hmm hmm foreign okay um thank you very much for having me um um um so the total session is one hour and 15 is what they said is that right is the total session one hour fifteen or one hour one hour fifteen for me okay yeah okay so um mechanical grazia in italiano don't don't always only slides no yeah well this isn't going to make the slides come oh okay okay now you can okay okapito well sparrow kelly slides sono in italiano uh utterly pervoy okay so um i want to uh talk today about the backlash the reaction against globalization that we're all aware of in europe but also in america and i think that there are lots of things to be worried about um but at the same time i think we shouldn't exaggerate yet so here for example is a slide showing the relationship between trade and gdp peel at the world level and as you can see in 2013 14 15 it was no longer rising and the fact that it was no longer rising was viewed as deeply disturbing and as you can see in 2015 the washington post said that globalization might be coming to an end and of course they became even more apo apocalyptic in 2016 when we had brexit and when we had trump but it's always important to remember scusa marco but that sometimes journalists can exaggerate and that you know you can't always extrapolate immediate trends and assume that this will happen forever so it's important to stress that globalization has not come uh to an end yet it's true oh and by the way this is the same picture for uh for italy and italy is just a very typical country you know you're you're you're open and you're becoming more open the same as everywhere else in the world is becoming more open now it's true that we're all very worried about donald trump's trade wars and yet it's also important to stress that this is not the 1930s so this is the u.s average tariff uh since forever until 2017 so 2017 not 2019 so presumably they went up a little bit but you know this is not the 1930s we don't have widespread quotas exchange rates biased against imports exchange controls you know we're not in the 1930s yet that doesn't mean you shouldn't be worried but it's important not to exaggerate and yet there has clearly been an important reaction against globalization so that's what i want to talk about today and i want to put it in a little bit of historical context but first i want to remind you of this fable written by asap many many years ago if he existed we think he may have existed and i suppose he didn't write it i suppose he told it but it was eventually written down and it's a story about a tree an oak tree who is we have to imagine him speaking in a sort of a slightly germanic accent because he's a tree who believes in rules he's a very proud and principled tree and these rules should always be followed no matter what the circumstances and this tree is quite dismissive of his flexible friend the reeds who are these little things here the reeds where are they there's the reeds and because they they go this way and that you know the wind blows one way they blow one way the wind blows the other way they blow the other way they have no consistency in england in the 1980s you would have said that they were a little bit wet which is what mrs thatcher called the left-wing ministers that she was trying to depose the reeds maybe have a southern accent well of course we know how the story ends there's a big storm and the oak tree ends up flattened it's ours and the reeds are still standing and the moral of the story is that we live in a world where there are unpredictable shocks they always happen there are always shocks and the moral of the story is that therefore you need shock absorbers they're useful if you're a plant they're useful if you're a car they're useful if you're a political or an economic system and what i want to suggest is that maybe some of the shock absorbers that history told us we needed have been allowed to erode in recent years maybe because people thought that would be efficient but it actually turns out to be quite costly because of the political reactions that you get which are predictable so i want to in particularly today talk about two episodes two historical episodes that i think speak to us today the first is the story of how the first great globalization of the late 19th century undermined itself because it created winners and losers and the second is the story of protectionism between the two wars which was catastrophic and of course it wasn't the protectionism that was the most catastrophic aspect of what happened so let me first of all talk about the first great globalization so marco kindly mentioned that book this globalization had political causes and it had technological causes so politically what you had was first of all a gradual liberalization of commercial policy beginning in britain but spreading to the rest of europe after 1815 so quotas were eliminated and tariffs gradually were reduced after the end of the war and the europeans very kindly extended the benefits of free trade to their colonies whether their colonies wanted it or not and they were so generous that they sometimes extended the benefits of free trade also to countries like china that were or or persia or thailand that weren't their colonies or japan uh but they got it anyway and this is something that the chinese are still quite angry about so imperialism was an important force making for globalization during this period in parts of the world other than europe where countries were free to choose they often chose protection actually that was true in north america and it was true in south america also but africa asia were largely exposed to to free trade during this period an important requirement for the globalization of this period was the fact that the 19th century was quite peaceful by europe's terrible standards i mean there were important wars of unification in italy as you know in germany and there was the crimean war and we know how the story is going to end in 1914 and yet the fact remains that if you take battlefield deaths deaths in war as a percentage of population in the 19th century it was only one-seventh of what it had been in the 18th century uh i guess we're counting the napoleonic wars as being 18th century for this purpose which is correct because the 19th century goes as we know from 1815 to 1914 so it was a peaceful period that was largely caused