AsiaGlobal Dialogue 2017 took place on November 22 at the historic Loke Yew Hall, The University of Hong Kong. The discussions were built around the theme of Asian Perspectives in a New Global Economy. Sessions focused on issues triggered by populism and a perceived retreat from globalization. They also touched on trade, finance, sustainable development, and the potential impact of artificial intelligence.
Welcome Remarks
Opening Remarks
Making Sense of Global Disorder
What Price, Populism?
Globalization: Dream or Delusion
Keynote Address: Old Ideas in a New World: Demystifying AI
Session 1a: Mapping the Future of Artificial Intelligence
Session 1b: Rewriting the Playbook for Global Trade
Session 2a: The Case for Sustainable, Inclusive Growth
Session 2b: Navigating a Course for Finance
Populism and the India Experience
Keynote Address: Asia: The Centre of Global Trade and Growth
Asia has attracted worldwide attention earlier this month as world leaders gathered in Da Nang, Vietnam, for the APEC Economic Leaders Meeting 2017. I represented Hong Kong, China at the meeting, and had a fruitful discussion with the leaders under the theme of "Creating New Dynamism, Fostering a Shared Future". The APEC meeting was followed by the East Asia Summit and the ASEAN Summit held in the Philippines, and the many formal dialogue and informal exchanges between state leaders had for a while dominated the news domain.
APEC members have a diverse profile as it is not an easy task to find consensus among all, but we managed to do it in Vietnam in the form of the Da Nang Declaration of 11 November. In the Declaration, the leaders expressed the determination to promote sustainable, innovative and inclusive growth, deepen regional economic integration, realise the full potential of the business sector, and enhance food security and sustainable agriculture. The Da Nang Declaration has provided much insight into how we should respond to a new global economy.
A graphic summary of this session created by Layla McCay, AsiaGlobal Fellow 2017. Please click to enlarge.
On Rising Protectionism
... despite all the benefits free trade and connected development can bring, we do see recently some worrying signs of rising protectionism. Why would this happen? One reason could be that the gains brought by economic globalisation have not been enjoyed by all, giving rise to social discontent, income disparity and a growing sense of disconnect, especially between the government and the people, and particularly young people. It is tempting to blame free trade for such social problems, and protectionism may easily gain popularity, but the fundamental solution lies in making economic development more inclusive and delivering benefits to our people.
Inclusive growth is highly relevant in the age of globalisation. APEC leaders have therefore agreed to redouble the efforts to advance economic, financial and social inclusion, with a vision to build an inclusive, accessible, sustainable, healthy and resilient APEC community. An Action Agenda has been endorsed to, among others, advance progress towards achieving full, productive and quality employment, and progressively achieve and sustain income growth for all members of society, especially women, and youth, persons with disabilities and other vulnerable groups, and enable them to seize global opportunities.
On Hong Kong's role in the global economy
Hong Kong is able to benefit from connected, inclusive and sustainable growth in the past 20 years under "one country, two systems". We enjoy unique advantages under "one country, two systems". We are an international financial centre and are universally acknowledged as among the best cities in the world for doing business. We have world-class logistics and communications infrastructure and a highly regarded services sector. And it's all underpinned by the rule of law and an independent judiciary.
It means that Hong Kong is the best platform for governments and companies along the Belt and Road, and their infrastructure projects, to seek capital. Our bankers, lawyers, arbitrators, accountants, architects, engineers, planners, project managers, insurers and marketing and communications experts are also capable of providing all the services these companies need in their projects.
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(Today) labour income as a share of national income is declining, Gini coefficients and other measures of wealth inequality have been rising. Probably the best single way of understanding this is job and income polarization, which mean the expansion of the tail end of income and wealth distribution and the decline in the middle; (it) is real, and its pervasive. If you go across different countries you’ll find that the impact is different… but nobody has been immune from this. And these patterns appear to have spilled over into political and social polarization and abroad, an expanding rejection of the status quo. To put it bluntly people are angry, anxious and they are insecure.
Why and why now? It’s a combination of growth patterns drifting in the wrong direction and accelerating in the wrong direction (starting in the year 2000), combined with either feeble or negligible responses on the part of governing structures. And they are both important. The anger comes from the fact that the patterns were ignored for a long period of time, and this is a cautionary for all of us today. Its not going to help to talk about it if nothing happens... It’s crucial that we end up in a situation where there is a vigorous attempt over time to reverse these growth patterns. So I think it’s that combination that has helped put us in this situation.
A graphic summary of this session created by Layla McCay, AsiaGlobal Fellow 2017. Please click to enlarge.
The non-inclusive growth patterns and the absence of effective counter measures led to a partial rejection of the system... What does that mean? It means rejection of established parties, elites in business, finance, in my field- in economics and academia. Why? Because we didn’t see the crisis coming. Because we oversold globalization. We didn’t discuss the difficult transitions that economies go through structurally and in terms of jobs with anywhere near enough clarity to help guide policy and so on. And in the course of this- and I think this may be the most important thing I say – we lost something that is intangible and important, and that is what the Europeans call political and social cohesion. That cohesion in my view, is based on the primacy of the cohesion of public interest. And I think we’ve lost trust in the institutions, in the governing elites and so on.
