On February 15, 2023, Social Science Matrix was honored to host Mariano-Florentino Cuéllar for a Matrix Distinguished Lecture entitled “Reimagining Global Integration.” Watch the video of the lecture above, or listen as a podcast below or on Google Podcasts or Apple Podcasts.
Abstract
Whether they live in vast cities or rural villages, people in virtually every corner of the world have experienced enormous growth in cross-border economic, political, and social connections since World War II. This latest chapter in the story of transnational activity has coincided with enormous changes in the well-being of billions of people. As China gained access to global markets and its share of worldwide trade increased eight-fold in a single generation, for example, the percentage of its population living in extreme poverty plunged from 72 percent in 1990 to 14 percent in 2010. Global life expectancy has risen from less than 47 years in 1950 to 71 years in 2021, and the male-female gap in primary and secondary schooling globally has almost disappeared.
But increased cross-border trade, migration, flows of information, and political ties have also engendered an intense backlash to “globalization” and related concepts. Today, at a time of major geopolitical upheaval and technological change, policymakers and the public are vigorously debating the merits of domestic policies suitable for an interconnected world. They are exploring new trade and migration rules, reviving strategies for national industrial and technological development, and reflecting on the lessons of 1990s-style globalization for international law and institutions substantially influenced by the United States. Discussions of “reshoring” supply chains and United States-China economic “decoupling” are just two examples of rising concerns in Washington about cross-border ties.
Yet global cooperation remains vital to solving many of humanity’s most urgent challenges: mitigating and adapting to climate change, harnessing technology for the benefit of humanity while taming its risks, reducing poverty, and preventing violent conflict. By better understanding the long-simmering conflicts over global cooperation and integration, policymakers and civil society can further develop the ideas, institutions, and coalitions necessary to create a stable foundation for a more reflective version of global integration: one that addresses the connections between economic well-being and security, and better aligns domestic realities with international norms to tackle the pressing issues of our time.
About the Speaker
A former justice of the Supreme Court of California, Justice Cuéllar served two U.S. presidents at the White House and in federal agencies, and was a faculty member at Stanford University for two decades. Before serving on California’s highest court, Justice Cuéllar was the Stanley Morrison Professor of Law, Professor (by courtesy) of Political Science, and director of the Freeman Spogli Institute for International Studies at Stanford. In this capacity, he oversaw programs on international security, governance and development, global health, cyber policy, migration, and climate change and food security. Previously, he co-directed the Institute’s Center for International Security and Cooperation and led its Honors Program in International Security.
While serving in the Obama White House as the president’s special assistant for justice and regulatory policy, he led the Domestic Policy Council teams responsible for civil and criminal justice reform, public health, immigration, transnational regulatory issues, and supporting the Quadrennial Homeland Security Review. He then co-chaired the U.S. Department of Education’s Equity and Excellence Commission, and was a presidential appointee to the Council of the Administrative Conference of the United States. As a California Supreme Court justice, he oversaw reforms of the California court system’s operations to better meet the needs of millions of limited-English speakers.
A fellow of the American Academy of Arts and Sciences, Cuéllar is the author of Governing Security: The Hidden Origins of American Security Agencies (2013) and has published widely on American institutions, international affairs, and technology’s impact on law and government. Cuéllar co-authored the first ever report on the use of artificial intelligence across federal agencies. He has served on the National Academy of Sciences Committee on Social and Ethical Implications of Computing Research and the American Academy of Arts and Sciences Commission on Accelerating Climate Action.
He chairs the board of the William & Flora Hewlett Foundation and is a member of the Harvard Corporation. He currently serves on the U.S. Department of State’s Foreign Affairs Policy Board. Earlier, he chaired the boards of the Center for Advanced Study in the Behavioral Sciences and the Stanford Institute for Innovation in Developing Economies, and co-chaired the Obama Biden Presidential Transition Task Force on Immigration.
Born in Matamoros, Mexico, he grew up primarily in communities along the U.S.-Mexico border. He graduated from Harvard College and Yale Law School, and received a Ph.D. in political science from Stanford University. He began his career at the U.S. Department of the Treasury and the U.S. Court of Appeals for the Ninth Circuit.
Transcript
Reimagining Global Integration: A Lecture by Mariano-Florentino Cuéllar
[MUSIC PLAYING]
[MARION FOURCADE] Hello, everybody. My name is Marion Fourcade. I am the Director of Social Science Matrix. And I am delighted to welcome you to today’s distinguished Matrix lecture. When I first heard Mariano-Florentino Cuellar speak at an event organized by the Center for Human Compatible Artificial Intelligence five years ago, I secretly hoped that someday I would get a chance to invite him, too. And so today, I could not be more delighted to introduce him as our distinguished Matrix lecturer.
Tino Cuellar is an extraordinary scholar and public servant. We can actually start with an inspiring life story, born on the Mexican side of the US-Mexico border, Justice Cuellar went to public schools in Texas and California and then on to Harvard College and Yale Law School. In 2000, he completed a PhD in political science from Stanford University.
He served for two US presidents at the White House and in federal agencies and was on the California Supreme Court from 2015 to 2021. Before that appointment, Justice Cuellar was Stanley Morrison professor of law, professor by courtesy of political science, and director of the Freeman-Spogli Institute for International Studies at Stanford.
In this capacity, he oversaw programs on international security, governance and development, global health, cyber policy, migration, and climate change and food security. Just among a few other things. A member of the American Academy of Arts and Sciences, Justice Cuellar has published widely on American institutions and public law, international affairs, political economy, and technology’s impact on law and government.
He is the author of the 2001 book, Governing Security– The Hidden Origins of American Security Agencies. And he’s now the president of the Carnegie Endowment for International Peace. And it is from this vantage point that he will speak to us on reimagining global integration. And also, I want you to note, please that in addition to today’s lecture Tino Cuellar will participate in the joint Matrix Clausen Center panel on economics and geopolitics in US international relations tomorrow at noon at the Spieker Forum at the Haas Business School, alongside four other distinguished panelists.
So we are so very fortunate to welcome you to Berkeley two days in a row. Thank you for being here. And we greatly look forward to your lecture.
[MARIANO FLORENTINO CUÉLLAR] Thank you very much. Thank you, Marion. And thank you all of you for being here in a world where attention is scarce and time has all kinds of competing demands. And a blissful escape is just one screen away that you have in your pocket. It’s probably the rarest of privileges that I have an audience of really thoughtful people to just be with me for some time.
I also want to tell you that it’s special privilege to me, because I really find this campus to be remarkable and special. Years and years ago– and David knows this because I mentioned it to him, David [INAUDIBLE]– I was an undergraduate research fellow at the School of Education here between my first and second year in college. And I just fell in love with the place. I fell in love with Caffe Strada. To this day, I think Berkeley is the best social science university in the world, because when I compare it to Stanford, we have Starbucks, and you have Caffe Strada. So that encapsulates in some ways the differences between these institutions.
For about seven years, I had the great privilege of serving you, the people of California and those of you watching online who are Californians, on the Supreme Court. And I thought that job was an incredible privilege. I did start to wonder, what do I have to do to be invited to give a talk at Berkeley? So that’s not the only reason why I switched jobs.
But I did find that, day in, day out, the work on the court was incredibly fulfilling, very engaging. And I can talk more about it. But in ways big and small, I would notice that these questions we would deal with about water policy, about criminal justice, about technology, about privacy, about contract law, about pharmaceuticals had not only a national overlay but a global overlay.
And at every corner, if I squinted, and sometimes I didn’t even just squint, there was this sort of massive set of forces at play in shaping things happening inside California. And then, of course, sometimes California’s shaping what was happening outside. So in some respects, maybe it’s not entirely surprising that I don’t think my work today at Carnegie is that different from the work I was doing on the California Supreme Court.
