Jeffrey Sachs' Vs Donald Trump: Jeffrey Sachs’ Attack On Trump Leaves Diplomats And Allies Stunned

Added: 2026-05-23

[00:00:00]Uh if you take your credit card and you go shopping and you run up a large credit card debt, you're running a trade deficit with all those shops.

[00:00:14]Now, it would be pretty strange if you then blamed all the shop owners for having sold you all those things. You're ripping me off. You're ripping me off.

[00:00:23]You're ripping me off. I'm running a trade deficit. That is the level of understanding of the president of the United States.

[00:00:33]The trade deficit does not represent at all trade policies.

[00:00:42]It represents spending relative to production or earnings.

[00:00:50]We call that an identity. I teach it in the second day of my course in international monetary economics. Trump never made it to the second day.

[00:01:04]So he says, "You're running a trade deficit. Look, they're all cheating me."

[00:01:10]But all that's happening is the United States is outspending its national income. And you can look at the national income chart. You can add up consumption and investment and government spending. And you can subtract off gross national product. And lo and behold, what will that equal? Not approximately, exactly. that will equal the current account deficit which is the comprehensive measure of how much you spend on goods and services versus how much you uh sell in goods and services.

[00:01:52]So the United States runs a current account deficit because it spends more than it produces. Why does it do that?

[00:02:03]We have a big credit card in the United States. It's called the national government.

[00:02:11]The US government spends about $2 trillion a year more than it takes in in revenues. What it's doing is making transfers to the American people and to American businesses. It doesn't tax Americans for those transfers because here's another little fact. Because the congressmen that vote on the budget got into office by being paid for their campaigns by rich people who don't like taxes.

[00:02:48]So the political system says, "Spend, but don't tax us."

[00:02:53]So we run a chronic deficit in the United States. That spending goes out either as transfer payments or goods and services.

[00:03:04]And that's more than our national income which is about $30 trillion and our spending is about $31 trillion.

[00:03:13]And that's our trade deficit. And for that Donald Trump blames the world.

[00:03:21]Okay. I fail him for this if he were my student.

[00:03:26]He's my president.

[00:03:29]It's a little weirder because when he did this in two days, the world lost $10 trillion of market capitalization.

[00:03:41]By the way, where did it go? Uh did it get transferred from here to here? No, it got destroyed.

[00:03:50]Why destroyed?

[00:03:52]Because trade, something also the president of the United States doesn't understand, is mutually beneficial.

[00:04:00]So if you stop trade, everybody loses.

[00:04:04]It's not that one side wins, the other side loses. He cannot understand that concept as a guy that traded real estate in New York.

[00:04:16]So his idea is somebody had to win, somebody had to lose. But what happened when he made this announcement was $10 trillion was wiped out worldwide. It's not that the US went up and they went down. No, everybody went down because the whole world system is based on a division of labor and he's breaking that division of labor into pieces.

[00:04:43]So then people said this doesn't make sense. Even the very rich people that gave him the money for him to get into office started saying this doesn't make sense.

[00:04:58]The hedge fund managers who were his big campaign contributors, Elon Musk who paid for his election became prime minister. Uh he said this doesn't make sense. And then the markets said this doesn't make sense. Not only 10 trillion dollars, but as the finance minister said, interest rates started to rise because people began to dump US Treasury debt.

[00:05:23]>> The safest thing in the world apparently.

[00:05:25]>> So interesting what happened.

[00:05:31]It's not quite true that he reversed things. First he left on this 10% tariff except for one country for China 145% >> where he raised the tariff rates. That's because the United States has a deep neurotic attachment to China.

[00:05:55]The US political system hates China.

[00:05:59]Why? Because China's big and successful.

[00:06:04]And so that the US hates.

[00:06:07]It's a rival. It's a competitor. And so this is the one thing he left on. Now he's going to mess up everything with this too because in a trade war between the US and China, China wins. China does not depend on the US market very much.

[00:06:26]It's about 12% of China's exports. China will do just fine.

[00:06:33]It's just dumb policy.

[00:06:38]That's There's no more Sorry to say it.

[00:06:41]There's just no more explanation to this than that. It makes no sense. Now, it raises if I could just one last point.

[00:06:54]>> How can this happen when it makes no sense? And that people should understand we are in oneperson rule in the United States. Our political system is in a state of collapse.

