 As you can see, this is a huge all-embracing talk that Joe gave day before yesterday, I was wishing that I would get a few pages of Joe's paper so that I would know what's coming and prepare for it. And within a couple of hours, I was wishing I did not wish for that because I got a massive paper from Joe. I don't know how he gets the time to write. It landed in my inbox, all I can say is that I actually read it diligently yesterday, a little bit through the fog of jet lag, but I read it. What I'm going to do now is use the combination of the talk that Joe just gave and my reading of the paper and make some points elaborating on the arguments, some possible disagreements. And also, there are one or two areas where I don't quite follow the arguments I want to place that to the floor. Overall, I should tell you that I find myself both in terms of theoretical methodology and normative positions so much in agreement with Joe. I think I independently reach positions which are very similar to Joe's. So I'm not a very good discussant, but still let me bring out the areas where I think there could be possible areas of contention. So first of all, this is framed, as you heard just now, in the context of the Washington Consensus and then the Stockholm Statement. The Stockholm Statement, it was just now presented today when you read it and even two years ago when we were meeting, all of us to discuss the statement. It doesn't sound like a very radical statement. It's a part of the sort of wisdom of economics, which is being codified, codified for policymakers to take this further forward. But if you really go back to 1989 when the Washington Consensus was being hatched and becoming popular, you can see how far we have come from that. The Washington Consensus was a very, very top-down ideas. Consensus developed high up and so pushed down the throats of developing countries. As Joe himself in an earlier paper said, it was not even a Washington Consensus. It was a consensus from 15th Street to 19th Street of Washington. Basically from the Treasury to the IMF, it was a consensus there. But ideas have changed and the Stockholm Statement gives you a much broader statement of the way we tend to think. Yes, there will be still a large number of very, very orthodox economists who oppose that, but there's also a very big body of economists who go along with that. You know, just after I became a chief economist of the World Bank, Joe came to give a talk. It was a huge audience. And someone asked that what was Joe Stiglitz's main contribution as the chief economist of the World Bank? Answering that, the question was directed to me, the answering that on the spot can be a bit of a difficult thing to do. But what I blurted out in retrospect was absolutely right. I said that the biggest contribution of Joe as chief economist of the World Bank was he changed the IMF. There was such a torrent of criticism across the street. And really if you look at IMF's position now, there are many elements of IMF's current position, which you will find in the Stockholm Statement picking up. But that was not the case at all at that time. IMF has changed its position since then. Having framed that, now let me come into the sort of central concern, which is also a concern that I feel very strongly, that labor in the manufacturing sector, wage bill as a share of GDP, this is falling across the world. And if you look at the last 40 years, 50 years, the drop in the share of wage bill as a fraction of GDP is very steady and almost across the board for advanced economies and upper middle-income economies. Low-income economies, lower middle-income economies, the wage advantage is still there. That's going to go, but that is still there. So some of them are not yet suffering sufficiently, but this is going to come. A couple of numbers over here, between 1995 and 2015, wage bill as a share of GDP, US, it's gone down from 60 to 57. Japan, 67 to 60%. Australia, 58% to 53%. China, 53% to 47%. Turkey, 41% to 32%. It's gone down almost across the board in countries. This kind of a trend can't go on for too long without tensions arising out of that. And I'm glad that Joe is bringing his huge amount of knowledge and expertise to bear on this and the challenge that this can give rise to. A couple of points about the challenge, where there may be disagreements on this, but let me sort of tell you the way I look at it. It's true that through the rise of technology, through artificial intelligence, robotic machines coming in, the share of wage bill may continue to decline. In itself, it is not an unmitigated disaster, something that Joe himself pointed out just now. Very often, when these changes take place, it is made out to be a labor versus labor problem. The standard thing, when there is outsourcing going on from the United States to India, the Philippines or somewhere, it's made out to be one group of labor pitched against another group of labor. What is overlooked, every time an outsourcing takes place, profit just jumps up. So there is a labor versus capital element that is going on, which is just huge in this. Attention is kept away from that. But therein lies some suggestions that better forms of distribution, ownership of profit is something that we ought to keep in mind. Two things might happen if labor productivity keeps increasing. As Joe mentioned, that labor becomes a smaller and smaller fraction of the productive process, but it's so productive that it's still doing the job. Two possible things can happen. One is overall growth rate in the world goes up dramatically. So labor becomes very productive, but the GDP growth rate also goes up so massively, that workers are kept involved, these very, very productive workers. At first sight, that looks almost, how will that happen? Overall, global GDP growth is now, say, 3.5%. Can it ever become 25%, 30%? It seems like no. But go back to before 1820s, Angus Madison is the sort of standard reference. Global growth, GDP growth would be 0.3%. From there to over 3% per annum is a massive increase in global growth that has taken place, and it is possible that that will happen. The