In one case, I was in a job with a set of constraints and interpreting a set of texts. In the other, I’m trying to help with colleagues the world upholds some of its greatest ideals. But in both cases, you’re dealing with reconciling ideals with practice. And if there’s one theme that connects everything I want to share with you, it’s essentially that. It’s about what is the intellectual work, the practical work, the creative work, the coalition building work that comes into not allowing the practical to displace ideals but at the same time being pretty grounded in the here and now.
So let’s go back to November of 2022. In many ways, a totally ordinary month for the world. And what it means for a month to be ordinary in the world is its own question, but not so different from the one before the one after. But in other ways, another little reminder of how complicated the global picture had grown.
So this is a month where the Chinese military claimed that a US-guided missile cruiser had, quote, “illegally entered” the waters near China’s Nansha islands and reefs without the approval of the Chinese government. This is in the South China Sea. The move according to China shows that the US is, quote, “the true producer of security risks in the South China Sea.” For its part, the US Navy, not to be undone, claimed that the American vessel was operating, quote, “in accordance with international law” and then was continuing to conduct operations in waters where high seas freedoms apply.
And what’s more? The US added, all nations large and small should be secure in their sovereignty, free from coercion, and able to pursue economic growth consistent with accepted international rules and norms. No one can evoke the South China Sea in this conversation, not only because the region’s importance is growing, not only because it’s a microcosm of the world, not only with respect to religion and demographics and economics, but many, many other things.
But it’s also that if you see that little vignette in the right light, maybe reflected through a little intellectual prism, it gives off all this interesting light on a whole bunch of questions that go way beyond naval risk management. One could ask, what meaning the South China Sea has in regional history for China, for the United States, for Vietnam? Why the United States embraced a passion for freedom of navigation? How capital cities for that matter build around them societies that come to feel cohesive one nation?
These deeper questions, I hope, were always going to be at least at the edge of our awareness as we go through the topics. But keeping our eye on the practical, I also recognize that we come back to the present and see challenges aplenty involving just risk management, how to avoid escalation and conflict, how to avoid war.
Weeks before the South China Sea stand up, the US had activated plans to choke off the supply of advanced chips and chipmaking equipment to China, all consistent with the new US national security strategy, which is understandable, not only given our domestic politics perhaps, but how American policymakers view China. That simultaneously paints a picture of rising geopolitical tensions on the one hand with China and the US, and yet also a world pointedly in need of collective solutions, particularly on climate and pandemics, but a thousand other things you can imagine.
So these dueling narratives are going to be a part of our daily life for decades in all likelihood– more simmering tensions, more decoupling, more contradictory goals. They reflect geopolitical change but also longstanding difficulties that come from tensions over territory and political control, all against the backdrop of domestic political audiences in many countries asking hard questions about how the concept of global integration, the degree of global interrelationships around trade, around financial flows, around security partnerships have affected their lives, and what that means for them, and what that means for their kids.
That fraying ties and tensions often cut against cross-border integration or cooperation projects, even among nominal allies like European countries is more than just a modern political reality. It’s more than just a reaction to geopolitical change. Here, I have to make the obligatory mention of Max Weber, because, how can I be here and not mention Max Weber?
So he was on to something, I would argue, when he sketched out this pervasive conflict between modernity, born of economic and technological change, steam engines, communications, telegraphs, integrated national economies, and the familiar embrace of smaller communities, thicker social relationships, the familiar, as harbingers of new practices that complicate social and institutional convention, modernity, and cross-border flows are joined at the hip. That makes talk of global cooperation and integration inherently fraught, perpetually daunting.
But I would argue that only the most inveterate and speculative techno-optimist, who thinks that machines will cure all the world’s ills, or maybe the most irredeemably pessimistic adherent to structural realism would play down the enormous importance of some set of concepts to deal with cross-border cooperation and some degree of relationship building to manage the world’s shared dramas. The climate crisis is no less urgent, because it’s pretty familiar to most educated people now, even if the details of how it’ll affect food supplies, even if we stop carbon emissions right now, in the developing world, are less clear, a little more blurry in people’s minds.
And then, of course, lurking in the background are other risks beyond climate– international conflict, the distinctive threats posed by nuclear weapons, the vast global disparities in wealth and access to energy across countries and within them, the machines that will increasingly offer an implicit and alluring bargain of convenience in exchange for decision-making power.
These images which, I’m asking you to imagine in your mind in lieu of a PowerPoint presentation– I hope that’s OK with you– they rightly send many in search of materials to assemble the scaffolding for sturdy and reliable kinds of cooperation and integration, forms of cooperation that can mitigate the risks while taking seriously the interests of billions of people in poorer countries who want to join the middle class and so many parents in the developed world who want their kids to stay in it. And for those among the would-be architects of the scaffolding inclined toward Weber’s ethic of moral conviction and not just an ethic of practical politics, the expectation likely persists that these cross-border ties are going to do more than just solve problems and reduce risks, that they’ll also move the world closer to maybe realizing certain ideals that are for many of us hard to ignore, like how to ensure that the world leverage is integration to grow incomes but also to shrink the risks of war and to reduce cruelty?
My hope is not to deliver a formula that can meet such an ambitious threshold for coherence. I’m not sure anyone can. But I want to do something else instead. I want to put on the table some modest ideas about how that scaffolding might be assembled to help us reimagine the possibilities of global cooperation. Sometimes, this means doing little more than reframing pretty familiar ideas, some of which come from people in this room literally. I can see you. But in some cases, I’m likely drawing on distinctive experiences that are a little different from folks who find their way as I have to the world of more diplomacy and global policy.
As somebody who spent time in the weeds on migration, on cross-border, anti-money laundering policy, transnational regulation, the court system, I will confess that I’m skeptical of too much economic or ideological orthodoxy. I’m sensitive to how massive movements of money or ideas or people across borders tend to affect communities far removed from national capitals. Rather than working from first principles, I’m often drawn to delving into specific problems and then working up towards broader insights.
That said, I’m also proceeding with the idea that a little bit of conceptual thinking might possibly be useful to shed light on some of these almost impossibly complex problems. And what you’re going to get from me is probably a little quirky, hoping that it can also be in service of some surfacing some hidden difficulties and possibilities.
The crux of my argument is that– because at Carnegie, we always put the bottom line up front– sane, pragmatic, and ambitious global integration and cooperation depends on making the world safer for a kind of plucky experimentation and learning that has allowed many countries from Western European countries after World War II to South Korea and Malaysia more recently to rebuild or develop economically. And that has helped the world learn, however, imperfectly to gradually improve how it deals with some discrete issues, where global coordination has made material contributions to human well-being, such as how the world patrols the vast oceans that cover 70% of the planet.
Learning on a massive scale will be crucial to fashioning carbon border adjustment mechanisms, harmonizing industrial policies in Europe, in the US, and getting the salt to put– to be part of a global framework that is going to work for more people around the world. But cooperation founded on important if somewhat thinner rules governing trade, for example, and allowing for greater experimentation with industrial policy, creative cross-border institutions must be embedded in domestic political realities while taking account of broader geopolitical constraints.
This kind of embedded experimentalism is necessarily creature, not only of national policymakers, but also dense connections and civil society and even subnational regions. And it will also benefit from some attention to difficult issues that have yet to receive the attention that they deserve, such as assuaging the disruptions of globalization and technology in the developed world and attending to the pressures for greater technology transfer and migration opportunities for countries in the Global South.
Taking the discussion in this general direction begs many, many questions, of course, which is why I will spend the bulk of my time delving into six of them that I consider particularly difficult and important. And that I hope to enlist all of you in helping to answer. But before we get to those questions, I owe you some clarity about certain presumptions I consider useful in the conversation. Maybe not everything that follows is completely earthquake-proof on the Hayward Fault, but the seismological instincts of a pragmatist perceive this as solid enough ground to start the conversation. Let me start with the point about countries mattering in specific ways.