[00:07:10]What President Trump did is an emergency decree.

[00:07:16]Everything he does is an emergency decree. Literally, you can go on to whitehouse.gov gov and then type follow the menu to executive decrees and there are dozens of them and each one starts the same way with the powers invested is in me as president of the United States I hereby declare a nonsense b nonsense c nonsense because he's king those powers are not invested in the president of the United states, they're invested in the Congress. You read article 1, section 8 of our constitution, it says that all duties originate with the congress and specifically in the lower house. All legislation has to start in the House of Representatives.

[00:08:11]But the US starting in 1945 after World War II became a military state to a large extent. And so it sprinkled in its legislation emergency emergency emergency. And Trump doesn't have to prove anything's an emergency. He just has to says something's an emergency. So suddenly the trade deficit became an emergency.

[00:08:39]And on that basis, he issues a oneperson rule. Even his aids don't know what he's doing. You raise one final interesting issue, which is that the market recovered about $4 trillion when he reversed.

[00:08:56]Anyone who knew that five minutes before made billions.

[00:09:01]This is not the cleanest government in the world, I can tell you. I'd be hugely surprised if some people didn't know just a bit ahead of time, starting with members of the US Congress. By the way, look, we'll get into the more general issues about protectionism and the end of globalization, question mark, in a minute, but I think what's happening and the directives coming from the White House are such a perfect example of what this panel is about. I'd just like to stay on this just for a few more minutes. Um, Minister, is protectionism always a shortterm aim and does it always come at the expense of the longer term gain? Donald Trump hasn't said it in public, but apparently in private during his first term, he was asked about the problem of the US national debt. And his answer was, I don't care because I'll be dead by the time it's a problem. And apparently that's also his approach to the climate crisis. So, is this protectionism coming from the White House a short-term fix which is going to hurt America in the longer term in terms of how it grows?

[00:10:07]>> It's not a fix. It's uh apparently a quick fix, but it's fundamentally flawed as professor has very clearly stated. Look, protectionism is nothing new. If you look at post global financial crisis, the number of annual trade restrictions have gone up dramatically.

[00:10:32]In fact, like last year, there were over 3,200 trade restrictions.

[00:10:39]That is almost 11 times higher than what it was pre- global financial crisis. So, this has been a trend.

[00:10:51]But what has you know what we have seen over the past week or two is clearly a new level. This this goes beyond you know some protectionist measures trade restrictions.

[00:11:08]This goes into something an allout trade war. So that's really worrisome because if you go back again I mean if you go if you look at 20 years to global financial crisis global annual trade growth was two times world real GDP growth rate. So in a way trade was the engine of growth.

[00:11:37]>> Now that engine has been slow. So if you look at post-global financial crisis, global trade growth barely kept up with kept up with uh real GDP, you know, global GDP growth. So that's no longer really one of the kind of like a strong engine. But I think the way things are now if you know if if current state of affairs is sustained we may end up actually protectionism dragging global growth. It is not only growth it's really there are many you know additional fallouts from these type of policies.

[00:12:20]>> Absolutely. Yeah.

[00:12:21]>> Yeah. So the answer to your question this is not a fix.

[00:12:27]There's a fundamentally flawed you know uh policy perspective.

[00:12:35]Obviously countries have choice you know they they always have a choice but we would rather you know see world moving back to rule-based multilateral framework you know where everyone benefits. I think I agree with professor. You know over 1 billion people since 1990s have been lifted out of poverty predominantly in Asia. I'm talking about absolute poverty here and that's largely thanks to you know trade and and growth associated with that trade. So it is worrisome that we are now experimenting policies that may actually reverse some of these gains which I think were very important. A billion people out of absolute poverty cannot be underestimated.

[00:13:33]It's quite sign. Now admittedly trade do cause geographic dislocations but the solution is not protectionism.

[00:13:45]The solution lies more internal sound policies, you know, structural remedies, but also you can deploy tax policy incentives and other things to address, you know, uh, dislocations in regions caused by, you know, global trade openness. Uh, so it's not a level, but protectionism will create more inequalities. it will create bigger problems.

[00:14:18]Uh already you've got significant headwinds for global growth, aging population, high global indebtness, climate impending climate crisis.

