 Intelligence is knowing the means to the ends and wisdom is knowing the ends. Oh, yeah. Yeah. Yeah. So I can't remember who said it, but I think it's at, you know, given your, what you've very insightfully pointed out, finance, technology, these are means to the ends. And I think we need to step back and ask ourselves, well, what is the end? Right? What is the point? And I think China, as well as the United States, are both at this juncture of asking themselves, what is the ends? This is Rob Johnson, President Institute for New Economic Thinking. I'm here today with an extraordinary guest. I had the good fortune of working with her on a panel on U.S.-China relationship recently. Had a chance to read a number of her books, but Yang Yong-Ang, who is a professor of political science and a China scholar at the University of Michigan, a PhD from Stanford, she recently won the Theta Scotchball Prize for the most prominent emerging scholar awarded by the American Political Science Association. Her first book in 2016 was How China Escaped the Poverty Trap. More recently, in 2020, she created a book called China's Gilded Age, The Paradox of Economic Boom and Vast Corruption. She writes in places like The Economist, Project Syndicate, and most recently, I read a wonderful article called The Robber Barons of Beijing, Can China Survive Its Gilded Age? She's here today to talk to me about, like Dickens talked about, the tale of two cities. Well, we got the tale of two gilded ages, and we're going to talk about what's happened historically in China, where they are now, what's happened historically in America, the tensions, the rivalries, and the, which I might call shades of gray, that one, I think is one is a thoughtful and deep thinker. We will, how we say, absorb from her the nuance, and it will be that one team is good and one team is bad, that there's good and evil in everything. So at any rate, John, thank you for joining me. This is, it's a real pleasure, and I really want to turn my young scholars and everybody else on to your writings, because we're at a time where this is not just a hobby, a whole lot of things related to climate change, nuclear safety, military balance in the world depend upon perceptions of US and China and how to work together. So let's start with wherever you'd like to start. You talked about, how do I say, the comparison of two gilded ages. How do you see that historically and in the present? Well, first of all, thank you very much for having me. I am immensely honored that you have taken time to read my work, and I'm very excited to have this conversation with you. So in my earlier writing in foreign FS, I argue that US-China relations today is better understood as the clash of two gilded ages, rather than the clash of civilizations. A term that has become popular in recent years, as the two nations rivalry intensifies. Was that a Samuel Huntington quote historically? Samuel P. Huntington about the clash of civilizations, I would call. That's right, and it has been borrowed and adapted and applied to the context of US-China relations during the Trump administration. And so I think that that notion of clash of civilizations is not accurate and also not helpful because it creates this notion of us versus them. It's meant to be divisive and it also blocks us from seeing some striking similarities between China and the US. And so I think it is much more useful to think about the two nations as the clash of two gilded ages. And as a start, it might help to explain what this term gilded age means. It was first introduced by Mark Twain in his novel about 19th century America and he chose this term appropriately because the term gilded implies that not all that glitters is gold and that beneath the gilded, you have many social problems such as corruption, inequality, financial crisis, speculative investment, moral decadence, excessive materialism. And so Mark Twain uses the term gilded age to paint this striking era of rapid growth that is simultaneously the best of times and the worst of times. And if you think about China today, as we see it, it's exactly that. We are looking at China's gilded age and in fact as we speak, all of the problems, the excesses of capitalism are exploding in a big way. We see that in the Evergrande crisis, we see that in the President's call for common prosperity, his acknowledgement that inequality in China is a serious problem and so on. And so if you look at the US today, well, I think interestingly, we can say that the US is in the gilded age 2.0 or perhaps even 3.0. The titans of the past, the tycoons in steel and coal, they have changed in forms and today they have migrated into high finance and technology. But in this country, we face similar problems, extreme inequality, populism. And so if you actually look at them side by side, they are much more similar than we think they are. Well, I have to say, I've done a lot of work in the United States and China going back to the 1980s and it is often the case that when people, particularly during the Trump years, are talking about how China ought to be more like us, that a number of my Chinese scholarly friends will say to me, there are things to criticize here. But have you looked at the public opinion polls in Germany, in the UK, in the United States, or even in Scandinavia? This is not something, when you look at those results, that we feel inspired to emulate. And their insinuation is there is a little bit of a gilded age, like you might call a plutocracy, rather than a democracy. The extreme inequality is not representing people in the way that it should. On the other side of the coin, I have seen surveys, a friend of mine who was a