I don’t know about you, but I think that the nation state is a core unit of political life in international relations. And it’s going to be with us for the foreseeable future. Non-state actors ranging from multinational corporations to subnational jurisdictions to criminal networks can have profound real-world consequences for people. But nation states nonetheless control the lion’s share of fiscal resources and aspire to Weber’s positive monopoly on the legitimate use of force. Though in practice, people have a variety of overlapping attachments. And even the most powerful nation states are honeycombed with limitations. Global cooperation and integration has to be built on a foundation of plausible nation state activity and relationships.
Channeling a version of classical realism, I would add, countries compete, they cooperate, they change in a largely anarchic system, but in ways that reflect not only coherent interests but the influence of history, of domestic politics, of ideas. All of which helps us make sense, for example, of the new industrial policies developing in the United States and Europe.
I would then add that of all the countries in the world, the United States is special. It’s a unique global power with unique influence with an unusual history of outsized power on the frameworks for global cooperation and integration, institutions like the World Bank, the IMF, the UN, bear the unmistakable stamp of American policymaking, American judgment, and to some extent American values.
It was the principal architect, the US, of the so-called rules based international order that epitomized John Ruggles embedded liberalism. And it spends more on its military than the next nine countries combined, of course, including China. But I would add growth in China’s wealth and geopolitical influence is also among the major storylines of our time. Obviously, it’s an overlay over much of what I will discuss. It’s not just China’s eight-fold increase in its share of global exports in a generation or the reduction in the poverty rate from nearly 3/4 to less than 15% in 20 years that has created a new world. It’s also the scale of China’s internal changes and its more assertive external posture. All of that countries matter in specific ways.
Second, the future is, as Professor Jonathan Kirchner, would put it largely unwritten. For starters, macroeconomic analysis to my mind is beset by uncertainty and imperfect knowledge. It may not be as one of my colleagues at Stanford once called it a voodoo science, because I think we do benefit from credible insights from macroeconomists. And I appreciate all of those that are in the room right now. But I would say I’m with the economist Paul Romer on this one when he decried the mix of unrealistic assumptions limited relevance of much macro scholarly endeavors at the moment.
And just to be an equal opportunity critic, I can’t say I have much confidence in the grand paradigms to organize thinking about international relations coming from political science. As I suspect many of you do, I find fault with hyperrationalism, even if I recognize that leaders can have plenty of pressures on them to be instrumental at times. And I can’t say that structural realism exalting the importance of relative power in the international system gives very convincing explanations for, say, Britain’s appeasement of Hitler’s Germany or the Vietnam War.
To me, there’s a little bit more utility in the kind of classical realism that has room for history, ideology, uncertainty, all variables that help explain industrialization in Asia and Latin America, for example. But even with all of this, better to work up to a tentative sense of what countries realistically do, what pressures are on them than deposit with conviction that simple principles solve global problems.
What we can say with confidence, or at least I think I can based on some work I’ve tried to do over the years, is that institutions learn and adapt over time, including global ones. They do so in a manner that reflects both their inherent fragility but also their capacity to achieve a degree of autonomy even in fraught political environments. Semi-autonomous evolution to my mind is evident in how the UN High Commissioner for Refugees operates, the International Atomic Energy Agency, and the International Monetary Fund, among others.
Finally, global interconnections are unavoidable and imply a shared fate. Between the climate crisis, water and biodiversity challenges, pandemics, cross-border security, and rule of law challenges, some global cooperation and integration is probably unavoidable to manage what has become an outsized set of cross-border impacts on the world. Governing the remarkable fast-evolving technologies that are a part of our lives will also have to be part of the story.
And the global record of managing collective action problems is, of course, decidedly mixed. It’s not ideal. It’s better on oceans and hydrofluorocarbons and climate generally or collective security. That reality to me underscores both the challenges and the possibilities.
I would add that from my perspective, growing, though, unequal global prosperity has depended on a considerable amount of cross-border economic activity in the last three or four generations, however flawed the details have been. From extreme poverty to women’s education, some degree of global integration facilitating the movement of goods, capital, knowledge, and people has catalyzed higher living standards, greater health, more openness to new ideas, and more inclusion of certain previously marginalized groups.
None of this is to deny that cross-border flows have also had a darker side evident in financial crises, human trafficking, environmental degradation. And, as David [INAUDIBLE] has pointed out among others, the rules and convergence standards facilitating cooperation from the dollar to the English language are path-dependent and far from equally advantageous around the world.
I would add that economic change matters in part because well-being and security are connected in multiple ways, as Keynes understood in American policymakers in the post-World War II era believed as well. Earlier, still, of course, Kant and Montesquieu laid the groundwork for appreciating how the economic fates of some countries matter to global peace even if we put aside ethical considerations or the goal of merely achieving a larger economic pie to tackle shared challenges.
Finally, it’s worth bearing in mind that enforcing border controls, which is part of how countries manage their sovereignty, is costly, can have a variety of undesirable consequences for the public from raising prices and scarcity for some goods to empowering organizations engaged in illicit trade, to allowing, in some cases, corruption and inefficiency to linger when shielded from broader competition. Even if some constraints on the movement of goods, money, and people are understandable responses to the primacy of the nation state, the returns to enforcement diminish at some point under almost any circumstances, will be it to any policymaker who assumes she can simply impose constraints on cross-border activity with little or no cost and that they will succeed as intended.
Before I turn to the six questions, that if answered right, I think can help us, let’s reflect on certain implications that arguably follow from these premises. Policymakers should bear in mind that particular countries may be fragile, the power of the nation state may come under increasing pressure as the decades turn into centuries. But with [INAUDIBLE] of borders and citizenship, their flags, and, for some, their militaries for most. Nation states have proven resilient in the face of predictions. The range of actors from multinational corporations to tech-enabled activists would limit their power in significant ways.
The developed world, leading nation states wield fiscal and monetary powers still largely dwarf the unfettered leeway of even the most wealthy individuals. The serious differences that therefore separate the US and China, along with many other states, are the crux of a politics of reality. The world won’t be switching to Esperanto anytime soon.
Meanwhile, a great many gaps in our knowledge persist about matters such as the interplay between social cohesion and endogenous growth, the future of technology, human cognition, viable pathways for success on climate. Yet it’s also clear that countries have overcome serious obstacles to growth. By learning, by adapting that civil society and subnational actors are exploring new modes of economic organization. And that even major diplomatic and collective action problems have not eliminated possibilities for reorienting international and domestic institutions.
But if we are to experience the benefits of existing progress and some possibilities on the horizon, we’ll need to navigate a few difficult questions. And this is where I switch from trying to give direction to mostly framing problems and hoping that I can engage you in getting to the right answers. The first is managing the US-China relationship with the whole world in mind. One elephant in the room involves the painstaking and principled work that will be needed in the months and years ahead to curb risks associated with the US-China relationship without succumbing to a naive temptation to airbrush out of the picture their fundamental disagreements, including the very principled and strong concerns that many US policymakers have about American interests and China’s impact on them.
Any major security conflict between the United States and China has the potential to devastate or at least starkly diminish global well-being in ways that even few policymakers fully recognize. The United States has understandable concerns about Chinese goals. It’s limiting Beijing’s access to semiconductors and other sophisticated machinery and software. And China’s own strategies will no doubt bake in a response to explicit American efforts to limit its technological progress. These realities are worth recognizing, not only because they highlight the importance of sensible frameworks for cross-border relations in general during this difficult stretch of history, but because they also serve to remind us of the constraints likely to frustrate any grand project to remake global integration.
