YouSaid · the spoken record

Michael Spence

lines on the record: 117
first: 2019-10-25
most recent: 2019-10-25
sittings or episodes: 1
sources: podcast

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“They did one other thing, which is I asked a senior person who was a partner of Lee Kwan Yu in the early days of development. I said, well, it was the secret to success. And in Singapore. And he said, well, there were two things. He was little, this is a little tongue-in-cheek, but because there were a lot of things. But he said, there were two things. One, we were really harsh on corruption. We basically stamped it out. So we took care of that problem.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“So they went after housing. So housing, the two critical elements were housing and education. So the education is stunningly good. Over a long period of time, and housing is subsidized. So you don't really ever have a problem with where you're going to live and whether it's affordable and stuff like that. And then they left things like saving for your retirement more or less up to you. So there's not a lot of pension big liabilities and pension funds, but that crucial piece.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“To get to make the growth patterns inclusive really from the get-go, then anybody who was not on board in that was simply marginalized. And they figured the most important part of that was housing.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“For example, you know, they figured out early on, first of all, they have a multi ethnic structure. Uh-huh. So they have Malays and Chinese and Indians. And they probably, Lee Kwan Yu figured out that if those people got at each other's throats, that'd replace apart. So they set out.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“Well It's basically the choice of the development strategy. That explains the difference. So, I mean, there's a kind of literature in, you know, that goes back and forth between policies and institutions in the development literature. And I think a sensible sort of assessment of that is institutions do matter, but policies matter as well. But Singapore basically was relatively autocratic, but they were pretty clever. In what ways?”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so it's not a sure thing that a crisis produces good results. But it Create at least an opportunity because it essentially weakens the vested interest power to maintain the status quo. And that's why you get routine statements like never waste a crisis, et cetera. And there are examples. I mean, one of the members of that commission. A Turkish citizen, always at the World Bank and now elsewhere, was finance minister when Turkey had a crisis and was able to put through some reforms that arguably just you couldn't do in quote normal times.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“And so if you believe the network is crucial, then that's the main thing. Then I can start to understand. So, you know, the Princeton network in New York or the Yale network in New York and Washington, maybe you're desperate somehow to make sure your kid is part of that and the opportunities that that opens up. That's the part that... That I think is perhaps real, but it's also worrying, right? I mean, you don't want to think that if you're out of any of those networks or all of them, that the meritocracy has failed to a point where you don't have access to the top government jobs or whatever. To the extent that's true and that parents are right, then I think we have to start worrying about this dimension of equality of opportunity.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“You went to Princeton. I did. No. I think I'm going to guess at what they're thinking. So one of the benefits you get from going to these schools is the education and the signal. The other is the network.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't quite understand what the kind of where this self-imposed pressure to get into these elite institutions comes from because My senses a kid goin' to any one of a huge range of institutions. Has a pretty good running shot at a pretty”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“Relatively speaking, I think yes, but not perfect equality of opportunity. That's unachievable. You know, this gosh, we've got to get into USC or Harvard or whatever, Stanford Puzzles me. I mean, I've always thought, you know, I grew up in Canada, Canada is more like other countries in that there's most of the higher educational institutions are publicly, largely publicly funded. And there's a few of them, and it really matters if you get into the right ones. In America, we've got hundreds. We've got public and private institutions. We've got all kinds of really top-flight colleges. A lot of your friends of mine went to these colleges and whatnot”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“They are, and it's connected. You know, if the income inequality gets sufficiently extreme, then the lower end of the spectrum doesn't have the resources to invest in getting to that playing field.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“But it's new in the post war era, I guess, is the way I would say it. But we're in the early stages of kind of thinking this through. I think the other thing that we learned from a wide range of both developed and developing countries is that Is that one of the things you want to so there's two ways to think about inequality. There's what economists call ex post. That's what actually happened. And on that front, I think most people agree with what you just said, which is it's okay. People understand we're not going to all be have the same incomes and stuff, but it can get out of hand. The extremes are not okay. And then there's what Americans call equality of opportunity, which is ex ante. That is, do you have a fair shot? On a level playing field at whatever this distribution out there is.