Rethinking Global Markets by Foreign Affairs and WSJ Pro

Harold Pratt House

Agenda

1:30 p.m. | Registration and Refreshments 

 

2:00 p.m. | Welcome Remarks 

 

2:10 p.m. | A Contemporary Perspective on Global Markets 

How have we misunderstood the global economy?  Emerging markets are no longer second class economies, and the boundaries between emerging and developed markets are no longer clear. A CEO and a statesperson share their perspectives on market forces and the changing global economy.

Jack Lew, 76th United States Secretary of the Treasury

Dinesh Paliwal, President and CEO, Harman  

In conversation with: 

Gerard Baker, Editor at Large, Wall Street Journal

 

2:40 p.m. | Emerging Understanding Part I: Bridging the Intelligence Gap 

Insights from the front lines of the intelligence community on the decoupling of China and the United States and its potential global implications where the developed and emerging markets intersect.

Jami Miscik CEO, Kissinger Associates, Inc.

In conversation with:

Gideon Rose Editor, Foreign Affairs 

 

3:00 p.m. | Emerging Understanding Part II: The New Frontier of Investing 

A perspective on how investors are approaching growth markets.

Adiba Ighodaro Partner & Head of Strategic Relationships, Actis

In conversation with: 

Dan Keeler Editor, Frontier Markets, The Wall Street Journal

 

3:20 p.m. | Emerging Understanding Part III: Group Discussion 

Adiba Ighodaro Partner & Head of Strategic Relationships, Actis

Dan Keeler Editor, The Wall Street Journal

Jami Miscik CEO, Kissinger Associates, Inc.

Gideon Rose Editor, Foreign Affairs

 

3:40 p.m. | Break

 

4:00 p.m. | Demography Not Geography 

Hear from a key leader in executing business in a borderless world.

Amit Anand Co-Founder and Managing Partner, Jungle Ventures

In conversation with:

Yun-Hee Kim Technology Editor, The Wall Street Journal

 

4:20 p.m. | Debate: The End of Globalization? 

A classic Oxford-style debate on the motion: This house believes the forces trying to undermine globalization are actually supporting and accelerating the next wave of globalization.

For the Motion: 

David Bohigian Acting President and CEO, Overseas Private Investment Corporation

Susan Lund Partner, McKinsey & Company

Against the Motion: 

Adam Posen President, Peterson Institute for International Economics

Dr. DJ Peterson Founder and President, Longview Global Advisors. 

Moderator: 

John Bussey, Associate Editor, The Wall Street Journal

 

5:00 p.m. | Closing Remarks 

 

5:15 p.m. | Cocktail Reception 

Featured Participants

Amit Anand is the founding partner of Jungle Ventures, a Singapore-based Venture Capital Firm that invests in and helps build tech category leaders from Asia. The firm recently closed its third fund and raised US$240M in total commitments, backed by global leading institutions and family offices. Mr. Anand brings 20 years of experience in Asia having played go-to-market and corporate development roles for startups and large corporations alike. Before co-founding Jungle, he presided as Deputy Chairman for Business Angels Network South East Asia (BANSEA). One of the first Kauffman Fellows from Southeast Asia, Mr. Anand also serves on the Advisory Council on the Ethical Use of AI and Data setup by the Singapore Government.

 

 

 

David Bohigian has extensive experience in investment, management, and international development. Mr. Bohigian has led and advised innovative financial services firms, most recently leading the Overseas Private Investment Corporation's transformation to the Development Finance Corporation – a U.S. Government agency established with bipartisan legislation he helped pass. OPIC has invested over $100 billion across more than 100 countries. As Acting CEO, Mr. Bohigian approved more than $5B in deals, from small businesses that empower women to major international infrastructure projects. Earlier, he worked on the core management team of the world’s largest hedge fund, developed machine learning techniques for a leading global investment bank, and pioneered new business models as a venture capitalist. In the Bush Administration, Mr. Bohigian was the Assistant Secretary of Commerce for International Trade.

 

Adiba Ighodaro is a partner and senior adviser on global strategic relationships at growth markets private equity firm Actis, where she has spent almost 30 years as both an investor and fundraiser. Appointed West Africa Head in 2000, Ms. Ighodaro established Actis’ Nigeria office and early portfolio. In 2004, she joined Actis’ newly-formed Investor Development Group, raising capital globally. Ms. Ighodaro moved to New York in 2012 to establish Actis’ New York office, and into her current role in 2019. She has been recognized by PEA as being one of the top women deal-makers and fundraisers in the industry as well as for the impact her leadership has on women. Ms. Ighodaro sits on the EMPEA Africa Council and is a former non-executive director of Old Mutual Plc.

 

 

 

Jack Lew served as the 76th Secretary of the Treasury from 2013 to 2017. He also served as White House Chief of Staff to President Barack Obama and Director of the Office of Management and Budget in both the Obama and Clinton Administrations. Previously, he was principal domestic policy advisor to House Speaker Thomas P. O’Neill, Jr, and has held a variety of private sector and nonprofit roles. Mr. Lew is currently a partner at Lindsay Goldberg and on the faculty at the School of International and Public Affairs at Columbia University.

 

 

 

 

 

Susan Lund is a partner of McKinsey & Company and a leader of the McKinsey Global Institute. As a Ph.D. economist, her research focuses on the impact of technology on globalization and trade, and the impact on work and workers. Recent research has explored the evolution of global trade and value chains, and on how digital flows are transforming globalization and creating new winners and losers. Dr. Lund has an active travel schedule discussing research findings with CEOs and other executives at global Fortune 500 companies and she is a frequent speaker at global conferences. She has authored numerous articles in leading business publications, including Harvard Business Review, The Financial Times, The Wall Street Journal, The Washington Post, and Foreign Affairs.

Dr. Lund is on the Economic Advisory Board of the International Financial Corporation; a Board Director of the National Association of Business Economics; and a member of the Center for Global Development Study Group on Technology, Comparative Advantage, and Development Prospects. Susan holds a Ph.D. in applied economics from Stanford University and a B.A. in economics from Northwestern University. She has lived and worked in Africa and Asia and currently resides in Washington, DC. Prior to joining McKinsey, she held a number of positions, including as a US Peace Corps volunteer in Guinea Bissau and in the Philippines and later a Fulbright Fellow.

DJ Peterson is the founder and president of Longview Global Advisors. Business leaders and investors turn to Longview Global Advisors for a relevant world view, and Mr. Peterson’s mission is to help them make sense of the political, economic, and social trends they care about. Core offerings are business intelligence, thought leadership, and executive positioning and the firm draws on a network of experts around the world that “bring the outside in” and enable executives to think and talk about the world, not just the business. Prior to founding Longview, Mr. Peterson held research and business leadership roles at the Eurasia Group and The RAND Corporation, and he earned his Ph.D. in Political Science from UCLA. Mr. Peterson speaks to and writes for top-level business audiences and he appears regularly on CBS, CNBC, and CNN.

 

Jami Miscik is CEO and vice chairman of Kissinger Associates, Inc., the New York-based strategic international consulting firm that assesses and navigates emerging market geopolitical and macroeconomic risks for its clients. Prior to joining Kissinger Associates in 2009, Ms. Miscik served as the Global Head of Sovereign Risk at Lehman Brothers.

Before entering the private sector, Ms. Miscik had a distinguished twenty-two-year career in intelligence, ultimately serving as the Central Intelligence Agency’s Deputy Director for Intelligence. As Deputy Director for Intelligence, she was responsible for all of CIA’s intelligence analysts, the production of all-source analysis, and for determining the content of the President’s Daily Briefing. She also served as the Director for Intelligence Programs at the National Security Council.

 

Adam Posen

Adam Posen is president of the Peterson Institute for International Economics. The author, co-author, or editor of eight books, Posen has contributed to research and public policy on G20 monetary and fiscal policies, European economic integration since the euro, Japan’s recovery from its Great Recession, and China-US economic relations. From 2009 to 2012, Posen served as an external voting member of the Bank of England's rate-setting Monetary Policy Committee (MPC). Posen co-authored Inflation Targeting with Bernanke, Laubach, and Mishkin while at the Federal Reserve Bank of New York (1994-97). He received his BA and Ph.D. from Harvard University.

 

 

 

 

Gideon Rose

Gideon Rose was appointed editor of Foreign Affairs in October 2010. He was Managing Editor of the magazine from 2000 to 2010. He has also served as Associate Director for Near East and South Asian Affairs on the staff of the National Security Council and Deputy Director of National Security Studies at the Council on Foreign Relations and has taught American foreign policy at Princeton and Columbia. He is the author of How Wars End (Simon & Schuster, October 2010).

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Event Transcript

Foreign Affairs

“Rethinking Global Markets: Trade, Policy, and Global Business on a Collision Course”

 

Participants:

Jack Lew, 76th United States Secretary of the Treasury;

Dinesh Paliwal, President and CEO, Harman;

Gerard Baker, Editor at Large, Wall Street Journal;

Jami Miscik, CEO, Kissinger Associates, Inc.;

Gideon Rose, Editor, Foreign Affairs;

 Adiba Ighodaro, Partner & Head of Strategic Relationships, Actis;

Dan Keeler, Editor, Frontier Markets, Wall Street Journal;

Amit Anand, Co-Founder and Managing Partner, Jungle Ventures;

Yun-Hee Kim, Technology Editor, Wall Street Journal;

David Bohigian, Acting President and CEO, Overseas Private Investment Corporation;

Susan Lund, Partner, McKinsey & Company;

Adam Posen, President, Peterson Institute for International Economics;

Dr. D.J. Peterson, Founder and President, Longview Global Advisors

John Bussey, Associate Editor, Wall Street Journal

 

Location: Harold Pratt House, New York City, New York

 

Time: 2:00 p.m. EST

Date: Wednesday, February 5, 2020

 

(Applause.)

ROSE: Thank you very much, and welcome to this incredibly interesting event from the Wall Street Journal Pro team and Foreign Affairs on “Rethinking Global Markets.” The subtitle we’ve given it is “Trade, Policy, and Global Business on a Collision Course,” but really if we’re honest nobody really understands what’s happening in this crazy world out there right now and we’re all trying to get some purchase on it, because we have no choice but to try to understand it because the stakes are higher than ever.

To do that, we’ve brought together the resources of the Wall Street Journal and Foreign Affairs in a combined effort to try to look further than even we individually as institutions have been able to look. The ancient statesman Cato once said that he didn’t understand how two soothsayers could pass each other on the streets of Rome without bursting into laughter. Well, we, the supposed experts and the people who edit the experts, know better than anybody just how impossible it is to predict the future. But we have assembled an all-star team of soothsayers to try to field collectively your questions and topics and bring some insight.

About the Wall Street Journal and Foreign Affairs, these two brands are actually really natural partners. We each stand for the same three principles: truth and facts, reasoned argument, and good clear English prose. On these rocks we have built our churches. And in this day and age when brands come and go and pop up and suddenly something that can screw up an Iowa election is a company that happened six—you know, emerged six months ago, we kind of feel that when you hit your second century as a brand people know what you stand for. And there’s a value to legacy brands like ours which have stood for truth and insight and reasoned discussion time in, time out, era in, and era out. With our respective specialties in economics and in strategy and political intelligence, we feel we can combine our resources to bring you insight you wouldn’t get otherwise.

So we’ve put together an incredible program for you that basically mixes all of our resources. We have an opening session with a secretary of the treasury and one of America’s leading corporate CEOs in conversation with Gerry Baker, who is one of the dispiritingly clearheaded analysts of our day as an editor at large at the Journal.

We then have a series of three linked sessions in which I’m going to talk with Jami Miscik at Kissinger & Associates, former high-level mucky muck at the CIA who, basically, understands all the things in the world but would have to kill us if she told them. (Laughter.) Then Dan Keeler from the Journal’s Frontier Markets Division.

We’ll interview Adiba Ighodaro, who’s been providing finance for emerging capital companies and institutions for decades longer than most of us even knew that was an option. And then Jami and Adiba and Dan and I will come up together and field all of your comments on those sessions, bringing our respective expertise to the general question of, you know, in trying to feel out the elephant from all the different sides and see if we can get a better picture of the group.

Then we’ll take a break—(laughter)—and then we will come back with a great session with Yun-Hee Kim, technology editor at the Journal, interviewing Amit Anand, who is a venture—sorry, yes, who is a venture capitalist dealing with emerging markets, and bring that perspective to bear.

And then, finally, we’ll end with a bang with an Oxford-style debate on the future of globalization, bringing in an all-star team led by John Bussey, the associate editor of the Journal, bringing in David Bohigian, Susan Lund, D.J. Peterson, and Adam Posen.

So, basically, every single perspective from central banks to consultancies to corporate to venture to finance to law to strategic intelligence to private intelligence to public intelligence to government officials of all kinds. We have it covered. I can’t promise you’ll learn anything. (Laughter.)

But I can promise that there is no better place to try, and we’ll see, at the end of the day, because if these types can’t give us any further purchase on what’s happening, then we might as well just give up and go along with the anti-intellectual tide of the times and say experts don’t know anything and go—you know, just go about our daily business. Because if there is any hope for the technocrats, if there’s any hope for the experienced accumulated wisdom, it’s going to be represented here. That’s all I’ll say.

And now it’s up to our wonderful speakers and, with that, let me kick off the first session by asking Gerry Baker, Jack Lew, and Dinesh Paliwal to come up for our first session on a contemporary perspective on global markets.

Jack, as the former secretary of the treasury, was, basically, the model of the modern technocrat in a book somewhere on the enemies of the deep—you know, the deep state’s enemies list. There’s Jack Lew high among them as the kind of disinterested public servant who wants the best for everybody and brings disciplined intelligence to try to actually achieve that in public policy.

Dinesh is one of the leading global citizens as well as global CEOs. A review of his career and commitments, basically, shows that he has been involved in more companies in more countries in more industries than I can even count, and is now, as the CEO of Harman, grappling with a global business at the highest frontiers of technology and quality, which, by the way, is the same kind of business that we are in here at Foreign Affairs and the Journal.

And Gerry Baker—so what can I say about Gerry? I’ll just say one thing about Gerry. I hate Gerry, and the reason I hate Gerry—(laughter)—is because whenever I have any slight little glimmers, delicate tremors of hope that the world can be slightly better than it is, that there may be some possibility of progress, Gerry comes along with his elegant bespoke heels and crushes them into the ground into little pieces of dust, reminding me from his incredibly dry intelligent center-right perspective that the world isn’t going to get any better and all the things I wanted and all the things I hoped for are never going to come about, and I come away feeling like I did from my old mentor, Irving Kristol, who also wrote for the Journal and also was a similar kind of intellect. It was like a bracing cold shower. And so I hate Gerry for being so damn good that he takes away my illusions about everything and shows me the world as Oscar Wilde—sorry, as Ambrose Bierce—said about a cynic, shows the world not as he wants it to be but as it is.

So with that, let me have Gerry Baker, Dinesh Paliwal, and Jack Lew come up to talk about the global world as it is. (Applause.)

BAKER: Good afternoon. Well, I can’t possibly live up to that so I am not even going to attempt to. But I will not promise I won’t be crushing anybody’s hope or attempting to this afternoon.

But thank you, Gideon, for that very warm introduction. It’s a great pleasure on behalf of the Wall Street Journal to be here and to be partnering with Foreign Affairs in looking at this extremely important topic. Markets coverage at the Wall Street Journal is, obviously, enormous and extensive and global, and we try to bring a genuinely independent perspective to it in an age when perhaps not a lot of the news is always seen as trustworthy or independent. That is, certainly, our goal. So I’m very delighted to be able to do that.

You heard, obviously, we’ve got a terrific panel and we’ll get straight into it. Jack Lew, seventy-sixth secretary of the Treasury. You’ve seen his name on the bank notes, since you probably still have bank—that you probably still have the Treasury bills that you—Treasury notes, rather, you still have in your pockets. And, of course, Dinesh Paliwal. As you heard, Harman—not only CEO of Harman but also on the board of major global companies like Nestle and Bristol-Myers and Raytheon.

So for this first session what we want to try and do is explore almost in a kind of—initially, at least, in a conceptual way what we mean when we talk about global markets, particularly what we mean when we talk about emerging markets and developed markets and to what extent that traditional differentiation continues to have meaning in an age when the world’s—what we think of as the world’s largest emerging market is actually also the world’s second largest economy and in the not-so-distant future will be the world’s largest economy.

What does it—what does it mean to talk in these terms where you think about, you know, the emerging markets, thinking about this—what do we think about when we think about developed markets. We think about, obviously, relatively high levels of aggregate and per capita income, high levels of sophistication. You know, the kind of—kind of countries that can organize elections very effectively and—(laughter)—and communicate the results to their people in a timely fashion. We used to think of developed countries in that way anyway. But some emerging markets, obviously, have been growing very, very rapidly and achieving remarkable levels of development.