by the fact that we had a hegemon the british they were the hegemon at sea i mean the russians maybe had a hegemony further to the east but the the british to a large extent performed the same services that the u.s navy has been performing since 1945 in keeping the seas open uh for everybody and something that is now under threat as we know in various parts of the world so in that kind of context you then had scope for the new technologies of the 19th century to really bring markets closer together uh steam ships railroads the telegraph okay what's globalization well you all know that if you have supply curves and demand curves then equilibrium it's where the two curves intersect actually doesn't matter what the model is the equilibrium is always where the two curves intersect or maybe where they're tangential to each other but if there's transport costs then there's the prices in the of the imp of the good and the importing market are higher than in the exporting market because it's costly to get the good from one market to the other so globalization is when trade costs fall in the 19th century trade costs fell this is a an index of shipping costs into britain which collapses after about 1840 at precisely the same time you see the wheat trade between england and america explode and at exactly the same time you see the the price gap the gap between prices of wheat in england and america collapsing so that's globalization and globalization implies both winners and losers so who are the winners well workers got cheap food that was good for the workers landowners in europe didn't get as much money for their output that was bad for the landowners in england which was open throughout and fully exposed to these globalization forces the income of landowners falls by about 50 percent here's a slide where you have the incomes of landowners relative to the incomes of workers in england in denmark they collapse in both cases so there's a big shift in income distribution because in europe you basically have now landowners facing competition from vast expanses of very cheap land in america and argentina and so on and so their incomes inevitably fall and so there's a predictable political reaction in france in germany in italy italy protects agriculture it's completely typical there's nothing unusual about italy you look just like for example germany during this period and this was inevitable because agricultural interests were still politically powerful in italy at this time they weren't in england that's why in england you could maintain free trade okay in the and at the end of our book we have this long quote which you know uh was written 20 years ago so you know politician journalisti analysti you know another tendency larry li mediato passato para application and so we're always going to have more and more globalization but the you know history suggests otherwise globalization can go into reverse la globalization because it created winners and losers and the losers objected and they got tariffs and by the way in the in the americas they also got restrictions on immigration and there's a story there too that i don't have time to go into and so we end up by saying that look if if you're a politician and you don't care about winners and losers uh you might find that globalization went into reverse and that the point is not that we were prophetic the point is that in the 1990s there were lots of people worrying about this already in america uh and then alhamdulillah will remember this this whole debate about whether our wages were uh being shaped by by beijing you know and this is why people were worried about it and this is why myself and jeff williamson framed the book in the way that we did so okay this this this thing is just not working is it the the the pointer the pointer's not working okay but we were writing about here and so here you've had a long phase where average wages in america are stagnating you know uh and people are worried about this there's already been um uh a couple of presidential candidates that don't do well who are essentially protectionist now i should say that the story is history is always complicated real wages start to recover after 2000 and it's after 2000 that china really becomes important so you know the links between globalization and inequality are are are complicated and yet you know this is pikaty's point since 1980 the incomes of the 50 poorest people in america have increased by one percent that's just pathetic you know it's just pathetic and in uh in britain uh median incomes since 2008 have fallen by 10 that's also pretty pathetic but an important point is that this is not inevitable because if you look at the same figure not for america but for france if you look at the incomes of the poorest fifty percent in france they haven't gone up by one percent they've got been gone up by twenty or thirty percent so you have choices as societies you don't actually have to choose to go down the anglo-american route if you want to but that is the way that they went down it's maybe not surprising that that's where the reactions were in 2016 and you know the point that people are making now more and more there are some economists making these points but if you just look at the electoral map of europe it's clear that what we have ultimately is a regional problem you know if you draw the map of france you look at the coal fields and you look at the vote for le pen and they look kind of similar you know so we have problems with regions that are deindustrializing and you know some people say they should just all move they should just go go to california well i mean in france it's more complicated you know but even in america that reaction ignores something rather fundamental about human beings which is a lot of us actually care about the place we came from and we're not necessarily going to be happy to see the place we come from uh uh decline uh if you look at uh the uk vote for brexit you don't here we have the the vote for ukip the vote for for ukip and here we have immigration and here we have how exposed the regions were to chinese competition actually there's no correlation with the immigration there's if anything where there's more migrants they're more likely to vote against brexit you know think about london you know but there is a clear correlation those parts of britain that in