Multiple power centers deliver many democratic benefits in a system like the American system but impede unified responses. China’s leadership may be more cohesive, but the country’s intricate internal challenges and internal disparities also make for a complicated story. Suffice to say that both countries benefit from the existence of room for the two to disagree vigorously without calling into question the desire of each for a peaceful, if ambiguous, status quo. Hence, the risk of too much movement to offset American strategic ambiguity on Taiwan security and the value of making some room for persistent and prudent expression of US human rights concerns.
Over time, some of the American moves to decouple from China technologically will likely limit American leverage over Beijing, as the country races however imperfectly to enhance its own capabilities. Given these ruptures, ideas exchanged by civil society, by students, by scholars will likely assume greater importance over time, as may areas of common interest, such as the safety of AI systems. But even if these issues merit plenty of serious attention, they should not detract too much from a range of other tensions between richer and poorer countries, including one some that have grown closer in the last few years, like the United States and India on a range of technology and environmental issues affecting development.
Second, how do foster laboratories of development without mass autarky? Increasingly, policymakers and developed economies, leaders of countries in the Global South, scholars agree about one thing, that trade and external investment may often benefit countries in their residence. But fixing what it takes for countries to grow and share prosperity is an intricate process and often fits poorly with an overly rigid orthodoxy about trade and industrial policy.
When the term Washington Consensus was coined a generation ago by the Peterson Institute’s John Williamson, he played up some nuances that have become blurrier over time he insisted that the concept reached more than a particular orthodoxy of unencumbered trade and financial flows, low taxation and privatization. It also encompassed the value of shifting spending towards education and health, for instance, and of helping the poor laboring in the informal sector acquire property interests in their businesses. But beyond the general reasons for skepticism of too much orthodoxy, even Williamson came to believe that some elements that came to be seen as part of the consensus, such as liberalization of inward foreign direct investment, did not even command a consensus in Washington at the time that he was writing. And he admitted that he may have overstated the convergence and thought about trade and certain related elements of international economic policy.
It’s now familiar that the pandemic and the financial crisis have pushed Europe and the US away from any such consensus orthodoxy in their own policies. And of course, as scholars like Alice Amsden and Peter Evans have persuasively argued from my perspective, for many countries, the path to development was through state-led export growth and fits awkwardly or not at all with the early 1980s DC consensus. From South Korea to Malaysia, to Turkey, once developing countries achieved economic growth in the post-war era by building up domestic industries and boosting exports, American policymakers were open to these arrangements, particularly before the 1980s.
They were often supportive even when they occasionally involved asymmetrical trade relationships because of geopolitical imperatives. Though, of course, eventually, Congress created USTR and sought to rein in the State Department’s tendency to treat trade primarily as a matter of diplomatic rather than economic statecraft. Today’s more familiar trade regime is one of intricate rules on matters, such as non-tariff barriers.
Here, Daniel [? Roderick’s ?] insights are particularly helpful to an extent. Fewer more targeted rules can help preserve greater space for sovereignty and democracy. For the moment, the US has embarked on a course of massively scaled up industrial policy without yet signaling what it will support or at least tolerate in a reciprocal fashion from other countries.
Europe, the United States are in the process of working out in a sense how to live with each other’s green industrial policies, including production subsidies, carbon border adjustment mechanisms for steel and eventually other commodities, and mechanisms for restoring or reshoring supply chains. One way to think about this is that once they reach agreement it’ll be one version of a basis for a broader framework, as with the gap during the mid 20th century for a former reinterpret the WTO’s requirements.
More generally, a return, I would argue, to tolerating somewhat more heterodox economic policies would benefit the United States and its allies, resulting in thinner but reliable trade rules and an eye towards more equitable global development. The resulting laboratories of development framework might carry a measure of justification similar to that of federalism in the domestic context, particularly at a time of major economic and political distinctions in countries that would find it difficult to tolerate sweeping incursions into their domestic spheres.
Three, how to responsibly recalibrate expectations and capabilities of global institutions? The devastation of World War II gave way to enormous interest in economic renewal and rebuilding, spurred by the United States keen to reign in colonialism in favor of more open trade, rebuild the economies of allies to forestall the spread of Soviet influence, and extend the country’s political and economic influence. That led to the creation of now familiar institutions and legal arrangements heavily, but not exclusively influenced, by American priorities and negotiated by diplomats like the indefatigable Ralph Bunche, particularly of the United Nations, the Bretton Woods Institution’s basic human rights protections, and a core military alliance connecting the US and Europe. Ralph Bunche didn’t do that all by himself, but I’m just noting he’s an example of people who did not shy away from that challenge and spent the career doing it.
But most of these institutions now face enormous difficulties. The UN is hamstrung by the structural original sin in a sense of the way the Security Council veto is structured. The World Bank is undercapitalized relative to the need for it to catalyze infrastructure in the developing world. And the WTO’s reach and scope seems poorly calibrated to the subsidy policies many countries, including the US, are now actively pursuing.
I start from the premise that markets generally deliver value to the public. But they require at least some degree of governance. Some convergence and ideas about practices considered morally reprehensible and acceptable and some degree of security. Climate crisis, cross-border illicit financial and corruption activity, the return of aggressive war, the pandemic, and other challenges have served as stark reminders of how these institutions have struggled to live up to their ambitious mandates at times.
As the lessons of the mid-20th century have been arguably fading a bit, several related trends cause friction and problems. Even as trouble brewed with global institutions meant to provide a modicum of help with governing shared problems, articulating human rights norms, providing security, the ambition of the trade-focused project raced ahead, one could say. Under the rubric of limiting non-tariff barriers, the WTO framework became increasingly enmeshed in domestic policy questions.
Now, of course, no set of institutional reforms which garner anything close to pervasive support. But the situation may ironically call for a recognition that we may be expecting too much from international law and too little from international institutions. In some sense, existing institutions like the UN, the World Health Organization, the World Bank requires some reform and renewal, even if it’s unrealistic to ever achieve routine consensus or to expect that they will simply be able to recur to legal arrangements for perfect enforcement. By the same token, institutions with less formal legal powers or identity as multilateral bodies will likely be crucial to provide a reliable information and analysis allowing for accountability on climate issues and governance of technology.
Four, how to democratize access to technology? Though a challenging subject for understandable practical reasons, transferring technology and know-how to the developing world can fill the void not likely to be addressed through loss and damage payments on the climate side. If you think about it, subject to understandable security caveats, security and skills transfer can spur innovation, particularly among countries where some shared values, can grow incomes, can broaden opportunity. It was key to the development of countries like South Korea and is understandably core to the agenda in countries like India today.
Although countries need to reconcile their economic policies with legitimate shorter-term security concerns, as I said, the need to leverage technology to shrink fissures and disparities that drive medium and longer-term conflict seems pretty crucial at this juncture in history. The massive changes afoot in access to advanced artificial intelligence just in the last few months merits appropriate efforts to engage the world not merely to make the technology available as a package.
The trips waiver for COVID-19 vaccines reflects a measure of movement on this issue and is maybe a reminder that the dimensions of it are not only about statecraft but also to some extent about morality and ethics. But most of the story of sensible compromise on how, when, and where to share technology remains to be written. And maybe some of it will be written right here at Berkeley. How to make these agreements more feasible, how to make them incentive compatible, how to scale them for greater practical impact, to me, is a microcosm of the whole conversation about global cooperation.
Four, how to incorporate greater attention to long-neglected dimensions of global integration? For one, the value of global integration and exchange is a matter of human progress and dignity, not just conventionally measured economic growth. Getting even beyond the UN Sustainable Development Goals to define evaluate and make policy responsive to broader measures of well-being, different time horizons can make a difference. The dignity piece of the conversation will remain contentious, where human rights fit into this entire story, and calls for careful thinking not only about the role of countries but also non-state actors like private military contractors and organizations involved in illicit activity.