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't know the history well enough to be able to answer that, whether we had an actual discussion of wealth. But it is new this.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“We understand it better and understand the history better and now are kind of grappling with the responses. So, I mean, we haven't had a presidential primary season where people are talking about wealth taxes for a long time.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I mean, you know, probably not using the potential for progressive taxation. On that, I'm not suggesting that's the whole answer, but it probably needs to be part of the answer. You know, there's... I think one of the reasons is coming into focus now is there's a bunch of really good research. With a long time horizon, Piketty, Say Know Zuckman, Chetty Reg, Shetty at Stanford, you know, that are bringing out dimensions of this. And, you know, so it comes in cycles, right? So in other words,”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“No, we're probably not at that point yet, but we're pretty late in the game because I think the people who have been sideswiped by the way our economies have evolved is a pretty large group, and they're pretty angry in part because This is my conjecture anyway because we didn't do anything about it. Right.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“And, you know, we had big changes in approach. I mean, that was the Reagan Thatcher era. Right? So we probably had some deregulation and other things that might have contributed to that. But basically, you've got something that's... By most people, standards just gotten out of control. And of course, so income, if you have rising income inequality for long enough, then it's on the wealth side, it's self-perpetuating.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it's more. The latter. I mean, I think it's more Combination of globalization and the evolution of technology have since about the late seventies has basically reversed relatively benign growth patterns with respect to distribution. So the whole thing started to go south, let's say around 1980”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“Is going robotic, you know, so I mean, it doesn't happen overnight, but it's happening pretty fast. I mean, so. Textiles is difficult because the material is soft and the robots have trouble kind of. We actually go talk to the people who are trying to automate this. They say, we're not quite there yet, we can't sew the stitching straight. On your shirt yet, but that's not that far away. So there's a real question about this growth model. And one of the things that part of the answer is probably going to turn out to be another aspect of digital technology, which is you can create ecosystems, platform-centered ecosystems that enable entrepreneurs to create businesses and employ people and whatnot. In an international version of that Would be moving in the direction of a partial substitute.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, jobs. What are you going to do? So you got to sell something, a good or a service to the global economy, but that part hasn't gone away. The question is, if it's not toys and assembled electronics and stuff and shirts and textiles and apparel. Is the starting point for most of these plates, then what is it?”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“You're almost ready to start. Almost ready to start. Yeah, no, I mean, on the development side, Barry, I would say the biggest potential shift does come from the digital technology side. So we are either at or very close to the point where the digital technologies, which you know are kind of high fixed, very low variable costs. Technology software replication zero marginal cost, et cetera, basically overtake the labor-intensive ones, replace. But that undercuts a very important part of the growth model that we saw being used essentially in every country that was really successful.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, they're probably a little puzzled because I think it's hard for them and many of us to figure out what with any precision the current administration in the United States is really after. It seems to be a bit of a moving target. But no, I don't think they'll just definitively wait it out. They'll see if they can make agreements where It looks like it's sensible from both mutually beneficial. To make an agreement”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“Exactly. So that's kind of, yeah, that's kind of where we are. I think. Probably for your listeners, the most important thing to understand is China would have been clobbered 20 years ago if something like this happened because they were dependent on the export sector. The demand that enabled the growth. Now they have this huge growing middle class with rising incomes Like the United States, they can enable a growth with the domestic demand to a much greater extent.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“They replace it with a higher yielding thing and the activity itself to the extent it's not cut off by automation, digital technology goes to Vietnam.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“Right, there's some things that are happening pretty fast. So, for example, China was in the process of, you know, basically moving the labor-intensive process-oriented manufacturing assembly, which was the early export growth engine out. And the reason is got nothing new to the trade war, is just their incomes are too high to be the competitive place for that.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“Of the uncertainty around how this resolves. Where are we supposed to put our supply chains? Is this going to go away? Right.