other thing, and here I would like to hear Joe's views on this, suppose really work becomes minimal, so that machines are doing virtually all the things that we find unpleasant, so that everything that we do are things for which we don't want to be compensated. If we go to the theater, if we read something that is a pleasure to us, you don't want to be compensated, that's not labor anymore. So it's all being taken care of by machines. To me, that's not such a bad thing. What about the dignity of labor, the fact that you could have income without having to put in work? That in certain circumstances, certain situations under a standard capitalist production mode, yes, that can be very demeaning. But there are many situations in life. Think of the high period of feudalism. We did not feel sad for the feudal lords who had to do very little work and earned a lot. We didn't feel that their sense of self was being diminished by this. And likewise, if we move into a world where work becomes very unimportant, because machines have taken over, that in itself is not going to damage our psyche. What we have to do, however, is the fact that everything is becoming profit and rent and wage share has gone down even more, which means that the profit and the rent cannot be cornered by 3-4% of the population. You will have to have profit sharing. You will have to have rent sharing. Ownership of the production processes will have to be distributed across the population much better. So I feel that, yes, you have to think in terms of the kind of technology where you are using labor, but you also have to think in terms of redistributions, which will look very, very radical and dramatic. And we have done a lot of radical thinking which we don't realize during the Industrial Revolution. There were changes made. The Factories Act which came in now looks all very commonplace. But that was very radical thinking at that time. Income tax comes in Britain 1842. That time when the income tax comes in, it is a very, very novel idea that you can begin to take away a part of people's income, which now seems like a normal idea. I feel we are at a juncture where we have to think also very radically in terms of redistribution. Let me come to industrial policy. I actually felt very persuaded. This is a very well written part of the paper on industrial policy that it pointing out that actually industrial policy need not be just industrial. It is more a conceptual idea of the role of the state which sort of pushes, directs and starts up new directions of enterprise in our country. A beautiful example came to mind. Joe Stiglitz with Greenwald in the paper, they have talked in terms of implicit industrial policy. And my mind suddenly went off to an experience in India which is best described as inadvertent industrial policy. This is India's huge success in the information technology computing software sector, outsourcing sector. How it happened is a kind of industrial policy but inadvertent. No one really wanted it, but it happened. In 1977, IBM was pushed out of India. There was a showdown with the government. IBM was asked to leave. The Indian computing industry, mainly the software side and information technology, that time in its very early stage was floundering absolutely. But it became almost like the infant industry exercise taking place. And this is in a paper not by an economist but by someone who is one of the founders of India's revolution in information technology in the corporate sector, Narayan Murthy points out how pushing out of IBM turned out to be exactly a period during which there was a lot of innovation and learning by doing, you're thrown into the deep end and India was developing. Then the market reforms that came in 1991 was also important. You did not want bureaucracy to strangle the sector. So this period from 77 to 1990, 1991 when India is floundering because it is getting a kind of protectionism, the sector is getting a forced boost and then the liberalization happens and India's software sector, the outsourcing sector, information technology takes off. And for about 15 years, if you look at this sector, India is the fastest growing country in the world. And that really is the sort of core of the change that came about in India. There are many other problems currently the country is facing but this was a period that got India going and it was a kind of industrial policy. Finally, and this is the bit that I do not follow, so it's more in the form of the question, the idea of global reserve system. This actually has a topic has been of great interest to me and I feel there is some analytical work that we need to do. The global reserves, foreign exchange reserves are just mammoths. It is true. And here are the some numbers. China, little over $3 trillion, dollars meaning dollars worth of foreign exchange. It's a composition of different kinds. Japan, $1.2 trillion. Switzerland, $800 billion. India, $400 billion. South Africa, $50 billion, which in comparison is sounding small but still substantial, Nigeria, $47 billion. So these are massive amounts being just held. Composition of this is most countries hold more than 50% in US dollars, which is in many ways it's like a senior age income for the United States because you've sold your goods to buy up the dollars which you're just sitting on now. So your goods have been spent and you're sitting on these dollars. By the way, there is an most countries, I know for sure China, will not give out publicly the composition of the reserves. There is a way of eliciting that information which when I was in the Indian government we would do that and I'm sure China was doing similarly for India is you know the overall balance. It's being regularly reported. You know the exchange rate shifts that are taking place. So when the balance changes and there's no sign that there has been a huge fresh infusion, the change in the balance is caused by the change in the exchange rates of various currencies. And I had a small team that would compute and try to guess what China's composition was and our guess was 60 to 66% of the foreign exchange was being held in dollars