But what I want to get into first, Jack, if I may start with you, is this question. To what extent—what, in your view, does the—and your view as both now where you are in the private sector and also as a teacher as Columbia but also from your perspective of—as the former Treasury secretary—to what extent does that distinction between emerging markets and developed markets—to what extent does it continue to be meaningful and how should we think about it?

LEW: Well, it’s good to be here with you and at this important conversation, Gerry. I think the distinction is still real. I mean, you—whether you’re looking at per capita income or the kind of business conditions that exist, there’s no doubt that there’s a difference. But when the two largest economies of the world are what has been long thought to be the most developed economy and the largest emerging economy are competing for number one, it, obviously, changes things.

You know, just a metric. There is any number of ways you could look at it. I just looked up what the projections are of what a 1 percent reduction in growth in the United States would mean to the world economy and what a 1 percent reduction in growth would mean if it was in China, and it’s, roughly, eight-tenths in the U.S. case and a half a percent in the China case, which suggests that the degree of integration in the world is growing but they’re not quite the same.

You know, China is still more separate unto itself. It has different levels of dependence of—on foreign markets and vice versa. I think the real question is how do we navigate the transition because, increasingly, you know, whether it’s China now or in a future period India, these are the largest, most quickly-growing economies. The rules of engagement in the global economy in the future have to accommodate them as much as the old developed economies, and we’re at a moment in time when the institutions where you would work out that kind of common consensus of what the rules for the future would be are getting kind of brittle, and the risk of having competing systems separating economies is now discussed as a real possibility, which I think would be very bad in terms of the future of global growth. But perhaps even more importantly, if you have more friction and conflict economically you, ultimately, have less geopolitical stability.

So I think it’s a very important question how we navigate that transition of emerging economies where, in my view, the U.S. and other developed economies have to demand that countries like China follow acceptable norms. On the other hand, it’s not realistic to say they should become our carbon copy.

BAKER: I want to get on to specifics of China. We don’t want to dwell too much on the inevitable question of the U.S.-China relationship. But it’s a very important topic and I want to get onto that.

But, Dinesh, if I may just come to you. One of the characteristics of emerging markets that we always tend to think of is not just measured in terms of aggregate incomes or per capita incomes, but countries that, you know, in the last twenty or thirty years have tended to be rapidly industrializing with a much higher share of their total economic activity accounted for by manufacturing and a much larger share of their GDP accounted for by exports. In an age when there is such a—one of the things we’re going to discuss this afternoon is this question of globalization versus de-globalization. In an age when there has been this backlash against globalization in so many of the developed economies precisely, or at least in part, because of the nature of these emerging-market economies and the way they’ve been able to do it, what’s—how is that going to change? How are those—you’ve got great experience in all of these markets, both developed and emerging markets. How is the nature and the characteristics that define these emerging markets, how is that going to change?

PALIWAL: So, Gerry, first of all, good to be with you on this session with the secretary. It’s a privilege.

You asked a bunch of questions. Well, first of all, on the definition side, for me there academic definition, there is a business definition. And business definition is countries did not have access to capital, access to technology, and access to markets. We wanted—as the Western world, we wanted them to open up. We helped them with technology, leadership, capital. China, India, Brazil, and many others fell in that. I lived in China. I’ve been going to China since ’86 but I lived there for five years. So I’ve seen China. Obviously, Secretary, you’ve been very much a part of that.

So China crossed a threshold. It’s a threshold of leaving emerging—well, it’s an emerged developed market. You don’t participate in world institutions like World Bank, IMF, United Nations, don’t pay as much as U.S. and Western world pay. We lower the threshold for your environmental—your certifications and things. We lower the threshold for the balanced trade. You trade a lot more to us in U.S. and we don’t force you to take it. But there’s a line. That line was crossed some ten years ago in my opinion, but they still have all the benefits.

So I think that’s causing a lot of friction, and rightly so, that we’re saying, come on, there are a level playing field which we need to redraw those lines. And in PPP basis—purchase price parity basis—Chinese economy is slightly bigger than U.S. economy today. Otherwise, they’re two-third and there’s a likelihood in the next five years they will take over. So they cannot be emerging market when they are the world’s second-largest economy already, and in some area they’re advanced—a lot more advanced: in compute platforms; in defense we heard the headline—I’m only talking public information—hypersonics, high-energy laser. They’re getting ahead. They worry a little bit to what happens to—so they’re leading even innovation. And Gerry, you mentioned manufacturing. Guangdong, just one province, was 40 percent of the world manufacturing once upon a time.

So to your third point, how do you transition out, I think China is doing a better job than I would think. They realized that they cannot continue to benefit just for manufacturing for the rest of the world, so they grew into value-added services, engineering, research, and consumerism is being pushed. So we’ve seen the impact that their reliance, their dependence on manufacturing is going down. This will all be the challenge because I can also see as a CEO of the company I have benefitted from China investing in China if I wanted to export out. Same thing applies to India, nine thousand software engineers.

But will this benefit sustained and long term? Because there is a lot of political backlash here of globalization we benefitted. How do we create—the genie of globalization is out. The problem is that inequality was created. The—(inaudible)—corporations benefitted by sharing high-paying jobs in our home market and accessing to low-paying jobs and access to capital, what have you—cheaper capital—benefitted both end, and forgot to invest a part of that profit on either side of the spectrum, one in home market in reskilling. I would say Finland, Sweden, Nordic countries have a great job. Germany traditionally has done a good job. But if you look at our own country, we have not invested in reskilling or working in collaboration with universities to tell them, listen, don’t teach these things; we as businesses, we need this, this. China does a good job. Germany does a good job, apprenticeship program. Same thing we did not do, Gerry.

And backlash is also coming from emerging markets. They are saying all you did is to set up your manufacturing base so you can export out. You didn’t invest in value chain. So it’s a very interesting debate which I’m looking forward to later in the afternoon.

BAKER: Yeah, let’s get on to that, too.

Jack, just one of the criticisms that this administration’s—Trump administration’s made of some of its predecessors, including yours, some I think goes to the heart of this issue of emerging market versus a developed country, and the criticism in particular that because, you know—Dinesh makes a very good point that, you know, China has maybe by purchasing power parity the largest economy in the world, certainly by nominal GDP the second-largest economy in the world, but they always make the point that, yeah, that’s true, but our GDP per head we’re not even in the top fifty countries in the world even today, even after this rapid growth. And there’s a sense—there’s a criticism that you hear from this administration, and even by the way from some Democrats now in this country, that maybe China was kind of given a pass—admission to the WTO back twenty years ago—and was kind of—because of its status as an emerging market and because it was a developing market was kind of allowed to get away with things and to build itself, I mean, in all kinds of ways—you know, appropriate as well as in some arguments nefarious ways—able to build itself into this enormous economy, and that China was given—because of its emerging status was given a free pass. What’s your response to that?

LEW: Well, Gerry, I think if you look a the way our administration and, frankly, the administrations before that engaged with China, it was not at all shy about taking these issues to the Chinese and demanding that they change their practices on exchange rate management, changing their practices in terms of whether their markets were open or closed, changing their practices in terms of subsidies to industries. We brought trade actions.

I think what Dinesh put his finger on and something I said is at the core of the problem, and it’s the speed of change. Fifteen years ago, China had not yet reduced poverty and brought people closer to the middle class. We’re now at a very different point in terms of China’s development, and China’s going to have to behave differently in a world where it is no longer able to say they’re the largest developing economy in the world.

And I think that if you look at the results of the more aggressive approach, I would argue it is much more—the phase-one agreement is much more like a standard agreement with China at the expense of global stability. The whole world spent a year and a half on the edge of crisis what was going to happen with the two great powers of the world, and what do we have to show for it? What you get from normal engagement. So I actually think there’s negative fallout from this approach.

And the risk that this gets put into a nice, neat box in the future is not that high. The hard issues are still there, except the relationships to deal with them are less well-developed than they were.

BAKER: Dinesh, do you think we maybe allowed China on some of these issues of intellectual property and technology transfer and currency manipulation, despite what Jack says that there were efforts made by the Obama administration and indeed by the Bush administration, that maybe we allowed China to get away with too much?

PALIWAL: We sure did, because that was actually self-serving. I will not name the companies, but I was sitting in a European board and it was a very important decision to be made. China was looking for a technology that didn’t exist. This is a(n) ultra-high-voltage power distribution. Nobody uses that. It’s a very advanced technology. Should we develop it? The idea was, if you develop it’s going to be owned by China. But the market is so big. If you don’t come in with our terms, you don’t have that market. So companies made those choices knowingly, that our technology is being copied, we are developing something that might hurt us.

And by the way, it’s the size of the market which they have leveraged against it. So yeah, we have allowed that. And frankly, this was not just the company. This is where I think administrations play a bigger role collectively.

BAKER: Do you agree?

LEW: If I can just say, it was a point of great frustration that we would take these issues of intellectual property to the Chinese government in the most forceful ways and CEOs did not want to step forward and get into a fight with China because they valued the market. It wasn’t a problem of government policy.

BAKER: And Dinesh, do you agree with Jack that the price of obtaining this phase-one deal and of maybe making—finally getting China to make some of these concessions has been too high in terms of the instability that’s been wrought on global markets by the uncertainty of the last year and a half about an all-out trade war?

PALIWAL: I think, as the secretary just said—I agree with him. And we really don’t know what we got out of it, frankly. What we are not realizing, time is the biggest benefit on Chinese side. And President Xi knows it’s not about two or four years; it’s a multiyear cycle. How much will they execute what they have told us? We don’t know that. So I mean, so in net/net, repercussions, the negative impact on some of the things which we as American corporations or Western corporations have built relationship and we get things done, single-window clearance, what have you, we will see what are the new norms going to be just as a sort of a punishment indirectly. So we’ll see.

LEW: If I can just have one more point, you know, there is no doubt that currency exchange rates were a big problem. God knows I spent a lot of time engaging on it.

The last two years I was at the Treasury Department China was defending its currency, a practice they continued for some time. At the point when they were named a currency manipulator, there is no one in the world who does analysis that’s meaningful that thought China was manipulating its currency. So it was an old grievance, and I would argue a grievance that was resolved during the Obama administration.

BAKER: Do you think—there’s a lot of talk—Jack, you first on this—there’s a lot of talk now that the world is entering kind of an economic cold war, that we—irrespective of whether we—you know, we got a phase-one deal; whether there’s a phase two, whether there is ever a phase-two deal with China; that we are in a long-term standoff with China over, more generally, about the integration of the two economies, maybe.

This administration is clearly trying to decouple the U.S. and much of the global economy from China. There’s a lot of talk about a tech cold war and that we see with issues like Huawei, the United States aggressively pursuing allies to distance themselves from China and to put—(inaudible).

Is that—how is that—without necessarily talking particularly about China, or indeed these specific issues, do you think that’s true, that we are headed for a period of kind of extended decoupling? And if so, what does that mean for many of these emerging markets that depend on this reasonably healthy global system for survival?

LEW: It’s hard to talk about it generally, because I think it’s different if you’re talking about China and other emerging economies. And I think there are other emerging economies that will be the winners as there is hedging against the risk of decoupling between the U.S. and China. So I think you’re going to see investment in places like Vietnam growing because it’s diversifying your exposure.

If it gets to the point where it’s broad decoupling of the developed from the emerging economies, that’s not good for anyone. The growth of emerging economies would not be very impressive if they didn’t have very active, robust trading relationships with developed economies. And the costs in developed economies would go up considerably, which means that the impact on consumers would be quite dramatic.

Now, I think Dinesh put his real finger on it, and this is something that I am deeply troubled by. We in the developed economies have to take responsibility for dealing with disruption in our own countries. Political dysfunction for a very long time has made that almost impossible. We deal with crises. We don’t deal with looking ahead and saying how do you not have a problem in the hollowed-out communities, because that takes complicated policy and a kind of compromise that’s not in favor and hasn’t been for some time.

 BAKER: Dinesh, do you think—what do you think about this prospect or risk of an economic cold war? Do you think it’s a reality?

PALIWAL: Gerry, can I first give a quick comment on decoupling economy? You know, it scares me, and it should scare everybody, because decoupling economies, right now it is somebody’s dream, but it’s not going to be real, because codependence on these two countries of the world is so deep.

Let’s not forget, 95 percent of the population is outside the United States and 80 percent of the purchasing power is outside the United States. We should not forget that. And we rely heavily on China and China relies heavily on us, and so does Europe.

Now, I’ll come back to we have to put China, as several administrations started, level playing field. But that—U.S. has taken the lead. I actually give credit to our president. But we need to have a political explanation—I mean, not explanation—political meeting with other European countries and U.S. on one side united, if they can, and really make China understand there are different rules they have to play; very clear.

But if you do isolate the countries of this magnitude, economic cold war is dangerous for U.S. as much as it is for China. And let’s not forget that.

BAKER: And I’ll ask both of you, do you think that this—that we are into an extended period of deglobalization? We’ve seen—I mean, since trade level—trade flows have really not got back to where they were since before the financial crisis. Obviously, that’s been accentuated in the last couple of years by political decision-making; obviously the Trump administration. We may see—we’ll see what happens with Brexit and what that leads to in terms of intra-European and global trade flows.

Do you think this is—do you think it’s—that’s now set in train, or can it be reversed? And can we revive the path of continued international integration that we had for the previous thirty years?

LEW: So I’m very worried about where we are, because I think that the post-World War II global integration has made the world both more prosperous and safer. And I think if we retreat from that, we know what happened in Europe when Europe wasn’t Europe, when it was fighting members of the same continent.

I don’t think we flip right to that, but there are signs that national identity is rising in importance, that the definition of the positive impact is solely defined by what happens in your own borders. And it’s not as if, post-World War II, everything the United States did was simply out of beneficence. I mean, it was an economic self-interest. There were no other producers. There was no way to buy things without dollars. We created a world where we could help the world and benefit and set rules in motion that were stable.

If we now, seventy-five years later, say we don’t care about a global order, there’s no—it’s not obvious what order takes over to replace that.

BAKER: I want to leave some time for questions too, but Jack, if I could just quickly press you on that. But how do you do that? I mean, even the Democratic Party in this country now seems to be—

LEW: I’m worried.

BAKER: —moving away from—

LEW: Yeah, yeah, yeah. I’m worried. I think that you wouldn’t—

BAKER: If Bernie Sanders—President Bernie Sanders is—(inaudible).

LEW: You wouldn’t stand up in either a Democratic or a Republican political event and make the resounding case for global integration. And I don’t think you would do it if you were running for, you know, prime minister in the U.K. And I’m not so sure, you know, perhaps outside of France, there’s anywhere in Europe you could do it right now. You know, it’s very worrisome.

It takes leaders to help make the case, even if there’s some political price. And that’s a special kind of leadership.

BAKER: Dinesh, do you think—

PALIWAL: Yeah—

BAKER: —we’re locked on this course now?

PALIWAL: I see—what’s the problem—what’s the cause of the problem? It’s inequality. I mean, again, I will only use—the model countries are Nordic countries because they have maintained a pretty good balance of equality. And they might be collecting lower taxes, but they put every single tax dollar to the, you know, citizens’ benefit. And I see that everybody seems to be very happy there, by and large.

So inequality in U.S. has created populism; Turkey, India, U.K., Brazil. It’s just growing. It’s happening because haves and have-nots have spread so much. If I look at India—I go there once a year—people are richer to the point where the richest man of Asia is not in China. It’s in India, as an example.

Then you have ultra-poor. So the middle class is saying, where do we belong? Am I going to the poor pool here? Overall, countries have all benefited. The book called Factfulness is a really good book to explain the world is getting better. But this inequality, people think, is the reason of—is because of the globalization, which I don’t think so.

Globalization, applied rightly—and some countries have done it—is actually creates a lot more value. And globalization is not about to be reversed, in my opinion. We are so digitally connected. We’re so dependent on each other. Technology has no boundary. Capital has no boundary. So I think—I cannot see myself—we’re in thirty-five countries. We have to be integrated economy, as you said, Gerry.

LEW: I don’t disagree that inequality is the root of it. But there is a social and racial component to it as well. I don’t think it’s accidental that it’s coming after a period when, in the United States, minority groups take their place in the leadership circles, or in Europe there’s populations from across Europe mixing in countries and coming into Europe. And in India for sure right now, it’s as much ethno-religious as it is economic.

BAKER: Let’s take some questions. We’ve got time for a couple of minutes for some questions from the audience. Please raise your hand and identify yourself.

The gentleman there in the green tie.

Q: Hi. Thank you. Keith Barge (ph) from Harding Loevner.