[00:14:30]So protectionism is going to be yet another big blow to long-term growth outlook. And that's why growth is barely you know at you know sustained at at 3%.

[00:14:44]I think the risk is that we will move to a new era where per capita GDP growth will almost disappear if we continue down this path.

[00:14:56]>> Really interesting what you say about protectionism having fallout in other sectors and we will get on to that about how it might affect cooperation on the climate crisis, global health etc etc. But let's use one country as a particular example about how a nation can react to protectionism. So we have the US tariffs which in 90 days will come into effect beyond the 10% that Donald Trump has placed. Let's take two rich countries. UK and Singapore will stay at 10%. Bangladesh and Botswana will both go up to 37%.

[00:15:27]Laos will be 48%. Syria will be 41%.

[00:15:31]Lysotu in southern Africa will be 50%.

[00:15:36]In 2023, the US exported to Lutu $7.33 million worth of goods. Loto in that same year exported to the United States $228 million. The US GDP per capita in 2023 was $82.8,000 per person. In Loto, it was $916.

[00:15:58]Gentlemen, how does a country like Nutu deal with the protectionism coming from the US minister?

[00:16:08]>> Well, uh, look, protectionism is an external shock, meaning it's not a decision by, you know, the counterparty. It's it's essentially So, how do you deal with it?

[00:16:21]I guess uh you focus on regional integration. I mean as a an antidote of protectionism. So regional connectivity, regional integration would be one way forward. to you know instead of globalization on a big scale you focus on how you can deepen and broaden your ties with your immediate neighborhood or countries that are still willing to entertain rule-based trade. So I think that's the only way um uh again this is a major shock for many countries. I think global supply chains are going to suffer. Uh this will lead to I mean already I think the risk is that capital will be misallocated.

[00:17:15]Take us I mean take Turkey for example.

[00:17:18]Uh we have we are the world second largest of white goods exporter. We need chips basic ones nothing sophisticated.

[00:17:27]We're not talking about four nanometers.

[00:17:29]We're talking about you know 30 40 70 nanometers.

[00:17:34]If we're worried that countries are not going to supply that uh even though it may not be the most efficient way, we may have to go into a very large capex to see if we could produce them. We are good at something, other countries are better at something. So we would rather trade. And this is a very simple, you know, uh economics, you know, theory. everybody benefits. So I don't think you know X country or Y country they there's not much they can do except to look at you know ways in which uh they could uh mitigate the fallout from not being able to sell goods to United States but professor that takes a long time to arrange because of course the shock is immediate. You can't make deals that quickly, can you?

[00:18:32]>> I think uh the particular uh tariff rates that Trump announced last week that led to that financial blood bath are not going to come back. So, I don't think we're going to hear again about those numbers after 90 days. 90 days in US time now is infinity. It's eternity.

[00:18:52]Uh we'll never hear those numbers again.

[00:18:56]Where did those numbers come from?

[00:18:58]something again so stupid you can't believe that that any uh country any country would would do this but the idea is the following as I said if you want to know what your trade balance is you earn some income so you sell some services to somebody and you buy things and if you sp if you spend what you earn you're in trade balance technical ally you're in current account balance. Now most of us I work for one employer uh my university so I run a a big trade surplus with my university and then I run a pretty big uh trade deficit with uh the grocery store that I we buy our groceries from and uh if I have to buy shoes I run a trade deficit with the shoe store and so forth. Trump's idea, just to add to the craziness of it, is that you should run a trade balance with everybody. Not an overall trade balance, but a trade balance with everybody. So, you should sell a little bit. You should work a little bit for your shoe store.

[00:20:12]You should work a little bit for your grocery store. You should uh you should go around anytime you want to shop, you trade something. I'll you know, I'll write you an essay if you'll sell me shoes. and you make your living uh somehow uh trying to balance your trade with all of your counterparts. Well, this is insane. This is why we have a market economy. You don't have to have balance with every transaction that you do with somebody. And but what Trump said was, "Oh, lutu, they sell us more than uh we buy from them, so they're cheating us."

[00:20:48]That's literally what he said. literally what he said.

[00:20:55]Okay. Is it completely delusional or rhetoric?

[00:21:01]It's delusional. Okay. Just so you know.

[00:21:04]Uh it's weird. But anyway, now then he calculated a formula. Okay. Lutu, we have to tax them by the amount to reduce the imports from them so that we have balance with Lutu.