Reuters reporter, where he said there was a survey done, this is four or five years ago, where they looked at the net worth of the entire US administration. And so they said, the executive branch undersecretaries and above the Supreme Court justices and everybody in Congress, House and Senate. And together they were worth, at the time, about $6.8 billion. The US economy at the time was about $15 trillion. They did a comparative study in China, and they said there are 72 people in the National Peoples Congress, a $10 trillion economy, about two-thirds the size at that time. And the net worth of those 72 people was $72 billion, or basically, how would I put it, more than 10 times the net worth of this 6, 700 person coalition in the United States. So the concentration of wealth and its relationship to governance and what the Chinese Communist Party would do looked very capitalist, very plutocratic, but that didn't mean America was a healthy democracy. So when we get into these shades of gray, and they're sometimes pretty dark gray, it's fascinating to hear how you would see the differences between the two of them. And where is the nuance in this? Meaning there's an interaction between state and private sector, between local governments, federal governments, etc. How do you see the Chinese situation having, how would I say, there was an old saying, the similarities between me and my dad are different. The similarities between that country and this one are different. By the way, that was famous baseball player who was very funny named Yogi Berra. His son was Dale Berra, and he said the similarities between me and my dad are different. Oh, I love that. I love that quote. I'm gonna, I'm gonna borrow that quote. And it's a great, it's a great place to take off because I should stress at the outset that it's very important that when we compare China and the United States, we need to be clear about the ways they are similar as well as the ways they are different. So they are similar, but they are definitely not identical. So I'm not saying that China is just like the US. Evidently, they are completely different in terms of their political system. China is a single party autocracy. There are no elections. You do not have constitutional protections for individual rights. And the US, on the other hand, has always been a competitive two-party democracy. But although their political systems are in sharp contrast with each other, they are both highly capitalistic societies. And that's where the paradoxes start to get in. So if we look at the way China has tried to deal with the problems of capitalism, China's method under the current President Xi Jinping has largely taken the form of top-down methods. He uses commands, he uses campaigns, and he literally ordered an entire private tutoring industry out of existence by command. And that just can't happen in America's free market economy. The government can't order someone out of business. Conversely, if we looked at the United States in the late 19th to the early 20th century, the way America dealt with the problems of capitalism was by leveraging the forces of democracy. It was bottom-up. There was political activism, empowerment of labor unions, marked-breaking journalism, breaking up political machines. And so that is why when we do comparisons, we definitely do not want to make spurious statements like China is the democracy. Of course it isn't. But they both are crony capitalist systems, and they're both struggling to deal with these problems using their respective political system. So I recall there was a gentleman who taught me a lot about China years ago, William Overhold, who's been affiliated with Harvard University and the Feng Global Institute in Hong Kong. And he wrote a book, I remember, called The Rise of China. And when I went on a trip with him in the 90s to China, he was telling me about the difficulties they were having because there was revenue at the local level. But the central government didn't collect a lot of revenue. And if they sent people out from, say, the finance ministry to the localities to talk about it, they would essentially bring, figure out who were the family members and cousins and so forth of that representative from the financial service, put them on their board and not pay any taxes, but the family would do well. And some local politicians would do very well. And my understanding from reading your work is there was a great deal of wealth generated for the state officials who created credit allocations to foster local and regional development. And so how did that system rise and how did that credit boom? How do I say, how is it being digested now, given the strains since the pandemic emerged? Yeah. Well, in my book, China's Gilded Age, I clarify a few issues so that we can understand, so that we can make sense of the paradox of economic boom and corruption in China. And as you related, corruption is rampant in China. And the president himself has made no secret that corruption is an existential crisis. And that just seems to be strange when we look at how fast and how long the economy has grown. And so the first thing that I clarify in my book is that corruption comes in qualitatively different types. And these different types have very different effects on the economy. And the types of economy, the types of corruption in China has evolved drastically over time since the 1980s. In the past, China, like any other third world country, had all types of corruption. Petty bribery was rife, embezzlement was rife. The government had very little capacity to even monitor where funds were flowing from one place to another. But I show that over time, what happened is that the