the 1980s were producing goods that later would face chinese competition are much more likely to vote for brexit so i think there is a a relationship here between globalization and the brexit vote uh so what are the shock absorbers well we know what the shock absorbers are we think and they emerge during the first great globalization so the origins of social security are to be found precisely in the period between 1880 and the first world war so this is when we have accident compensation unemployment insurance old age insurance uh pensions uh coming in uh also in italy you're a little bit slower but it happens also in italy now an important point to make is that if you look at how much of this social insurance you do you find that you get more of it in more open countries so there is not a race to the bottom here it's not the case that the more open you are the less you can do to help people actually the more open you were the more you did to help people how that worked politically in practice is for example in belgium you have a political coalition between the socialists and the liberals the socialists say we will support markets and free trade if you the liberals support the introduction of social insurance programs so there's no reason why you can't have political coalitions giving you both at the same time and that positive correlation was that correlation was still positive as late as the 18 1980s and 1990s so this is a famous paper by danny roderick written uh in the 1990s so using data that you know it's already 20 30 years out of date but still in the 1980s and 1990s it was the case that the more open you were other things being equal the bigger your government was now you could say that it's become more difficult now with capital being mobile and we're all chasing the capital you could say that but look at europe look at the european union you know 28 countries never in the history of the world have you had 28 countries more tightly integrated than the eu and yet you have very liberal countries like britain with a small government and you have countries like denmark that look completely different so you know even when you have that much integration countries can still make very different choices if they want to you know so i think you know there is this view that you know you can't have a welfare state with globalization i think that if you're on the right you say that because you don't want the welfare state if you're on the left of a certain sort you say that because you don't want globalization but it may actually not be true and if you care about markets maybe you should uh welcome that because maybe these shock absorbers are necessary to to protect the markets in the long run and it's not just that you can have welfare states that protect workers of course it isn't just about protecting workers in terms of giving them unemployment assurance you have to think about giving them jobs as well you know because that's what they ultimately want but governments can do something there as well i think but free trade agreements themselves can also protect we think of free trade agreements now as always tearing down existing standards but that's that doesn't it doesn't have to be that way and historically actually it hasn't been that way if you go back to the 19th century there are many examples of trade agreements where the deal is we will lower our tariffs if you raise your social standards in 1904 there was a a an agreement between france and italy on migration italians are moving to france the french are saying they're coming to get our social insurance they're coming to get our welfare benefits what's the solution you still have the right to move to france but italy raises its standards to french levels so you can have deals between countries that are progressive they don't always have to be deregulatory um and of course the best example of this is the treaty of rome and this is a quote from alan milward and his book is emphasizing that in the 1950s what was europe trying to do it was trying to create a bigger market which we needed for prosperity but it did not want the cost of that to be a race to the bottom so that the social standards would be undermined because we had just lived through the 1930s and we knew that that was too difficult and so if you look at the treaty of rome it's right there in 1957 you get all of this stuff about the right to work about social security about hygienic work conditions uh protection against professional illnesses right to collective action as trade unions equal pay for men and women big deal in a country like ireland when we join in 1973 uh stuff about paid vacations and if you look at our current negotiations with the british we know that one thing that we are absolutely clear about is that we want there to be level playing field guarantees that there is no way that they are going to allow the british to deregulate and have free access to our markets which by the way does raise i think the question of why you would necessarily want to have a very deep behind the borders type of agreement with a country like america i mean i mean it's it's a legitimate question and i don't think you know we're we're in a pretty globalized world already you know and maybe you shouldn't exaggerate you know okay so you know i think that these lessons of the past have often been uh forgotten uh these welfare safety nets have been eroded especially in the anglo-saxon countries it's important to remember that austerity in britain had nothing to do with europe nothing to do with europe they're not on the euro they're not subject to european fiscal conditions this is purely ideological and driven by david cameron and his chancellor george osborne and there's a very clear statistical correlation also between austerity and the brexit vote so in those parts of britain where austerity hit the hardest where you get the longest increases in queues for housing or health services that's also where the brexit vote is that the highest so they they're suffering a shock a deindustrialization shock like many parts of the world they need those social security nets and the chancellor takes it away from them i guess because he thinks this will be good for business but it turns out to be really bad for business because the political consequence is brexit so it doesn't matter how right-wing you are