I was wondering, in—so I live downtown, and all outside my apartment building is Hikvision-based cameras that were made by a company that I’m sure you’re familiar with. A third of the company’s shares are owned by foreigners, like my firm and BlackRock and Vanguard and lots of global investors.

So as a consumer, I’m benefiting. As an investor, I’m benefiting. Where does the antagonism come vis-à-vis China when the increasing growth of the Chinese economy comes from publicly traded businesses that are benefiting global consumers and benefiting global investors?

LEW: So I think, depending on which aspect of it, in the case of a new technology, where the concern is do we become exposed to either surveillance or hacking because of the technologies, then there’s a national-security concern. If it’s an older technology and it’s unfair competition that displaces a workforce, I think it’s a different kind of friction.

Where I think—you know, it’s not always clear what the objective and what the objection is. So you take some of the concerns that have been raised in the last couple of years about China’s telecom technologies. I think it’s a very dangerous business to, on the one hand, say we’re going to bar transactions because it’s a national-security concern, and then over in a trade negotiation say but we’ll bargain it away for some commercial benefit.

I think we’ve mixed the message up in a way where, if I were in China now, I’d have a harder time saying it’s on the level; it’s really about national security. And, you know, I know we used to be able to argue with real credibility that national security was national security. I think it’s much more confused now.

BAKER: Dinesh, briefly, do you want to comment?

PALIWAL: I agree. I mean, sometimes we hide behind national security and we mix it up. I mean, Huawei’s a good example. I mean, I may be contrarian here, but from the technology point of view we missed the bus in this country on 5G. Huawei has cost-effective—the best technology, period. Now, we will not—should we or should we not allow American corporations to be—should they be deprived of? The Europeans will take advantage, the Asians will take advantage. And the story goes back and forth.

BAKER: Can I just ask Jack about that? Because, I mean, you say that we missed the bus, and there is a general sense that we have. You were Treasury secretary throughout this period. I mean, how much of this—of the sense that the U.S. was behind with the development of 5G—how much of a concern was that? And was there anything you did or could have done to lift up U.S. capability in that field?

LEW: In general the federal role is much more in basic research and applied technology comes out of the private sector. I think we pressed very hard and maintained minimally acceptable levels of funding of research and development. But it fell—it fell because of the budget wars from where it would have been if we could have done what we would have liked to have done in universities and research centers. I think the converse is that China invested governmentally in developing these technologies. And that’s the difference between our systems. I mean, we did fall behind. I would argue the way to catch up in the future is to do basic research the way we used to, to put more than anybody else does so that we’re at the cutting edge.

BAKER: Let’s take some more question.

Dinesh, I’m sorry, just very quickly, if you would.

PALIWAL: Just real quick. I just wanted to echo what he just said, secretary. We have such thing called DARPA for U.S. defense, where we do incredible prototyping which the world has not even dreamt of. And that gets into commercialization, industrialization. We do very little of that basic research. I mean, we do a lot in internet area and cloud work, what have you. But a lot more needs to be done at that level.

BAKER: Thanks, Dinesh.

Yeah, gentleman in the front here. There’s a microphone. If you’d identify yourself.

Q: Ricardo Tavares from TechPolis.

Gerard, I think my hopes are already crushed at this point. (Laughter.) So if we agree—if Jack and Dinesh agree that to deal with the globalization we need better domestic policy, we are more exposed to fluctuations, to shocks, and so on. And our domestic policy environment is a mining field. So you mentioned—Dinesh mentioned he’s killing our health care. So compared with the U.S., what a poor person in the United States and a poor person in the U.K., the health system is different. So the U.K. person’s better off.

BAKER: But—go on. The question—

Q: So the question is, can we have any hope that we are going to agree so far? Even on infrastructure.

LEW: Let me be a little more—let me be a little more optimistic.

BAKER: Enemy of the deep state. (Laughter.)

LEW: As Dinesh said, we need to invest more in higher education. We need to invest more in community college education. It is actually the least-expensive, most accessible level of education that we need to reskill people. And I don’t know a Republican or a Democrat who wouldn’t agree with that as a matter of principle.

BAKER: Dinesh, quickly though. I want to—

PALIWAL: Quickly on education, actually, I always said we need to invest in the skills, the trades. That doesn’t require a bachelor or master’s degree. We are completely wiped out on that. Right now we rely on Latin America for a lot of trade practices, and then we say we don’t have manufacturing. Tim Cook said, if you want me to make me to make next generation iPhone, twice as much the cost. Who affects? American public. So we have to bring that competence back, as secretary just said, invest into primary vocational training and apprenticeship program. And they’re not ready to go to university, but they can be very, very valuable to our value chain.

BAKER: One more question. I hope we’ve managed to raise your hopes just a little bit there. Any more questions? I just want to make sure I got a fair geographic distribution there. Gentleman there in the middle, yeah, with your arm up. Yeah, the microphone is coming.

Q: Mike Holt. I’m with Beacon Trust in Morristown, New Jersey.

You mentioned that one of the impediments to globalization is this income inequality and the populist movements that are springing out of that. Do you have any suggestions on how that could be dealt with? (Laughter.)

LEW: I have a lot of ideas—

PALIWAL: It’s a policy question.

LEW: Yeah. I mean, look, I think we have a tax system that’s profoundly unfair. If you have great income and great capital gains you can find ways to shelter much of your gains from ever being taxed. We should fix that. We didn’t have tax reform two years ago. We had a tax cut. It make the system more unfair. In a world where people are anxious because of inequality, we made it more unequal. I think that that—we know how to reverse it. It takes a political consensus. And it’s hard. I think if you look at what are the problems people have, you know, paying for childcare. We know how to make childcare safer and more affordable. We just have to put the resources behind it. We know we have an infrastructure crisis, where people are wasting hours a day on bad transportation platforms where you could create good jobs by fixing it and making it a better economy and a better quality of life. All that takes a functioning set of decisionmakers who deal with more than the immediate crisis. And we haven’t had that in a while.

BAKER: Final question—we’re out of time, but a very quick final question for you both because we haven’t discussed it. It’s a very important topic. To what extent is climate change—do we—this seems to be another issue that is causing increasing divisions between developed and emerging markets, if we can use that terminology. There is a sense in a lot of emerging markets that, you know, hey, you rich countries poured CO2 into the atmosphere for 200 years and, you know, that’s all fine. Now you’re pulling up the ladder from underneath us, and requiring that we—especially India, Dinesh argues this very strongly, but also to some extent China. How are we going to—and everybody acknowledges, you know, in the north, as it were, that we’re not going to address climate change significantly just ourselves. It requires these emerging markets that are obviously pouring huge amounts—and, by the way, we’ve made great advances in the developed world in terms of reducing at least the growth of emissions. How much—how do we address that do you think, Dinesh? How do we address that dimension?

PALIWAL: I think it’s partly political, partly economic. Yes, it is the right—this is a sentiment these countries have. I travel to China and India. They say: Look, when the U.S. was burning and dumping all that pollution into the environment and saying: We are industrializing our country, and so was the West, nobody questioned that. Now when China, India, and Brazil are doing, there are all kind of thresholds being put on. So I think the practical answer would be, look, you cannot stop them tomorrow because they’re not going to listen anyhow. They will do what they have to do, China, India, what have you. We can be speaking.

But you can help them. You can say, listen, we have found—like Israel is doing incredible technology they’ve developed. It applies worldwide. So many things—I bought companies—(inaudible). So we could offer—the West could offer some technologies for energy. Like, hey, you have a high-sulfur for coal? This is a technology which reduces the carbon monoxide. We can help you with water. We can help you with these things. While you create business, that technology going through the businesses, with protecting IP, I think it will create jobs and also a lot of goodwill. But that comes with bilateral.

LEW: I think if you look at the Paris climate accord, the fact that the United States and China were able to agree together to enter at the same time was an enormous diplomatic accomplishment because of all the things you said. You know, I think a lot of that is attributed to the diplomacy that we pursued with China, and that President Obama and President Xi engaged on. Part of it was because the Chinese people were starting to complain they couldn’t send their kids outside to play because they were getting asthma. And the worst air was in the areas where the influential people lived. So the complaints were coming from people who had the ears of their leaders.

And I think the fact that the United States has withdrawn from Paris, the world doesn’t know if that’s a permanent decision. I think if the United States stays in the Paris accords over the long term we’ve made a lot of progress. I don’t think India would have come in if China hadn’t come in. These things are tied. One of the hardest discussions around the Paris climate accords was with the emerging economies that are at the lower income level. There was a conference in Ethiopia which was the financing track of climate. And the big argument at that conference was: Will you help us fund—finance clean alternatives? And will you do it not by substituting clean financing for old aid, but adding resources?

Coming out of that was a three-legged agreement that was, I think, actually pretty historic. Which was, there had to be three things at the same time. There had to be new external developed country support. There had to be host government support. And there had to be private sector participation. Now, if the United States were actively engaged, you’d be pushing on that agenda as opposed to letting it kind of float out there.

BAKER: We are out of time, unfortunately. I do hope we’ve left you with some hope. And if we haven’t, we’ve got plenty more panels this afternoon that are going to instill lots of hope in all of us. But for the time being, ladies and gentlemen, please thank my excellent panelists. (Applause.)

(Break.)

ROSE: Well, that was cheery, wasn’t it? Actually, you can see why Gerry and I have really the best jobs, and Dan too, in the world because we get to play ask Mr. Wizard or ask Ms. Wizard, and it’s actually really kind of fun. Even if the answers aren’t always the answers you want, to have the horse’s mouth giving them is actually a lot—a lot of fun. As editors, one of my junior editors once said, yeah, the problem is they usually speak horse—(laughs)—which is the problem for the editors.

At this point I’m going to bring up—at this point we’re going to do our little sort of, can you tell the elephant from, you know, the feel of the trunk or the tree or whatever it is. The blind man and the elephant is the—(inaudible)—thing.

Jami Miscik has basically been at the center of American intelligence for decades, first in the public—in the public intelligence arena at the agency and now at Kissinger and Associates in the private version of it and the consulting version, and will come up and enlighten us on all sorts of things relating to intelligence. (Applause.)

I want to give a little plug. Dinesh mentioned a book called Factfulness by Hans Rosling and his kids, and it really is a wonderful book that’s worth reading, one of these rare big-think pop books that actually brings a bit of perspective to the world in general. And you know, factfulness is something we all need a lot of, and it’s a good way to get that in a—in a quick package.

MISCIK: I just want to know, have you introduced me as the horse or as the elephant? (Laughter.)

ROSE: You are—you are the—you are the horse’s mouth that we are listening to and you’re going to describe the elephant for us.

MISCIK: I see. OK.

ROSE: Talking about, you know, the one—the three blind men. One looked at the elephant, at his legs, and said this is a tree. Another looked at it, at the trunk, and said it was a snake. And another looked at the side and said it was a—you know, a barn and, you know—

MISCIK: Just want to be clear. (Laughs.)

ROSE: OK. So, Jami, you spent decades knowing absolutely everything about everything that was possible to be known. You were at the top of the American intelligence community with the highest clearances it is possible to have. Every crown jewel of every world intelligence service was at your fingertips, and you knew what. What perspective did that give you on the world? This is the Sue Terry (sp) question we were talking about before. Did that allow you to predict events more than the rest of us schmucks who didn’t have that access?

MISCIK: I think yeah, absolutely. It gave us what I would call a decision advantage, that we could take the information, the intelligence we had to the president, giving him hopefully the best information available, the most timely, and with a longer lead time so that policymakers could respond to that in a meaningful way. It doesn’t mean that we knew everything that was going on. And I think one of the keys is that you do know what you don’t know.

And Colin Powell had a rule. I think it was—he called it the 40/70 rule. If you know 40 percent of the information—or if you know less than 40 percent of the information, you don’t know enough to make a decision. If you know 70 percent of the information but you’re waiting for 80, 90, 100 percent of the information, you’re probably going to miss an opportunity. So trying to get in that sweet spot with enough information, recognizing what you don’t know, and relaying that in my case to the president of the United States or now at Kissinger Associates to business leaders, really is the key.

ROSE: I love that. It’s actually a great concept and I’m going to use that story. These guys deal with numbers where things like 70 percent or 40 percent mean something. It’s like a—you know, it’s $40 instead of $70 instead of $100. What you just talked about is sort of a squishy concept of our best guess at what there is to be known about a subject. How in the world do you know you are at 40 percent of what—and the unknowable total is, as opposed to 70 percent of the unknowable total? That’s a metaphor. What does that mean in real practice?

MISCIK: If you have really good analytic, critical thinking, you’ve already thought through what the questions are that you need to have answered. So you know what the questions are. You know where you have answers to some of those questions. You know what questions you don’t have answers to. And in the intelligence community, you would go out and send people out to collect that information if they could get it, steal it if they needed to, intercept it if we could. But then you also had to stop and ask yourself, what am I assuming here that is so critical that if I’m wrong on that point, you know, the entire analysis, you know, kind of falls apart? And you owed it to the policymakers to tell them that—tell them what you didn’t know, tell them—the phrase is linchpin analysis. You know, what is that linchpin?

And I think the same holds true for business. You’re never going to have all the information you want. If you’re a private-equity company and you’ve done all the numbers on a deal, and you know you want to do that investment, but you’re not so sure about the new government of that country, and how are they going to treat investments, how are they going to treat investments by foreign companies, how are they going to treat investments by foreign companies that happen to be American, those are squishy.

ROSE: You’ve been in this business your entire career, of telling presidents what to do, telling CEOs what to do, all the things—you’ve been the soothsayer in chief. As you look back—

MISCIK: That’s what my card said. (Laughs.)

ROSE: As you look back at your record of prediction honestly, what are the things you feel proudest of getting right and what are the things you feel most embarrassed about getting wrong?

MISCIK: Well, let’s start with embarrassed about getting wrong, and I think Iraq WMD would be right up there. You know, that was a judgment that was made in the intelligence community, you know, throughout the world. We got it wrong. There is no question we got it wrong. If you were in my position then, it was an obligation, I thought, as stewards of the intelligence profession to figure out why we got it wrong.

So when we did—you know, our military did shock and awe through Iraq and we weren’t finding anything, I thought, OK, well, they’re moving fast; they’re just not finding it. You know, a couple weeks went by, we still hadn’t found anything. I decided we had to put together a team to make sure that we went back and figured out what was right, what was wrong. So that would be the failure.

The things that are really positive are often the classified ones that you can’t talk about. But I think there is a function in intelligence that is about warning. And it’s not—it’s about getting policymakers, or now in my case CEOs, to think about what isn’t right in front of them that they need to be thinking about. And I think some of those warning functions were amongst our biggest successes.

ROSE: So what kinds of issues did you tell people, hey, put this on your radar that they were like, nah, nah, nah, this is long term, and then—they should have listened to you about?

MISCIK: Well, it wasn’t that they didn’t listen to us, but one of the examples I remember at the time was we took in the situation that was developing in Darfur and explained how bad this was. You know, President Bush was the president then. We put a map of Texas over the size of Darfur, so in a minute he kind of got how big of an area this was, what was going on there in terms of genocide and the like. So that was a warning function. I’m sure they’re doing a lot of warning functions now that hopefully are being received well.

ROSE: Did you call, either back in government or outside, the rise of populism that we were just beginning to talk about in the last panel?

MISCIK: I think, clearly, coming out of the financial crisis, you know, you could see it at the very start with the Occupy movement, right? Occupy Wall Street, occupy parks. That was the start of modern-day populist resentment against their governments, their institutions, their leaders. We’re still seeing that.

You know, the previous panel talked a bit about nationalism. I think—I think it’s actually subnationalism that we’re looking at now. You know, we’re not looking at people saying, you know, I’m a member of India as much as maybe the ethnic/religious backgrounds that they have there. You see separatist movements starting in different places around the world. So I think, you know, those sorts of populist movements need to be paid attention to at a more discrete level.

ROSE: This administration has a notably controversial relationship with the intelligence community. As you watch that from the outside, can you—what is your take on all that?

MISCIK: You know, I think if you think about it in terms of kind of the political government—you know, elected officials—versus the professional—in my case, this case, national security cadre—of government, there are aspects of the political government that have kind of gone to war with the professional side of government. You know, the phrase “deep state.” It is not a deep state. These are professionals who are trying to carry out a mission on behalf of the country and its best interest. They’re not—in many cases they’re not policymakers. They’re law enforcement. They’re the people who are providing intelligence assessments of Russian involvement in the election. So whether it’s CIA, FBI, the meteorologist predicting hurricanes, the people looking at crowd size of inaugurations, I mean, those people are not out to get anybody. They’re just presenting what they see as the facts. Facts can evolve over time as you get more information. But they are there trying to do their job.

And I really am frustrated on their behalf because they can’t speak out about this the way that people like myself can now go out and say these really are people trying to do the best for the country and really don’t deserve the kinds of attacks that they’re under.