[00:21:20]And then they made some absolutely stupid formula that you would not accept in a firstear third week class. It came out of the US trade representatives office. They probably were told do it overnight. The boss wants it. And then they came up with a list of tariffs country by country based on the bilateral trade balance. You cannot make this stuff up.

[00:21:48]This is not a It used to be not a Mickey Mouse country, my country.

[00:21:54]But this is Mickey Mouse. This is not And I'm sorry. I apologize to Mickey Mouse. He would not do this. Mickey Mouse is smarter than this.

[00:22:04]So, we are in a crazy land actually with this. Now, it stopped for a moment.

[00:22:11]We'll never hear those numbers again. I don't know what we'll hear in 3 months.

[00:22:17]God help us really because it probably won't have to do with trade. It'll have to do with something else. But we can't normalize this as what's the rationale how to negotiate, what to do.

[00:22:34]Of course, 60 countries immediately said, "We'll rebalance with you." And the president of the United States literally used the language I'm about to use. I'm quoting him because otherwise I would never say this. He said, "60 countries are coming to kiss my ass." He said that in a public speech, the president of the United States.

[00:22:58]So this is I'm sorry. I apologize, >> but it's presidential language.

[00:23:03]>> Yeah.

[00:23:04]>> Okay. I'm only speaking at high political terms.

[00:23:11]So we cannot normalize this.

[00:23:15]We have to say no. We didn't spend a hundred years on 200 years 27 years since David Ricardo put forward the idea of comparative advantage. Okay.

[00:23:32]And we have been building the trade system since the ruins of World War II for 80 years.

[00:23:42]And we have been building the World Trade Organization, which the US led the creation of, I think it's fair to say, for 31 years.

[00:23:53]This should not be normalized to try to figure out what is the theory of this.

[00:23:59]And it's a more fundamental point, ladies and gentlemen. The United States is a rogue nation right now on many things, not just on trade, but on making Gaza into the US Riviera. Uh on whatever it wants to say, it's a little bit of a rogue nation. for the world to hold together. The rest of the world has to say, "We're not going down crazy lane.

[00:24:31]We're going to be responsible. We're going to go to the UN. We're going to go to the World Trade Organization. We're not going to get into this downward spiral because if we normalize craziness, there is no way out."

[00:24:50]Uh you mentioned Mickey Mouse, but there's a kind of a theme here from Bloomberg, the news agency. These are its headlines in the morning and the afternoon of Tuesday, Wednesday, and Thursday. Tuesday morning, this is madness. In the afternoon, a clown show.

[00:25:05]On Wednesday, stocks keep falling. In the afternoon, could have been worse.

[00:25:10]Thursday morning, assessing the damage.

[00:25:12]Thursday afternoon, Trump blinks.

[00:25:16]And by the way, if I may, because it's interesting because I'm living in this crazy world, the Secretary of Treasury then with with all deference to a person who has a very hard job, he says this was planned all along when Trump dropped this.

[00:25:36]Can you imagine?

[00:25:37]>> He couldn't say anything else, though.

[00:25:39]>> Well, yeah, I know. to hear this from your Treasury Secretary is not also reassuring because all you hear is a crazy land rather than what we need to hear which is rationality.

[00:25:53]>> Okay. So, let's make it more general for the moment. And by the way, ladies and gentlemen in the audience, I'll give you a few minutes at the end if you want to ask our two panelists a question. We'll try to get a few questions in from the audience. So to broaden it out, Minister, as the professor says and pretty much everybody agrees, protectionism doesn't make economic sense because in the longer term it's going to cost everybody. So what's driving increasing protectionism, not just in the United States, but in other nations as well? Because if it doesn't make economic sense, does it mean it then becomes a political statement from the person uh imposing that protectionism uh to almost appear as like a nationalist moment to bring people towards that decision maker politically rather than economically?

[00:26:42]>> Well, it's easy to explain. I think what is driving the current you know uh what seems like a fundamentally flawed policies is first of all let's set the scene I mean there's a geostrategic competition >> between China and United States we know that >> um China has what it takes to become a superpower because it has human capital it as state-of-the-art infrastructure and now it's catching up in technology.

[00:27:21]United States consider itself as the hedgeimon power.