Some greater attention to migration is also called for, a particularly contentious and challenging topic in the current system we have. Beginning perhaps with regional migration agreements that show promise to address the concerns of developing countries and create pathways for exchanges of information, ideas, and culture. And then there is the role, of course, of civil society, this university and its peers, catalyzing the spread of knowledge across borders, curating global talent, and ultimately creating the kinds of linkages that allow for unofficial diplomacy to deal with a particularly unruly and challenging world. Such connections will grow more important, not only to spread knowledge, but to maintain relationships as more conventional diplomatic ties bring.
Finally, how to reconcile global integration and domestic prosperity? Keynes may not have figured out every technical detail of how to reconcile domestic well-being and international peace. But he was right to identify the challenge as fundamental to the future of democracy and arguably to the future of the planet. In some respects, the post-1980s era of globalization, even if it delivered benefits to certain populations in the developing world, contains certain seeds of its own risk and maybe demise by destabilizing this kind of embedded liberalism compromise that shielded key populations in the West from a full measure of financial uncertainty and by heightening the risk of financial instability more generally.
Domestic adjustment in practice at the level of administrative law, how to actually structure the programs and reshape budgets, is wickedly challenging as a matter of implementation, regional adjustment, individuals own realities. Here, again, Weber’s insights about modernity come into play, because we’re not just talking about incomes, we’re talking about people’s sense of purpose and meaning. Future navigation of this space will require more nuanced approaches that reflect distinctions, for example, in the educational opportunities suitable for people at different points in the life course.
A challenge for policymakers is to leverage interest in the most advanced large economies, meet the needs of that domestic population while continuing to lift the fortunes of the developing world. Among other sources, one can imagine interests coming from coalitions concerned about climate, about global security and peace, about geopolitical competition. Interests can be reflected, too, in reform of international institutions, new approaches to development, and ultimately ways of building coalitions that will connect the middle class and the developed world to the billions of people who want to join the middle class in the Global South.
Even a cautious optimist like Ralph Bunche would readily admit, if you were here, I suspect, that the course I had for global integration, cooperation, is going to get rougher before it gets easier, not only because of geopolitical tensions. But because reconciling the needs of billions of people whose political lives are playing out separately is incredibly daunting. That’s true even if all the technical answers about climate or pandemics or macroeconomic policy or tech governance were easily discernible. And of course, they’re not.
If there is a saving grace in this realm, it’s that we’re not starting from scratch. We can deploy some of what we’ve learned over the past 60, 70 years about domestic politics, about respect and complexity, about setting slightly less ambitious global rules as goals in some domains and clearer ones in other domains. Consider how the elusive search for viable climate solutions is playing out, just to take one issue that’s recurred during this talk and during our lifetimes. How that depends on Weber’s slow, boring of hard boards on time and again, reaching for the nearly impossible, not to mention staggering feats of diplomacy, precision crafting of carbon adjustment mechanisms, reshaping the way the private sector sees its roles, legal codes.
Experiments and development suitably bounded by guardrails need warm nurturing from the harsh winds of geopolitics and interest group machinations. The machine learning model soon to colonize most institutions need intricate multilingual curation. The scale of the problem is as daunting as it is exhilarating, like navigating the 1.4 million square miles of the South China Sea on a small but sturdy skiff under rumbling clouds with just enough supplies and domestic goodwill to call it all the ports on the schedule.
Everything one might see along the way– the naval craft directed by faraway bureaucracies, the artificial islands, the drones occasionally flying overhead, the containers being loaded onto ships at Saigon port, the wooden fishing boats crossing borders– would have been familiar enough to the author of politics vocation. Among these are textual reminders of the tensions between modernity and responsibility, between an ethic of moral conviction and an ethic of politics, between loss and promise, and above all, between passion and a sense of proportion.
As global integration is far more about a set of discrete but interconnected problems replete with such tensions than about any single destination, we should plan to be on the water for quite a while. Thank you. [APPLAUSE]
It has been years since I spoke for that long. So I’m sorry. I’m sure I could have edited it a little bit. So questions, comments, reaction, or do you want to moderate? Yeah.
Maybe we can sit.
Yeah. Good, good. Sitting is good.
[MARION FOURCADE] Thank you so much for a pragmatic and inspiring talk. And I really appreciate also all the references to Max Weber, as a sociologist. So we will begin– actually, I have questions also online. So the online audience, and just a reminder, you can ask your questions in the Q&A. And then we can also begin with questions in the room.
Great.
Daniel.
[AUDIENCE MEMBER] Thank you so much. The topic was really, really wide-ranging and compelling talk. The question I would like to ask you, I’m a historian, so I have to think about the precedents and what we learn from them. So after the Second World War, the United States builds a hegemonic or imperial order sort of without precedent in world history. And all other imperial systems, resources flow from the periphery to the metropole. The American order works according to a very different logic. Resources flow from the center to the periphery and support development elsewhere.
The US also provides and underwrites military security for allies throughout the developing and Western world and thereby, enables the postwar order to flourish. But it does so in the context of a bipolar Cold War with the Soviet Union. And I think in the end, if you want to answer the question, what animates the United States to build and underwrite and subsidize a world order? The answer is the Soviet peril and the fear and the trepidation that parallel inspires in Washington.
So the question that I would like you to answer is, do you think that world order requires an enemy? And if so, is the China rivalry perhaps not an obstacle to the rehabilitation of international order but a possible invitation?
[MARIANO FLORENTINO CUÉLLAR] It’s a great question. Thank you. And I’m actually reminded not only of Max Weber but of William James, the moral equivalent war, where he’s struggling with this question about why it takes war to motivate societies in ways that one would like to do for any number of other goals.
I think your reading is pretty much right, in that it’s hard for me to tell any of the story I’ve told without acknowledging that not only did the US mobilize enormous internal resources for the world, but also for the kind of public investment that we’re only now beginning to see again. But also, I mean, you probably caught this, but this little riff I had in there about how– and this here, I’m indebted very much to the work of Alan Simpson, among others– how the US approached its global economic relations in a more tolerant way for decades after World War II, including the asymmetrical trade policies, I think, can only really be explained with the notion of a Cold War.
So two quick thoughts on implications. The first is it is worth being honest about that reality and recognizing there are many different ways of building a competitive and strategic posture for the country now. And that means that if– to the extent one takes even say, half of the framing of the National Security Strategy, and I’m willing to accept 90% of it, let’s say, that means that there’s still some hard choices about what it means to be thoughtful as a competitor. So this is sort of like the Tony Blinken line about, well, we’ll compete where we can, cooperate where we must or– whatever. I’m getting the order wrong.
But what he’s getting at, I think, is just a recognition that there’s room for the US to set different courses. Now, all of that has to then be balanced against another reality, which is it’s really strong medicine to motivate a country with an external enemy. And I would just be mindful of both the domestic implications, how that impacts very large segment of our population that is sort of demographically at some level connected to that region or viewed as such, and also how risky it may be to impose a set of boundaries that might give countries, like the ones I mentioned in Southeast Asia, since that they absolutely have to choose between one country or the other.
[AUDIENCE MEMBER] Just a follow-up on that question. With the Cold War, it seems as the previous commentator pointed out, the US was able to create a hegemonic system, a system that could unite something called the free world. It seems that with this battle with China when the US has denied its semiconductor technology, it doesn’t seem to make anyone think that this is for a larger good except for US interests.
So there seems to be a difference in the ability to achieve any kind of hegemony here. It seems like there’s a complete collapse of any hegemonic project, even if China were to become the enemy. At the same time saying that, I really like the discussion of the dangers of the thin rules, articulating a very thin set of rules that would unify the world.