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“So let's So in China, it's slowing them down because they still have some dependence on the export sector and it's slowing everybody down through a somewhat different channel, which is uncertainty. You”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“To rear attention, exactly. Yeah, they're becoming part of the kind of global system that generates the technology that enables the growth for all of us.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it depends on. I mean, you know, the trade war could put a dent in the kind of speed of the trajectory and a natural slowdown is occurring in China too. I mean, countries, you know, where they have per capita incomes in the teens, meaning thousands. Just don't grow at 7% anymore. The ketchup effect isn't as powerful. They're generating technology. They're becoming like advanced economies of big.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, small economy, not small number of people, but small economy. So they can grow at very high rates without really becoming a major presence in the market and starting to turn the prices against themselves.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“Just done work. I mean, you look at the demand in a country with a per capita income of $500. It's kind of food, shelter, energy, and not much else. So everything we know, specialization and the Adam Smith sense, you know, Taking advantage of comparative advantage, none of that works on a standalone basis. But even a country the size of China, in the early stages is small relatively global economy.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, they're basically all the same growth model, which has come to be called the Asian growth model. So it's high levels of investment funded domestically, openness, including especially foreign direct investment, which is one of the principal channels for inbound technology transfer, and leveraging the big global marketplace. If you try to do this on a standalone basis,”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“But you double every decade at 7%. And there's 13 countries that have done that at various points. China's won. Brazil in the early post-war period was one. Korea, they won't be surprised you The Taiwanese economy, Japan was in that group. There were some surprises. Botswana. A member of that group, yeah. So, different sizes, different governance structures. It was pretty interesting.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“And could we kind of summarize it and give it back? So that was the exercise. We wrote a 75 page report based on kind of two years of listening to people and thinking about it. And it was meant to be an up. None of these things are ever kind of definitive, right? It was an update, right? Now we know this that we didn't know before. In the course of doing that work, we went and looked for countries that had grown”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, there's a list of things. There's about 13 things that are crucial components. Some people interpret it as a kind of turnkey system. You can't do that. Every country has idiosyncratic characteristics. But the thing that gave the Washington consensus a bad name is it was taken, especially in Latin America and stripped down. To liberalize, privatize, etc. And that gave rise to kind of excesses and, you know. Not terribly good results. So we decided it was a good time. We had a lot of experience. Have been accumulated in countries like China and India and others, Brazil had come out of its 25-year funk and looked like it was starting to grow, et cetera. It was a good time to kind of figure out what research, what experience, and so on had taught us that was useful.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“It came out of Washington temporarily forgotten that. John Williamson wrote it. It's been much maligned and unfairly, to be honest with you. The Washington Consensus is a perfectly sensible assessment of what it takes to kind of grow and develop in a developing world.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“That what you mean by signaling? No, no, no. No, it was the decision I made. So I made the following decision, Barry. I said, I'm going to do this. And there's one of two outcomes. Either it'll be a disaster in which I'll have learned something that I shouldn't be mucking around with the 10,000 people who are the experts in development in the world. Or it'll go, okay, and then I'll learn something else, right? So it was. Deliberately a screening device. And it seemed to go okay, and from that came a commission on growth and development. And the idea behind that commission wasn't to do original research. It was approximately 15 years since the Washington consensus had been enunciated.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so I kind of stumbled into this because I had not been a specialist in development, growth related to developing economies. And so around about the early 2000s, I got a call from some folks at the World Bank who've become good friends, and they said, would you come and give a lecture on investment and growth at the one of the spring conferences, the poverty reduction in economic management? And I said, why me? And they said, well, you sort of, you know, Kind of a microeconomic focus and pay attention to these things. And so I thought to myself, this is signaling or screening. I thought, okay, so here you have.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“They just look at their credit history, their transaction history, their transaction history, their payments history, you know, and their online activity.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“Creates a whole new market. It creates a whole new market I mean, when we're talking about, I mean, my bank has 17 million small business customers, average number of employees five. No collateral, nothing.