ROSE: As we go through what we’re going through, other nations are watching us and trying to analyze this. Two questions. One, if you were—if your opposite—if you were your opposite number, how would you be telling your president or prime minister to analyze the current U.S. political situation? What’s the—what should be the authoritative marker of truth of American policy these days? They’re somewhat hard to find.

And second, this is a question, I guess, about the stuff that Jack and Dinesh were talking about in the last panel. I’m curious whether nations hold grudges. In other works, Jack was saying, well, what we did was we had a lot—annoyed a lot of people for not a lot of gain. If there were to be a reversion of U.S. policy eventually to a more normal traditional historically policy course, not necessarily one that backed away from American interests but one that was more conventional in terms of its policy approach, would other countries respond to that or insist on payback for the annoyance of the last several years? Or would they say, OK, look, we’re all cynical professionals and we know it just happened—let’s move on to the next guy?

MISCIK: Well, I think if I were advising another country looking at the U.S., I would say, you know, no big initiatives now. Let’s hold off. Let’s see what the election brings. You know, if it’s a second term of the Trump administration that would probably indicate they’d go down one road. If it’s a new administration coming in, they’ll probably have a wait and see attitude about that administration. So I would kind of just advise the wait and see.

You know, I don’t think that going back is the way we should be thinking about it. I think we have to focus on going forward, and I guess one frustration I have is that leaders around the world don’t always lead their people—their populations—in positive directions and looking forward.

So some of the things that were being discussed in the previous panel. What types of technologies are really going to be meaningful? Are we going to be world-class leaders in those technologies? What do we need to do to make sure that we are? How are we going to respond to populations that are going to be displaced in terms of their jobs, in terms of whether it’s reskilling, whether it’s training, whether it’s universal basic incomes? Those conversations I don’t hear taking place as much as they need to, and I would say that’s true not just here in the U.S. but elsewhere as well.

And then, finally, I think this is a year where you’re going to see a lot of the major countries in the world focus on domestic rather than international relations. China, obviously, with the coronavirus has issues. Their economic growth will be impacted by this. The United Kingdom, trying to deal with Brexit and what that means internally and what that will mean for their markets. The United States with our election. Russia, with Putin’s latest speech, which was very much focused on domestic and national projects and getting the economy going again.

So I think we may be in a period where there’s a lot of domestic focus around the world.

ROSE: OK. That was a great global survey, by the way.

Let’s do—let’s take coronavirus for two hundred (dollars). (Laughter.) You have watched these—similar crises emerge and go up and go down and resolve themselves. What does that wealth of experience from previous epidemic crises tell you about the one we are going through right now and about how China is reacting and about the economic impacts?

MISCIK: Well, I think the one thing I would argue against or caution against are these comparisons to SARS. As we go back—I mean, not on the, you know, the death percentage and those sorts of things but even on the economic impact, and you read a lot of stories about this now.

But, you know, China is hugely more important to the world economy right now than it was at the time of SARS, even though that was just seventeen years ago. Guangdong Province in China now equals in terms of trade and exports what all of China equaled back during SARS. So those comparisons have to be taken with a grain of salt.

I think the transparency of the government in terms of its reaction to the crisis—you know, you see a lot of stories and a lot of indications, a lot of intelligence out there, about early on trying to tamp down reports. Maybe if things had gotten handled a little bit more quickly the spread would have been contained more so than it will be now.

It will get worse. I think that—there’s a phrase that Bill Bishop, in his newsletter wrote, saying, “The stability mechanism in China may have once again caused more instability.” You know, so the people who try to keep things calm and, you know, bad news not reported may have actually caused this to become worse rather than achieving their objective.

So I think the response since then has gotten much better from the Chinese government. I think—but, again, going back to what was said earlier, you know, it’s still great that the world looks to our CDC—our Center for Disease Control—for truth, right. They still look to us to help them understand where it’s going to spread, where we need to work with the World Health Organization.

You know, the World Health Organization is also another huge player. I think one of the things that will show evolution of other countries will be when their centers for disease control equivalents start to become the go-to.

ROSE: So let me press you on that. That sounded suspiciously self-congratulatory, just like Jack Lew’s comment about how, oh, we used to be able to be trusted on national security exemptions and things back in my administration and these guys have politicized everything and now everybody worries about the politicization.

So I’m starting to get really cynical and I’m starting—you know, now that I know I can’t trust my government I have started to go back and ask myself when and why I did believe I could trust my government and I’m having a harder time coming up with more valid reasons for that than I did.

And so my question to you, Jack said on national security exemptions on trade we used to have a reputation when people said this was a national security exemption it was for real national security and these guys are politicizing it and, therefore, now nobody can really say that, you know, the 5G—if we’re going to trade it off for trade things, if—(inaudible). We have a president who marks up, you know, maps of climates with a pen—you know, maps of weather with a Sharpie and then says, this is that.

Why do you think people still trust American institutions? Anybody who listened to the president of the United States last night understood exactly what they were hearing, which was a very good political speech and a very good recitation of a whole bunch of facts. But there were also a lot of things that, shall we say, would not necessarily support a fact-checking mode.

And so if that is true of the president of the United States in the most august supreme moment of national policy, why should people trust the lower-level minions of that very administration on things like China? If I were Chinese, I would suspect the Americans of politicizing CDC stuff just like I suspect them of politicizing trade.

MISCIK: Well, I think you’ve answered part of your question already. We have a fact-checking organization, you know, whether it’s the media, whether it’s NGOs, whether it’s not-for-profits, whether it’s CFR asking tough questions. You know, there are places that don’t have that.

If you really think about why people go in to work every day in government, it is not to lie to the American people or to the world. It is to do the best job that they possibly can with the information that they have, period. Now, one of the things I find very disturbing is when you start to see institutions, their leadership, begin to shift to hoe more to a political line than to a professional line. You know, the phrase speaking truth to power. You know, when I would go into the president’s office with his, you know, daily briefing or my briefer would go in, we were not there to be liked. We were there to give judgments to the best of our ability, recognizing that we are wrong sometimes.

But if you go in wanting to be liked or wanting to not be seen as disagreeing, that’s very dangerous and I think that’s where our society, our strength, and our ability to question and have transparency really does work to our advantage and I think people overseas still see that.

ROSE: We talked in the last panel a little bit about China decoupling. It’s, obviously, a crucially important issue. What’s your take on the China decoupling question, from an intelligence professional’s perspective? Is it going to be something that’s inevitable? Is it going to be complete or partial, or can it be averted?

MISCIK: You know, I think for the people who were instrumental in bringing China into the WTO they made some assumptions about what that would then lead to, right. It would lead to China being more integrated into the global economy. That would cause the political system to open up and be freer. Some of those assumptions were true—came true. Others did not. I think one of the things you have to ask yourself are, you know, when do you let go of an assumption? You know, when is it too long? You’ve held on to it too long. I think that’s a period—we probably got there two or three years ago with regard to China; we, as a political-establishment approach to it.

My question is, what are the new assumptions that they’re thinking? And we have to think about what are not only the new assumptions that we have about China, but what does China assume about us? And where do we each have national interests that are likely to be in conflict, and where do we have national interests that we are able to work together? And we need to craft a relationship out of that new basis rather than a basis that existed from 20 years ago.

ROSE: OK. Well, we will get into more of that in the panel after this one. Right now thank you very much, Jami.

And we are going to turn to another one of these with Dan Keeler—(applause)—Dan Keeler and Adiba Ighodaro, who are going to bring a different perspective on some of the same issues. And then we’ll all come back together.

KEELER: Thanks very much. Thank you, Gideon, for the introduction, and Gideon and Jami for a fascinating conversation. I have to say, you actually managed to restore some of the hopes that were crushed by Gerry Baker earlier on. (Laughter.) So thank you for that.

So I’m here with Adiba. We’re going to be talking about the key trends in the global economy and their impact on business. So we’re taking a much more business-focused view on things.

One of the core themes of this event is the growing power, politically and economically, of the emerging markets or the so-called emerging markets, as I like to call them now. And one of the other themes that we’ve been talking about is the coronavirus and the trade war and various other global changes that are taking place.

Adiba, the first question I want to ask you is, would you say that the coronavirus and these other events, the trade war and so on, are undermining the case that emerging markets are becoming more powerful in a global sense? Or is it actually supporting that case?

IGHODARO: Thanks, Dan. And good afternoon, everyone.

I think that’s—it’s a question that actually is not as relevant, I think, to the long-term role that emerging markets are going to play in the context of a global economy. Coronavirus is—and I think Jami mentioned—it will probably—it’s a terrible thing going on right now, but it’s not a long-term issue. It is having an impact not only on the emerging markets, but also on developed markets.

We have, through this period of what one might call hyper-globalization, seen global supply chains, seen such an intricate web of interdependencies develop, particularly at the business level, that it’s very difficult to separate them out today because of one event. And, you know, Hyundai closed its factory in South Korea. The German carmakers are wondering what are they going to do about certain parts that are important to the industry.

So I don’t think there is a disproportionate impact per se through the virus, but we’ve all talked about and the previous panels have talked about the growth of China and its importance. And it is through that—it’s where China perhaps slows in growth that we see an impact on emerging markets, particularly on perhaps commodities, those that are commodities exporters.

But I think it’s too simple a question or an answer to say that, yeah, emerging markets are going to be impacted disproportionately.

KEELER: Thank you. So on the theme of the growing power of the emerging markets and the sort of emergence of the emerging markets, you’re investing on the ground in many of the countries that are particularly at the small end of that scale. And do you think that business leaders and policymakers generally have grasped the scale of the changes taking place of the emerging markets?

IGHODARO: Well, again, I think it’s a bit of a yes-or-no answer, Dan. I think everybody has grasped the fact that there are huge changes happening generally in the global economy. We’ve talked a lot about China and the U.S.-China trade tensions. I think people have grasped that.

I think what we’re seeing less of currently is, particularly if you’re looking at it from a long-term investor perspective, we’ve seen less of an understanding, or at least I haven’t heard conversations around the so-whats as it impacts my long-term investment strategy.

And so if you look at—I mean, whether it’s from the demographics perspective, growth perspective, the emerging markets are going to be 70, 80 percent of activity in global economy. I think that’s sort of—that train’s left the station. You can’t afford to ignore them. But at the same time—and the first panel spoke a little bit about whether or not that distinction between emerging markets and developed markets still exist, and I think they concluded yes.

I think that—and certainly when we look at it from an investment perspective, that definition, that distinction, may exist from sort of the macro-stats perspective. But when it comes to looking under—beneath the surface and looking at investment opportunities, I think that distinction has really fallen away.

So from an investment perspective, we’re looking at—we’re looking less at just sort of regional and geographic definitions. We’re looking at, from a sector perspective, if I am an investor in infrastructure or, you know, energy infrastructure, or indeed financial services, it really—I am compelled to look at where the best opportunity is from more of a micro level, I would say.

KEELER: So really you’re saying that you don’t differentiate between emerging and developed markets or frontier or any of those categories when you’re choosing the investment. It’s more that you’re looking for the investment category and the rate of return. And then if it happens to be an emerging or developed, that’s immaterial.

IGHODARO: That’s right. I mean, I think—well, let me start by saying we don’t invest in developed markets anyway. But I suppose within that sort of very broad range of what you might call an emerging or frontier market, I mean, in fact, at times we call them growth markets. It’s hard to say that Korea is not a developing or an emerging market. And we—you know, China’s the second-largest economy globally.

So we’re looking—but in that broad spectrum, we’re certainly looking at and actually capitalizing on the fact that when you look through a sector lens and you look at—let me take one sector, consumer, for example. And the growth in consumption generally, you are seeing consumer spending or the number of consumers diminishing in many developed markets. You’re seeing—I was reading the other day that, I think, as of next year, the sort of—the working-age population in Europe is going to start decreasing.

And so you are—you know, we’re looking at, from a sector perspective, the fact that in the infrastructure space, you have a much more significant need and opportunity that’s actually more attractive than in many developed markets.

KEELER: Right. That’s interesting. As journalists, we tend to take a fairly gloomy view on things. We’re always looking for things that are going wrong.

IGHODARO: Yeah.

KEELER: I’m intrigued what your sort of overall feeling is about the direction that we’re heading as a world, you know, globally. Like, do you feel optimistic about where things are going, or are you as gloomy as we are on the media side?

IGHODARO: Well—(laughs)—not gloomy, because—

KEELER: Well, that’s a relief.

IGHODARO: (Laughs.) Not gloomy, because I think I’m looking at different markets. I mean, one of the—we’ve talked a lot about Asia and China. We haven’t spoken at all about a region like Africa, for example. And if you travel to many places in Africa, you have the youngest, fastest-growing population in the world. There is an excitement. There is a sense of, I think—what are the numbers? You’ve got 1.2 billion people currently, population, across Africa. You could fit all of—to go back to the illustration of sort of putting Texas on Vietnam—you could fit all of the U.S., China, India, half of Europe into the continent—into the map of Africa.

KEELER: So it’s quite big.

IGHODARO: It’s quite big. (Laughter.) You have a working-age population that is—that over the last ten years has grown by 30 percent, compared with the sort of 2 percent elsewhere. And I believe in 2034, 25 percent of the world’s population will live in Africa. And so the excitement there is about looking at what are those secular themes that are then generating opportunity that everybody is opportunistic about—is optimistic about? And it’s—you know, you’ve got all those growth metrics on one side. But you’ve also got the fact that there has been such under-penetration in certain key sectors. So that leads to—that makes me feel optimistic, since Africa is one of the regions where we invest, as well as, you know, the continued opportunities in certain sectors, in parts of Latin America, and indeed in Asia.

KEELER: Mmm hmm. No, it was interested you mentioned that we haven’t talked about Africa. Obviously, I cover Frontier Markets. African countries are a big component of that. And it struck me last week that there was a vast disparity, as it so often does, between the coverage of Africa and the coverage of what’s going on in the rest of the world. And it was really illustrated by the fact that, you know, we have the coronavirus unfolding at the moment. And I think at the time there were, I think, twelve thousand confirmed cases and several hundred dead. So not insignificant.

Meanwhile, in East Africa, you’ve got a plague of locusts which is sweeping through East Africa. Some of the swarms are bigger than Manhattan. And they can demolish hundreds and hundreds of acres in hours. And some tens of millions of people are being affected by this. And so you’ve got a health crisis there which is absolutely immense, and it’s not really registering in the global news, where—you know. So just, to me, that illustrated the sort of lack of attention that’s paid to Africa. And I wonder if, from an investment point of view and from a sort of geopolitical point of view, there’s a lack of attention that perhaps is—should be addressed somehow.

IGHODARO: Well, sometimes in Africa we welcome the lack of negative attention, because most of the attention when it does happen is on the negative side. But you’re absolutely right. And I think at the end of the day, it boils down to self-interest. So Africa is making the news now from a coronavirus perspective because of the concern that Africa isn’t really set up. Many countries—I think there are only two countries they’ve identified, they said, when the equivalent of the CDC can actually diagnose coronavirus. So that’s now hitting the headlines in the sense of, you know, perhaps there’s coronavirus in Africa, and nobody’s spoken about it because they haven’t been able to detect it.

But, yes, you’re absolutely right. I mean, I think—when I think, again, back to from an investment perspective, the fat that we’ve invested over the years some $3 ½ billion in Africa—we’ve put $3 ½ billion to work. We’ve actually returned to investors close to $5 billion U.S. These are numbers that may not be large in the context of China, but they tend still to sort of have people saying: Oh, you can actually invest at that sort of scale on the continent of Africa.

KEELER: Right. So one of the comments, I think it was Dinesh made, in the first discussion, he was talking about inequality, and the uneven benefits coming from globalization. I’ve had discussions with African leaders particularly where they’ve talked about inequality as being one of the biggest threats. You know, you’re talking to somebody who’s really managing an economy that’s relatively in its early stages. And they’re already seeing this vast disparity developing between people that are perhaps moving up the economic ladder slowly, and the people that are just leaping towards the top. And you’re seeing the huge gap.

Towards the end of last year I put out a weekly newsletter which is focused on frontier markets. And towards the end of last year I felt like I was writing Protest Weekly because almost every article that I was picking up on was a protest in one country around the world or another. And it felt to me like there’s this really strong surge of kind of recognition of unfairness and the ability to do something about it. I mean, is this something that you fear might derail this whole growth story, that might see more and more of these protests?

IGHODARO: Well, I think—I think—and it’s interesting that you mention that because, you know, populism, the rise of populism, and civil unrest we’ve seen in developed markets as well. I mean, we were just talking about—or, we talked about sort of Occupy Wall Street. Recently in the U.K. there was, I don’t know if people are familiar with Extinction Rebellion. It was just some—and with the technology these days it is very easy to bring people together. They had not real objective. I mean, it was just shutting down streets in London. I think there is a common theme of frustration with the growing sort of disparity in income and wealth.