you do have to sometimes think about the political consequences of your actions especially if they are as predictable as this one now having said that i should say that the story of brexit's complicated i've stressed economic causes there surely are also non-economic causes there are very rich people in the south of england who have concerns about sovereignty there are rich people south of england who don't like foreigners you probably want to think about russian interference uh fake news and all of that kind of stuff there are stories about the funding of the brexit campaign but the point is you don't have to choose and you shouldn't want to choose between economic explanations for brexit or trump and cultural explanations both of those votes were very tight every vote counted right you take away any part of their coalition and they don't win okay so it's a complicated story and i think that this debate about whether the causes are culturally economic i think it's in part a culture it's in part an ideological debate you know it's as if it's as if the left can't cope with the notion that there might be some economic causes because that would in some sense be justifying these votes well i think that's self-defeating because you need to get rid of those causes if you're going to prevent this stuff from getting worse in the future and yeah you can read all about it in this book and it'd be great if you could read about it in italian okay secondly there's the interwar period where everything breaks down much more dramatically than today and this is entirely due to the great depression so it is not true that the great depression is caused by protectionism that's rubbish nobody believes that who studied the great depression okay it's the great depression that causes the protection but the problem is that the protection then has all sorts of other implications in particular i think political ones and geopolitical ones and that's actually why i'm mostly worried about what's happening uh today so let's just remind ourselves of what happened so these are interest rates central bank discount rates the red line is what happened this time and then the blue lines or the green lines are what happened in the 1930s and what you can see is that in the 1930s interest rates were kept very high you know they were kept high because people were trying to stay on the gold on the gold standard they were trying to keep on to fixed exchange rate systems this time around everywhere interest rates fell quickly even in the eurozone which was the slowest and which utterly perversely raised interest rates twice in 2011 okay so the eurozone was the worst of them but even there they eventually got their act together this is uh budget deficits in the interwar period and i have put on a red line and the red line is budget is three percent of gdp now why we care about three percent of gdp well who knows why we care about three percent of gdp well the good news is folks that all of these guys almost not mussolini when he was invading africa i mean things weren't that cost a lot of money but basically most of these guys were very very responsible they all stuck to the maastricht guidelines which is great news because it is not great news right because if you're in the middle of the great depression and you want to limit your budget deficit to say three percent of gdp you're going to have to raise taxes and cut expenditure at the worst point in the cycle and you're going to cause a great depression there were a couple of countries this time around who had to do that because nobody was going to lend them money so that was true in ireland it was true in estonia and we had great depression sized falls in income we had so 10 15 20 falls in income but we're little countries that doesn't matter in the great depression it was germany doing this it was america doing this and and so we ended up with a proper uh great depression so an important shock absorber is what we call automatic stabilizers you don't have to do keynesian things as good if you do but even if you just don't have austerity in the middle of the crisis that will cause deficits to increase and that will stabilize the economy to some extent so here you can see the uh the the balances so this is the surpluses and it goes down which means you're going into deficit and there is a move towards deficits in the interwar period it's much much bigger that moved towards deficits after 2008 and that was a good thing that was a good thing the combination of that plus the loose monetary policy meant that in 2009 we were already recovering whereas in the interwar period things went down and down and down for three four years and it's when the economy starts for three four five years that people lose hope and start turning to extremist parties who offer easy solutions okay uh there's a clear link between how long you stayed on the gold standard and how protectionist you were uh and yes that well this is basically saying that when you when you when you when you recovered from the great depression depending on how when on when you left the gold standard and when you when you you left this fixed exchange rate with gold the sooner you do it the quicker you get out of the great depression uh and those who stay on gold the longest are the most protectionist because they have you know they're in deep crisis and so they end up having to do this uh politically so they were trying to be orthodox by sticking to gold and they ended up being very unorthodox in terms of what they were doing to the international uh trading system and of course there were graver consequences yet so this is the unemployment rate in germany and the vote for the nazis and we we know this story now here's a book that you really all should read i don't know if it's in italian but it's a great book um and the theme of the book is summarized by its cover okay so it's a basically a family history of all of the parties on the left going through to the interwar period and one of the things that she's saying is that in many countries like germany the spd in the 30s was still an orthodox marxist party and so they weren't actually going to offer you useful policies to get out of the great depression because they were waiting for capitalism to collapse so in a country like sweden they had already become social democrat so they were saying you