by this method. And that's I think roughly correct. It's quite a robust way of doing that. And for most countries you get a sense. So you sit on a lot. The idea that Joe is proposing and maybe I'll paraphrase this wrong. I don't fully follow global reserve system. I do believe that the reserves are excessive and there is a bit of a prisoner's dilemma going on. India's 400 billion is a very handsome amount. But when India looks over the Himalayas at China with 3 trillion dollars, India feels that maybe India needs a little bit more and likewise other countries begin to do and then you begin to build up and there is an wastefulness involved. I don't quite follow how without a pact among these countries, can you do this through a global reserve system? I read it quickly and I said it was last evening that I was reading it. I do want to understand this because I feel there is a problem over here. And this is something where we need a global architecture, where we need to sit down and talk and think through this. Actually with Olivier Blanchard, I had some meetings when I was at the World Bank, precisely on this problem. So I would love to see this idea being developed because I think there is a lot of waste going on and we have to put our attention to how we can solve it and I don't quite follow what Joe is suggesting over here. I'll stop it there. Thank you very much. We have time for questions. Why don't we take three or four questions and please indicate who the question is directed at. Thank you very much. I mean, as beautiful as the former lecture of 20 years ago. Now, I think that I would change the title of your presentation, not the demise of the export-led growth in Africa, but what are the conditions to make it successful? And I think that what you have highlighted is that the East Asians, basically they fixed their own agriculture before proceeding to export-led growth of manufactured goods. Second, they benefited from the demographic dividend. I mean, basically fertility had gone down, which is not the case in Africa. And thirdly, as Angtard has been repeating for centuries, like in Mazakius in Angtard, the miracle is not an export miracle. It's an investment miracle. And there has been a massive increase in investment rate, which is not taken care in Africa. So one would say that if this is the case, then Africa will succeed with export-led if they fix their own investment, if they reduce population growth, and most of all, if they change their own agricultural sector. And under these conditions, of course, they will have to export in a global economy. But this is needed. I mean, their own balance of income, what are they exporting? I mean, what are the tradeables? The service sector, some. But they will need to have tradeable goods or services, but they are mainly tradeable goods. So I would be in defense of export-led growth of manufactured Africans, provided they control their own population, they solve the agricultural problem. All the way you mentioned, they increase the investment rate, and the North basically comes up with this Stockholm consensus on pro-development. All this pro that you have been indicating. I don't know if you agree. Thank you, Joe. I have two questions. First, you seem to suggest that manufacturing is the agriculture of the future. In part, because productivity increase is outpacing demand increase, and in part because mechanization not combined harvesters but robots now will replace labor. Now, that's true in the very long term. But there will be an interim period, perhaps a quarter of a century or half a century, where there is scope for manufacturing for latecomers in Africa as also in Asia. There are two reasons. First, that there are some labor-intensive manufacturing activities that will not be easily replaced by robotics. Some are more vulnerable, such as consumer electronics or automotive components. Others are less vulnerable. And two, as the distribution of GDP in the world is changing, a large part of markets are in developing countries themselves, where such labor-intensive manufacturers would have a market. That's question one. Question two, is services the new manufacturing 25 or 50 years from now? Now, there are two aspects to that question. Services are very dichotomized. So you have labor-intensive, low-skill, low barriers to entry sectors. They are the ones that create employment. But you have high-skill, capital-intensive, high barriers to entry sectors, business, telecom, financial services. They are the ones that raise productivity. Now, do you think that this mix of creating employment on the one hand, although it doesn't raise productivity as much as manufacturing does within the sector, and this high-tech area is a virtuous combination because I have a sense, I may be wrong, that all three of Caldor's laws about manufacturing are possibly applicable to that part of the services sector. Hello, I'm Tuveseli, expert of sustainable development here in Helsinki. And what you are proposing is mainly dealing with sustainable development, which includes also human rights and environment. And then they are kind of also including the sustainable trade and other issues. So it was agreed in the UN in 2015, and many countries are now implementing it. And you should use us, we are killed to attain these, your objectives. And other issue is export credits because export credits are kind of trade subsidies for industrial countries. But in Finland, for example, most of the export credits goes to shipbuilding, which is then kind of trade with Norway and Germany and the US. So it can be used also in developing countries in kind of these trade subsidies if they need it. So these are kind of existing vehicles, and please use them and don't invent new ones because they already exist. First, I think when one talks about the declining labor share, there are two reasons for this. It's partly technology, but it's also partly the rules of the game, the bargaining power, the weakening of unions, the increase in the market power firms, lack of competition. So as we think about some of the distributive consequences of various policies, part