But I think on the positive side in emerging markets it’s less about—it’s been less about, well—and it varies from market to market. But—so in a more developed market like Chile, I mean, it was just a small trigger, an increase in the metro fare. But in—you’ve seen in some of the African countries civil unrest, in Brazil as well, that’s really been focused on eliminating corruption and demanding better democratic principles and execution of democracy. And so though that might cause some short-term pain, again, when you look at it in the context of what the people are now demanding of leaders, it really is—if it—if it has the result of—I mean, Angola, the so-called hand-picked successor to (dos Santos ?) has now turned on the family.

So if it has the long-term—achieves long-term a strengthening of institutions that are able to address and deal with corruption, that’ll—that can only add to the opportunity that will exist in emerging—or, that does exist for investing in emerging markets. You know, I’ve always—I’ve always said that there’s corruption everywhere, in every—you know, whether it’s a developed market or an emerging market. The key difference was that in developed markets there were the institutions and capabilities to deal with it, although I would say in some markets now those institutions that one took as a given are being tested. But in the—in the emerging markets, if you are strengthening those institutions it’s for long-term benefit and gain.

KEELER: Yeah. So do you feel that the protest movements we’re talking about, do you think they’re actually—the leaders and potential leaders are really taking notice of that, and they are going to behave in a more transparent and honorable way, for example?

IGHODARO: Well, I think so. I mean, it’s not going to sort of transform overnight. But we saw—I mean, you look at elections that have taken place, you know, in a large country like Nigeria, for example. The fact that the incumbent president in the election that brought Buhari in was toppled, was something that was a little—that was surprising to many.

KEELER: Yeah. Seems like the bar is being set quite low, though, just to sort of say the election is fair and—

IGHODARO: But it is—well, but the kind of wealth that comes with government, and power, and the ability to—you know, the fact that you weren’t able to swing the election your way, I think, was—little Malawi has just—the court there has just annulled an election that they said, you know, had, what did they call it, the Tippex election.

KEELER: A very long struggle to change that.

IGHODARO: Yes. Kenya did it three years ago. So these are manifestations of people sitting up and taking it seriously. I think also with that recognition that, again, you look at—again, if you come back to Africa, because that’s where a lot of people talk about some of these challenges—the rate of urbanization, and therefore the infrastructure needs, the challenges in the electricity sector, the financial services sector, they are demanding—those sectors are demanding investment at a scale that governments can never afford. So again, it’s sort of tied hand-in-hand with creating both the perception and the actual attractive regulatory and geopolitical environment that makes private—that allows private capital to come in and invest in these sectors in a way that—you know, in order to sort of manage and grow the economy, and also manage people. (Laughs.)

KEELER: Right. So in your role as an investor, do you pay much attention to policymaking? Or is that just like a separate universe that’s going on while you’re busy trying to find opportunities?

IGHODARO: I think, look, you can’t ignore that. I mean, we—if we invest significantly in the electricity sector, we’re not going to invest in a country where we don’t feel comfortable that the regulatory environment is right. And that—particularly when you’re signing, you’re relying on sort of fifteen-, twenty-, twenty-five-year long-term contracts, you need to be comfortable that that policy is and regulation is right. So you have to pay attention to that. But it’s—you don’t—and there are certain countries that you just kind of rule out altogether.

But you do—even where in certain—it’s just not uniform, Dan. You know, there are certain sectors, certain regions even, where you might—you know, regions within a country where you might find opportunity—a state in particular in a—like a large country like India where you do have an attractive environment.

KEELER: Right, right. So we’ve got—oh, we’ve only got four seconds left. In four seconds—(laughter)—

IGHODARO: Super.

KEELER: In four seconds, how do you—what do you think the world’s going to look like in ten years’ time? You know, talk very briefly. (Laughter.) You’ve got four seconds for this. (Laughter.)

IGHODARO: One, two, three, four.

KEELER: That should be enough, right?

IGHODARO: What’s it going to look like.

KEELER: Yes, what’s it going to look like.

IGHODARO: OK. Brr. OK.

KEELER: That’s it, time’s up. (Laughter.)

IGHODARO: I think—I think it’s important to recognize that we are—there has been a shift in the way globalization is happening. The emerging markets who were strong benefitted enormously from that, and the people that got left behind in developed markets—you also had in developed markets companies benefitting from that and asset owners. But the ordinary person on the street, the low-skilled worker, the fact that the trickle-down was—I was saying a little earlier the number of listed companies in the U.S. has halved since the peak in the ’90s, so that means that there’s less general ownership and less trickle-down of profits and benefits.

KEELER: So everything’s getting more and more condensed.

IGHODARO: So everything’s getting more condensed. So that is going to—people are going to have to focus on—or policymakers are going to have to focus on what to do about that.

So I think that will continue to rumble on. I think the way in which China and the U.S. engage, it’s much broader than trade or tech. It is really who’s establishing themselves as a leader in the world. And that’s going to be broad and that’s going to rumble on.

I think—

KEELER: Do you think that the—

IGHODARO: —Africa will become much more significant in people’s minds in the next ten years.

KEELER: Yeah. I think—well, it’s going to have to given the number of people there and the wealth being generated.

So we are out of time. But we are going to come back for another session, and that will be all four of us.

IGHODARO: OK.

KEELER: So thank you very much, Adiba.

IGHODARO: Thanks, Dan. (Applause.)

KEELER: So there will be a quick set change. And that will give you guys a moment to think of all the questions that you’ve been waiting to ask because we’ll have Adiba coming back with Jami and Gideon, and the four of us basically engaging in a conversation with the audience. It’s not so much a Q&A; it’s more that we want to hear from you, your thoughts about the topics we’ve been discussing and to really kind of dig into some of the subjects that we’ve been talking about just now.

So I think we’re pretty much ready. So, Adiba, Jami, Gideon, would you like to come back and join us?

(Break.)

KEELER: All right. So welcome back. What I’m hoping for, actually, is that you two are going to get involved in an animated and possibly ferocious discussion that then the audience can contribute to. (Laughter.) But—

IGHODARO: Surely not. (Laughter.)

KEELER: When you were listening to Jami before, did you have any sort of thoughts or comments about the topics she was discussing?

IGHODARO: I thought it was all very interesting and really agreed with a lot of what she was saying. What struck me the most, though, was that while it’s all interesting and parts of it certainly relevant to us as investors, there was quite a sort of degree of separation in terms of what we’re thinking about, what we’re looking at, and the opportunities we’re seeing compared with that sort of, well, U.S.-centric focus sort of look on the world, so.

ROSE: I actually have a question for both of you in that regard, which is now at Kissinger and Associates you are doing, among other things, advising companies on how to, let’s say, be in China. You have invested in China and other kinds of companies. I was struck by Dinesh’s comment about the plight of the external businessmen having to get involved in the China market even though they knew they were going to have trouble getting anything out of it, condemned to be in but also condemned not to be able to get their profits. What advice do you guys have for people actually in that situation trying to deal with China?

MISCIK: You’re the investor. (Laughter.)

IGHODARO: Well, I would never define or look at ourselves as being condemned to be anywhere or do anything. And that’s—you know, we invest across Africa, Asia, Latin America, and through global funds really for that purpose. We don’t—if the opportunity is not right in a particular place, we will not invest there. I don’t—you know, from a business perspective you’re looking—you’re investing to make money, and to make money for our partners and their beneficiaries. So—

ROSE: So what is it—how is it possible to make money investing in China?

KEELER: I think you might be asking the wrong person, actually. Jami, you tell companies that.

IGHODARO: Jami, do you want to—

KEELER: What—

MISCIK: Well, no, what we tell companies is, you know, how to mitigate risk. It’s not about avoiding an opportunity that’s there. It’s trying to understand the upside of the opportunity, which by and large the businesses understand themselves. And they’re trying to get this additional overlay of, you know, is there anything I should be thinking about that I haven’t thought of from a financial investor perspective that might wind up affecting my interest.

I had a boss when I was on Wall Street who once said to me—(laughs)—I was the global head of sovereign risk at the time. She said, politics don’t matter. And I thought, oh dear, we’ve got a long way to go here. (Laughter.) Politics can have a tremendous impact on business decisions.

But I think just going back to something that you said in your session that I thought was absolutely right, you know, there’s actually a lot of hopefulness—and I think this applies to China as well—when it comes to indigenously developed movements against things like corruption; you know, when it’s the local prosecutors who are taking on things that they seem to be unfair. We saw that in Brazil a couple of years ago. This wasn’t the IMF coming in and saying you have to do this, you have to do that. So I think where you start to see that, where you see that in China, where Chinese companies who have built themselves up, they want intellectual property rights as much as a U.S. company investing in China wants intellectual property rights. Those are the things that I see as being really positive developments in the emerging markets that can advance those economies and those—rule of law isn’t quite the right expression, but that operating environment that businesses can feel more comfortable in.

KEELER: So let’s see if anyone has questions from the floor. Gentleman?

Q: Hi. Craig Charney of Charney Research.

My question is for you, Jami, because I thought your comment about linchpin assumptions was intriguing. If I could articulate what I thought was yours, it was that the world is an opportunity; that’s why we should see how we adapt to new technologies, how we reskill and retrain and redevelop. The thing that strikes me about the questions that are being asked by the administration is that they come from a different linchpin assumption, namely that the world’s a threatening place—we have to protect our corporations, we have to protect our people against diseases and against immigrants, and that we have to protect ourselves from predatory outside technologies. What really struck me about that is that that helps to explain, perhaps, why there’s been such a dialogue of the deaf, because if you’re asking different questions that proceed from different assumptions, don’t you end up talking past each other? I’m wondering if that’s true for government and business now.

MISCIK: Well, I think anytime someone comes at a question from it’s 100 percent this or 100 percent that you’re going to wind up talking past each other, whether that’s in government or business. And I think the real question is, you know, it’s a—and I don’t mean this to be a copout—but it’s always going to be some of both, right? There are going to be opportunities. There are going to be risks. There are going to be things you have to protect your business from or your population from, but then there are also going to be reasons that you want to engage. So making sure that you’re not, you know, these black and white, you know, we will not talk to you because you’re of that political party or this political persuasion, or you happen to be in this country and we happen to be in that country, that is a recipe for a failure, in my mind.

IGHODARO: Yeah. And I think if I might just build on that a little bit, because again, it reminds me of something that was said in the very first session—and in fact, you asked me the question, Dan, in terms of the sort of distinction between emerging and developed markets and, you know, black and white. I think one of the things—building on the risk point, one of the observations I have is that there needs—there hasn’t been the degree of change in how one understands, analyzes, and assess risk that the changes we’re seeing at a geopolitical level and also within countries, developed markets in particular, those changes—we haven’t seen the change in that risk analysis that those changes actually demand. And I think that’s where business—and I’m sure you’re probably helping them out on areas like this, but we certainly—I find it a little surprising.

So take a statistic. Out of the sort of the I think it’s around $17 trillion that globally needs to be invested in the electricity/energy infrastructure space, 14 trillion (dollars) of that is in the emerging markets. So that’s the scale of the opportunity. Yet, it’s the inverse—when it comes to capital that’s being raised and looking to deploy, it’s the inverse sums of money that are being raised. And so, of course, what’s that going to do? It’s going to force asset prices up in developed markets. It’s going to create—it’s going to force greater risk-taking when it comes to—(of ?) takers and contracts. But that’s—somehow, that’s not being factored into—you just hear the words “emerging markets” and you think, right, that’s got to be higher risk.

KEELER: It’s also holding back the development of those markets, as well, because power is such an important component of the development story.

IGHODARO: It is.

KEELER: So it’s kind of—it’s a self-reinforcing prejudice, in a way. It’s like, we’ll keep the money out of those markets, so the markets don’t develop, therefore that’s a good reason to keep money out of it.

IGHODARO: Well, for those who are in there, I mean, you’ve actually got—you know, we didn’t talk about climate change. And I’d be interested to hear how your businesses are thinking about that, particularly in the context of the U.S.’s position.

But you know, what we’ve seen in terms of the opportunity in emerging markets, it’s a significant opportunity to invest in renewable energy, because actually, you know, the sun shines more and the—and the wind blows harder in many of those markets, and so it’s financially and commercially very attractive. So you’ve got that opportunity both to make returns as well as to do the ABC in the climate—contribution in the climate.

ROSE: Do you need another question?

IGHODARO: Question.

KEELER: Gentleman here.

Q: Thanks. So since this is a Wall Street Journal and Foreign Affairs co-production and you mentioned that you had a boss that said politics don’t matter, I’m wondering for people that have a business or an investment background but they’re looking to do business or invest overseas and you’re mentioning that politics matter, what would be examples of the world of politics that business investors would need to be familiar with? And what kind of skills—like, how would they go about developing the kinds of skills that they would need in order to factor that into their business and investment decisions?

ROSE: Jami, you want to take that one first?

MISCIK: Gideon would like me to say read Foreign Affairs. (Laughter.) I would like to say that as well. (Laughs.)

ROSE: You know, it’s funny. We try to every issue ask ourselves that kind of question, what is it that we’re putting out there that can give value to our readers? Because everybody reads the papers. We assume everybody knows the facts, right? It’s just like the market. Everything that’s public information everybody knows, so you can’t get any purchase on that. You have to either do something with it or come up with some new stuff that other people know.

And I think that the answer is the ways that unexpected risks that you didn’t think about sort of suddenly come and dominate stuff, and perspective in handling those. So on something like the coronavirus, what the experts can tell you is, A, to have been aware that this kind of thing could happen and have factored in resilience into your operations, into your investments, into other things so you don’t get caught entirely by surprise, to have a contingency in place. And then a perspective of how these things have played out in the past, what the—you know, so you don’t freak out when they happen.

I remember after 9/11 I was having dinner with some friends in the investment community and some financial guy said—they were saying, OK, when’s the next attack coming? This was like on Thursday. And I was saying, well, I’m not sure there’s going to be another attack. And they were like, of course, we know, we’ve read these things; there’s always a second attack. When is it happening? No, I said, you didn’t have any idea there was going to be a first attack until Monday and now you know everything and—(inaudible)—right? I’ve been studying this stuff and I knew there was a percentage odds, and you know, it wasn’t totally a surprise although somewhat surprise. And now I’m telling you, we don’t know. We’ll see. Don’t assume that you know.

And I said, what’s the market going to do next week? And he was like, oh, well, that’s—you know, that’s unfair to predict. You can’t expect for more prediction in both. But in the same kind of way that good analytical intelligence and calm perspective of the range of possibilities, the forward-thinking odds that can happen, that’s the kind of—it’s basically perspective in context. That’s what I would say.

And the question of political things, if you think about the area of interaction between government and business, all the ways that regulation affects various industries, all the ways that the failure to push trade policy forward will create dampening effects on the global system that will have outlying impacts in several years to come, if you don’t understand those things or if you don’t understand the follow-on consequences you’ll be taken aback by them.

And I like what you said about not too much telling your companies how to profit, but how to avoid getting screwed or how to avoid blowing themselves up. That’s the kind of advantage you can often do.

IGHODARO: You know, I think—and I will take a slightly different perspective. I think, obviously, the politics is important as it impacts on where you—how the attitude towards regulation in certain areas, as you mention. But I think it’s also important not to equate politics or geopolitical issues with sort of that means don’t do something, because if I think about places where we’ve made significant—there was—when the Arab Spring started and everybody was sort of like, well, you know, North Africa, Egypt—we were literally about to make an investment into a consumer snack foods business. And actually, looking at it from the inside out, we went ahead and made that investment. And when you sort of stripped away the fact that, yes, there is civil unrest, you focused on the fact that there’s still a large—there’s a large population there of people who are going to eat irrespective of whether or not there’s civil unrest. They’re going to buy drugs, you know? And actually, when they’re demonstrating, they’re out on the streets, they’re going to buy more snacks, actually. (Laughter.) And that was a very successful investment.

We missed an opportunity in another market where it almost went into civil war and there was a mobile phone—this was going back a long time where mobile telephony was really just kicking up in Africa. And we missed investing in a particular business which went on to do exceptionally well. So all I’m saying is that politics, yes, but don’t get so caught up in politics that you miss out on opportunity.

KEELER: So when we were talking about unrest before you missed an opportunity there to say that that’s actually a business for you, that you—(laughter)—providing snacks for people on the streets.

IGHODARO: Dislocation, whether it’s in a sector or in civil society, is always to be looked at.