know what you're in trouble we're going to help you and if you offer the people that they go for it but then there are other countries where there's nobody doing that the sbd they're waiting for capitalism to collapse the liberals are hopeless they just want to leave it to the market you know and then when other people come and say you know what we want to help you you end up going for them so here you have two election posters and the one on the top it's exactly like the one on the bottom you know the one the bottom work and bread the one on the top it's work for all and higher purchasing power you know countries like ireland as well we had governments that said we're going to intervene in the economy to protect you and people went for that so it was an absolute tragedy what happened because it was unnecessary at some level if people had been willing to think outside the box earlier we might not have had everything that we ended up having okay so in that context let's talk about the eurozone it's not a happy story uh this is gdp after the crisis and what you see is it's the anglo-saxon countries that are the best at recovering and that's because in in in america you had uh loose monetary policy and you know reasonably a bit of lose fiscal policy in britain you had austerity but you had loose monetary policy you know so america does better than britain britain does better than the eurozone the germans do well because they're exporting to china but if you take germany out of the euro zone what you see is the eurozone has only recovered by 2016 eight years later and that's completely pathetic you know and let's not even talk about italy and if you prefer gdp per capita actually gets worse the eurozone outside of germany has only recovered by 2017. so are we are we surprised that there has been a political reaction and we should not be surprised that there's a political reaction the surprise i think is that the political reaction hasn't been more systemic in my view you know you put this on top of the longer run stresses and strains associated with de-industrialization and globalization and so on and i mean i think i think the center is doing pretty good doing pretty well but it's it's obviously in deep trouble you know and and the question is what do we do about it and and and really the real worry you know is that it could have been worse and when this guy is gone it could be worse you know so this is your compatriot trying to show the germans how german he is how prussian he is when he first gets his job luckily he wasn't being sincere and so when he took over from trichet things almost immediately got better he made his promise to do whatever he takes the central bank starts being more unorthodox and the eurozone economy finally starts to recover many years too late and one of the worrying things that we all have to think about is what's going to happen after draghi because it could be a real ideologue you know it could be somebody who's not pragmatic and is going to want to follow rules who's going to be more like that oak tree and less like the reeds uh yes i think i've said that so i'm sort of getting towards winding up now um i think that brexit at least in northern europe at least and if you're irish let's say i mean but all of britain's immediate neighbors i mean we can all now see thinking about brexit just how useful europe is you know we've all gotten used to europe without borders as i we've gotten so used to them that we don't think about them anymore actually the brexiteers they've gotten so used to them that they think that they can do whatever the hell they want and there won't be borders but that's wrong right there's nothing normal about a borderless europe it's a very odd thing okay and and and i think we're really learning to appreciate the implication of a borderless europe and the usefulness of a borderless europe not only economically but politically as well and my country is the best example uh of that and i think that also when you look at uh british people half of whom are very happy to be leaving but the other half of whom are absolutely distressed distraught at losing their european citizenship i mean you understand that actually this thing about being european is is hugely important for people but we're still in trouble we're in big trouble i don't want to exaggerate they're being moves towards making the eurozone architecture a little bit less dysfunctional but we don't have deposit insurance we don't have deposit insurance which means that a euro in a greek bank or an italian bank is not in the event of a crisis the same as a euro and a german bank and that's just crazy because the one thing that we know is that there will always be another crisis and you don't know when it's going to happen but there will always be another crisis and you get the sense that they're not going to make any further moves towards further integration uh unless unless there's another crisis but who knows what the other crisis will bring you know we you don't have a proper monetary union if the euro in a bank in one country is not the same as a euro in a bank in another country that's not a proper monetary union uh folks that's very very dangerous and it's also the case that many too many of our politicians in europe are too conservative when it comes to fiscal policy uh in particular and the real worry is that as we can see in this country and around europe is that the the reserves of democratic and political capital and and pro-european sentiment have been eroding you know uh they're still there but they've been eroding uh and if there's another shock what will happen next you know so these guys you know they're they're wasting they're wasting time so we need shock absorbers that are macroeconomic also that's that's my second conclusion uh finally justif what are the real costs of all of this i think the real i mean if trump puts on a 10 tariff it's not great it's not the end of the world but that's not the problem in my view in my view the real problems that we face are political and geopolitical you can see that in italy of course you know there are political issues here you think about le pen think about what would happen to europe if le pen never got into power uh god forbid that would be the end of the the project so there clearly are political costs here but they're also geopolitical costs