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00:00MANY PEOPLE ARE TRYING TO WORK OUT WHAT LINKS THERE ARE BETWEEN THE ORGANIZATION AND THE RISE OF POPULISM. WHAT DO YOU THINK THAT OVULATION -- POPULISM GETS WRONG ABOUT -- GETS WRONG? GUEST: PEOPLE ARE FEELING ANXIETY THAT THEY DID NOT THE LAST TIME THAT GLOBALIZATION ADVANCED SO QUICKLY. REGARDLESS OF YOUR SECTOR, REGARDLESS OF YOUR SKILL GROUP YOU ARE NOT SURE WHETHER YOUR JOB WILL BE AFFECTED. ANNA: THERE IS A GREAT DIVERSION AND THERE ARE IN IDEAS -- THERE IS A GREAT CONVERGENCE. WAGES HAVE NOT CONVERGED. THE PART OF THE SIX ALL THAT HAS BEEN LEFT UNDONE, HENCE THE SITUATION THAT WE FIND. GUEST: WAGES IN EMERGING MARKETS ARE FAR BEHIND THAT IN RICH COUNTRIES BUT THEY HAVE RISEN RAPIDLY. THIS DIFFERENCE IN THE WAGE RATES AND THE FACT THAT THESE WORKERS ARE USING OUR TECHNOLOGY SEEMS UNFAIR AND I THINK THAT IS -- PEOPLE ARE ANGRY THAT THEIR COMPANIES ARE TAKING THEIR TECHNOLOGY AND MOVING THEIR JOBS ABROAD COMPETING WITH LOWER WAGES AND THAT MAKES PEOPLE ANGRY. IN SOME SENSE IT HAS GONE ON FOR SO LONG AND GOVERNMENTS HAVE BEEN UNABLE TO ADDRESS IT THAT PEOPLE ARE REACTING AS INDIVIDUALS AND COMMUNITIES THAT FEEL THREATENED. THEY FEEL THEIR COMMITTEES ARE THREATENED BY THIS TREND THAT THEY DO NOT UNDERSTAND. MATT: ISN'T THERE SOME CONCERN THAT THE RISE OF GLOBALIZATION GOES HAND-IN-HAND WITH THE RISE IN INCOME INEQUALITY, EVEN IN THE SAME COMMUNITIES, INCOME INEQUALITY ANY U.S. AND THE DEVELOPED WESTERN WORLD. >> GLOBALIZATION IS ALWAYS MORE OPPORTUNITIES FOR YOUR MOST COMPETITIVE CITIZEN AND MORE COMPETITION FOR YOUR LEAST COMPETITIVE CITIZEN. THERE IS ALWAYS AN ELEMENT OF INEQUALITY. THE SOCIAL WELFARE STATE, EVEN IN THE U.S., ADVANCES WITH STUDENT LOANS AND LAND GRANT COLLEGES, PEOPLE HAD THE MEANS TO HOPE THEY COULD TAKE ADVANTAGE OF GLOBALIZATION. GLOBALIZATION HAS ADVANCED BUT THE SOCIAL WELFARE STATE HAS RETRACTED SO PEOPLE FEEL A LITTLE BIT LEFT BETRAYED BY THE GOVERNMENT. EIGHT YEARS OF THE KRATZ AND REPUBLICANS, NOTHING CHANGED. ANNA: WE HEARD FROM THE CHINESE PREMIER TALKING ABOUT THE BENEFITS OF GLOBALIZATION, GLOBAL TRADE. THEY HAVE A LOT OF STAKE IN THAT GAME. HOW MUCH IS THAT RELATIONSHIP REALLY AT THREAT BY WHAT WE HEAR FROM DONALD TRUMP? GUEST: WE ARE SEEING RATHER TRANSACTIONAL ADMINISTRATIONS. >> THAT IS A REPLACEMENT FOR THE -- IT IS A CHINESE-LED TPP. THE ENGINE IS RUNNING BUT THE DRIVER LEFT THE KEYS IN THE IGNITION AND OPEN THE DOOR AND WALKED OUT. THE THING IS READY TO GO. RCP IS THE ONLY OTHER VEHICLE. IT GAVE A BIG INITIATIVE TO IT. THERE IS NO DOUBT THAT WE DO NOT KNOW WHO WILL TAKE LEADERSHIP OF TPP BUT CHINA IS