MISCIK: I really think—I couldn’t agree more. The way you have to look at this is recognize what risks exist, what kind of an investment you’re making. If it’s, you know, a very fluid thing where you can be in and out of a market very easily, that’s a very different situation than if you are a heavy, sunk capital investment type of arrangement. But it’s understand the risk, mitigate what you can, accept the rest, and take the opportunity. And sometimes you will get elements of maybe your own organizations that start agitating, right, because, you know, the security people will come in and say, oh, this is far too risky, you can’t be here; you know, people have died in this country. Really? You know—(laughs)—find me a one where that isn’t the case. So it’s how you deal with those situations. It’s not to avoid the situations.

KEELER: I think that’s a(n) excellent point to end this discussion on, actually. Unfortunately, we’ve run out of time. But we will all be available at the cocktail hour to continue the conversation if anybody wants to ask further questions. But I’d just like to thank the panelists. (Applause.)

ROSE: So this brings the first half of our conference to a close. But we’re going to be back in about twenty minutes with a second half that is equally explosive and interesting and fun. And in the meantime, if you want to continue this discussion outside the Wall Street Journal Pro’s latest product, Strategic Intelligence, offers a way to basically get all these kinds of discussions funneled right to you and all sorts of information you’re needing. Brian’s (sp) outside with a table that can explain that new product.

We will see you back here in twenty minutes. More fun, I promise—debate, interesting stuff. Keep going.

(Break.)

ROSE: OK. So this is actually a testament—we had bets internally on how many of you would show up for the second session, and we are—I’m glad I won, because basically almost all of you did. That shows that you understand what you are getting and what you are about to get now.

So we have another hour left. And we’re going to cram in seven more experts—seven more fat cows to follow the seven fat cows already. So you won’t have seven fat and seven thin. You’ll have fourteen cows, and the pharaoh’s predictions will basically come completely true. We have now for this session yet another perspective on emerging markets. We have basically venture—we have venture capital, which is yet another way of looking at the same thing, in conversation with finance.

So we have Amit Anand, who is the co-founder and managing partner of Jungle Ventures and Yun-Hee Kim, the technology editor of the Journal. After they have another session like the ones we just had, we’re going to have our closing blockbuster debate on the future of globalization, which will be—determine which way globalization goes, based on how you vote at the end. And then we’ll wrap it up. So hopefully you’re finding out what the risks are, how to manage them a little better, and how to think in context about this crazy world we’re in.

With that, let me turn it over to Yun-Hee Kim and Amit Anand for our next session. (Applause.)

KIM: Thank you for being here, Amit.

ANAND: Thanks for having me out, guys.

KIM: You flew all the way from Singapore, so we appreciate you making the trip.

You argue that using the terms “emerging market,” or “developing market” to describe Southeast Asia is actually wrong. And for global investors who are ignoring that market, they’re missing the train. Tell us why.

ANAND: I would even argue that calling U.S. as a developed market sometimes can be challenging. (Laughter.) And you know, point in case, I flew into the San Francisco airport, and it took me four and a half hours to get out of that airport.

KIM: Four and a half hours?

ANAND: Four and a half hours. And I believe now it took somebody six hours to get out of the airport.

KIM: Oh, wow.

ANAND: And you know, just sort of coming from where I am, even with all of the things that are happening there, you know, it takes you ten minutes, twenty minutes to get out of Singapore, Hong Kong.

KIM: Singapore and Hong Kong are very efficient. (Laughs.)

ANAND: You know? So I think the challenge I have is that, you know, maybe twenty-thirty years ago all this made sense. But today, if you look at the fact that a twenty-five-year-old sitting in Jakarta or a twenty-six-year-old sitting in Singapore, or Ho Chi Minh City, or Mumbai, or Shanghai, you know, she’s got access to everything on her mobile phone. She’s spending four to six hours of her life every day online. And with that, she is exposed to the world in terms of opportunities. And that’s created a very even playing field, where when you talk about Millennials and Generation Z, they do not think about the world as, you know, I’m from Indonesia, or from Thailand, or from Singapore, or from the U.S. You know, they are—they’re following—(inaudible). They’re following K-pop. And they belong to that community. And so in that sense, you know, what we’ve realized is that looking at Southeast Asia from a lens of a socioeconomic band has created far bigger and scalable opportunities than looking at it from Indonesia, Vietnam, Thailand, which is what it used to be back in the day.

KIM: We’re talking about a region of about six hundred million people, three hundred sixty million internet users in the region. Yet, a lot of companies are entering Southeast Asia, they see these data points and they think there’s a great opportunity, but we do—we do see some challenges. It’s a fragmented market. A lot of people speak different languages. So for a group of investors looking at Southeast Asia, what are some of the challenges that they face?

ANAND: You know, me and maybe thousands of people like me have made our career on the back of this arbitration—knowledge, arbitration, information gap between Southeast Asia and the rest of the world. And the reality is, yes, Southeast Asia is a collection of eleven countries loosely put together. There is no real understanding between them around policies and languages. And when—back in the day, when I was operating for software industry, my job was to help principals from the U.S. understand that when you come to the region, you can’t paint the region with one brush. You really need to understand Malaysia is different from Singapore, is different from Indonesia, and the Philippines, and Thailand.

But I think, again that’s changed today. Because of this young, homogeneous consumer you are able to now go from one country to the other country, which is creating an opportunity to scale. But on the other hand, you’re still dealing with operational issues at the ground. You’re still dealing with having the fact that you have to recruit people in every city in a different country. And those operational complexities, in some sense, are the true barriers to entry. And that’s where you see from a mergers and acquisitions perspective, or JV perspective, there’s a lot more happening in Southeast Asia than markets like India.

KIM: On that point, we’ve seen many of the Chinese tech companies over the years invest heavily in Southeast Asia. Companies like Alibaba, Tencent, and JD.com have entered this space. And yet, none of them are actually profitable. So what are the lessons there? I mean, obviously they’re making a bet on this huge opportunity with a huge demographic. But they can’t make a profit. So should they remain in the market, or should they be evaluating a different structure?

ANAND: I think the challenge for most of these players is that they’ve brought this philosophy of what made them successful in China and applied it directly to Southeast Asia, and maybe to the rest of the world as well. And the reality is very different. The fact is that if you’re in a China, if you’re a company like Pinduoduo which I think went public in Nasdaq—

KIM: This is a group-buying company in China.

ANAND: This is a group-buying company in China.

KIM: Figure the next Alibaba from China. (Laughs.)

ANAND: That’s right. It today has about $21 billion in revenue and $250 million in net revenues. And this company was started three years ago. So in three years, the company achieved $21 billion of global revenue, and mostly in China though. And the reason they were able to do it because of a strategic partnership with WeChat. And today, out of the four hundred—

KIM: WeChat is the—is Tencent’s big messaging platform.

ANAND: WeChat is essentially the communication platform for every Chinese within China. Almost everybody in China uses it. And it’s Tencent’s platform. And today, out of the four hundred million people that transact on Pinduoduo, two hundred fifty million consumers have come from WeChat and been part of their network.

And so these Chinse companies had a lot of leverage in their domestic markets, the networks they’ve created, the consumer brand, the trust. But when they come to Southeast Asia, the Southeast Asian consumer doesn’t know anything, doesn’t have access to the WeChat, doesn’t have—is not in their network. So to a local entrepreneur, they don’t have really any value proposition, beyond the fact that they can just give capital. And that’s been part of the problem. I think if these companies approach it from a win-win scenario of sort of growing the pie in Southeast Asia, like some companies have, you will see that there is a significant revenue opportunity in the region. It is today the fifth-largest economic bloc in the world. It’s $2.8 trillion. And it’s growing 5-6 percent per annum.

KIM: Companies—foreign companies—or, I should say, U.S. tech companies have also eyed Southeast Asia. And we’ve seen Uber over the years expanded in Southeast Asia. But the local players, like Grab, actually took the market share, and they had to eventually pull out of the market. What, in your view, given that you’re an expert in this space—what should be the future strategy of U.S. tech companies in the region?

ANAND: I think the challenge has been that the level of localization that most of these companies have approached these markets with needs a completely redefinition. I think Uber—I don’t think Grab won the market. I think Uber lost the market. And I’ll give you a very simple example. I’m a Singapore Airlines frequent flyer. And you know, I collect points whenever I’m traveling globally. And a lot of Singaporeans are very loyal to Singapore Airlines because it’s one of the best sort of mileage programs in the world. And Grab knew this. And when they launched in Singapore, they did a very insightful thing. They partnered with Singapore Airlines, so that whenever you were taking a Grab taxi you would be earning Singapore Airlines miles. And so you put myself—you know, yourself in the shoes of every Singaporean. Why would you want to take Uber?

And so I believe that understanding of the culture, and what value means to the consumer, needs to go at a much deeper level than most people have done. And son that sense, I would say Uber had done a poor job of understanding the local market, and hence they’ve come out losers.

KIM: So should they have initially when they entered the space just partnered with a local company?

ANAND: Absolutely.

KIM: Yeah.

ANAND: And that’s where you will find that a lot of companies have succeeded in Southeast Asia. We’ve sold some of our companies to the like of Twitter, HomeAway, even Naspers just recently. And a lot of these people understand the importance of that extremely local understanding versus just lip service, as far as localization goes.

KIM: We talked a little bit backstage about how Indian companies are now also looking at Southeast Asia, because they want to get out of that market. What are some of the trends you’re seeing with Indian companies in the region? How are they approaching the market? Are they approaching it very differently from the Chinese and the U.S. companies?

ANAND: I think the fact is that India and Southeast Asia both are very, very young demographic. Southeast Asia is home to close to two hundred fifty to three hundred million Millennials. India is somewhere slightly above that. So you’re talking about half a billion to six hundred million Millennials. And the fact is that none of them want to work for—(inaudible). They all want to do their own thing. So despite the fact that there’s a lot of capital flowing their way, there’s a lot of people looking at sort of putting money and acquiring them, they all want to build global brands. They all want to be the next generation of SoftBank, and Alibaba, and Tencent, Google, Facebook, if you may.

So I think what you’re going to see is over the next ten, twenty, thirty years Indian and Southeast Asian entrepreneurs are going to dominate on the fact that they are sitting on almost half a billion of Millennials, 5-6 percent per capita GDP growing, average $3,000 in Southeast Asia per capital GDP. They have got a very strong domestic consumer base, on the back of which they can build great companies and then kind of expand outside. And that’s what you’re seeing with most of these players.

KIM: Just on the point of Softbank, I want to get your thoughts on this mentality that you have to grow at all costs, and very quickly. Are we entering a new environment where the mentality now has to change and there’s more responsibility on some of the founders to make sure they are profitable before growing too quickly and expanding too quickly?

ANAND: I don’t expect it to be. I think unfortunately the venture or the investing world has a very short memory. And I’ll tell you a story, the day this happened where WeWork decided—SoftBank decided that suddenly a company that they were valuing at $47 or $48 billion is probably worth only $8 billion. The day this happened, a company in India with zero revenues and just, you know, growing in terms of users got a $25 million check from some of the best VCs in the world. And so I think—as I was saying, I think the memory’s short-lived. I hope it’s—it doesn’t happen that way, but I wouldn’t be surprised if it happens.

KIM: What are you telling the founders in your portfolio when it comes to growing too quickly?

ANAND: You know, I’ve been in the region. I’ve seen two downturns. I’ve been part of the SARS phenomena. I’ve seen the great financial crisis. By the way, if you look at the data around the great financial crisis, you will see that Southeast Asia was the only region in that year that shows positive growth. It’s small, but it’s still positive. Every other region in the world was negative growth. But yeah, I’ve seen those. And we—you know, when we started Jungle, the philosophy with which we approached investing was to invest in companies which were built to last, not investing in companies which are here to flip.

And so from day one Jungle has been investing behind entrepreneurs where if you take the aggregate revenues of our portfolio companies we manage about three hundred fifty million (dollars). We have over thirty companies in the region now. The aggregate revenues of our portfolio has grown by sixty, seventy times in the last four years. But their cash burn has grown only by five to six X. And so that’s really the power of technology that you want to see capture these Southeast Asian opportunities. So I think it starts from day one. You can’t suddenly flip and say that, oh, you were burning all the money, but now you have to stop burning. It’s going to be very challenging for people to transform.

KIM: Hmm. I want to give our audience a chance to ask questions. So if there’s anyone who has a question for Amit raise your hand. No? Oh, yes. And please identify yourself.

ANAND: You saved my day. (Laughter.) Because it’s a long flight to be here.

KIM: I was getting a bit nervous. (Laughter.)

Q: Derek Brooks with Flat World Partners. We’re an impact investor.

In Southeast Asia, we tend to see multiples at the same level of the U.S., if not sometimes higher, in the tech space. I wonder if you can comment on that. Is that warranted and sustainable?

ANAND: I think the problem that you’ll see with every emerging market, especially from the outside in, is that typically there will be pockets of companies or pockets of sectors where there’ll be too much euphoria. So if you’re suddenly seeing those kind of multiples, you got to stay away from that. That’s euphoria. In general, we’ve seen that the multiples are significantly lower. Just to give you a reference point, average early stage investment that we make, the companies are valued at $10-15 million, with revenues of $2-3 million. You’d never get a deal like that in the U.S. or China. So certainly those are crazy hot sectors. And stay away from it.

KIM: We have a question up here.

Q: Ricardo Tavares from TechPolis.

How do you see Bangladesh and Pakistan integrating or not integrating with the growth that’s happening in Southeast Asia?

ANAND: I think it goes back to the point I was making that, at least from Jungle’s perspective, we’ve stopped thinking about the region from a geography basis. We don’t think Bangladesh, Pakistan, Singapore, Malaysia, Thailand, Indonesia. We just think consumers at different socioeconomic levels. And we have a company now that we’ve invested in that essentially sells Muslim-compliant products to Muslims—whether it’s finance, whether it’s Halal food, whether it’s modest fashion. This company is going after every target consumer in all of these markets, and not just in one of these markets. You know, Google has set up shop in—you know, in Singapore now to actually enable Pakistan to sort of develop in terms of their technology. Bangladesh has got a ridesharing company now that’s got one of the most successful mobile payment companies in the world, M-Pesa. So, you know, by no means I think they are developing or developed. I think if you look at socioeconomic levels, you will see that there’s a lot of activity happening.

Q: So the topic is demography not geography. And I’m just wondering, there seems to be a growing sense of nationalism in different parts of the world. Is that a change that would kind of challenge your thesis? Or is that something that’s just transitory?

ANAND: Yeah. No, we were chatting about this offline with Dan as well. And I think the—you know, I was sitting in the back listening to all of these panels. And I was going, you know, if I go back to Singapore, Malaysia, Jakarta, Mumbai and sit down with my entrepreneur and give him, you know, essentially a summary of whatever I’ve heard today, the guy is going to listen very intently, and then in five minutes is going to put that in a drawer and go back to work. I think the reality at the ground level is that all of this is still fairly abstract from an entrepreneurial ecosystem perspective.

These guys have very high ambitions. They’ve got an opportunity with technology creating a level playing field where, you know, no longer do they have to go and work for a conglomerate locally, you know, or have to do a back-office job for a global company. They have an opportunity to create something. And so I think that passion, you know, combined with capital and talent, is not getting stopped by things. If anything, I’ve seen that it’s benefitted some of them. There are companies in Indonesia, for example, that the nationalistic pride has gotten behind the company. And it’s enabled them to become a category leader in Indonesia and then expand outside. And so I think at least at the ground level it feels very different. And unfortunately, my ground is really, really, really down there.

KIM: If you—if we were to make one big prediction, looking into the next five to ten years, where do you think the region, Southeast Asia, will be?

ANAND: I don’t—yeah, there’s more experts on that. (Laughs.) But I think that where I’d put it, again, is from a context of value creation. If you look at—when we started the journey of Jungle in 2012, we launched our venture fund with a $10 million fund. Embarrassingly, we were the largest venture fund in Southeast Asia at that point. In 2018, the amount of capital that has gone into Southeast Asian technologies is about $14 billion. So just in the span of six years, we’ve seen a tremendous amount of value creation happen for founders, investors. And I think that’s an irreversible trend. And what I feel is that that trend is going to go global, in that these entrepreneurs are not satisfied by servicing the geography. They want to go after the demography, wherever the customers are.

I was sharing with you I have six companies how who have now set up shop in U.S. They have offices in Charlotte. They have offices in L.A. They have offices in New York. I had to eventually hire a partner in U.S. to support these companies, because the ambitions of these founders was great. So I would like to say that next time you’re sitting here and sort of talking about Alibaba, Tencent, the next ten-twenty years, you’re going to see there’s a lot of discussion that’s going to happen about companies coming out of Southeast Asia and India.

KIM: And going global, potentially.

ANAND: Yeah. For sure.

KIM: OK. Well, we’ll be watching this space. Thank you so much, Amit.

ANAND: Thank you for having me here, guys. (Applause.)

(Break.)

ROSE: Are we on yet? OK. Jews don’t usually need mics like this. We usually talk loud enough to be able to be heard. But it’s good to actually have this here.