and they're worth thinking about as well so i have a book where i talk as he marco mentioned about the links between war and and trade and and trade is a reflection of the geopolitical equilibrium of the day but trade can also have an impact on geopolitics and in particular what makes me worried is that there are rising powers like china that we have to absorb into the political system we've never done a very good job of absorbing rising powers in the past and these countries like china they have to buy raw materials in from the rest of the world and that means that they need a multilateral trading system to interact with and you tamper with that trading system at your peril to me the the thing to be most scared about is the way that trump is undermining the world trade organization the way that he's refusing to replace judges in the court in geneva i mean he clearly wants to just destroy the world trade organization so you know he wants to replace the rule of law with the law of the jungle and i suppose he wants to do that because he figures he's a big beast and maybe he is but there are other big beasts there as well we're in a multipolar world that's not great i don't think it's dangerous enough he risks making it much more uh dangerous so to conclude really now finally to conclude when you think about those bigger stakes you know you then have to think about you know the the real costs and the real benefits of maintaining existing levels of social protection in rich democracies a certain sort of liberal politician will say look we can't afford this you know it's costing tax tax revenue to pay for to pay for decent pensions for people and so we can't afford this you know but if you think about all the political risks that you run if you get rid of uh if you undermine people's security i mean maybe you can't afford not to pay this and maybe this is actually a pretty cheap uh investment in our political uh futures um and maybe those people like myself i suppose who are broadly speaking liberal and who broadly speaking think that trade is a good thing especially in my case i suppose for political reasons maybe rather than always you know yeah there's this bicycle metaphor you know that might afford the bicycle we must always move further forward or else we will fall over they use that metaphor in the european context all the time it's a dangerous metaphor you know maybe you should just declare victory say you know we live in a very globalized world let's try to keep what we have and let's try to focus on uh shoring up political support for what we have and that means focusing on the people and on the regions who are being left behind that's what i wanted to say um organization okay so um two responses firstly you firstly you mentioned their um nation states being being hostages to markets or or how can we avoid them being hostages to markets and it's very simple you can do whatever you want so long as you pay for it yourself so you know you can have a well-developed welfare system paying decent pensions and all the rest of it if you pay for it yourself out of taxes which the scandinavians do you know you become a hostage to markets if you're borrowing all the time because then indeed you need the markets to lend to you so uh you don't have a you don't have a a sensible center left social democratic political program without being willing to pay for it so that's the first point and then the second point is that i think when you talk about supernatural institutions i mean let's just focus on europe i mean i think macron i'm basically with macron i shouldn't be because i'm irish which means i'm a i'm a citizen of the new hamza league which makes sense for us politically because we now have lost our former best friend and we need new friends and the scandinavians and the dutch and so on are our logical friends but i think there are so i'm in favor of that politically but i think i'm they're completely wrong when it comes to the architecture of the the eurozone i mean i think macron is right that if you want a single currency to work you need an element of fiscal transfers that doesn't mean one way transfers towards the south from germany all the time that doesn't work that's not what's required technically and it will never work politically you know but you need mutual insurance uh schemes and you know the old french idea of having you know for example some sort of eurozone or actually i would prefer your eu level taxes uh on whether they be carbon taxes whether they be taxes on on on it companies or whatever they are right that then are used to to refinance unemployment insurance systems for example so that if you have a severe downturn you know you're in less trouble than you would otherwise be i think that's a sensible kind of mutual insurance system at the eurozone level so you know i think ultimately you know if you did have the center uh you know taking in a decent chunk of tax revenue and sending it out again it would make the whole thing more stable i don't think that's politically invisible but you could imagine small steps along the lines of is an unemployment system that that that would help you know but but i do think the more important point for all of us to to bear in mind is that you know if you want protection you got to pay for it and that's okay you know and so what you need is leaders who make voters understand that if you pay you know that's in your interests and that's what you know these leaders that i suppose i'm nostalgic for uh from the 50s and 60s were able to do and that's that's what we need going forward because there clearly is a demand for protection i mean that's i guess largely the salvini vote i suppose it's you know it's lots of things but i suppose in part it's a vote for protection it may be other things as well prego my english is much worse than the new italian so i'll speak italian just just quickly before i i forget i mean i think i would say two things i would say two things firstly um i think this notion of sovereign debt getting a zero risk weighting or whatever as we currently have is is mad you know i mean we know that sovereign debt is risky and rules should take that into account but secondly i mean to be positive in a way it's not just italian banks who have problems actually german banks have big problems too you know and what we need to move uh mutual