[00:27:26]So we know from history there's always been tensions between existing superpowers and emerging ones.

[00:27:38]uh it doesn't have to end this way meaning in a trade war or any other force but it does in the past I mean history tells us that is you know we more frequently see tensions rather than cooperation so what lies behind this very simple go back to 20 years ago roughly speaking China accounts for about 8% of global manufacturing Today, China accounts for more than 30% of global manufacturing.

[00:28:12]Who lost ground? United States, European Union, and Japan.

[00:28:21]United States clearly also sees this. Again, go back to 20 years ago and just visualize a world map.

[00:28:31]Um, which country commands as the main trading partner of the rest of the world? Maps are all over the place. Clearly, it was United States 20 years ago. Today, it's China.

[00:28:49]Now normally uh what you would the way you would respond the way I would respond is that look we need sound policies structure reforms to regain ground.

[00:29:05]Instead it looks like this rivalry combined with lack of obviously clear understanding is that it leads to to go after quick fixes. Mhm.

[00:29:20]>> And quick fixes which is also to do with populism, nationalism is to blame others and is to present it in a simple fashion. The reality is you have to be more competitive.

[00:29:35]You know you have to invest in upskilling reskilling your population.

[00:29:40]you have to invest in your infrastructure and you have to you know there's a lot of I mean there's a long list of homework but those are politically difficult to deliver they take time and they're difficult so structural policy has been lacking in most countries and when you can't deliver structural transformation then you go either you rely on monetary policy to fix things [snorts] you know monetary policy in many parts of the developed world have been doing the heavy lifting over the last couple of decades >> in the face of difficulties.

[00:30:23]So my point here is that I think we know what drives it is losing ground. But how do you regain ground?

[00:30:34]Again, the sophisticated way would be to do the right thing and deliver on reforms. The easy way would be to blame everyone else and come up with high tariffs as a fix.

[00:30:49]Uh let's see. Um okay, so protectionism is also not helping your friends to concentrate more on yourself rather than the outside world. We know that the dramatic drastic cuts to USID, the Agency for International Development, has already or is going to cost lives.

[00:31:14]Myanmar's recent earthquake, the Americans have been for decades maybe the most important first responder, sending hundreds of rescue workers.

[00:31:25]They sent three administrators. They didn't send a single rescue worker.

[00:31:30]They laid off recently some people working for the federal government on uh the US nuclear program. They realized very quickly within a couple of days that it was actually a national security issue. So they were told to come back to their office. The office said sorry they've been uh excluded from their federal email so we can't get in touch with them. So they couldn't remploy them.

[00:31:53]Professor Saxs, when you were president of the Earth Institute at Columbia University, it focuses I've got to read this from the notes. It focuses on sustainable development. This institute at Colombia, including research in climate change, geology, global health, economics, management, agriculture, ecosystems, urbanization, energy, water, everything that we need to live.

[00:32:17]So how does protectionism affect these kinds of relationships between one country and another country?

[00:32:26]>> Yeah, I I want to answer that by uh continuing on with the brilliant explanation that that the minister just gave about the hard stuff and the and the easy stuff.

[00:32:38]>> Yeah. So uh just to say in American politics the swing states in the presidential elections in the last uh three elections in particular have been the Midwestern states. Uh so those are states like Michigan, Indiana, Illinois, Ohio, Pennsylvania, Wisconsin, Minnesota.

[00:33:01]These are states that can go either way.

[00:33:05]And those states did suffer a decline of employment in manufacturing not only or even mainly because of trade but also heavily because of automation >> over the last 40 years. I come from Detroit, which is uh Motor City used to be. Uh and uh I used to go uh when young on school field trips to see the assembly lines and there were actually workers on the assembly line. But now if you go to an automotive plant, it's all robots, very very few people inside.

[00:33:45]That's not because the jobs went overseas in that case. That's because uh the assembly line itself became an automated phenomenon.

[00:33:55]So Trump is giving an answer to those swing states. It's China's fault. It's Mexico's fault. It's Lutu's fault.

[00:34:09]What the minister said is really important that when he said that trade benefits the economy, but it could hurt some sectors.

[00:34:21]And what you do is not stop the trade, but you make sure that you pull everyone along. Maybe in a regional policy or maybe uh in job reskilling or maybe in some other kind of public investment or education policy.