So, you know, listening to Amit and Yun-Hee talk, it reminded me when Adiba was talking about Africa, because, you know, Dan Keeler said earlier that, you know, journalists get depressed because they look at the world and it’s going badly. Americans get depressed because their world’s not going so well. I have friends who invest in Africa, and friends who invest in Southeast Asia. And they always say: Come here. Friend in tech, friends in consumer goods in developing markets. And they say, basically, your perspective is skewed by being in the heart of a decaying old world. If you would come to our areas, you’d be a lot more enthusiastic about the future.

And there’s a real truth to that, because the expertise, and the base of authority tends to be backward-looking. We knew a lot—we had a lot of Soviet experts, and a lot of Russia experts in the 1980s. And in the 1980s and ’90s, what we really needed were China experts. But we didn’t have those yet. We have a bunch of good China experts now, but now what we really need are the Southeast Asia experts, which we don’t have, or the Africa experts on economics, which we don’t have. And this represents an opportunity for you guys, because the lack of knowledge of the conventional authority and expertise means that there is far greater opportunity there.

The people who are investing in Africa, the people who are investing in Southeast Asia know a lot more about those regions and the conditions on the ground than the rest of us, and certainly than the so-called experts in that area. I can say this confidently, as the editor of Foreign Affairs. For a decade now I have told graduate students: Go into Southeast Asia, because that is what will be the story down the road. And we have no expertise base. I can’t buy authors on Southeast Asia who actually know what they’re talking about, except for a tiny handful, and I wish I could. So that stuff Amit was talking about, about Southeast Asia, and that Adiba was talking about, about Africa, is absolutely true. And that represents the kind of opportunity that strategic intelligence can give you a head—you know, tell you what’s coming down the pike.

To close it out, to close out this fun day, we’ve decided to do something really fun. OK, you all have been here, and you’ve been listening to all these serious people talk about serious subjects. Now we’re actually going to weaponize it in a kind of fun way. Still according to good rules of the game. Still according to facts, and truth, and reasoned argument, and good clear prose. But we’re going to have an Oxford-style debate about the future of globalization from a really impressive crowd. And the rules of this debate and the details of it, and of our participants, are complicated enough that we need a special introducer for that. So John Bussey, associate editor of the Wall Street Journal is going to come up and tell you about our next panel and the people who are on it with this Oxford debate. And I’ll come on for a final thing to close at the end. (Applause.)

BUSSEY: Well, welcome, everybody, to our debate segment of the program. We’ve watched over the last few years as globalization has come under attack. There’s a rise of nationalism and protectionism pretty much around the world. But is that backlash diminishing globalization, or is it just reordering it—maybe even expanding globalization? That’s what we we’re going to debate today.

And here’s how this is going to work. This is an Oxford-style debate. And we’re going to start with a motion. The motion is: The forces trying to undermine globalization are actually supporting and accelerating the next wave of globalization. The forces trying to undermine globalization are actually supporting and accelerating the next wave of globalization.

So we’re going to want your opinion in this. The most important thing is for us to determine whether or not our debaters have swayed opinion. So we’re going to have you vote before and at the end of the debate, and we’re going to do that right now. We’re going to take a vote of—from the audience. You have these voting devices on the corner of your chair. They should be either on your chair or sort of strung over the back. Grab one. Or if you’re from Chicago, you can grab two. (Laughter.) But do vote just once.

So on this motion, we’re going to—we’re going to start with a benchmark opinion of the—of the group on “the forces trying to undermine globalization are actually supporting and accelerating the next wave of globalization.” One for yes, two for no, three for undecided. A for agree, B for disagree, C for undecided, depending upon what device you have.

So while you’re voting, let me just run through how this is going to play out. First, the team in favor of the motion will present four or five minutes. And on the team in favor of the motion we have: David Bohigian, who’s the acting president and CEO of the Overseas Private Investment Corporation; Susan Lund, partner of McKinsey and Company. Then the team against the motion will argue its position for five minutes: Adam Posen, the president of the Peterson Institute for International Economics; and D.J. Peterson, founder and president of Longview Global Advisors.

We’ll then return to the in favor team for a five-minute rebuttal. Then the against team gets its five minutes to rebut.

Then we’ll go to questions. I might have one, but we’ll try to get to you folks first for questions from the audience. Keep it brief. Tell us who you—tell us who you are.

Then we’ll have one-minute closing remarks from each side and we’ll vote again. And the side that has actually swayed the most votes—it’s not going to be an absolute vote count. It’ll be the side whose percentage of total votes went up will be the winner of the day.

All right, so let’s see if we have results on the vote so far. Are the results in? Have you all voted? OK. Very good. This is like a national election in the United States. (Laughter.) Here we go. (Inaudible)—God only knows. Well, we’ll know next week what happened in Iowa. So, A, 40 percent; 39 percent, B, disagree; and there’s 21 percent of undecideds out there, which is not, quite frankly, too different from the national perspective between the different parties.

Let’s get underway. Let’s hear first from the team in favor of the motion. And Susan Lund is going to kick us off. Susan?

LUND: Thank you for inviting me. I’m going to try to convince you that globalization is not reversing; it’s, in fact, continuing and accelerating. It’s just in a different form than what we’ve seen before.

So yes, of course, we’ve seen a rise in populism. We’ve seen a rise in nationalism. We’ve seen the United States step out of major trade agreements and put up tariffs against a major trading partner, China. In the last era of globalization, what really mattered and what was driving the global economy was trade in goods, and it was largely led by the U.S. and other Western countries. But today what we’re seeing is globalization is continuing, but it’s about the digital economy. It’s about data flows, and it’s being driven by a much more multipolar set of countries.

I’m going to make five points.

First, the other team is probably going to point out that global trade in goods like manufactured goods and commodities has grown more slowly than it did in the past twenty years. It’s now growing at about the same rate as global GDP. But this slowdown in goods trade our research has shown is almost entirely because China is now consuming more of what it makes. So rather than just being an export platform and sending goods out to the world, Chinese consumers have rising incomes and so they’re consuming what they’re making themselves. This is not a sign that globalization is over; this is a sign that globalization is working. China is developing and maturing, and it’s becoming more of a consumer economy like the U.S. It’s now the largest market for a whole range of goods, whether it’s automobiles, Apple products, luxury goods, and so on. And that creates opportunities for companies around the world.

Second, rather than goods trade, it’s really the digital economy and it’s data flows that are the new connective tissue around the world. This is because over the last fifteen years we now have a whole raft of underseas high-capacity fiber-optic cables that crisscross the world’s oceans, and it’s connecting the world in new and different ways. When we look at the volume of internet traffic going between countries, it has expanded more than a hundredfold over the last fifteen years. And Cisco, that collects the data on this, projects that it’s going to continue expanding. This contains everything from emails to videos to online purchases. It’s driving innovation, news, information sharing. Some of this is intra-company data as they knit together operations around the world. So in this new world, it’s enabling the rise of digitally-delivered services. Think of telemedicine. Think of offshoring call centers and back-office processes to the Philippines and India. That’s the new face of globalization, despite all the trade negotiations around agricultural products.

Third, globalization is becoming more multipolar and we have more countries than ever participating. When you look at trade with developing countries, whether it’s north-south trade or south-south trade as it’s called, they’re expanding and exploding. More countries than ever are participating in global value chains. And as China develops and wages rise, it’s pulling out of some of the labor-intensive manufacturing. That’s now going to Bangladesh, Cambodia, Vietnam, Ethiopia, so a wider set of countries than ever before are participating. Now, as we sit here in New York, this has nothing to do with the U.S., and to us it might look like, well, globalization is fading. But when you’re out there in those regions, what you see is that more countries and participants are being connected to the global economy than ever before.

Four, I’ll argue that more different types of players are participating directly in the global economy. So it used to be—well, back in the day of Christopher Columbus it was kings and queens that sent forth explorers. And then in the last twenty years it was really the very largest multinational corporations that drove globalization. Now you’ve got small businesses and individual startups that can participate on Amazon platform, Alibaba, eBay. So now it’s globalization for the little guy. We can all directly participate, even our kids. Those of you who have Fortnite players at home know exactly what I’m talking about. (Laughter.)

This is not to say that globalization has been perfect. Indeed, the gains have not been equally shared. A lot of people in the United States have lost jobs. We need to address these distributional issues. The same internet that crisscrosses the ocean can carry misinformation, terrorism, and cyber threats, and we need to address these. But these are not reversing globalization. It is, in fact, continuing, just in different ways than it did in the past.

BUSSSEY: Susan, thank you very much.

Against the motion, Adam Posen.

POSEN: Thank you to the Journal and to Foreign Affairs for having me. I’m going to start off in much the same place as my friend Susan and I’m going to, obviously, end up 180 degrees the opposite place.

So I think two observations that she makes and her research with colleagues at McKinsey have helped support I think are really important. First, that the world isn’t about goods trade, and you have to think beyond manufactured goods and stuff. And second, that the world is more multipolar; that it’s not everything—whether you map internet or you map trade flows or capital flows, it’s not all in and out of the hubs of the New York, the London, the Paris, or Tokyo. I think those are valid points. I think they lead us to the exact opposite conclusion.

The globalization in the end is getting to be of a worse quality than it was. That it is—if you think of globalization to be a bit abstract, it’s a fabric of many threads. Some are political. Some are security. Some are economic. Some are capital flows. Some are educational. Some are migratory. Many threads. And part of what was the high age of globalization was that the U.S. played a role with international institutions and partners to actually make it relatively even and smooth fabric; that these threads were, of course, never perfectly distributed, but that ultimately there was some guiding mechanism that suggested that the fabric had to be even and that everything had to be looped into this fabric. And what’s happened instead is under the Trump administration, but frankly starting somewhat under the Obama administration—these are longstanding factors, political as well as economic—the fabric has frayed. It has become more uneven.

And so not to be abstract, let me take it down to two examples. In terms of trade, Susan mentioned the populism backlash and the protectionism, and my colleague D.J. is going to talk some more about those kinds of issues. The fact is, if you’re an emerging-market business you have more upside than you used to but you also have more downside and you have more volatility. There’s less guarantee that you can fairly go out there and compete in the high—in the world that you could in the high world of globalization in the ’90s. There aren’t the same kinds of institutions and rules in place assuring fair treatment. In fact, there aren’t even necessarily the same opportunities. As Arvind Subramanian, Dani Rodrik, and others have pointed out, we’re seeing what’s called premature de-industrialization; that (the bridge ?) countries are pulling up the ladder so that the Nepals and the Cambodias and various sub-Saharan African economies are doing their best but they’re not getting the same opportunities to export cheap goods to China or the U.S. or Europe that their predecessors did.

The second factor I would talk about as an illustration is talking about global finance. And here, of course, the huge flows of capital that go back and forth daily may have very little to do with what’s going on in the main economies, and there are good institutions like OPIC that do things to make it more possible for businesses to act. But the biggest lesson of the last couple years is that the effect of trade isn’t—the effect of the trade wars and the trade threats isn’t so much on trade. The trade always gets through, or it’s done more inefficiently, or it’s rerouted, or you decide you’re going to put production in more than one place so you don’t get cut off from it—which is less efficient, but you get around it; it’s a redundancy. It’s the investment that falls off. And that’s what we’ve seen, not just in the U.S. but in Europe, in Japan, even in China, that private investment has gone down. Now, this is partly due to many other factors, but you can clearly see how the world being a more uncertain, more uneven, the corroded globalization has deterred private investment cross border even in a world where growth has been quite good; even in a world where you have a lot of governments that are very pro-market, deregulatory, might be excessively but usually pro-investment; even in a world where there’s plenty of cheap capital available because of low interest rates. Something is holding that down. And one of those somethings is the fact that this is a more volatile world and that this is a less fair world. Not to say globalization was fair there. Of course, I agree with Susan. But it was fairer.

So if the question is, as was put by our moderator, about is this cycle of de-globalization feeding the next cycle, I think no. I think we have an eroded quality of globalization. And in a multipolar world, in a world where data flows much more easily can get around governments, much more easily can do pernicious spillover effects than, say, just a shipment of cars, in a world where in part totally separate from this U.S. and China are at odds, this is a world where investment will continue to be diminished and globalization will not fulfill itself, even if hardworking, good people in emerging-market countries continue to do quite well.

BUSSEY: Adam, thank you.

David Bohigian, you get the first rebuttal.

BOHIGIAN: Well, thank you, and I appreciate the opportunity to be here today. I want to take a quick halftime poll here, not on the same question. But who in the audience lives more than two hundred and fifty miles away from here? For reference, Cambridge about two hundred, the Peterson Institute about two hundred. OK. Most of you from the East Coast bubble, all right? (Laughter.)

So keep in mind—keep in mind the cover of the New Yorker from forty years ago, the view of the world from New York, from 9th Avenue, right? And that’s what I think we’re seeing here today. And so protect against what I think is a logical fallacy we can all fall prey to, which is hasty generalizations. Which is, the data that’s in front of us is what we’re looking at. And I believe that both Susan as well as Adam have made the case that we’re living in a more multipolar world because the forces that are decelerating globalization are actually accelerating them.

If you look just across the Hudson, as the map of the New Yorker did, you look at Pittsburgh, which deindustrialized and now has come back stronger in robotics and health care. You look at Detroit, which was fighting globalization, now is autonomous vehicles. You look at Massachusetts, was famous for its textile mills and now is in biotech. And that’s just there.

You look further west and you see Hollywood and you see Silicon Valley who have thought about trying to stop the flow of intellectual property rights and making sure that people compete fairly in China and in other places. But that, in fact, has accelerated the data flows that Susan’s talking about, and the data now is more valuable than oil in the world, right? That’s what’s being traded.

If you go further west you’re talking about the Pacific. And yes while the U.S. pulled out of the trans-Pacific agreement, other countries put one together. And the flow of south-south has never been stronger as supply chains move, maybe not into China but the tariffs that the administration put in place have moved trade to Vietnam, as well as Indonesia and Malaysia. And those linkages, again, are more threads in this fabric than we’ve ever had before.

And it’s not just south-south. North-south, you think about what the EU’s doing with Mercosur. And even one of the poster children for de-globalization, Brexit, could very well lead to better, high-quality trade agreements that could spur additional innovation in the European continent. So think about that in 2021 as Europe is watching the U.K. develop free trade agreements. That could be a force for more high-quality trade across the world.

And I think we’ve seen that not just in trade flows, but also in global FTI. We talked about how it’s not just going to China these days. But global FDI—foreign direct investment—in the first half of this year is actually up by 24 percent. That’s significant. While uncertainty was a drag, now we’re starting to move again. And that’s absolutely crucial to the next phase.

Right, cars need brakes, right, whether that’s Trade Adjustment Assistance, and we just can’t have unfettered globalization. Dan Keeler earlier today said, you know, he thinks he’s writing the protest of the week column, right? Those protests make democracy stronger, they make capitalism stronger, and they make these multipolar trade flows even stronger than they ever have been. So I think that’s the proposition that’s in front of us.

And you know, it was Darwin that said it’s not the strongest of the species that survive, nor the most intelligent; it’s the most adaptable to change. And we’re going through a generational change right now that’s going to catapult us to a more global economy than we’ve ever had in our lifetime or anybody else’s. Thank you.

BUSSEY: David, thank you very much.

And just a reminder, after this last rebuttal we’re going to go to you, the bubble people, for—(laughter)—your questions for the—for the—

BOHIGIAN: (Laughs.) Other bubble people.

BUSSEY: The other bubble people.

D.J., please?

PETERSON: Oh, thank you very much. So we’re here in the mecca of globalization, CFR. We’ve got the Wall Street Journal. We are all deeply invested in globalization. My company is Longview Global Advisors. I am speaking to business leaders who are traveling around the world, and what I have to tell them is don’t invest in globalization, all right? If there’s one thing I can leave you with, it’s local is the new global, all right?

And just think of some of the things we’ve heard about today. We heard earlier that politicians in the United States don’t want to get up and champion globalization. Why is it? Because it has a bad name. Now, you can cite these datapoints about the world—people getting richer, goods getting cheaper, we have access to better technologies. But when you ask the average people and when you go into the small towns in countries, when you leave the big city, they’re actually very ambivalent. And if you look at some of the data put out by the Pew Research institute, which I think have really good—they follow this issue very closely, the countries that have benefited the most from globalization—the United States, Japan, China—if you ask people what they feel about globalization they say, ah, I think it’s kind of a good thing. OK, so yeah, if they’ve kind of bought into the rhetoric. But when you ask them does it lead to more jobs, they’re very pessimistic. Does it raise wages? They’re very pessimistic. And does it give you better, cheaper goods? Even less optimistic, all right?