insurance systems forward is we need the germans to understand that they might sometimes benefit from these things as well and so in some in a perverse way the fragility of the german banking system may be one of the positive features on the landscape right now but but they may only realize when it's too late foreign yes i think the second question is the one i think i think completing the banking union has got to be the priority because without a banking union you don't have a monetary union worthy of the name and you're storing up huge risks of major systemic crises going forward um so i think that would be my my my priority really yeah well i don't have any particular views on exactly how you should structure your your tax systems in italy i i admit i'm happy to defer to your collective expertise on that a question about common european foreign policy and it could be useful to contribute to protection as well as to reduce reaction in your opinion the question sorry i didn't quite understand the question yes the question is about the common eu european uh foreign policies yes yes it can contribute to protection and at the same time reduce the risk of reaction to globalization are you suggesting that if european citizens see europe behaving as a unit in relation to its neighbors then in some ways that can help defuse tensions in europe is that the question thinking about migration flows for example or where are you coming i mean where are you coming from uh i mean i mean i guess migration flows is one area where you know we can potentially well we are already actually acting together aren't we and there i guess is pretty obviously a link between our our our foreign policy actions and and our external development actions and and migration flows um well you know you look at something like the ukraine and very often it seems like when we've done things jointly we've made things worse actually um so you know i think we i would say i would say that um if you're the sort of person who worries about secular stagnation and joel mccair has just left the room and if you're worried about a systemic under lack of spending at the european level especially in germany and if you're worried about europe's strategic weakness the fact that we seem to be completely dependent on america which is no longer a dependable ally well it does seem that uh rearmament would hit several targets at once uh it'd be a way of spending money creating jobs and and making us more uh secure but i guess you know the germans i guess don't want that right uh but that probably would help in various ways um thank you okay so the question is are some countries better equipped administratively to have social protection social shock absorbers than others i guess that was the question well maybe maybe but um there are different sorts of shock absorbers so and i suppose the the quality of administration i suppose would matter especially if you're trying to think of new policies and you're trying to be flexible and reacting to new situations and this kind of thing but if you have an established system of taxes and transfers i mean you just have to run that and and people will be protected by it you know if you if you have a government that is hiring x number of people those people's jobs and the jobs of the people who depend on them i mean that they're hired and uh you you could have very not very clever bureaucrats but they'd still be hired and the job would still be done i mean i can see where you're probably coming from um and of course the quality of uh public administration matters especially politically but you know i i think if you people were setting up tax and transfer systems in the 19th century when you know in early 20th century in 1920s and 30s and 50s when probably there were a lot fewer civil servants around so i think i think it's fairly basic stuff actually i don't think you need to be a genius to figure it out so the the problem with your shock absorbers is that um usually the people who would most benefit from them are the ones who vote against them what do you do about that well it isn't clear to me that the ones who had most benefit against them are always voting against the shock absorbers i think there may be voting against the people who i think are imposing shocks on them i think that's what's going on in the in their heads you know and i mean i think if you look at for example denmark right now and that's an interesting one right there the spd has sort of gone back to basics and they've they've cleaned up you know um my senses if you look at and if you look at the populists in scandinavia before the sbd started cleaning up what were they saying they were actually saying that the liberals you know the center right or whatever were undermining the welfare state and that was their big pitch so i think i think that i think that in europe maybe not in america this may be one air america is very different here maybe but i think in europe a lot of the populist vote is there to be reclaimed by the center left if the center left starts distinguishing itself from the center right you know so i mean i'd be one of the people who think that one of the great catastrophes in germany is the sbd constantly going into coalition with the cdu so you're saying to people you have no choice you know in the center you know so i'm in favor of the center right moving further to the right i'm in favor of the center left moving further to the left you know i'd be in favor of the spd turning to the greens and de linker in germany um so i think i think the two continents are fundamentally different that way so essentially what the danish populists or the swedish populists would be doing they'd be saying we're in favor of the welfare state but it's a club good you know you've got to remember the club to get it that's kind of a way to think of it and actually what the sbd now are doing is they're saying well we don't believe in completely open borders either which makes sense because actually nobody does it's a complete straw man and and once they made that move they started shooting up in the polls again foreign yeah when i think about basic income is that we should all go and listen to hillary hines who's giving the alan krueger lecture uh on precisely this this topic uh just around the corner because she's the one who knows about it again thank you you