of our response ought to be changing the rules so that within the existing technology it's not just redistribution as an instrument that we have for dealing with the problems, but changing the distribution of income given the technology and that there is considerable scope within that. In fact, there are studies in the United States, for instance, that argue that if you look at what's happening to the distribution of income, it's not just the share of labor's gone down, the share of capital has also gone down, where you measure the share of capital as the amount of capital times the return to capital, the risk-adjusted require return. What's the difference? Well, the difference is ranks, monopoly ranks, land ranks, a whole set of ranks, and these have all gone up markedly. So that part of the policy response in terms of the new technologies, what we've done is they've been mechanisms for increasing the ranks, and what we need to do is change our legal frameworks to undo the power that has resulted from that. The second question, a broad question that you raised, has to do with the dignity of work. The next question I often wind up talking about in the context of UBI, and a lot of my students say that I am very 20th century, and that they find very much meaning in life from spiritual exercises of just existing is a meaning to their lives. And they say, I love your example of the feudal lord feeling dignity. I think that may be true, but I'm still skeptical. And the way I would reframe it is actually that artificial intelligence and these innovations are still going to replace only a fraction of jobs over the intermediate future, and that we will need jobs for taking care of the aged, healthcare, nurses, education, teachers, a whole variety of jobs that these jobs currently often don't have dignity in part because they're very low-waged. Their values determined not by market processes. These are goods that are typically related to public demand. That is to say, this societal need pays for these services, and the way our politics has worked has focused on the big corporations working to keep tax rates low, and people are keeping tax rates low, and tax rates low, you can't hire many of these, and you can't pay them decent wages. But if we realize that the basis of most of this growth is knowledge that's been produced, that has been funded publicly, that is to say basic research, the real asset here should be a publicly owned asset, and if we could appropriate for the public the return to this public asset, then we would have no trouble financing these other labor services at a high wage and providing work with dignity to everybody who wants work. So to me, maybe not at 40 hours a week, but at 25 hours a week. So to me, this is really a political economy issue. It's really an issue of reappropriating, directly or indirectly, some of the value that has been created by the public sector, reappropriating it back by the public. And that's related, I liked a lot your discussion of reminding us that income tax is an innovation, it was an innovation after the Industrial Revolution. And I think there are some interesting ideas, one of the ideas that Kallimoni has talked about that I find is not so much a universal basic income, but a universal basic share. So at the corporate level, we talk about ESOP's employee sharing, where they own a share of the corporation, and that has an advantage of aligning interest of the various participants. At the national level, we can do something similar, which is to have a universal basic share, and everybody getting a share in the growth of the economy. And the global reserves, given the limited amount of time, I won't be able to go through it, but basically what this does is it's like a global central bank. We already have it in the SDRs, which is within the IMF, the SDRs who are deposit that are made in the account of a country. All the other countries agree that they will accept the SDR account and transfer, convert it into dollars, which then can be spent on markets. So it's basically that kind of idea. And what I've argued in one of my earlier books, Making Globalization Work, you could make this work even, you don't need to have universal agreement, you could have a subset of countries agree to do this, and it would, if it's large enough, it could still work. So the reason why I emphasize that there are large numbers of countries at a variety of times that have said that they support this. China, France, Russia, and the main obstacle has been the United States, which mistakenly views that it benefits from being the reserve currency because it can borrow at a very low interest rate. But it also realizes that it pays a cost because it has an effect of increasing our trade deficit and weakening the macroeconomy. So we can't go through it all, but I think I'm confident it can be done. Let me answer just a couple more of the questions very briefly. On the question of, is there a scope for manufacturing leg growth in the interim before the long run? Let me say that, as I said in the beginning, it has a role, but it's not going to be the dominant role that was played in East Asia. One way to realize that even in China already employment in manufacturing is going down. Globally, manufacturing is going down. Employment is going down. So the number of jobs globally that's available is really diminishing. And that's even with global growth so that the global growth has not been enough to offset the increase in productivity. And so if you just did a hypothetical, what would happen if all the jobs in manufacturing shifted from China to Africa? It would still not be, it would still just make a dent in the labor force requirements for Africa. So yes, it's going to be part of the strategy, but it won't be enough. And if Africa is going to have successful development, it'll have to focus on those other parts. Now that's partly an answer to the first question. Yes, Africa is going to have to address the problems in land reform that were addressed in East Asia. It will go through a demographic transition, but maybe it will have to do it more rapidly than it has