[00:34:38]Here's where the US really failed over the last 40 years. We let the inequalities widen and widen partly because of automation, partly because jobs did go overseas, but for the right reason. They had comparative advantage in in those jobs. Skilled people got better and better salaries. Lower skilled people had their living standards fall. the gap widened. By the way, not just the income gap, the life expectancy, >> became 10 years or more. So many of our epidemics, so many of our social problems relate to this widening inequality. The United States political system didn't address it at all for 40 years. And that comes to what I mentioned, the corruption of the political system. When part candidates of both political parties are paid by rich donors for their reelection campaigns and both parties then become the agents of tax cuts and uh and and uh no uh really addressing the social conditions. You end up with a Donald Trump coming in and selling a pseudo explanation. It's all China and selling a pseudo remedy, a trade war. What the auto workers are going to learn right now is they're they're going to lose jobs by even the tariffs that have been put in place because we need the intermediate parts brought in from elsewhere. Now, they face higher costs.

[00:36:22]And the United States can't compete at all with Chinese electric vehicles.

[00:36:28]China. The United States has basically handed China the electric vehicle market for the next 20 years. So did Europe, by the way. Europe delayed the transformation to electric vehicles, said, "We produce great internal combustion engines. We're going to continue to do that. The world actually needs electric vehicles because of the climate crisis." So all of this is to say the real hard work is to think ahead. Mhm.

[00:36:56]>> The country by the way in my experience of working all over the world in the last 40 years that thinks the head that thinks ahead the most is China.

[00:37:08]>> China's success is not random. China's success actually is a lot of forwardlooking planning. In 2014, China issued a document called made in China 2025.

[00:37:24]And it wasn't a protectionist policy. It was we need to invest in the technology so we can be at the forefront. I think in eight of the 10 sectors that were identified there, China succeeded in reaching the forefront. In 2017, China made a plan for artificial intelligence.

[00:37:45]This is already eight years ago. Deep Seek didn't just come out of nowhere. It came out of a long-term strategy. So this is hard work that actually pays off. This is what every government should do. This is what every country should do is look ahead. Now you [snorts] mentioned very interesting idea. We we got a president who doesn't understand and maybe doesn't care about the future in the same way. But just to say the biggest issue on the planet should be the climate crisis, not all the things we're endlessly talking about. And every part of the world is going to suffer terribly by what has been built in in terrible, very dangerous climate change.

[00:38:39]It's it's out of the headlines. But you know I had a very difficult job.

[00:38:48]I was the director of an institute with 300 climate scientists for 14 years.

[00:38:55]Some of the world's leading climate scientists. The reason it was a hard job is that every week they came up and told me it's worse than we thought.

[00:39:06]They would give me endlessly grim news.

[00:39:11]And the lead climate scientist at Columbia University is a man named James Hansen, who I regard as the world's leading climate scientist. And he produced a study in January that said it's much worse than we have thought. The world's temperature has gone up by.3° C in 3 years. We have had 21 months of the last 22 above 1.5 degrees.

[00:39:44]That's the new baseline, by the way.

[00:39:47]That's not because of an El Nino effect.

[00:39:50]That's the new baseline. We already blew the limit that we set 10 years ago in Paris that we said we would not exceed.

[00:39:59]We're already above it. And what Hansen says is we're rising at an accelerating rate.

[00:40:07]Now it's the average rate is probably between 3 and 04 degrees Celsius per decade now on average. So we'll be at 2° excess.

[00:40:20]What all of this means is profound danger 20 years from now, 25, 30, but we're already seeing terrible danger today. It's I don't want to minimize what's already happening. Los Angeles burned down. Massive forest fires in Korea last week. It's everywhere. I'm My wife and I are non-stop traveling. Every single place we go is some kind of climate crisis literally in some it's a drought, it's floods, it's heat waves, it's pest infestations, it's forest fires. And the sea level is going to rise by many meters which is not great for Istanul by the way and not great for coastal areas. It's very dangerous what is built into the system.

[00:41:11]Now what is Trump's answer for this?

[00:41:14]Yesterday King Donald issued an executive decree to bring back coal.

[00:41:24]It's willful destruction of well-being. Willful.