Chinese government built up capacity to control forms of corruption that were growth damaging, such as embezzlement. But at the same time, bribery exploded, the types of cronyism that you had just described in the anecdote. And that system, I call it profit sharing. It's a paradoxical term because profit sharing comes from, it's a practice employed by American corporations where employees have a direct cut of profits is a high powered incentive system. And this profit sharing, I argue, was actually applied in China's bureaucracy in such way that government officials derive their personal benefits from the amount of economic performance they can bring to their jurisdictions and their organizations. And so this profit sharing spurred them to aggressively promote growth at all costs. And at the same time, they were corrupt. They benefited a great deal from this process. And so it is because of this type of profit sharing corruption that we see in China today, this paradox of highly risky unequal growth along with outrageous stories of crony capitalism. When you see right now the Evergrande episode, when you see the real estate deceleration, are we at a profound, which you might call transformational node or juncture? Is this a time when what has propelled that society is going to have to change significantly or can they ride it out, ride out the storm and resume as some have suggested? Absolutely. So I call the type of corruption that dominates in China the steroids of capitalism. And it's an apt term because when we think about steroids, it's a drug that helps you to run really fast and do superhuman feats. But the side effects accumulate and it only blows up in the event of a meltdown. And I would argue that right now we are seeing that meltdown. The Evergrande crisis is one of the clearest expression of this meltdown. And a lot of commentators, of course, are panicking. They've called this the Lehman Brothers moment. They're worried about the broader spillover effects, whether China will collapse. And I would say if we take a historical perspective and think about America in the late 19th century, it can give us a little bit of perspective. I would actually call it the not the Lehman Brothers moment, but the 1837 moment in reference to the first depression in the US, which was triggered by very similar problems, excessive debt, speculative investment, falling land prices. And if we look at US history, actually in the 19th century, there were at least five financial panics. So these sorts of boom and bust cycles were part of the history of American capitalism. And now with that perspective, when we look at China, we might be able to have less hype and see that, well, this is now China's turn. It's having its first full-blown meltdown that results from the accumulation of all of the problems that have been accumulated over the past, I would say, 40 years. And so the excesses that we're seeing, sometimes a country can go for a long time, they experience excess, and then they go into stagnation. Japan after the boom of the 1980s is one that comes to mind, or the boom that culminated in the 1980s, excuse me. There are other times when people seem to shift gears, and one of the things that I saw, I remember my friend Orville Schell, he and John DeBerry wrote a book called Wealth and Power, and he said, so far, some American interests have done very well with China's development. Places like Wal-Mart and Nike and foreign direct investment has been prosperous, but this is going to change. Wages are going to rise, environmental protections are going to rise, profit will be compressed on foreign direct investment, and around that time, the China 2025 plan came out. And here you could see a vision which was not, which you might call labor intensive China falling in line in the world system, but the notion that they were going to use the cultivation of knowledge-intensive industry and displace some of the areas that trade theorists would call the comparative advantage of the American companies or European companies. And so the complementarity that had set things in motion was now reaching a attention point with China 2025. And when I would meet with people in China, they would often say to me, well, the next phase that China will engage in is more domestic R&D, less what you might call infusion or borrowing of intellectual property or knowledge from foreign countries. The second thing is they will focus moving from the middle income trap to a prosperous country, and the aggregate demand will not be based on export-led growth, it will be based on internal development. And so there was a sense in China, prior to the, which you might call extremes of this real estate boom, that they were planning for a next phase of turning inward. Obviously, economies of scale could be achieved because the sheer size of the country. I talked to people informally, but over many, many visits about whether the education system, which I guess historically had created a handful of elites that would administer the country, was now going to have to go to a broad-based knowledge-intensive education system to prepare everybody to be more productive and to, which I might call justified, moving up in a higher standard of living, moving out of traditional agriculture or even labor and manufacturing into knowledge-intensive work as a broad-based strategy. I didn't feel, prior to say 2020, that even with that looming, lots and lots of very expensive real estate, unoccupied real estate and so forth, that people thought they were going to head into a downturn. So is it the pandemic that changed, which you might call the balance? Is China still looking at that longer-term, inward-focused