism it failed GDP didn't even grow faster it grew more slowly after 1980 when it became the dominant doctrine growth was slow most of the growth that did occur went to the very top there was more insecurity less well-being as we've been talking about it and there's a mini rebellion going on unfortunately it's a rebellion that is grounded in anger but not analysis so the easy answer to why things haven't done gone well is others Americans might complain about unfair trade agreements we hadn't signed those unfair trade agreements if we weren't paying more than our fair share if we didn't have those immigrants and each it plays out in different ways in different countries but it's basically the same blame others rather than looking inward and say you know we didn't get our economic philosophy our economic our economics right and that's really one of the central messages of my new book the road to freedom the the right wing people like Hayek and Friedman said that if you only add unfettered markets forget about negative externalities forget about positive externalities everything works out fine the market is you know worship at the at the market everybody's going to be better off growth will be higher trickle down economics will make sure everybody will be the same we were duped by a failed economic philosophy and what makes me you might say almost angry about this thing is that at the time it went into ascendancy to say with Reagan in 1980 we'd already proven that those ideas were wrong we had already shown we talked to earlier today about how economists analyze the economy and we've shown that unfettered markets do not deliver on societal well-being and we explained why and they ignored all that now we have 40 years of evidence of seeing wide extra when I what I try to write about it in this book the road to freedom they thought this free enterprise would lead to not only more efficient markets but also to political freedom but the growth of authoritarianism is seen most in places where there's not too much government but too little government and where government he hasn't done enough so my claim is it was this neoliberalism wasn't really freeing as it claimed was going to was bringing us exact in the wrong direction.