[00:41:31]And that is again he pulled out of the Paris agreement. What I'm hoping, ladies and gentlemen, is the other 192 members of the UN have to say, "No, we're not entering a crazy land. We're going to take care of our future right now. I live in a crazy land, but the rest of the world has to avoid the crazy land.

[00:42:02]Has to avoid normalizing this.

[00:42:06]I don't know if any of you saw it during the height of the coronavirus pandemic, an Australian artist uh cartoonist drew a cartoon which had the first tidal wave kind of a tsunami of um economic recession. there was a bigger tidal wave tsunami behind it which was COVID 19 and then a huge one over both of them which was the climate crisis. So get ready.

[00:42:29]I'll give you a chance to ask a few questions but I just wanted to address one final issue to the minister and I was getting a bit depressed professor when you were talking about that. I tell my kids since they were born they're now 21 and 19 live anywhere you want in the world but don't live near the coast or near a river. Um the professor is saying that the climate crisis is going to be one of probably I'm kind of you know putting words into your mouth professor that del globalization if it becomes more and more of a popular sentiment and policy the climate crisis will uh be affected because of a lack of cooperation through delobalization.

[00:43:04]Minister what other big dangers do you see if the trend of deglobalization gathers pace?

[00:43:12]Well, as I mentioned earlier, in addition to the impending climate crisis which could have a devastating impact on the future of humanity, you know, I think we are faced with significant headwinds uh that already exist uh but some of them could become more complicated.

[00:43:38]One of them is high global indebtness. Mhm.

[00:43:43]>> If protectionism, you know, uh clearly goes the way it is today, meaning if we really >> go into these trade wars and if this leads to higher inflation even for a couple of years, if that's the case, then that means long-term interest rates are likely to rise.

[00:44:11]And if that is so then many countries are already struggling to manage the debt service.

[00:44:20]You know global indebtness if you look at it overall indebtness was 328% last year 328% of GDP. Yeah >> this is huge. When interest rates are very low but when rates go up >> clearly that's a big issue. I mean, look at, you know, look at the Turkish scene.

[00:44:44]Um, yes, we've had a, you know, domestic uh, you know, I mean, domestic issue that led to some market turbulence.

[00:44:56]But what happened post April 2, CDS have gone through the roof. CDS are country risk premium. you know our external bond deals 10 year five year they all gone up significantly on the back of these tariffs.

[00:45:15]>> I think there are already many countries according to UN that pay more in on interest on debt than what they you know are able to earmark for education and health care combined.

[00:45:32]So I think you know we already have issues such as indebtness that could that the current you know trend could exacerbate. I mean aging population already is could create huge constraints on public finances going forward.

[00:45:52]Um so those are some of the additional headwinds that exist that could actually serve as speed limit or a drag on growth.

[00:46:02]So I think you know the world and I agree with professor that um the world has to you know rather than going you know down this path we need to cooperate more. We need to work more closely on climate change on how to address other problems because protectionism will also lead to probably global inequalities.

[00:46:29]You know, if you don't allow AI chips to be freely available to everyone, clearly that's a big issue because then many countries will be left behind in terms of tapping this, you know, AI that has immense potential to boost productivity.

[00:46:51]You know, protectionism is not limited to trade of goods and service.

[00:46:57]it's now associated with financial flaws, you know, with diffusion of technologies through FDI.

[00:47:07]So clearly, um I think we'll be worse off unless we cooperate, unless we return to multilateralism.

[00:47:16]Uh but sadly, right now it's all about shift to minilateralism.

[00:47:23]You know, a few countries getting together, but that's not enough. I think um issues are too big for few countries to address. I think you know the rest of the world should come together. So yes there are significant challenges.

[00:47:39]>> Uh when you mentioned aging population I have a good example from Europe that only two countries on the entire continent are having enough babies to sustain their population level. That's Ireland and Portugal. So you imagine the pressure on the taxation system and the spending on those other countries that are not sustaining their population levels and are just getting older and older and older. Okay, let me look at the back as well if anybody has any questions. We've got about 7 minutes left and please make it a question not a lecture because if it's a lecture I'll have to stop you. Gentleman over there and gentlemen over here. Okay, please introduce Oh, there's a microphone.

[00:48:15][snorts] Thank >> Thank you very much.

[00:48:18]>> Doesn't work.

[00:48:22]Yeah, does work.