development strategy? How do you see things right now? Well, well, first of all, you are the expert on finance, so I'm going to stay away from commenting on finance. But I think what I, but with regard to your question of where China is heading right now, as a political scientist, I would highlight the importance of politics. One of the things we know about economic growth is that you need the fundamental condition of political stability. That is, that's just absolutely fundamental. If you do not have political stability, you're not going to be able to have investment and entrepreneurial activities. And I think the biggest challenge facing China right now is that that stability is in question. And let me elaborate a little bit. One of the greatest things that Deng Xiaoping did when he became leader of China was that he established political stability. He did that by means such as introducing term limits, collective leadership, and he did that so as to end the malpractice of concentrating power in one person's hands. And that practice created a great deal of instability because outcomes were entirely dependent on the whims of one person, the whims, the preferences, the health, whatever this person does. And he wanted to end that and create some hybrid form of political stability. And he successfully did that for about 30 years. There were always tensions during times of transitions, but for the most part, it actually, power was handed from one generation to another up until 2012. So I think the big structural break in Chinese politics is that around 2018, the current president ended term limits. And it's not just the term limits that he ended. It was an expression of other ways in which he rolled back on the norms that Deng had laid down. And so we are now entering, we have now entered into a new chapter of Chinese politics where any extreme outcome is possible. It could be possible that the president will stay in office for life until 2035 or further providing enduring stable rule. But the opposite outcome of just any random accident, coup or possibility, none of that is ruled out now. Right. So I think that from a political point of view, that is the biggest challenge facing China. The underlying fundamental condition of political stability is now called into question. Any outcome is possible. So entrepreneur or an investor can't plant their feet with the confidence of a horizon of what I'll call stability or the understanding where they can feel comfortable putting their best foot forward. Exactly. I think if I were to use a slogan, I would say Deng made China boring again. So that it's boring in a sense, it's predictable. So you know, every 10 years, there will be a change of leadership. You don't expect extreme outcomes. And all of the leaders have interest to keep the status quo. They don't have incentives to rock the boat. And so that provides the predictability for investment because you roughly know the parameters of change. But I think the great difficulty for investors today when they think about China is they see so much growth potential. There is real growth fundamentals. The middle class is likely to grow even more. So many bright spots in the economy, but there's always this big uncertainty that on the political end, anything could happen. And that's just something that they have to take into account. And it's not something that the investors can control or predict. Well, and we have, I find something very interesting right now. This notion like Orville Shell had predicted of a rivalry between a wounded China from the opium war and the Japanese invasion regaining its national dignity in America, having been the leader of a world system since the baton was passed from the British thinking everybody should emulate them. And we're in this place now where I don't see either side feeling comfortable. The tensions are rising. We are seeing such as in foreign affairs. There's a new article on why China wants more and better nuclear weapons. The notion of mutual assured destruction that's been part of which I might call the game theoretic logic of arms control for years seems to be suggesting they're building up to stalemate America. They want to be equally powerful, equally muscular. One can understand that to some degree. But at the same time, I'm not seeing, for instance, a lot of Americans encouraging American firms to go invest in China. That the rivalry is perhaps getting in the way of some of the transfers in both directions that could make each society better off in these difficult times. And I know at some level China was demonized when American firms participated enthusiastically in globalization. China is a big country. It's not like the island of Tonga. It's four times the size or more of the United States population. So there were going to be profound adjustments. And as many Chinese leaders have said to me over the years, the stress is going to come because the American government doesn't take care of the transformational payments to which Michael rebalance or make everybody better off and nobody were soft to use a phrase that free trade theorists use. So that burden, that despair, that notion that fostered someone like Donald Trump becoming president, in the eyes of China, they feel helpless to arrest that. And they don't feel like they know how, if America won't make transfer payments within reeducating, adjustment, support, better health care, better educational systems, they don't know how America is ever going to calm down. But now are Americans supposed to cheer for a stagnant and more militant China with all these weapons or the Chinese supposed to work in competition with the United States over Africa and other places, which increases the risk of military conflict and diminishes the capacity for climate collaboration, which is essential to life on earth. And I know just as you and I are making this in the last few days, President Biden and Xi Jinping did a equivalent of a video conference to try to take a little bit of the sting out of things. But it does feel like the tensions are rising as these two countries in their respective gilded ages are clashing as you describe. What's the next phase look like to you? That is, like you said, you look at the politics, look at the military politics as well as the commercial politics and the internal politics. How do we get out of this stressful place? Well, that is the big question. The way I see U.S.