been doing it. Some of the countries are doing it, but it has to be done more than it has been doing. But again, different circumstances in different places, China had a revolution to solve the land problem. Japan and Korea had a war. We hope that we can avoid those kinds of things as the impetus for the change and to get some of the changes that I described, we'll have to go through those changes in the basic structures of say land reform, land ownership. I guess one more remark given the limited time, and that is I agree very strongly that services, as I said, is a very mixed bag. It has a lot of different things. I think that's a virtue. Just like if you look at the whole economy, there are some things that are creating jobs and some things that are going to be more associated with learning. I think the diversity of technologies within the service sector is going to be one of the virtues of enabling it to address the development challenge. But most of them have the common characteristic that the units of production are going to be small. Therefore, there is going to be a bigger role for government in promoting advances in technology and making sure productivity in the service sector moves to the global frontier. Right now, it's well below the global frontier and closing that knowledge gap in the service sector is going to be one of the big challenges for the developing countries. Doug Aaron, Denrell. So a note of, with quite some pleasure, statement three in the Stockholm statement around environmental sustainability. But in the current paper, you make only a statement about a role for the developed countries in supporting the developing countries. And given all of your prior work on green GDP and other aspects, I'm wondering why there's not a stronger statement about, I'll call it, self-determination of environmental, of including environmental requirements and environmental externalities in development economics and the development paradigm of the developing countries themselves, not from just the developed countries and their role in supporting them. Thank you. We have time for one more question. Yes. I'd like to congratulate the two speakers, not only on excellent speeches, but also managing, I think, not to mention a single name of an African country. And therefore, my question is, how would you comment on the successful experience of Ethiopia and Rwanda in the light of your strategy? Very quickly. With Joe's comment, actually, the redistribution part and rules, I think I'm in full agreement. And it is, and when I'm talking of redistribution, really, I'm talking at a fundamental level, not after the income has earned. And I have similar hesitations about universal basic income, whereas I feel ownership is what you want to give them. And Kalle Moine, there are some left libertarian philosophers. There are a group of people who have argued in terms of that. Also in this age where antitrust legislation like the Sherman Act is becoming relatively unimportant because of the economies of scale are so huge that single firms are producing tiny goods. They are producing all of them. What you need is shareholding laws about distribution of shareholding more than antitrust laws. So we will have to go somewhat along those lines. Andrea, I'm glad you brought in the investment matter because, actually, India is a very striking example. Not enough people talk about it. But India's better performance goes so very well with the rise in the investment rate, which took place in two stages. Once in the 1970s, it goes up. And then in 2003, it goes up once again. And the growth with a bit of a lag really goes very well with that. But that does not take away from the question that the investment's productivity could suffer depending on the change in technology. So some of the issues may come up with us in the future. Deepak, I just wanted to touch on when you're talking about the nature of the manufacturing in the future, first of all, within the manufacturing sector of labor within industries, I've been shocked by looking at a couple of American industries, manufacturing firms which are doing well. If you look at their balance sheet and look at the cost, that is, labor cost, shockingly low. So it's already clear that they are managing to do with machines a huge amount. What I think is true, and we don't give enough attention to, is another saving grace could be that the nature of growth will probably be dramatically different. So it could be that a disproportionate amount of human energy goes into health improvement. And health improvement could be hooking up our brain to different kinds of things. Physically also we are becoming much better off, so they can be the nature of growth difference so it need not be manufacturing, but there could be other ways in which creative labor, it'll be different kind of labor that we would be able to absorb. Thank you. Very briefly on the two questions. First, one of the arguments about broader objectives, including broader objectives for industrial policies, is industrial policies are not just promoting GDP, they're promoting a broader set of objectives for the developing countries. And we're talking now about that their active industrial policies are about promoting green economies. And if I didn't say it, I meant to say it more clearly in the paper. And clearly one of the things that has shaped my own thinking is that some of the ideas, particularly development state industrial policies that were successful in East Asia, are transferable with appropriate adaptation to Africa. And Rwanda and Ethiopia provide the strongest evidence of that. Very clear, Mellis was very influenced by the successes of East Asia. Mauritius was very influenced by the successes of East Asia. At the same time, they had to adapt that to the circumstances of their country. So I think that is sort of evidence that one can do that. And interestingly, in some of the successes in Ethiopia, very explicitly, including agriculture. So they realized that for Ethiopia, it wasn't just manufacturing. The ideas of the development state had to be applied to other sectors of the economy.