[00:48:23]>> Okay, thank you very much. Uh, I have a question for Mr. Jeffrey Saxs. Uh, my name is Sarcer and I'm from Haraj News.

[00:48:31]Um, so you mentioned that we shouldn't look for a rationale behind the actions of Donald Trump. But just just to be a devil's advocate, I just want to understand their point of view which they mention yes trade deficit and the national debt of the United States but also they mention the hard industries that left United States back in the day.

[00:48:54]So uh what I'm trying to understand is uh if United States gets into a confrontation with global powers such as China or Russia or any other state maybe even Europe one day uh is it wrong for them to want their hard industries back and this is their rationale to put these tariffs on because Donald Trump mentioned that uh we are buying cars from Canada that we could have been producing uh before. So uh is there a rationale behind at least on the hard industry part?

[00:49:27]>> Okay, thank you.

[00:49:28]>> Yeah, you know in in trade theory or trade concept there is the national security rationale. Uh so you may want to procure domestically to have a an armament industry. That's quite different from imposing tariffs on 150 countries in a completely arbitrary way.

[00:49:51]In fact, the right policy might be local procurement from domestic industry that has nothing to do with trade policy at all. So that is not an argument for what he's doing. But I would add one more point.

[00:50:12]We don't need an arms race and we don't need a war. Actually, diplomacy is really cheap compared to war. That's why we're at the Antalya diplomacy forum, not the Antalya military forum. Uh, so if Trump really wanted to save some money, we have almost 800 overseas military bases in 80 countries. This is crazy.

[00:50:51]So if you wanted to save money and be close the budget deficit, I would close hundreds and hundreds of military bases and leave all these countries at peace because wherever there's an American military base, there's a big headache. Believe me, [applause] >> sir. Okay. Is your question to the finance minister?

[00:51:20]Is your question to the finance minister or to the professor? Because I want to even things up. I would come back to you if it was for the professor, but if you Okay, let's address it to the finance minister.

[00:51:36]1212. Uh my name is Real Miller. Uh formerly of the OECD, formerly of UNESCO, and formerly an adviser to finance ministers. So I can address my question to a finance minister. One of the things that's tremendously tempting and it was really in part part of what the last question was about was the hard industries right so now let's go back to being an extractive economy coal mining you know uh be in Canada I'm Canadian originally beaver skins right that we sent over so resources right now we have seen in the past historically when there was a move from natural resources to manufacturing it was quite difficult for the society and the politics to change because the oligarchs of resources were not the oligarchs of manufacturing. So I have a question which relates to the historical context we're in. What if we're moving to intangible economies?

[00:52:24]What if we're moving away from tangibles in general and those robots are going to take care of producing intangibles? How do we talk to people who are nervous and worried because they're accustomed? I go to Germany and I say, "Can Germany be rich without producing cars?" And they go, "Never." I said, "Could could the could Britain be rich without producing coal?" Never. And so we have this historical difficulty of making the transition. And I wonder what you can say in a country like Turkey where you are making the transition through industry and China through catchup and convergence. But can we begin to talk about going beyond the tangible economy?

[00:53:05]Of course we can imagine because if you look at last couple of hundred years there has been significant you know trends. I mean if I'm not mistaken if you go back to 200 years ago 90% of employment was in agriculture. Today in developed west it's about 1% 2%. Uh but but we are much better off. So I think we can uh extrapolate it's true that uh you know we may achieve artificial general intelligence soon meaning within a year or two and according to exports maybe artificial super intelligence within 5 years and assuming that also gets converted in robotics and advanced manufacturing chances are the traditional employment will no longer be there.

[00:54:07]So we have to come up with obvious. So that's why I think you know it seems like today's debate considering what is ahead of us a bit outdated.

[00:54:20]So I I I I hear what you're asking and it's really complicated. We all have to think. I remember attending a global economic symposium in KE uh back in 2007 and one of the session because I was finance minister and you well treasury they put me in that session in that panel and the question was uh when do we start taxing robots?

[00:54:44][snorts] So look uh yes I I do see that happening. I don't have the answer, but certainly we have to think about it.

[00:54:55]>> It'll be interesting to know if a robot will need a work permit as well, right?

[00:54:59]Okay, that that's it. The time is up, ladies and gentlemen. It was always going to be too brief with these two particular gentlemen.