-China relations is that I would divide the drivers of their deteriorating relationship into two different factors. There's the structural factor and then there's the perceptional factor. So the structural factors are factors that we can't change. You have a rising power that is challenging the primacy of a global hegemon. And so each of them will be determined to stand their ground. And that is a structural factor that we cannot change. But there is also the perceptional factor. And I think this is where we have agency. The two countries are locked in a vicious cycle of misperception. So the U.S. thinks that China is a threat. And China also thinks that the U.S. is a threat. The U.S. demonizes China and China also demonizes the U.S. So they are doing the same things to each other. And the effect of that kind of vicious cycle and rhetoric is that it influences public opinion because the public is highly influenced by statements put up by politicians, what they read on the media and the vast majority of people actually do not understand the substance of the conflict. They don't. They don't have time to be properly educated about the substance of the conflict. What they get are the perceptions. And now when you have this toxic public opinion on both sides, both in China and the U.S., that creates the underlying social conditions for confrontation and even in the worst circumstance, war. And so we see this new care buildup, which is very concerning. So if you were to ask me where I think we could have agency, I think it is at the level of narratives. The narratives that we provide, whether it's about China or the U.S. or their relations, does have an important impact on perceptions. And so that's why I think it's very, I wanted to put out this idea of a clash of two gilded ages because, A, it reminds us that this is not us versus them. This is not good versus evil. This is about two nations that are both struggling with very similar problems of capitalism. And that adds a layer of humanization because we can relate to someone else when we share the same problems. It also reminds us that at the end of the day, for China and the U.S., their biggest problem is domestic in nature, whether it's inequality, finding jobs for displaced workers, creating social justice. These are fundamentally domestic problems. But by having this rivalry in the sense that allows each of these countries to divert attention from the domestic issue onto this narrative of a foreign enemy that we have to deal with. So I think by thinking about the two gilded ages, it helps us to remember that at the end of the day, their biggest enemy, if you want to call that, is themselves. And each of these countries should be doing what they need to do to strengthen themselves, to solve their deep structural problems, instead of saying, oh, it's the other country's fault. You're kind of, from my recollection, paraphrasing Bismarck who sort of said, when you can't handle your own problems inside, go direct your entire population at an external enemy and unify them. But that has tremendous dangerous ramifications in the event of failure of climate change or nuclear war because nobody escapes losing from the breakdown. It's not like there's a clear winner and a clear loser. Everybody's worse off, not just those two countries, but all around the world in this particular context. One of the things that I find interesting now, and you'd mentioned my background in finance earlier on, I won't call it expertise, but it's experience, is the notion that some people think people in the West are anti-patriotic if they invest or build funds or even manage the money of Chinese people. And others would say, if you can help China get out of this ditch, this gilded age, make the transformation, unlock its corruption, they may be willing to take a softer approach to their relationship with America, global collaboration or what have you. There's an old saying, you should always create an exit for a cornered tiger and maybe make sure they eat before you open the door. You don't want them to bite you. You want them to do better, feel less afraid. How do you see right now global finance and the question of whether, which you might call the expertise, the skills and the flows of capital that could come in from abroad, is that likely to be helpful to China or is it likely that because of the turmoil in China in this gilded age that you've described, that capital is going to be cautious and not come in? Well, on matters of finance, I have to learn from your vast experience. I really do. But from some of the observations that I have, I would say that if you look at China's course of development, foreign investment has played an absolutely indispensable role, FTI, in the early stages of its growth. Without FDI, China's economy couldn't have taken off. And I think today that narrative has been spun into a simplistic narrative that, oh, it was wrong for us to