And I’m thinking, as you pointed out several times, maybe with the trips exception but also with industrial policy running against any kind of global set of rules because of subsidies or tariffs or that kind of protection. Maybe that in defense of what you were saying when it comes to the Green Revolution, all these breaking with this global thin order or this global order of thin rules, might be a good thing because that might be the best way to advance the green technology and we are, to an extent, technological determinists, the only way to solve this climate problem is to actually put the technology in place that can solve it.
Perhaps we do need this break with a project of thin rules, a hegemonic global order of thin rules so we can compete with China. We can openly compete with them. We’re going to get there first before you. We’re going to break with some rules of the global order to do it, but that might be the highest form of global cooperation ultimately I guess would be my way of maybe extending what I think you were saying.
[MARIANO FLORENTINO CUÉLLAR] Yeah, that’s really interesting. Let me start with your point about the semiconductors and the efforts to restrict access to technology for China. Look, I think if one were to try to paint the US approach in the most positive light one would say two things.
First, that even leaving aside domestic political pressures, if the US has a principled set of disagreements with China, both in terms of how it governs and how it projects its influence, it’s not an irresponsible thing to do to at least try to assemble a coalition. And like any coalition, it’s a bit of a negotiation. So if you want the Dutch on board, if you want the Germans on board, you have to do some give and take.
Now, one constraint the US has, which is sort of implicit in what I shared, is that we’re not in the business of making big market access deals right now. So to the extent that in the past that was an important element of geopolitical agreement and binding, that’s not exactly on the table. Joining the Indo-Pacific economic framework is not exactly a carrot in that respect. But I do recognize that for American policymakers it feels risky not to try.
The second point they might make is look at the coalition that’s been assembled on Russia and Ukraine, and is that operating in a way different from the way many folks might have predicted, particularly given the extent of European energy dependence on Russia. And the answer is yes. And so their position might be it’s a little too early to tell, like, let’s wait three or four years out.
But I would add one thing that maybe the administration needs to focus a little bit more on. And here my colleague Jon Bateman at Carnegie is really the person who’s written literally the book about this– and that is decoupling has this weird structure because it does mean that whatever influence you’re getting in the short term is likely to diminish your influence in the longer term. I mean, it depends really on what assumptions you make about the progress of Chinese technological development, but it’s not clear that that end game piece has been thought out like what is the equilibrium you ultimately get to.
Now, briefly, that gets me to your point about the Green Revolution and trade rules. I think for those of us who believe that global trade has been in some ways good and in some ways complicated with respect to social welfare, there’s a real burden now to figure out what the framework should be to make it not only compatible with domestic politics but with the imperative on the climate side.
And just to pick one example, there was such an understandable emphasis on reducing tariffs, and yet if you think about how carbon adjustment has to work at the border, it’s almost impossible to imagine it working without some incentive to decarbonize that would involve the imposition of some costs or trade. So how to rebuild that regime in a way that’s compatible with the present is going to take some effort and time, but I think we’re already beginning to see the outlines of that.
[AUDIENCE MEMBER] Hi. I’m Daniel Aldana Cohen, and I’m a sociologist. I work on the political economy of climate. So thank you very much for this wide-ranging and pragmatic talk for center on climate. And this question follows up on where the conversation is moving. The basic question involves how we can mobilize a lot more green investment. So you’re looking at necessity in order of like $3 to $9 trillion a year.
I think the high-end is realistic. If you look at adaptation that’s almost entirely public sector right now and it’s low. So we not only have to decarbonize but adapt to extreme weather and to tens to hundreds of millions of people moving, and most of those people even within their own borders like borders to slums.
So it seems right now that it’s pretty hard to get green investment going in the US, but we have some success. Countries in the Global South many of them the interest rate is extremely high. They are extremely burdened by debt. And then the developmental states that they used to have were, to a large degree, undermined if not destroyed by the forces that you talked about a little bit earlier.
So my provocation is what can we do to foster green developmental states elsewhere, and what other strategies are there to leverage a significant increase in green investment that will land in communities in ways that help build cohesion and adapt and decarbonize all at the same time?
[MARIANO FLORENTINO CUÉLLAR] Thank you. My short answer is massively capitalized multilateral development banks. And I think that’s– so from an administrative law perspective, those are the institutions that have some mix of the know-how and the capability of the mission to actually mobilize the capital quickly, which is no small thing. Even if we had the resources, getting it out the door and getting it to roughly the right places is a big part of the equation.
Of course, that then begs the question, which is sort of representing which is how do you create these coalitions where somebody who is in the fragile middle class somewhere in Fresno, California thinks she has some remote interest in making sure that India can decarbonize. That is a hard sell politically, let’s just be perfectly honest.
But I want to believe that that is possible. And maybe it evokes a little bit back the Cold War question earlier because if you unpack Kennedy’s inaugural address, it is a brilliant piece of rhetoric. But it works as rhetoric because it’s backed by some political reality.
He’s talking about student exchanges, he’s talking about the Peace Corps, he’s talking about food progress, he’s talking about the huts and villages around the world and it has the ring of being not totally cheap talk in the game theoretic sense because the US was in that struggle.
I would hate to think that the path to mobilize that capital is to say, look if we don’t do it, who’s going to do it? But I do think that finding a way to leverage the reality that both countries feel like they’re in some competitive pressure and we have a big set of equities, then this climate thing is going to have to be part of the solution.
So I would say the political little p, not partisan political but the coalition building homework for all of us, is to take that and articulate it to the point that you could imagine somebody running for Congress in the Central Valley of California saying, I’m for the farmers, I’m for the water, and I’m for making sure that those people around the world don’t blow up and therefore your family and mine will be better off. Yeah.
I want to start with–
Wait, hold the mic.
[JOHN SYZMAN] Oh, sorry. I’m John Size. I would like to start with the semiconductors story, which I’ve been following since the days of the old US-Japan trade wars when Japan thought if it dominated semiconductors they could dominate the world. That was quite explicit at the time. The big difference now, of course, is that the story isn’t just about semiconductors, it’s about AI, and heavily about military technology.
But really what become– and it’s driven in this country by the National Security community as you know. But the point is is that China is not simply a strategic rival, it’s an economic rival in a way that didn’t exist– Japan never really was, never really became an economic rival in quite the same way.
So all of those outflows that Daniel was emphasizing from the US, the asymmetric trade relations which you’ve mentioned which were strategic instruments of great importance, they aren’t available in quite the same way anymore, which complicates trying to accomplish these broader public goods, whether we agreed with them back then or whether we agree now that we really need that kind of public action.
So that leaves me in a pessimistic position. What do we do with a diminished American capacity in the face of a quite different strategic problem?
[MARIANO-FLORENTINO CUÉLLAR] I embrace intellectual honesty and I appreciate pessimism when it’s called for.
Thank you.
There is a part of this story to me that goes again back to what happened in the US in World War II. And I don’t think this is a perfect answer to your question. I think it’s a very good question and I think we’re in a tough spot. I mean, in a nutshell, the big headline is we have to develop ways of being credible as a partner to parts of the world that don’t simply have the American security umbrella.
Say they’re part of NATO, they know they’re pretty much in with us for the long haul. And even then, of course, their economic interests might diverge in part because of the security guarantee. And we have some negotiating to do with so many of the others. That’s why I keep coming back to Southeast Asia because it’s so interesting.
It’s not Latin America. It’s a place of contestation by great powers, but also a place of incredible agency for 700 to 800 million people. And when we go to the Indonesias of the world, what are we bringing if it’s not market access?
Now I think we can still bring some things that are valuable and important. So we bring access to a desirable society in some ways to the best universities in the world to the hub of global media and culture to a place that has historically been perhaps the most generative place for innovation. And this is why migration feels like it’s important as a part of the story at least, because if we’re not offering access to goods, finding the right way to engage the right people from the right countries and what we’re doing here.