So you can cite the data. But I’m a political scientist and I’m focused on perceptions, all right, and what do people think and what do they believe. It could be completely false, based on wrong data, but what do they believe? It’s globalization is just—politically, it’s nuclear. And so that’s one key—if you think about it, U.S. politicians can’t support globalization so already you have one major pillar that’s been removed. So we’re going to see this retreat of globalization accelerate.

We heard this term earlier from one of our eminent speakers that we have subnationalism. I would call it tribalization. We’ve had this tremendous wave of globalization over the last generation, and look where we are as a world. We are less globally minded. Everybody is locally focused. Think about the way our attitudes have changed about China just in the last two to three years. Think about the virus that’s in the headlines today. It’s creating kind of real perceptions of the world out there which is challenging, it’s scary, and we don’t like it, all right? Now, you can say that might be false. It might not be very charitable. It might be—you know, have darker origins. But that’s the reality of the world. That’s the reality of the policy environment. So tribalism, nationalism, we’re just getting started.

I think another—when we think about globalization, what we’re really talking about is China, all right, and China’s rise as a power, first because of its industrialization drive and its export-oriented growth, and then joining the WTO. But that’s over now, all right? It’s peaked. China has basically built out. They have too much industrial capacity. The world has too much industrial capacity. We don’t need more trade. So there’s just natural limits to that.

I also want to talk about another aspect of the China question, which is the fact that they are now a global superpower. I was trained as a Sovietologist to think in terms of superpower politics. We are now entering a new Cold War. And the—one of the biggest forces for de-globalization is going to be our national security community. And if you listen to the Pentagon, they’re talking about all the threats, how we have to decouple. We can’t rely on Chinese technology, and we heard that earlier. Well, the Chinese are saying the same thing. They’re working very quick to get American and Western technologies out of their IT stack, and they want to be a world leader. They want to be champions of and in control of their own economy. So you have the world just pulling apart. So this notion—so when you think about globalization, keep China in mind.

We heard about another force, technology. Well, Susan was talking about data flows moving around the world. What is the biggest trend right now in policy? It’s data control, localization. We’re doing a big project right now for a global company and they’re really worried about their data in China and also in Russia. And we’re helping them strategize out about how to segment it, not have data flows around the world but actually segment their data so the authorities in China can’t access their data around the world. Same with India. Same with Russia.

So, yes, this idea of the world globalizing thanks to technology, just one more point. Facebook. Has it really brought the world together? (Laughter.)

BUSSEY: And with that, we go to you. Let’s—(laughter)—let’s take ten minutes. And we’ve got mic runners here. You can ask questions of our for and against teams. If you keep the questions very short and the answers short, we can get to more questions.

Yes, please.

Q: For the negative team, if globalization is going away, why is it that the current administration is so dependent on foreign intervention in U.S. elections?

BUSSEY: And tell us who you are.

Q: John Davidson, Options Clearing Corporation.

BUSSEY: OK. It’s a good sign for globalization, isn’t it, that we’re asking Ukraine to get involved? (Laughter.)

POSEN: You’re going to hear an economist admit that economics doesn’t determine everything. (Laughter.) Sometimes people behave badly just because they’re bad people. (Laughter, applause.)

BUSSEY: The second person in right here, second—

Q: Oh—(off mic). Rachel Ziemba, Center for a New American Security.

Question for the pro—the pro team. You highlighted ways in which globalization, especially in digital—on the digital side, has been increasing. Could you talk a little bit about how you see that extending? Or is it—I mean, because the question talks about a wave of globalization, which implies an extent. Could you talk to us about some examples where you’d watch for what that wave could look like? Thank you.

Q: Craig Charney, Charney Research.

Question for—

BUSSEY: Let’s get an answer to that.

Q: Oh, pardon me. Yeah, sorry.

BUSSEY: Sorry.

Q: (Laughs.) Sorry.

LUND: OK, examples of how it’s expanding. And it will continue, because remember most of the people on the planet don’t have high-speed internet connection yet. But they’re getting it with mobile phones, and you look at what that’s unleashing. Look at mobile payments and digital banking in Africa. It’s enabling some of the poorest people to just skip over the credit-card/check-writing phase that we had here and go immediately to more efficient payments, and that’s having ripple effects that are enabling households to pay for off-grid solar through their mobile payment account. So there is one example of how the continuing spread of digital technology is unleashing new forms of participation.

BUSSEY: Yes, please.

Q: Question for both teams. We’ve heard earlier how there’s likely to be separate 5G standards from China and the U.S. Now, I assume I can still call from my iPhone to a Huawei phone, but what will be the implications of this for globalization?

BUSSEY: D.J.?

PETERSON: Yeah, so I think you’re pointing to a good—a good point, this idea that we’ve having fragmentation, right? And it’s not just in 5G and communications technologies; you’re going to see it around a whole range of technologies, especially when they’re considered frontier or very important to national security. So you’ll see it in aerospace, for instance, right?

And again, that’s what we saw with the Soviet Union. They had Soviet computers and then there was Western. There was Soviet rockets. There was Western rockets. There was Soviet airplanes. There was Western airplanes. And by the way, it was really costly. So let’s—this is—not that de-globalization is a good thing, it’s going to be very costly. So we’re going to have that.

I think another point to keep in mind is it’s not just the technologies. It’s the rules and standards that govern them. And again, it used to be the United States that controlled everything. Now we have many competitors.

LUND: I’m going to give a contrarian view. I think it’s like we have Fords and we have Toyotas. And you put gas in on the right side on one and on the left side on the other. Some people buy Fords. Some people buy Toyotas. But what’s the problem?

So we have two different major technologies and 5G providers—none of which are American by the way, but that’s another story. But nobody’s talking about lack of interoperability and not being able to call someone on a 5G network built up by Huawei.

POSEN: There are all kinds of people who are—as D.J. said, who in the national security realm are making it a point to develop lack of interoperability. Yes, you can make a call, but the whole idea is to create barriers between these things. And divergence in standards, you know, we did have a period in the mid-20th century where it wasn’t the same buying a British Leyland as buying a Fiat as buying a GM car. I think you want to be cautious about that.

BUSSEY: Yes, right here. This gentleman right there.

Q: Sasha Algarve (ph), SATA (ph) Group.

A question for both groups. I think it’s our nature to expand and human beings don’t like being confined, but as those barriers are erected do you foresee some transnational nonstate actor stepping into the space to facilitate this unavoided cooperation in trade and business contacts?

BUSSEY: David, why don’t you take that?

BOHIGIAN: Sure. I think you’re seeing that there’s a synthesis happening between governments and the private sector and NGOs that are, in fact, accelerating it. When we talked about those sort of entities that are holding people accountable—and again, that are the forces that are being able to give us the confidence to go forward. So I think those three nonstate actors working together are actually accelerating globalization over the long term.

BUSSEY: Cathy (sp), right here.

POSEN: No, he’s asked for both sides. So on the—(laughter)—so on the—so just—this is what you’re supposed to do in presidential debates, right? (Laughter.)

So the way I would put it is, again, there’s no question that those kinds of developments are happening. It’s the issue is, how consistent are they and who has access to them? So imagine you do have these transnational elements. Let’s say the Islamic financial network which exists becomes a very constructive force beyond what it already is. But it is very unlikely to include certain other countries or certain kinds of people or certain kinds of transactions. And that’s just one example.

It’s like with philanthropy versus the welfare state. If you have an excessive welfare state, it can be a costly thing. But if you’re dependent on the munificence of people, you know, some people get cut out. And I think that’s the way to think about the corrosion of globalization.

BUSSEY: Cathy (sp), right here.

Q: Cathy Gaye (sp).

Do you think that—right now populism reigns and we’re very competitive with China, we’re very competitive with Russia, we’re very competitive in general. Do you think there’s any chance that in the distant future we’ll be—well, China, for example, may become more and more democratic? I know that’s not happening now. But if and when that could or does happen, will that have an impact on the question on whether or not will—globalization will continue or go the other way?

BUSSEY: Susan?

LUND: Look, I am not going to make any forecasts about China’s political system, and my company will thank me for that. (Laughter.) But I think that it’s—remember the New Yorker cartoon. I mean, the fact is a lot of the developing world, particularly in Africa, has welcomed Chinese foreign investment because it doesn’t come with the Washington consensus set of rules about fiscal policy and monetary policy. And so there’s a good chunk of the world out there who thinks that China is about doing business, their domestic politics are their domestic politics, and there’s much of the developing world that is signing up to saying, yes, we want to work with you because you have this twenty-five-year period of unprecedented global growth. You’re doing something right; what can we learn from you? And can you invest in us?

PETERSON: I would—I look at it as—I call it a supercycle. The globalization supercycle is over, all right, and now we’re in a period of retreat or retrenchment or fragmentation. And this could reverse. It’s potentially cyclical. But not in my lifetime, probably, not from a business-planning lifetime. I think for at least the next five to ten to fifteen years I think we’re going to be in a de-globalization, decoupling, fragmentation, bumpy world.

BUSSEY: One last question for the audience. Right here.

Q: Kathleen Stephansen, Haver Analytics.

So for both teams, so you talked, J.D. (sic; D.J.), about the over of the globalization, the end of globalization. Are we in a transition period? And will that morph itself into a regional type of trade dynamics? Thank you.

BOHIGIAN: Well, I think that’s exactly what’s happened. When we talk about decoupling, you’re talking about two things pulling apart. And I do think Adam made the point earlier which concedes the case that multilateralism was happening. There’s a multi-coupling going on right here—south to south, north to south, and around the world with data. I don’t think that we’re in an era of deglobalization over a super cycle. It might be dark before the dawn, but you think about what’s happening with data, and artificial intelligence, and health care, and the—and the globalization of everything that we’re not able to count yet—that’s what’s actually setting the cycle for the next generation to be more global than ever before.

POSEN: Do you want to do it?

PETERSON: I think the—one of the things that we haven’t talked about yet that I think is very important about this issue of transition is globalization has been governed by what we might call the international liberal order, right? So institutions like the WTO, World Bank, U.N., and so forth. And if you talk to anybody, those institutions are in decline or being fundamentally challenged. And that points to this issue of transition. We have no idea what any kind of liberal order in the future looks like. So, again, I think it supports the argument that globalization is under threat.

BUSSEY: Thank you for your questions. Let’s go to our final one-minute summation and arguments. And, Susan, you’re doing it for the pro-team.

LUND: Well, the proposition that you’re voting on is that the forces that are trying to undermine globalization are in fact ushering the next era and accelerating it. Well, there are two big forces trying to undermine it. One is the rise of populism, and the other is the fact that the U.S. has really pulled out of some major trade agreements and is looking inward. But when we look at the impact of those two things, what we see is that it’s becoming a more multipolar world. The global fabric of integration is increasing to include more countries, more types of players, and it’s stronger than it’s ever been.

We’re not being asked to debate the quality of it. We’re not being asked to say: Is this a better globalization or a worse globalization? Is Facebook an actor for good or bad? That’s not the question here. The question is: Is there more globalization? And we would argue, yes, very clearly. It’s different, but it’s continuing.

BUSSEY: D.J., for the against team.

PETERSON: I have to disagree. I think my colleague, the quality of globalization does matter. If you’re a global firm, right, or you’re a global investor, you’re looking abroad, you’re looking for quality. You’re looking for the rules and regulations, right? And those are—those are getting more challenging, all right? We’re not saying that trade is going away. We’re not saying that people will not be flying. But you may be flying less. And we haven’t talked about climate change but, you know, flying may be the new smoking in a couple years. (Laughter.) So it’s—what we’re being challenged to think about is really how to look at the world differently, all right? Again, think locally. You know, the idea—made in China, what does it mean? The idea of made in China is going to be very different in the future, and how we’re going to think about it. Is that a positive or a negative? We used to not really think about it, except cheap goods. So these—there’s a lot in play now, which I think is really undermining globalization from a business and investment strategy.

BUSSEY: Just like you used to be able to smoke while you flew. But those—(laughter)—those days are—those days are long over. (Laughter.)

Let’s vote again. Tell us who you side with in this argument, who you were convinced by. And while you’re doing that, again, the decision that you have is A for agree, B for disagree, C for undecided. And the motion is, the forces trying to undermine globalization are actually supporting and accelerating the next wave of globalization.

And while you’re doing that, I can tell you that the vote count in Iowa is now up to 86 percent. (Laughter.) Remarkably, two days on. Pete Buttigieg, Bernie Sanders each have eleven delegates. And Buttigieg is one point ahead, little bit more than that, in the popular vote.

Q: Trump was acquitted.

BUSSEY: Pardon me?

Q: And Trump was acquitted.

BUSSEY: There we go. That’s the shocker of the day. (Laughter.) So do we have the vote in? Do we have the results? Everybody’s had a chance to vote? I don’t see the results yet. And remember, it was—

POSEN: We are in Iowa.

BUSSEY: We are in Iowa. (Laughter.) For the opening vote it was yes, forty, no thirty-nine, and undecided twenty-one.

BOHIGIAN: OK. We lost that one. (Laughter, applause.) OK, congratulations.

BUSSEY: So the against team prevails. It’s time to—for all of us to buy those canned goods and stock them into the shelves. (Laughter.) But please join me in thanking both teams for an exceptionally good job. (Applause.) Gideon Rose is going to have some fun with his wrap up.

ROSE: OK, let me just—let me just now say that I don’t just hate Gerry Baker. I also hate Adam Posen and D.J. Peterson for crushing my remaining little illusions about globalization. So that was—that was really fun, and really interesting. And let me just close this off with two points—one about substance, one about process.

At Foreign Affairs, we’ve been hosting debates about the future of the post-Cold War world for decades now. It’s part of our job to run the forum that—with all the people in the Kennan sweepstakes, and all the big thinkers telling you what’s going to happen and what models we should use. And we all have read Fukuyama, and we’ve all read Huntington, and we’ve all read all the different big thinkers trying to explain the world. When I listen to this debate, and I listen to this whole afternoon, and I think back also on the discussions a couple of weeks ago that I had when I was in Davos—and Davos actually is an interesting place to travel a lot and get a whole lot of takes on what’s going on.

I think, in retrospect, that—I’m coming around to the theory that the thinker who has best captured the nature of the world that we have been moving towards is not my former professor Sam Huntington, and not my friend Frank Fukuyama, or any of them, but Fareed Zakaria, my predecessor at Foreign Affairs, because as I look around the world what seems dominant now are the trends towards illiberal democracy in a post-American world. And that is the world that we seem to be going into. We’re certainly living it right now. And we’ll see whether it changes, or whether it snaps back. I voted against the proposition, but I think in the long term I am somewhat hopeful. And not because of the current trends, but because the current trends of globalization that the pro team pointed out are going to continue, at least to some extent, and liberate more people and allow human capital to be deployed.

And we will all benefit from that, because the second point that I come away with is process. What you’ve seen here this afternoon is the new voice of authority. Doesn’t have to be stodgy, doesn’t have to be boring, doesn’t have to be a bunch of dead white males repeating talking points. It basically are—it involves people who know what they’re talking about confronting the world honestly, and saying what they think, and engaging with each other. And out of that debate comes somewhat greater knowledge and somewhat greater perspective, that allows all of us to benefit from all of the insights that we’re getting.

We have all gotten things wrong. This new voice of authority is chastened. This new voice of authority knows what it does not know. And that kind of resilience intellectually is what is going in the long run to power the next wave of human development, whether it’s globalized or not. And when we think back in the long run, all the good things that we have received have been the product of a tiny handful of people. That New Yorker cartoon didn’t just reflect the bubble people lived in. It often reflected the power structure of the world. This place fifty years ago would have looked very different. And the fact that it looks like it is now, and the fact that we had the range of voices that we had indicates that the human capital of the world is starting to be developed and deployed without regard to the barriers that used to hold it back.

And in the long run, the more people who actually have the chance to participate in conversations, develop their talents, put their operations into market companies for all of our benefits—we’re all going to benefit from the different developments in technology that occur across all these different countries, wherever they originate. And in the long run, the enterprise that we’re engaged in, that the Wall Street Journal has been tracking for well over a century, that we’ve been tracking at Foreign Affairs for a century, is going to continue down the road, even though it’s not in the best of shape right now.

And I look forward to continuing the conversation with all of you, not just in the cocktail hour now where we have some good, stiff drinks to basically raise our spirits once again, but as we go forward in this discussion. Because the one thing we know is the future is not going to be just like the past, but we do strongly believe—and I truly think that we’ve seen this demonstrated today, that we can get at least some little bit of intellectual purchase or context on confronting and dealing with that world from a free, fair, honest discussion of the kind that Wall Street Journal Pro and Foreign Affairs have put together for a very, very long time, and are the core of our brands.

So thank you. Thank all of you for attending. Thank all of you for speaking. And I look forward to continuing the conversation. (Applause.)

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This is an uncorrected transcript.