invest in China with help them grow. That narrative completely does not say, well, why did these investors go into China? They're not doing that out of altruism, right? There must have been tremendous benefit that they derived from investing in China. It was an emerging market. Wages were low. You could outsource manufacturing if there were any environmental problems. Essentially, it all happens on Chinese soil. And so oftentimes, I tell my students that we are part of a global capitalist system. And we can't decouple ourselves from it because we are complicit. We are complicit. I tell them, why is it that the average American can buy 75 pieces of new clothing a year? It's excessive, to be honest. It's like buying disposable clothing. And the reason is because we've been part of a global capitalist system where manufacturing and production was outsourced to places like China, allowing us consumers in the northern part of the world to enjoy, frankly, an indulgent lifestyle where we can consume more than we need. So I think it's important to avoid this oversimplistic and judgmental narrative about China being the bad party and realistically recognize that we are all complicit in global capitalism, even as a modest consumer. So unless you choose to go out into the woods and have your own farm, you're not dependent on the urban global capitalist economy, then we are all part of this story together. And so looking at China today, my understanding, and this is not complete, I think the nature of the role played by foreign capital has been changing over time. In the early part of its takeoff, they came in the form of FDI, building factories, for instance. But in just the last few years, I think the nature of Chinese market has changed. It has opened up its financial market on an unprecedented level. And so ironically, even as we are talking about US-China tensions and decoupling, China actually has had a tremendous amount of foreign capital flowing into its economy in just the last few years. And it has also attempted several breakthroughs like opening up its market for bond issuance and so forth. So I think at the financial front, actually there is still tremendous room that has not even been opened up or explored before. So in short, I'm not sure if I answered your question, but I think we're just looking at a paradoxical situation where it looks like the relationship is terrible on the one hand. But on the other hand, we also see new forms of tightened relationships. Yeah. Yeah, remember in this realm of finance, an author named Richard McGregor used to be the head of, I believe, the Financial Times Bureau in Beijing. He wrote a book called The Party. And in it, he described Wen Jibao when meeting the members of the George W. Bush administration at the Cusp of 2008. He said, well, I guess the world's going to have to change now because you kind of wrecked Asia in the 90s with your financial crisis. And now you wrecked yourself. So if China is going to go on and be the next pillar or leader of the world, it's not going to do it by emulating what the West does in finance. And he seemed to suggest, this is the author McGregor, that the Chinese would maintain capital controls and directed government directed restructurings and government directed allocations of capital between private and stay known enterprise. And they wouldn't leave it up to the market, primarily. And that only over time as they developed more experience with financial regulation and supervision and structures, et cetera, would they become confident enough to link up to the international market. And I don't know if we're there now. I do believe that relative to that time, which is now about 13 years ago, China's had a lot of experience exploring the use of capital markets and understanding the behavior of the stock market. People in Shanghai become very sophisticated. So I don't know if I don't know if we'll see in this next phase a bigger opening in the realm of international capital flows or foreign companies being allowed to manage consumers or business finance inside the country. But it seems to me like an area that's how would I say my intuition is that China has been much further ahead in technology than they have been in finance. And maybe it was the scar tissue of those early financial crisis that led them to believe that another direction was a better pathway to prosperity than financialization. Right. Do you feel optimistic that the financial liberalization will continue in China? I don't feel either way right now. I don't have a good sense of direction. I was myself in the years between say 2012 and 2019 before the pandemic of the mind that they're which am I called tentative or cautious approach made sense. But I was a person who believed that the great financial crisis in the West revealed what I used to call the mother of all moral hazards and reckless too big to fail banks. And I thought that money and politics in the United States we're talking about the other gilded age now the money politics in the United States allowed finance to play too big an influence in who got appointed what regulations were created what was enforced what laws were made they were they were making the rules for their own game and being subsidized on a contingent basis by the American people meaning the tax base or the government debt that would be issued and supported by the tax base and we experienced a very dreadful episode albeit they were skillful in handling the bailout but should we have ever gotten to the place where things that got that far out of balance and so I think in the United States I don't know that it's going back to primitive but deeper capital requirements and more