Often with the expectation that they may go back. They may build businesses that span both countries. If we don’t think that through and leverage that carefully it seems like a waste to me. This is the point I wanted to make about World War II.
So when I was thinking about the articles I’ve written that would vaguely make me feel like I have any right to talk about these subjects, particularly with an audience like this one, in many respects, I think to myself this room has more knowledge about these subjects than I do in many respects, but there is a piece I wrote that captured really my imagination. It was about the transformation of American public law during World War II.
And it was interesting to me because it upended a lot of my own assumptions. I went into it thinking about how this was going to be about the impact of the New Deal on geopolitics, sort of via how a reconfigured American economy and legal system put the country in a better place to go into World War II. Instead, I found that the New Deal was pretty small potatoes relative to the changes in public law that happened around World War II, which reinforces the Cold War point in a way.
So that’s when the White House began to develop the actual capacity to oversee regulatory policy pretty directly. It’s the first time the US developed a national federal agency with the capability to regulate economic transactions happening at the local level, the Price Administration. It’s when the US developed a mass taxation system that took the mass taxation based from 20% to 70% and never goes down after that.
But over and over again the theme that kept on emerging as I looked at these memos of how the government was being reconfigured, what Roosevelt was trying to do, how he re-architected these agencies, was the desire to create and maintain a vibrant domestic consumer economy in the face of war.
And I would argue that that was an incredible American innovation to some degree– the ability to fight wars while your consumer economy not only didn’t collapse but thrived to a certain point. And it feels to me like we have to bring that into the discussion a bit. What does it take for that consumer economy to thrive while we still serve our security goals? So that’s part of our homework, and I’m happy to work on them.
[AUDIENCE MEMBER] Pierre-Olivier Gourinchas. I’m an economist, currently working at the IMF [? Andalus ?] IFIs. I was very impressed by your speech, and I must say that I think I would fully agree with the premises that you started with, the importance of nation-state, the future being unwritten. I would even subscribe to the fact that we have limited knowledge even as economists into what might be happening.
We keep talking about a world where we hit by shock upon shocks and they come from different quadrants than we’re used to. And also on the really important role that integration played in achieving global prosperity over the last 50 years, that has to be acknowledged. So that certainly our starting point as well.
So I would like to make basically two comments. One is from our vantage point. It’s very clear and that something that has been mentioned some of the questions and in your remarks as well that IFI stand in a very vulnerable position.
I mean, we could be going back to a world in which we have blocks and then we have designated enemies. But then international organizations, how do they survive in a world like this? Are they becoming the international organizations of one of the blocks and not the others, or how do they straddle the divide? And I think that’s something that we’re grappling with.
We’re especially concerned because some of the measures that are taken might be taken on perfectly legitimate national security grounds, which are explicitly carved out in terms of all the international agreements that we have, things that you want to do on national security reasons. That’s your Joker card. You can do it.
But then you can get into this path of what we call runaway fragmentation that it leads to retaliation, leads to tit for tat, leads to an unraveling of the global order and that’s something that we’re concerned about. And so I’m going to make these two comments.
The first one is when we think about the political economy, the pushback against integration that we’re witnessing, it’s very, very strong in advanced economies. It’s strong in the US, it’s strong in Europe. I think it’s stronger than it is in emerging market and developing economies, which have been in many, many respects benefited. Even the lower end of the income distribution, countries have benefited, hundreds of millions lifted out of poverty or food insecurity.
So where is this pushback coming from in advanced economies? One is in some sense is the fact that the way the discourse has been structured around the benefits from integration has ignored the distributional consequences and it has ignored them in order to make progress.
We understand perfectly well from economic theory that they can be what we call winners and losers from economic integration, whether trade or financial. But we always follow that statement by saying, well, it increases the size of the pie so we can always find a way to compensate the losers, except we never do. And so over time, we’ve built these domestic coalitions of people who have been left on the side in relative terms, maybe not in absolute terms.
And I think that should cause us to rethink the way we engage on the political economy of structural reform. And let me mention one area where this is likely to be important is when we think about the green transition. Obviously, we need to do the green transition. It’s imperative in order to deal with rising climate and all the calamities that come with it, but it’s going to have huge distributional consequences as well.
And distributional consequences even in advanced economies, either we tax carbon or we try to move workers from some industries to others, the brown industries, the green industries, there are going to be distortions and dislocations associated with that and we don’t talk that much about them.
I’m coming from a country of France, where as soon as they tried to put in place a carbon tax, we had the Yellow Vests movement that was basically brought everything to a standstill. And it’s the same kind of fears that people were facing compared to global integration and things like that. So I think this fear of a technocratic discourse doesn’t recognize the complexities of distributional impacts is going to be a key in being able to make progress on the economic side.
Now, in terms of the role of the IFIs, it’s been very instructive for me sitting at the International Monetary Fund for the last year. We have been able to function. We have been able to engage in a number of programs, develop new instruments, whether it’s to deal with the food crisis, with a food shock window, whether it’s emergency financing, whether it’s emergency financing for Ukraine or for other countries despite the fact that we have Russia sitting on our board. We’re representing 190 countries.
So in a sense, this is the optimistic side in me, which is that there is a way to build those bridges, there is a way to be very pragmatic in the way we’re dealing with the challenges we’re facing by trying to make progress where we can make progress, not trying to make progress on all the fronts.
And I think I was very pleased to hear you mentioned a few times pragmatism because that seems to me the only way we can progress. And pragmatism is a way also in making progress on maybe smaller issues. It’s a way to rebuild the global trust, it’s a way to rebuild and re-engage further down the road maybe on broader agendas. So the scope has been reduced but it’s not been eliminated and we have to rebuild from where we are.
[MARIANO-FLORENTINO CUÉLLAR] I agree with everything you shared. I will simply add that the level of attention, concern, and focus on these questions of compensating the losers– and I’m looking for even a different word from loser because– as a technical meaning, but it will not be heard right. Compensating the people who are affected adversely by global economic relations feels to me almost as important as any number of technology restrictions that are in the National Security Strategy.
If I start from the premise that the well-being of let’s just say the United States, although I can make the argument of other countries, depends on its ability to engage in the world, and that in turn depends on building a political coalition that supports that and yet, it is too often viewed as I think a bit of an afterthought, both the economic investment necessary but also the really intricate questions I was gesturing towards.
If it’s going to be spending on education, what kind of education? What role for community colleges? And then ultimately, apropos of the ILRS point, how do we deal with the reality that people don’t just want the paycheck? They want to feel they matter. So building an economy where people who are displaced or affected adversely by global relations can thrive and feel like they still have a role feels pretty central to the whole discussion.
[AUDIENCE MEMBER] I had just one. It’s a small point, but your reference to World War II and the focus on building a strong consumer economy reminds me now, today, 2023, we have come to learn that that consumer economy with disposable the increase in waste actually has climate impact, whether it’s production of food and food waste but textiles, which is something I’m deeply interested in. So consumer economy but climate impact, how does that square?
[MARIANO FLORENTINO CUÉLLAR] Yeah, great. So let’s just say there were many, many sequels and darker sides to what was in many sense is an achievement of the US mobilization– the US able to stop and push back on tyranny, and to build the world order, if we want to call it that. In many ways, it was more benign than what came before, and yet, right? Obviously, I mentioned it contained the seeds of its own destabilization given the lack of attention to some of the issues raised by the previous question.
And it all was part of an episode in history where there had been for decades already. As I understand it from my friends who were climate scientists, some scientific evidence that this amount of carbon going into the atmosphere is going to likely have an effect very long term.
Now, for those of us interested in artificial intelligence, one interesting question sometimes is AI comes in many shapes and sizes. But if we think about it as a set of systems that are increasingly burrowing into our lives and that have some coherence, what’s the right analogy to think about the upsides and downsides? Is it the internet? Is it the carbon economy?