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Rejection, which is what we are seeing now with growing vigor, doesn’t that what replaces is it better. There is a real risk, I think, that we’ll be in a real period of political paralysis, policy inconsistency, maybe some very poor choices with respect to how to proceed... In a deeper level, there are inherent tensions in the concept of globalization and the way that our societies are evolving. People have needs and desires and fears with respect to a wide range of things. They care about growth and productivity and incomes to be sure, but they care about equity and fairness, inclusiveness, opportunity, sustainability, stability, culture, identity, sovereignty, security, governance, self- determination. And all of those things have surfaced in the discussions that we hear about, so this isn’t just an economic phenomenon.
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I think the simple truth is globalization in its simple and somewhat naive form, which worked for a while, has lost its capacity to meet (a) broad set of needs of people. And we have before us an exercise in creativity rebuilding governance structures, rules and procedures, and so on, in such a way that it does a better job to meet those needs.
A graphic summary of this session created by Layla McCay, AsiaGlobal Fellow 2017. Please click to enlarge.
A graphic summary of this session created by Layla McCay, AsiaGlobal Fellow 2017. Please click to enlarge.
A graphic summary of this session created by Layla McCay, AsiaGlobal Fellow 2017. Please click to enlarge.
When the masses rise, not because of any demagogy, but because of their ability to differentiate between the good and the lofty, and decide to choose their own leadership in a democratic manner, these elites become jittery. They invent new theories of Right-wing populism. Populism, generally understood as ‘support for the concerns of ordinary people’ or ‘the quality of appealing to or being aimed at ordinary people’, turns into a pejorative political theory that ‘seeks to disrupt the existing social order by solidifying and mobilizing the animosity of the ‘common man’ or ‘the people’ against ‘privileged elites’ and the ‘establishment’.
It is an interesting transition for these elites. They were once the vociferous champions of the masses. They found virtue in the Marxian dictum that the masses have a class enemy in the capitalists, and became the cheerleaders of all sorts of struggles in the name of the masses. But when the very same masses rise independent of them, the elites suddenly find that less virtuous. They now propagate that the masses are against the elites themselves.
When the masses rise, that is not democracy; that is populism, they argue. Democracy for them is a guided affair, guided by the elites. Where they have no say, it is mobocracy or, the new vitriol, “populism.”
A graphic summary of this session created by Layla McCay, AsiaGlobal Fellow 2017. Please click to enlarge.
(Indian) Prime Minister Modi’s policies are populist only in the conventional sense that they work to address the concerns of the common people. In fact, Modi’s populism is about changing the habits and mindset of the masses. His populism is about making people not just citizens, but stakeholders in India’s growth story. Modi defied conventional political populism by way of reduction of subsidies and introduction of Direct Benefit Transfer policies. For the first time in India, a scheme by name ‘Give It Up’ was launched by the Ministry of Petroleum asking well-off people to give up their gas subsidies. Over 20 million people have responded to the call thus allowing the gas connections to be provided to same number of rural poor families. This kind of populism has helped in improving the health and hygiene of the rural folk besides helping address carbon emission issues in a big way. Similarly, Modi’s Ujala scheme has led to distribution of over 230 million low-energy consuming LED bulbs across the country. This populism has not only helped in reducing energy consumption but has also reduced the electricity bills by 12 billion rupees.
Modi’s populism can be seen in his endeavour to build about 50 million toilets in the country’s rural belt. They have helped in improving hygiene at one level, while at another level they were helpful in addressing the health, security and educational concerns of rural women. Through seemingly populist schemes like Mudra, Start Up & Stand Up India, Modi government has been able to encourage rural youths from becoming mere job seekers to job creators. In the last three years, millions of jobs have been created especially in rural and informal sector through these lendings.
If there is any one scheme that clearly portrays political populism, it is the demonetization program. It was directed against the corrupt elites who loot the country and hide it as black money. Through demonetization, the government has been able to break the backbone of the parallel economic establishment in the country. Today, our economy is clean and transparent. The government has done away with hundreds of obsolete laws paving the way for ease of doing business.
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Modi’s popularity soars today... Here is a leader who has defied the conventional political wisdom of incumbency and improved on his approval ratings after three and half years purely based on his performance. Country’s ease of business ratings, investor confidence indicators and overall approval ratings of the government remain undisputedly high.
It is this popularity that the neo-elites want to destroy by pejoratively calling it populism. Their frustration lies in the fact that many an institution that they had captured earlier is slipping out of their hands. The masses are awakened today. Social media has transformed the way society thinks. The mainstream media, sections of which have been the bastions of the liberal elites, have been tamed to a large extend by the explosion of the social media. Social media is the most democratic media. Today we find many of the elites complaining about it calling it populist tool because it can no longer be ‘guided’ or ‘controlled’. Populism narrative is the proverbial last straw to hold on for these elites.