ONE OF THE LEADERS OR PART OF A TEAM OF PEOPLE WHO WILL GO AHEAD. IT IS GOOD, IT IS A FREE TRADE AGREEMENT BUT IT DOES NOT HAVE THE UNDERPINNING OF PRODUCTION NETWORKS THAT TPP HAD. INTELLECTUAL EFFORT HE, CAPITAL FLOWS, DOES NOT HAVE THOSE ELEMENTS. MATT: SKEPTICS WOULD SAY AND DONALD TRUMP'S WHITE HOUSE WOULD SAY OF COURSE THE CHINESE ARE ARGUING FOR A RULES-BASED FREE TRADE OFF THE LIKES WE HAVE NEGOTIATED. OF COURSE THE GERMANS ARE ARGUING FOR THE CONTINUED GLOBALIZATION, MULTILATERAL STATION, AND FREE TRADE BECAUSE THEY HAVE THESE MASSIVE TRADE SURPLUSES. IF THEY HAD HALF $1 TRILLION IN TRADE DEFICIT, DO YOU THINK THE CHINESE WOULD HAVE THE SAME VOICE RIGHT NOW? GUEST: THEY HAVE BEEN WAITING IN TERMS OF EXPORTING AND GROWING. THE DEFICIT THING, THE WAY I LIKE TO THINK ABOUT IT AS IF I AM SPENDING MORE THAN TAKING A NET INCOME I HAVE A PERSONAL DEFICIT. PART OF THAT DEFICIT IS WITH THE GROCERY STORE. I DO NOT FIX THE IMBALANCE BY FIXING IT WITH THE GROCERY STORE. WE STOP FOCUSING ON BILATERAL, IT IS A DOMESTIC THING FOR THE U.S., THEIR DOMESTIC POLICIES HAVE LED TO MORE SPENDING THAN SAVINGS AND THAT LEADS TO A TRADE DEFICIT IN A MATTER WHAT. THAT CANNOT BE FIXED BY TRADE AGREEMENTS. IT IS LIKE TRYING TO CHANGE A MICRO-BEHAVIOR TO HAVE MACRO-IMPACT AND IT DOES NOT WORK. ANNA: YOU MENTIONED THE COMPLEXITY OF GLOBAL SUPPLY CHAINS AND HOW TRADE IS NOT ABOUT NATIONS. TRADE DOES NOT NECESSARILY WORK THAT WAY. WHAT IN A BREXIT CONTEXT IS THE GOVERNMENT HAVE TO UNDERSTAND ABOUT THE GLOBAL SUPPLY CHAIN TO GET POLICY AROUND TRADE RIGHT? GUEST: A LOT OF THE PEOPLE INVOLVED IN BREXIT ARE THINKING ABOUT TRADE AS IF IT WAS IN THE 20TH CENTURY AS IT WAS GOODS CROSSING BORDERS. BRITAIN IS PART OF FACTORY EUROPE. WHAT THEY'RE TRYING TO DO IS BY PUTTING UP BARRIERS AGAINST TRADE OR MIGRATION AM A THEY ARE BUILDING WALLS AND SIDE EFFECT RETRYING TO SHIP MORE JOBS FROM ONE END TO THE OTHER. IT DOES NOT WORK. IT WILL MAKE ENGLAND LESS COMPETITIVE. ENGLAND IS NOT GOING TO SINK INTO THE SEA BUT THE ADJUSTMENT WILL BE LOWER BRITISH WAGES COMPARED TO OTHER PRODUCTION LOCATIONS IN THE EU AND THAT WILL RESTORE BRITISH COMPETITIVENESS. THE PRICE WILL BE PAID BY LOWER WAGES AND SALARIES IN -- AND BRITISH WORKERS WHO WORK IN COMPETITIVE INDUSTRIES THAT ARE

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What Populism Gets Wrong About Globalization

Centre for Economic Policy Research President Richard Baldwin weighs in on the populism versus globalization debate. UBS Wealth Management's Geoffrey Yu also speaks on "Bloomberg Daybreak: Europe." (Source: Bloomberg)

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