Because if it’s the carbon economy, I just think about how much would have turned out differently in the world if sometime circa the ’50s and ’60s we’d found a way to link concerns about climate and about waste to the Cold War imperatives that were driving our geopolitics and driving, to some extent, our economic priorities, too.
[AUDIENCE MEMBER] Great. So my name is Ryan Brutger. And I study domestic politics of international negotiations, so I love this talk that you gave. But I’d love to hear your thoughts when we start with this premise of the nation-state as the core unit and we’re seeing more industrial policy and you talked about the domestic challenges of global integration, so given that background, how do you think we get to democratization of the access to technology? And I’d just love to hear if you have any preliminary ideas on what can be pushing us towards that outcome that you prioritize.
[MARIANO FLORENTINO CUÉLLAR] This is the part that I’ve fleshed out the least. And I think you put it– as I would expect from a good Berkeley audience you found the Achilles heel. Because, look, how could I sit here and say that there’s no value to protecting intellectual property? I’m not going to say that.
I’m also not going to leave aside the security concerns because so much of this is tool to use. But let’s try to channel our historians. And here again, I’ll note Alice Amsden is probably among the best on this, but there are others too who tell the story.
You watch these countries go from being dirt poor like as poor as you can get, which was the situation in the Korea that my parents-in-law grew up in, to being industrial powerhouses giving aid to the developing world in about one and a half generations, and it’s not because of comparative advantage selling whatever Korea was able to produce in 1950, it was because knowledge is being grabbed and pulled in.
And one can certainly point out that in the Korea context, some of that was encouraged even by some geopolitical imperatives the US had, whereas in the China context maybe it was a kind of theft. But let’s not forget that there is a social process involved in taking technology and making it more accessible to more people.
And then two sets of questions follow, one which is very familiar to the American business side of the discussion, which is like how does that affect incentives, how does that affect our economic position, how does that affect the jobs of people who work at these companies, which is a fair and important question but one that I think– here I’m going to show a little bit my Silicon Valley roots– there is a thing around open source, which suggests to me that there’s some room between give it all the way with no constraints and on the other hand, leverage trade secrets and that sort of thing and non-competes as much as you can.
And the goal is to avoid a neocolonial relationship where if you can you just sell the finished product or actually provide a subscription to it. And if you have to set up a factory somewhere you tightly guard it Foxconn style and make sure that no technology leaks out.
But the other piece which I will channel from my days thinking more about illicit non-state actors, it’s like all this stuff is not only dual use in the sense that governments can use it for the military but in the sense that non-state actors can use it to do all kinds of disinformation, harm, and to move corrupt money, and to potentially disrupt the rule of law and all that. And I would just note that I think those are real problems.
I don’t think we will solve them by trying to just cut off access to the technology. They will require a deft form of organizational change among the folks who are on that side of the house. But, I mean, I’ll end with this because I think in a way I’m just restating why I think this is important. I’m not telling you how to solve the problem, but maybe I’m getting a little closer to it now.
Let’s say we’re in 2045– not even. Let’s say we’re in 2040. So just a little less than 20 years from now. And mostly the conversation we’re having is about how the world averted the worst disasters that seemed on the horizon of climate. We kept warming to something like a little bit under 2 degrees somehow, and that in the course of doing that, by the way, incomes grew, and the US is in a fairly secure position geopolitically vis a vis China or anyone else.
If I’m telling that story and you ask me then what the story has been with tech, it’s hard for me to tell that story and not think that some substantial amount of technological development has not happened, at least among countries that we want to be close to geopolitically. I’ll just use India as an example of a country that is not a treaty ally but is pretty central to any vision the US has for its own security.
And if you go to India and you talk to their government, they will ask why and how are we not getting access to this technology and what can we do, like how can we enable that linkage, particularly given that the top end India has this vibrant and interesting startup sector. So I think there needs to be a deal with this broker that takes seriously the equities of American innovation but also of a geopolitical imperative that requires the rest of the world be brought along.
[AUDIENCE MEMBER] So thank you so much for this brilliant and engaging talk. So I wanted to ask you about a different Weber work that you didn’t mention, which is on bureaucracy.
[MARIANO-FLORENTINO CUÉLLAR] Oh, good.
[AUDIENCE MEMBER] And so to give, again, to give the–
[MARIANO-FLORENTINO CUÉLLAR] I’m playing Weber bingo, so I’ve just filled that one.
So again, to give the question up front, it’s something along the lines of this– so are we at the mercy of a new democratic deficit insofar as many aspects of the US-China relationship which contour everything from climate to growth and inequality, you name it. We’ll be at the mercy of bureaucratic logic that exceeds democratic control.
And I think last week we saw perhaps a silly or microcosmic example of this, where it was widely reported that President Biden gave the order to decommission the infamous balloon on a Wednesday but it was actually shot down on a Friday.
And you wonder about other similar perhaps more dramatic cases, to what extent does this relationship exist within a democratic framework? Just on the American side of the ledger that we’re at the end of the day dealing with massive bureaucracies, be they NATO or the Pentagon or the People’s Liberation Army, or even Apple computer.
[MARIANO FLORENTINO CUÉLLAR] Yeah, great question. I like it because it has both policy implications but real intellectual meat on it as it were. It’s not difficult to see why we sometimes slip into a shorthand of saying, well, they’re democracies and they’re authoritarian regimes. So the first intellectual move I’d like to make is to recognize that I think democracies are special. I believe in them. I think the world is going to be better off with more democracy and more democracies.
But even inside democracy, there are different forms of administration of power and organization. So one observer of Harvard University once pointed out that Harvard runs a little bit like– well, any private university, let’s say, it doesn’t have to be Harvard, but they run a little bit in the Byzantine way of some regimes that are not completely transparent and have to manage a set of competing equities through these interlocking boards and all that.
And it feels to me once we acknowledge that, the question becomes for those of us working in the democratic system what’s a good way to deploy bureaucracy to get the benefit of its value and not its constraints. And here one part of the question for me is easy to answer but one is harder.
What’s easy to answer for me is that I don’t believe that bureaucracy is inherently undemocratic. It can be. But it can also be quite democratically responsive. And depending on how one defines democracy, it can be responsive to a broader range of democratic concerns.
And so here I would point to the work of Daniel Carpenter that strikes me as just really thoughtful and observing how bureaucratic leaders in a democracy can fashion a degree of autonomy but even that autonomy is not undemocratic necessarily. It’s a different way of channeling democratic pressures.
I think the harder question to answer is if we’re better off or worse off with more hyper-responsive bureaucracies when it comes to things like shooting down the balloon. Here, you just got to remember you get different kinds of presidents. Some have the cushion built in, some have the cushion at the White House, some have either the cushion built in or at the White House, and suddenly they’re giving orders left and right.
And ideally, I think we want a layer of governance that can be a shock absorber but still be pretty responsive. And for what it’s worth, I think that was the engineering that was happening governmentally at the White House in the 1940s, early ’40s when the modern administrative state was actually being built in the US.
[MARION FOURCADE] OK, unfortunately, I think we are out of time. And I apologize to people who posted questions online but we had to give priority to the questions in the room. We’ll send them to you.
[MARIANO FLORENTINO CUÉLLAR] Please do. Yeah. I would love it.
[MARION FOURCADE] So thank you so much.
[MARIANO FLORENTINO CUÉLLAR] Thank you. Thank you so much to you, to all of you here in the room, and all of you watching. I’m very grateful.
[MARION FOURCADE] I also want to acknowledge the Matrix staff.
Thank you.
Eva Seto, who really is working wonders and helping organize this visit, and then Chuck Kapelke, who’s behind in the back doing our video, and Julia Sizek right there in the back. Thank you very much, everybody.
Thank you very much.
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