restrictions on composition of portfolios and other things right right might make sense but to go back to the word I started this with the political economy if you're going to allow money politics to drive what you're doing you're not really going to to create laws rules and regulations that represent the society it's going to represent the people who pay for the politicians favors and I don't know if you can regulate a financial system if you allow the profits of the financial system to be place such a big role in the architecture of that system I think that's part of the American gilded age right now we're seeing new manifestations of it related to tech we've seen manifestations in the military industrial complex in the pharmaceutical industries and health industries and so I guess like you said there's not good guys and bad guys there's good and evil inside of every system I think there's there's work to do in the United States in my view how do you see it how do you see the United States you live you live in Michigan now I I your comment brings up a really interesting point which is that Chinese policymakers have always been wary of the dangers of financialization and and the term they use is really interesting I struggle to translate it into English but I think the closest translation is the unreal economy so they talk about the real economy and the unreal economy and and and the state council the national development reform commission have come out publicly several years ago even before ever grand saying we have a problem we are moving away from a real economy into an unreal economy for example speculative investment and all of the various financial products offered by ever grand that turned out to be unreal so I think the Chinese policymakers haven't have a two-sided ambivalent attitude towards the unreal on the one hand they recognize that financialization brings bubbles speculation and risk on the other hand if you look more closely beneath the surface in some of my most recent research the Chinese government has also been sophisticated in using finance to promote technology so one example is the establishment of government guiding funds they're known as ggfs in china these are staggering massive government created investment funds that partner with private venture capital to invest in emerging industries and tax startups in the country and and to me that's an example of them advancing adapting and learning to use financial tools to advance technology and at the same time on the other hand being very cautious about the dangers of the unreal economy a mess that they have yet to clean up yeah well they uh how would I say the unreal economy uh in in the textbook of economics and financial literature finance is a tool it's a means to an end when it starts to create the ends unto itself the question is whether it's a win-win game or whether it's being done at the expense of the well-being of some people in that that live in that society similar things could be said about technology technology as a vision as a potential you know there's a great tradition as people became disillusioned with christianity in the west that the idea that you're not going to be delivered or reach salvation in the secular world it became inventors and technology and science in which people place their faith about a better future and anybody that quibbled with or wrestled with technology was considered to be someone harming the potential of the future they should be left alone well I think we're now reaching a place with regard to technology in the west where people are saying like you said at the outside there's good and evil and everything and I have friends who say we have a food and drug administration we test all the drugs why don't we test these technologies and see how they affect children's brain development how they affect polarity in society like the movie the what is it called the social dilemma where they're feeding the left more on the left and the right the more on the right and as some of the narrators in the film said maybe we're fomenting a civil war well all of a sudden these means I referred at the outset finances a means now technology as a means is now working to the detriment of society and we're being told keep your hands off because that's the future that's a belief that at some level man has become his own god and uh I don't know if that kind of hubris uh maybe that's part of the evil in the good and evil at a time like this but but I own I also know a lot of people believe the churches have been used for a lot of oppression and evil too so it's it's very hard to create the balance but I think in the west right now pretty people are pretty confident that finance got out of control needed to be balanced and it's interesting in China to see what oh ask it as a question what do you think needs to be rebalanced in China so that those people are better off in the next 50 years I so it's my turn to offer a quote but I can't remember who said this I it goes along the lines of uh intelligence is knowing the means to the ends and wisdom is knowing the ends ah yeah yeah yeah so I can't remember who said it but I think it's apt you know to uh given given your what you've very insightfully pointed out finance technology these are means to the ends and I think we need to step back and ask ourselves what what what is the end right what is the point and I think China as well as the United States are both at this juncture of asking themselves what is the ends and I and when and when the presidency talks about common prosperity it's it's not a narrow campaign against inequality it's actually a short form for asking the whole country to think about