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“Know so, in like Ant Financial, and for example, in Alibaba, you have a massive amount of data because basically they're half the mobile payment system in China. They can use that data to issue credit to little tiny businesses. There's a partially owned subsidiary called MyBank that just won an award for this. Using this data to make credit assessments and price the credit appropriately. And these people are otherwise blocked away. I mean, they can only borrow from family or friends. A bank can't either assess the risk and or it's way too costly to assess it.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so when the internet was sort of in its early stages, meaning a kind of public property, let's call it the mid-90s, people, you know, had all kinds of theories about what its impact was going to be. And I got asked a lot of questions, the gist of which were, is this going to close informational gaps? And my answer then is the same now, but I underestimated something. So my answer was it's not going to eliminate private information, meaning information that I have because it's me. That you know you're only going to get the FI somehow transmit it to you but what the internet does is it gives you so many access at very low cost to so much information that's correlated with this kind of thing that I actually think it does close informational gaps and the best example of that I think is what we see now in fintech.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“You can't go into a hedge fund or a venture capital. Don't have assets of a certain size. We assume you can't withstand the kind of risk characteristics of that asset class. Regulation in that sense has multiple avenues, and they done properly, they tend to be pragmatic. To real human behavior as opposed to some kind of theory about it.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, no, the answer is no. It's not. And then if it's important to close that informational gap, then you can't close it. Then you have to do something else. So we do all kinds of things. So we assume that there are classes of investors who are not capable of understanding the risk characteristics of certain asset classes, and they're simply precluded from.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“Doing buyers and sellers is the best way to think about it. The second thing is signaling, the things that the sellers can do to convey actually accurate information in the market. The third thing that we do collectively is regulate, right? So financial markets have enormously large gaps in principle. So it isn't a great surprise that every set of financial markets in the world has disclosure requirements that are pretty stringent and the penalties are pretty high for violating it. And when those disclosure requirements are not there or not enforced, then you get bad misbehavior in the markets, which you see in the developing world all the time.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“So the origin of it was that discussion that we had earlier that had to do with informational gaps. So the adverse selection problem is basically what happens in markets if you can't close the gaps. Then we talked about brands as a way of closing. What do markets do? They're going to try to close the gaps. That's one of the things that between buyers and”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“Yep. All that kind of thing. So if they're doing that, nothing good's going to happen. The Chinese weren't doing that. And they did put a hell of a lot of resources. low levels of income in the economy into education. What they didn't do is run a market economy. So for the first 29 years, they basically got nowhere, but they built assets that were useful. And when they changed the development model, the growth model, To opening up and using markets initially, selectively, then it just took off like a rocket.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“At the moment, yes, and certainly historically once they decided to open in nineteen seventy eight under Dung Xiaoping, now is it logically possible that they could close themselves off enough to put a major dent in their growth? Yes, it's unlikely, I think, but it's possible. You asked about the history of China. China had... A revolution in nineteen forty nine, the communists took over. The communists on the positive side probably had the intention of making everybody better off, right? That you can find a lot of governing structures in the developing world where the governing elite, whoever they are and however they got there, are doing something other than trying to make people better off. Right. Lots of corruption, especially where there's a...”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“In real terms, yeah, in real terms, how could you have advanced countries growing at max three in real terms? And these people are growing at 7, 8, and 9. And the answer is they're catching up, right? All of that technology that you need to drive growth in the long run. The solo insight was already developed. So it just had to be brought in and adapted.”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source
“So there's two kind of crucial ingredients in the postwar growth that we've seen. And by the way, this is growth that we've never seen before. I mean, we're talking about extended periods like two and a half decades of five, six, seven percent growth, even higher in China. Just never happened before. So, one of the things I was trying to do in the book is explain how you could do that, right? How could you have a max of 2% before that or two and a half?”
2019-10-25 · Masters in Business · Michael Spence Discusses Inequality and Growth · IDENTIFIED FROM THE TRANSCRIPT · source