what is the point of our development right why are we doing this right is it we want an economic growth we now have it but this economic growth has also brought us so many problems so what is the real ends of what we are doing so he's actually asking a bigger question to himself as well as the rest of the country about you know what is the point and I think the same conversation is happening in this country in the United States right people are asking well if we just keep having more economic growth consumption production but if we have a climate crisis that threatens our very planet then what is the point so I I think in that sense both of the superpowers are actually grappling with deep questions about the ends I'm good I'm grinning right now because at the time of Occupy Wall Street a friend of mine who was a professor at Union Theological Seminary asked me to come and I ended up co-teaching a course with her and it was called economics and theology and our short hand our joke between us was means and ends the name of the course was really means and ends not and right but the idea that the market should be left alone because it preserved freedom acted as though after a while that the market was an end in itself and there are lots of people who've been very troubled by that there was a gentleman named Christopher Lash who wrote a book called The True and Only Heaven and what he said was when we became enamored of secularization and markets we acted like this is an analogy to the Christian tradition you should abstain you should restrain your demand for wages and you should go to the priests of capitalism we'll call them top management and allow them to invest and by abstaining from wages today and increasing investment tomorrow we'll have more productivity and we will all how you say be delivered we will have salvation in the material sense and where Lash got off the train I mean he pointed out this analogy but where he got off the train was when he said when globalization took place 60s 70s and beyond all of a sudden you were restraining certain people to create money for foreign direct investment and there was no salvation and it was going to create demoralization because people were no longer the beneficiaries of their respect for social leaders business leaders or what have you and he was in many ways prescient because we saw surveys of confidence in business leaders in government leaders and so deteriorate very markedly in the united states over the next period as productivity kept going up and wages didn't follow and so I think your your quote about wisdom and ends and intelligence and means is very apt I note by the way from preparing for this that you used to teach at the school of international public affairs at Columbia University well my colleague and I I'm Arminio Fraga when we were at Soros Fund management I think for five or six years we taught at SIPA and we had a very very positive experience and I learned a lot from my students and the mid-career people coming in from finance ministries in places like Indonesia or Brazil and Arminio left our course to go become the central bank governor of Brazil and I had to carry the ball for the last half semester because he had to depart but I I found the experience of SIPA to be very nourishing and how would I say when I listen to you today I sense that how would I say you must have been quite a force in the realm of SIPA I know what you mean because my students at SIPA came from all over the world and they taught me about the world yes so I benefited tremendously I I felt like I learned more from the students than the other way around yeah well there's an old saying that my co-teacher and friend at Union Theological her name was Serene Jones and she said teach to learn yeah and when I was sitting in front of about 17 graduate students in theology I was learning a lot more than I was teaching no and because of their perspective in particularly at the time of the outrage associated with Occupy Wall Street they really knew what they didn't like but they didn't know what they did like and that was kind of the hard part was to which you might call together create the wisdom and find out where we wanted to go right right but you're I you know you're in your career I sense a tremendous amount of awareness of of what you might call the contradictions this is if things are not dynamically stable and you're watching things in motion rather than static not really what you might call a not passing judgment and I find your which are my called depth perseverance and humility to be an excellent model for young scholars and I hope that they will reach out to your works hopefully this will be a catalyst and I want I often in this podcast at the conclusion and reminded of something in the realm of the arts that describes the experience I've had from getting to know you and I'll quote today Leonard Cohen from his song the anthem where he says ring the bells that still can ring forget your perfect offering there's a crack a crack in everything that's how the light gets in in you and you are a person whether in China or the United States or Ann Arbor Michigan who illuminates and brings a lot of light to things and it's a light that is not a harsh light it's a it's a soft light in the sense of the humility so I think in addition to the intellect that comes with that phd and professorship I don't know where you got the wisdom from but I sense that within you and growing and I want to thank you for being here today oh thank you so much thank you for sharing your light with me I I cherish that very much your words are very generous it's really my honor to have this conversation about wisdom with you